WILLS, TRUSTS & ESTATES OUTLINE Hofstra Law, Professor Folami, Fall 2009
WILLS WEALTH TRANSFER UPON DEATH: THE FUNDAMENTALS I. Th Thee Econ Econom omic icss Of Inh Inher erit itan ance ce Justi Justific ficati ations ons for passi passing ng weal wealth th at death death Society based on private property – this is least objectionable way to deal with property at owner’s death
Incentive for recipients to do certain things (take care of parents, grandparents, so they will get) Allows for the taking care of dependents (rather than State having to) Encourages productivity and control (work hard so children can have better life) Encourages earnings and savings (b/c you know it will pass to children, so no wasting)
Argu Argume ments nts again against st passi passing ng weal wealth th at at dea death th Transfer of fortunes perpetuates wide disparities in the distribution of wealth, concentrates inherited economic power in the hands of a few, and denies equality of opportunity to the poor. Danger - inherited wealth becoming the basis of enduring privilege
Tends to reward chance of fortunate birth, rather than merit or productivity Accumulation of wealth, rather than consuming it (which is better for society)
II. Fre Freedo edom m of Tes Testat tation ion:: Lim Limit ited ed a) Rest. Rest. (3d) (3d) Prop. Prop. Donati Donative ve Transf Transfers ers § 10.1. 10.1. The controlling consideration in determining the meaning of a donative document is the donor’s intention, which is given effect to the maximum extent allowed by law. i) Rationale: Rationale: freedom freedom of disposit disposition ion – property property owners have have the nearly nearly unrestricted unrestricted right right to dispose dispose of their property as they please. ii) Effect: Effect: donor’s intenti intention on not only determines determines the meaning, meaning, but also the effect effect of a donative document document B) THE RIGHT TO DISPOSE OF PROPERTY BY WILL IS CONFERRED AND REGULATED BY STATUTE . i) Wescott v. Robbins (1946) (1) Facts: Soldier sent letter to to bank saying he wanted to open an account to deposit money, and made it “in trust” so only he could withdraw. Also said if he died, he wanted grandpa to be beneficiary. Letter to grandpa he planned on using money for business when he got back from war. Letters typewritten and signed only by soldier. (2) Holding: The right to dispose of property by will is conferred and regulated by statute; the letters letters did not conform to what statute prescribed as to constitute a valid disposition of the property. Proper form is for will to be signed, witnessed, notarized, or o r holographic – otherwise, could be fraud. Not a trust b/c no trust property created – never set it up. C) THE DEAD HAND LIMIT : R ESTRICTIONS ESTRICTIONS ON INHERITANCE PERMITTED IF NOT ILLEGAL, AND IN ACCORDANCE WITH PUBLIC POLICY.
i) Rest. Rest. (2d) (2d) of Prop. Prop. Donat Donative ive Tran Transfe sfers rs § 6.2: 6.2: (1) Restraint on marriage marriage must be reasonable and must not interfere with marriage marriage (i.e., last name provisions, encourage divorce) (2) Restraints Restraints may not promote promote destruction destruction of property. ii) Shapira v. Union Union National National Bank Bank (1974) (1) Facts: Will disposes property to son only if he marries a Jewish girls whose both parents are Jewish within 7 yrs of testator’s death; otherwise goes to state of Israel. (2) Holding: will provision held valid valid & enforceable – must honor testator’s testator’s intent within within the limits of law and public policy. (a) Constitut Constitutionali ionality ty - right to marry, protected protected by 14th amendment, being violated? No. No restriction on marriage here; Court only asked to enforce the restriction on the inheritance. (i) Note: Cannot restrict restrict ability ability to to get married. married. (b) Public Public policy policy violated violated?? (i) violated violated b/c free free choice of religi religious ous practice? practice? No. Son won’t be be in contempt contempt for faili failing ng to marry a Jewish girl. Just won’t get $. (ii) Violated b/c would encourage marriage marriage just for $, then divorce? No. possibility possibility too remote, & assumption that son’s motive for marriage is proper. 1. Note: Cannot condition condition bequest bequest on gettin getting g a divorce. divorce. (c) Unreasonableness – pressure pressure to marry in 7 yrs w/o opportunity for mature reflection & jeopardizes college education? No. 7 yrs reasonable time for exhaustive reflection & fulfillment of condition w/o constraint or oppression.
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Tran Tr ansf sfer er An And d De Dece cede dent nt’s ’s Es Esta tate te a) Probate v. Nonprobate i) Probate Probate - property property that passes passes under the decedent' decedent'ss will will or by by intestacy intestacy (1) Distribution of probate assets under a will or intestacy may require a court proceeding involving probate of a will or a finding of intestacy followed by appointment of a personal representative to settle the probate estate. ii) Nonprobate - property passing under an instrument instrument other than than a will (1) Nonprobate Nonprobate property property includes the following: following: (a) Joint Tenancy property - decedent's interests interests vanishes at death; survivor has the whole. (b) Life Insurance - proceeds on decedent's life life paid to beneficiary named in policy. (c) Contracts with payable-on-death provisions - Contract can be with with employer, bank, etc., to distribute property to name beneficiary upon death (ex: pension plans) (d) Interests in Trust Trust - trustee holds the property for the benefit benefit of the named beneficiaries, then distributed per terms of trust. (2) No court proceedings – distribution distribution determined determined by the nonprobate document b) Terminology i) "go through through probate" probate" - to have have the estate estate administ administered ered through through probate probate courts courts ii) Proper to use the word "will" "will" to refer to an instrument instrument disposi disposing ng of both real and personal personal property property iii) A person dying testate devises real property to devisees; bequeaths personal property to legatees. "I give" effectively does the job in all circumstances iv) Real property descends to to heirs; personal property is distributed distributed to next-of-kin. c) Admini Administr strati ation on of Prob Probate ate Esta Estate te i) Personal Representative – appointment of personal rep necessary to oversee winding of decedent’s affairs. Appointed by, under control of, and accountable to probate court. (1) Executor - If the will names the person who is to execute the will & administer probate estate, the personal rep is called an executor (2) Administrator - if will doesn’t name the personal rep, then called administrator 2 / 42
(a) Selected from a statutory list list of persons given preference (usually heirs or creditors) (b) Administr Administrator ator must must give bond bond ii) ii) Four functi functions ons of of proba probate: te: (1) Collection Collection of assets assets (2) Notifying Notifying and paying paying creditors creditors (3) Paying Paying estate estate taxes taxes (4) Title Title clearing & distributi distribution on of the assets iii) iii) Jurisd Jurisdict iction ion: Primary or domiciliary jurisdiction - jurisdiction where decedent domiciled at time of death. If real property in another another jurisdiction, then ancillary ancillary administration in the jurisdiction jurisdiction is required. iv) Probating Probating will will in common form (1) Ex parte proceeding in which no notice or process issued to any person. person. Execution of will proved by oath of executor or other witnesses is required. Will admitted admitted to probate at once, letters of testamentary granted, and executor began administration of the estate. If no one raised objection, then fine. Otherwise, one might might compel in solemn solemn form (2) Maj of states don’t permit ex part proceedings, but require require prior notice to interested interested parties before appointment of a personal rep or probate of a will. v) Probat Probating ing will will in solemn solemn form form (1) Notice to interested parties parties given by citation, due execution of will will proved by testimony of attesting witnesses, and administration of estate involved more court participation vi) UPC (Uniform Probate Probate Code) - adopted in many states, states, so representative representative if statutes statutes regulating probate procedures. Provides for both ex parte probate (informal probate) and notice probate (formal probate) (1) Informal Probate requirements (a) w/o giving giving notice, notice, rep petitio petitions ns for appt (b) Petitions contains info on decedent & names/addresses of spouse, spouse, children, other heirs; if will, also info on devisees (c) If petition is for probate of a will will - original will must be with the the petition (d) Executor swears that to best of knowledge, will validly validly executed (no proof by witnesses req) (e) Registrar will probate, probate, w/o further proof if if will has req signatures and contains attestation attestation clause showing reqs of execution were met (f) Within 30 days after appointment, personal rep has duty of mailing notice to every interested interested party, including apparently disinherited heirs (2) Formal Probate - is is a judicial determination determination after notice to interested parties. An interested party can demand formal probate. These are final judgments if not appealed. (3) Statute of limitations limitations to probate probate is 3 years after date of death. If not within within 3 yrs, presumption of intestacy is conclusive. vii) Time for contest - depends on statute; if statute of limitations limitations expires, probate court no longer has jurisdiction to revoke probate, and probate of the will is final. (1) statutes require creditors creditors to file claims claims within specified period, otherwise otherwise barred (nonclaim statutes). viii) viii) Closing Closing the Estate Estate - Judicial Judicial approval approval of personal personal rep's rep's actions actions required required to relieve relieve rep of liabili liability. ty. Rep not discharged from fiduciary duties until the court grants discharge. ix) Universal Succession (Louisiana & Europe) - the heirs or the residuary devisees succeed to the title of all the decedent's property; there is no personal rep appointed by a court. The heirs assume all decedent's obligations and liabilities
Will validity generally requires: 3 / 42
• Testamentary Capacity • Testamentary Intent • Due Execution
CAPACITY Testamentary Intent requires testamentary capacity. Testamentary capacity requires mental capacity.
I.
Mental Capacity a) The Test of Mental Capacity To be competent to make a will, the testator must be an adult (18+ yrs) and must be “of sound mind.” i) Four Part Test for determining “of sound mind:” (1) The testator must must be capable of knowing and understanding in a general way: (a) the nature nature and extent extent of his proper property, ty, know in a general sense what you own; not necessary to know the specifics about your property (b) the natural natural objects objects of his his bounty, a sense of who should take (c) the dispositi disposition on that he is making making of that property; property; and and you have to know what exactly you’re doing with the will (d) must also be capable of relating these elements to one another and forming an orderly desire desire regarding the disposition of the property. Have a clear understanding of what you’re engaging in when you create a will ii) ii) Note: Note: The The test test is one of capability , not of actual knowledge. If test was of actual knowledge, a reasonable mistake about whether one of your children was alive would make you mentally incompetent since you wouldn’t know the natural objects of your bounty (family). B) TESTAMENTARY INCAPACITY CANNOT BE ESTABLISHED BY ISOLATED ACTS. i) In re Estate Estate of Wright (1) Facts: Will devised to his his friend one of this properties, his daughter another, and his interest in the 3rd to his granddaughter. He left his grandson & others $1 each. Will duly executed, with notary & witnesses signing. signing. Will contested b/c of mental capacity. Many witnesses testified testified that he was of unsound mind, including those present at the signing of the will, and gave many examples of his weird behavior. (2) Holding: not enough evidence of unsound mind (a) The legal presumption is always in favor of sanity, especially after attestation by subscribing witnesses, for it is the duty of the subscribing witnesses to be satisfied of the testator's sanity before they subscribe the instrument. The notary & witnesses has subscribed to the will, but later testified that he was of u nsound mind at that time. Not enough evidence offered to overcome presumption of sanity that was created when they subscribed. (b) Testamentary capacity cannot be destroyed by showing a few isolated acts, foibles, idiosyncrasies, moral or mental irregularities or departures from the normal unless they directly bear upon and have influenced the testamentary act. The only evidence 4 / 42 •
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was testimony that he was a drunk, kept to himself, lived alone and in a messy place, and did weird things (like pinning pinning garbage to bushes & showing the the neighbor his "roses"). These acts had no bearing on his ability to create the will. He knew the objects of his bounty, the property he owned, etc. c) Why Require Require Mental Capacity Capacity? Possible Possible Justificati Justifications: ons: i) A will should should be given given effect effect only if if it represe represents nts the the testator' testator'ss true intent ii) A mentally mentally incompetent incompetent man man or woman is is not defined defined as a "person." "person." iii) The law requires mental capacity to protect the decedent's family. iv) To a large extent the public acceptance of law law rests upon a belief that legal institutions, institutions, including inheritance, are legitimate, and legitimacy cannot exist unless decisions are reasoned. v) Assures Assures a sane person person that the disposit disposition ion the person person desires desires will be carried carried out even even if the person person later becomes insane and makes another will. vi) May protect society at large from from irrational acts. (but doesn’t protect society society from a sane person acting irrationally) vii)May protect a senile or incompetent testator from exploitation by cunning persons. D) MENTAL CAPACITY CAN BE DEFECTIVE DUE TO AN INSANE DELUSION i) A person may have sufficient mental capacity generally to execute a will but may be suffering from an insane delusion so as to cause a particular provision in a will (or the whole will) to fail for lack of testamentary capacity (depending on how much of the will was caused by the insane delusion). (1) An insane delusion which impairs impairs testamentary capacity is one to which the testator adheres against all evidence and reason to the contrary. ii) In re Strittmater Strittmater (1) Facts: Will gave everything to the the National Woman's party (NWP); (NWP); decedent had worked as volunteer for NWP for long time, it was her whole life. Doctor testified that that she had schizophrenia. She never married, and lived with with her parents until they died. died. She was devoted to her parents when they were alive, but after they died, she wrote nasty n asty things about her parents, especially her father. She hated men, wished they would all be killed and looked forward for the day when women could bear children without men. However, her dealings with people such as male lawyer & male banker were entirely reasonable and normal. (2) Holding: found that the evidence showed "incontrovertibly her morbid aversion to men," and "feminism to a neurotic neurotic extreme." Therefore, her mental state of paranoia about how evil men were led her to leave her estate to the NWP. (a) Note: Court makes assumptions. Assumes b/c she hates all men, then she is insane. But even if she was insane, does that mean she cannot dispose of her property the way she wants to? OR AFFECTED AFFECTED , OR MIGHT MIGHT HAVE CAUSED HAVE CAUSED OR E) A WILL IS INVALID IF THE INSANE DELUSION CAUSED OR AFFECTED , THE DISPOSITION OF THE PROPERTY . i) In re Honigman Honigman (1) Facts: Will leaves wife only a life use of her min statutory statutory share, plus $2500, while giving other members of his family family a lot more. Wife objected to probate b/c he was not of sound mind when will made. Wife said he was obsessed with the incorrect belief that his wife was cheating on him. (2) Holding: Court denied probate. It doesn’t matter if if there existed other reasons reasons why he might have disposed of his property in a specific way - the will is bad if the insane delusion did or might have affected the disposition. (a) Insane delusion vs. Mistake - An insane delusion is a belief not susceptible to correction by presenting the testator with evidence indicating the falsity of the belief. belief. A mistake is susceptible to correction if the testator is told the truth. As a general rule, courts do not reform or invalidate wills because of mistake (although this rule is changing). 5 / 42
OR UNDUE UNDUE INFLUENCE) NOTE: CONSTRUCTIVE TRUST (IN CASES OF FRAUD, DURESS OR • •
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Constructive trust is a remedy; alternative to a will contest. Where the probate court cannot do justice by refusing probate, the will may be probated and then a court with equity powers can impose a constructive trust on one or more of the beneficiaries to remedy the unjust enrichment caused by fraud, duress or undue influence (unjust enrichment if devisee permitted to keep property that otherwise they would not have taken but for the wrongful acts). This type of post-probate procedure is much riskier than contesting the probate of the will before the property is distributed, since by the time a judgment is obtained, the Δ may have disposed of the property or not have assets to satisfy the value of the property.
Undue Influence a) Bur Burden den of of Pr Proof oof i) Proponent Proponent of a will will has burden of proving proving its its validit validity y (showing (showing due execution). execution). The person person contesting the will then has the burden bu rden of proving undue influence directly or by proving facts that give rise to a presumption presumption of undue influence. The burden then shifts back to to proponent to negate undue influence. b) PRESUMPTION OF UNDUE INFLUENCE WHEN (varying approaches) I) CONFIDENTIAL R ELATIONSHIP ELATIONSHIP + INFLUENCER PROCURED WILL II) CONFIDENTIAL R ELATIONSHIP ELATIONSHIP + S USPICIOUS USPICIOUS C IRCUMSTANCES IRCUMS TANCES (1) Rest. (3rd): §8.3. Confidential relationship + suspicious circumstances = Undue Influence. (a) Factors Factors indicating indicating suspicious suspicious circumstances: circumstances: the extent to which the donor was in a weakened condition, physically, mentally, or both, and therefore susceptible to undue influence; the extent to which the alleged alleged wrongdoer participated in the preparation or procurement of the will or will substitute; whether the donor received independent advice from an attorney or from other competent and disinterested advisors in preparing the will or will substitute; whether the will or will substitute was prepared in secrecy or in haste; whether the donor's attitude toward others had changed by reason of his or her relationship with the alleged wrongdoer; whether there is a decided discrepancy between a new and an d previous wills r will substitutes of the donor; whether there was a continuity of purpose pu rpose running through former wills or will substitutes indicating a settled intent in the disposition of his or her property; and whether the disposition of the property is such that a reasonable person would regard it as unnatural, unjust, or unfair, for example, whether the disposition abruptly and without apparent reason disinherited a faithful and deserving family member. (2) In re Will of of Moses •
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(a) Facts: Moses married married 3 times; all 3 husbands husbands died; no children. She then had intimate relationship with Holland Holland (an atty) 15 years younger than her. 3 yrs before death, she made a will devising almost all her property to Holland. Will drafted by another atty who had no connection to Holland. Older sis attacked the will on ground of undue influence. Holland argued she had independent counsel to draft will, who was entirely devoted to her interests. (b) Holding: No meaningful independent meaningful independent advice or counsel. Atty knew she was giving substantial property to Holland rather than her sister, and did no t pursue the issue with Moses. Atty didn’t care who she gave prop to, whatever she wanted. Court said it was clear that he did no more than write down what she told him, and therefore Moses did not really have independent advice or counsel. (c) Dissent: Moses was a good businesswoman with with strong personality personality – she knew what she wanted; she had no relationship with sis. Attacks court by saying their decision is b/c she was having a relationship with a much younger man. ELATIONSHIP + INFLUENCER REC’D BULK BULK OF OF THE ESTATE + DECEDENT ’S III) CONFIDENTIAL R ELATIONSHIP INTELLECT WAS WEAKENED
(1) Estate of Lakatosh (a) Facts: 5 yrs prior to her death, Roger befriended testator who was was in her 70s, lived alone, & was rarely visited by her sister. Roger lived close & visited her at least daily; he assisted her around the house & drove her around, suggesting that she came to depend on him. A few mos. after they met, she gave Roger Ro ger power of atty (POA), & executed a new will which gave almost everything to to him. Atty who drafted drafted the will was Roger's cousin. cousin. Using the power of atty, Roger unlawfully converted assets from testator’s testator’s estate for others’ benefit. 2 yrs later POA revoked. (b) Holding: Court finds there was undue influence. Confidential relationship - established by Rose's dependency on Roger and the power of attorney. Roger received the bulk of the estate Rose's intellect was weakened – she was an elderly woman; helpless & unable to prevent the consumption of her assets by Roger. Roge r. Dirty home, living in bad environment generally. g enerally. (2) In re Kaufmann's Will – – (1964) Decedent very rich; gets away from family & has an 11-yr intimate relationship with another man. Basically, they were like a married couple & decedent treated him like that including including financially. He leaves almost everything to his partner. Family doesn’t like the homosexual relationship & objects on grounds of undue influence. Court Cou rt agreed, finding that there was a confidential relationship (partner had P OA), plus the disposition was an “unnatural, insidious influence operating on the weak-willed, trusting, inexperienced” decedent & his natural warm family attachments had been weakened by false accusations against him by his partner. Note: this is prob only b/c of the homosexual relationship relationship that people weren’t comfortable with, more than anything else. c) ELEMENTS OF UNDUE INFLUENCE : (modern view) i) SUSCEPTIBILITY - That the testator was susceptible to undue influence, ii) MOTIVE - That the influencer had the disposition or motive to exercise undue influence, iii) OPPORTUNITY - That the influencer had the opportunity to exercise undue influence, and iv) CAUSATION - That the disposition is the result of the influence. v) SUBSTITUTION – Substitute the will of another for that of the testator (1) Someti Sometimes mes this this 5th element is also necessary to prove undue influence, even if prior 4 proven. (2) Libber v. Weslow Weslow (a) Facts: Decedent executed a will at 81; she was of sound mind mind and in excellent health. health. Frank (her son; an atty), drafted the will per her instruction. instruction. Will gave to Frank & his sister; but expressly disinherited 3 grandchildren grandchildren from deceased son (Julian). (Julian). Decedent dies 22 days 7 / 42 •
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after executing the will. Frank wrote the will and hated Julian; he lived next door to mom & had key to her home. ho me. Decedent didn’t read/discuss will before signing. Frank got a lot more than if grandkids had also taken. Will also explained reasons why grandkids disinherited – bad relationship. Witnesses testified testified that decedent often expressed her intent to disinherit them. (b) Holding: Will not invalidated on ground ground of undue influence. The test of undue influence is whether such control was exercised over the mind of the testator as to overcome his free agency and free will and to substitute the will of another so as to cause the testator to do what she would not otherwise have done but for such control. Although there was a confidential relationship (Frank is atty), the opportunity (always around), and motive (he rec'd a larger share), there was no proof that Frank substituted his mind and will for that of his mother. A lot of evidence suggested she wanted this. d) No-Contest Clauses - provides that a beneficiary who contests co ntests the will shall take nothing, or a token amount, in lieu of the provisions provisions made for the beneficiary beneficiary in the will. i) Designed Designed to discourage discourage will will contests contests (so no unmeritor unmeritorious ious litigati litigation, on, family family quarrels, quarrels, defamation defamation of testator). But, it may also inhibit inhibit lawsuits proving forgery, forgery, fraud, undue influence – basically nullifying safeguards. ii) Majority Majority - enforce no-contes no-contestt clauses unless unless there there is probable cause for the the contest. contest. iii) Minority - enforce unless the contestant alleges forgery or subsequent revocation by a later will or codicil, or the beneficiary is contesting a provision benefitting the drafter of the will or any witness thereto. e) Bequ Beques ests ts to Atto Attorn rney eyss i) Undue Influence - many courts hold that a presumption of o f undue influence arises when an attorneydrafter receives a legacy, except when the attorney attorney is related to the testator. testator. The presumption can be rebutted only by clear and convincing evidence provided by the attorney. f) Effect of a finding of undue influence i) If part of of a will is is the product product of undue undue influence, influence, those those portions portions of the the will that that are the the product of of such influence may be stricken and a nd the remainder of the will allowed to stand, if the invalid portions of the will can be separated without defeating the testator's intent or destroying the testamentary scheme.
III.
Fraud a) ELEMENTS OF FRAUD (in the testamentary context) I) DECEPTION AND RELIANCE ON IT BY THE TESTATOR II) MISREPRESENTATION OR OR FALSE FALSE STATEMENT III) INTENT BY DECEIVER TO DECEIVE iv) PURPOSE OF INFLUENCING THE TESTAMENTARY DISPOSITION (in deceiver’s favor) b) TYPES OF FRAUD (in the testamentary setting) i) FRAUD IN THE INDUCEMENT – occurs when a person misrepresents facts, causing testator to execute a will, to include a particular provision in the wrongdoer’s favor, or to refrain from executing or revoking a will. (1) (1) Ex Exam ampl ples es:: (a) H induces O not to execute a will in favor of A by promising O that H will convey the property to A. At the time H makes the promise, H has no intent to convey the property to A. (However, if H did in fact intend to carry out promise, but later changed his mind, no fraud.) (b) Husband asks wife for will so he can destroy destroy it. She holds up an envelope, pretends it it contains the will & burns it. After he dies, se probates the will that hadn’t been destroyed, which left her everything. Husband induced to believe there was a revocation, revocation, which is what he wanted. Heirs here would be entitled entitled to a constructive trust. trust. 8 / 42
(c) Testatrix executes will will leaving everything to Jean. Two days before she dies, Carol tells tells testatrix Jean is dead (Carol knows Jean is actually still alive), and in response, testatrix, who relies on this, executes a 2nd will, giving Carol everything instead. (However, if Carol did not know Jean was beneficiary, then there might not be a purpose to change the disposition.) Note: Jean could get a constructive trust here. (2) Puckett v. Krida (1994) – nurses hired to provide care for testator (who was in weakened condition). Nurses got under will; family family didn’t. Niece alleged fraud fraud in the the inducement. Court held there was a confidential relationship relationship b/c of status status as nurses, & one nurse had POA. They encouraged testator’s false beliefs that family using her & her money. Evidence of fraud – testator only started believing this after nurses started caring for her, and niece kept meticulous records of how she handled testator’s money (so the beliefs were clearly false). ii) FRAUD IN THE EXECUTION – occurs when a person misrepresents the character or contents of the instrument signed by the testator, which does not in fact carry out the testator’s intent. (1) Example: O, who has poor vision, vision, asks her heir apparent, H, to bring her the document prepared for her as a will so that she can ca n sign it. H brings O a document d ocument that is not O's intended will, knowing it is not the document O wants. O signs it, believing it to be her will. c) Effect of a finding of fraud - A provision in a will procured by fraud is invalid, but the remaining portion stands unless the fraud goes to the entire will or the the portions invalidated by fraud are inseparable from the rest of the will. (Diff from mental capacity where the whole will is void, b/c there can’t be capacity for some parts and not others.) o thers.)
IV.
Duress a) When undue influence influence becomes becomes overtly overtly coercive coercive,, it becomes becomes duress. b) Rest (3d) Prop §8.3(c): A donative transfer is procured by duress if the wrongdoer threatened to perform or did perform a wrongful act that coerced the donor into making a donative transfer that the donor would not otherwise have made. C) R EMEDY EMEDY OF CONSTRUCTIVE TRUST IS AVAILABLE WHERE FRAUD PREVENTS TESTATOR FROM REVOKING OLD WILL. i) Latham v. Father Father Divine Divine (1949) (1) Facts: Testator (white) died leaving a will that gave most of her estate to Father Divine (black) (Δ). Δ was a charismatic religious leader, although some thought he was a fraud, and his church a cult. Will probated & prop distributed. Then testator’s cousins (Πs) sued Δ asking for a constructive trust on that prop b/c of Δ’s fraud & duress. Alleged that testator wanted to revoke the will she made & make another giving most to Πs, that testator had another will drawn up but Δs prevented its execution via false representation, undue und ue influence, and physical force, and an d that shortly before her death when testator again said she wanted to execute a new will, Δs & others conspired to and did kill her, by means of an operation performed on her, w/o knowledge or consent of family. (2) Holding: Court Πs entitled entitled to a constructive trust. trust. (a) This is a fraud in the execution; specifically, specifically, a fraudulent nonrevocation. nonrevocation. But for the the fraud of Δ, the existing will would have been revoked and the new n ew will executed. In this situation, the so-called nonrevoked will is probated, and the relatives must bring a lawsuit seeking the equitable remedy of constructive trust. (b) Note: suggested that court rulings here were motivated, at least in part, by racial prejudice prejudice against Father Divine & a belief that his church c hurch (called a "cult" the by b y court) was not quite a legitimate religious group.
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V.
Tort To rtio ious us In Inte terf rfer eren ence ce Wi With th Ex Expe pect ctan ancy cy a) Rest. (2d) (2d) Torts include includess intentional intentional interfer interference ence with an expected expected inheritanc inheritancee or gift as a valid cause cause of action. i) Key Poin Points ts to Note Note: (1) Not recognized recognized widely widely (2) Not a challenge challenge to the the probate probate of a will (3) Tort damages damages (compensatory (compensatory and punitive) punitive) available available b) Marshall v. Marshall - 86 yr old testator married 24 yr old Anna Nicole Smith 3 yrs after they first met at a strip club, where Smith was a dancer. Testator died 18 mos after they were married. Smith spent heavily, so despite all the money he gave her she needed n eeded more. Testator’s relatives blocked access to his money, and she ended up in bankruptcy. Smith sued for tortious interference with an expectancy, & court imposed punitive damages on son who restricted her access to the money. i) Test for tortious interference : (1) A plaintif plaintifff must prove: (a) the existen existence ce of an an expectancy expectancy (b) a reasonable certainty that the expectancy would have been realized but for the interference interference (c) intentional intentional interfe interference rence with that that expectancy expectancy (d) tortious tortious conduct involved involved with the interference interference;; and (e) (e) dama damage gess
EXECUTION AND FORMALITIES I.
Attested Wills A) INTRODUCTION
i) The Function of Formalities: (1) Ritual Function - Impress upon testator testator the significance significance of what is is happening (2) Evidentiary function - reliability reliability - shows there wasn't wasn't fraud/coercion (there are witnesses); witnesses); signature in specific location (3) Channeling Function - the benefit of having having requirements is piece of mind to testatrix testatrix to know that if you follow requirements, then you know k now your will is going to be valid & in effect (4) Protective Function – more difficult for testator to be taken advantage o ii) Comparison of Statutory Formalities for Formal Wills Statute of Frauds (1677) (land (land ) Wills Act (1837) Uniform Probate Code (1990) Writing Writing Writing Signature Subscription (signature must be Signature at the “foot or end” of will) will) Attestation & subscription by Attestation & signature by two Attestation & signature by two three witnesses witnesses witnesses B) THE R EQUIREMENT EQUIREMENT OF DUE EXECUTION
i) Execution of a Will, Generally (1) The most basic formalities for an attested will are: (a) In writi writing ng,, (b) signature signature by the testator; testator; and (c) attestat attestation ion by witnes witnesses. ses. 10 / 42
II) LINE OF SIGHT VS. CONSCIOUS PRESENCE TEST FOR WITNESS
ACKNOWLEDGMENT /ATTESTATION (1) CONSCIOUS PRESENCE TEST - presence is found through site of hearing or general consequence of events that the witness comprehends that testator is in the act of signing. (a) UPC § 2-502. Execution: Wills. A will must be: i. in writing, ii. signed signed by by the the testa testator tor or in in the testat testator' or'ss name name by som somee other other indivi individua duall in the testator's conscious presence and by the testator's direction; and iii. iii. signe signed d by at at leas leastt two two indi indivi vidua duals ls,, each each of of whom whom sig signe ned d within a reasonable time after he witnessed either the signing of the will as described in paragraph (2) or the testator's acknowledgment of that signature or acknowledgment ack nowledgment of the will. (2) LINE OF SIGHT – You must be capable of seeing the witness in the act of signing (do not have to actually see, just could have seen if you looked up) (a) In Re Groffman (1969) i. Summary Summary: Testator Testator signs will. will. Witnes Witnesss #1 #1 comes comes into room & signs signs in testator’ testator’ss presence, then leaves. Then Witness #2 comes into room & also signs in testator’s testator’s presence. Held will not properly executed, b/c the law relevant here provides that the “signature shall be made or acknowledged in the presence of 2 or more witnesses present at the same time,” and “such witnesses shall attest & shall subscribe the will in the presence of the testator.” (b) Stevens v. v. Casdorph i. Summary Summary: Will executed executed at bank; decedent decedent signs signs in presence presence of bank employee employee (notar (notary). y). Employee takes will for 2 witnesses to sign, at separate times; each did not see the other nor the testator sign. Will improperly improperly executed. Statute requires that “signature “signature shall be made or the will acknowledged by him in the presence of at least two competent witnesses, present at the same time; and such witnesses shall subscribe the will in the ." No one saw anyone sign; no communication presence of the testator, and of each other ." btwn any of them either. 1. Note – if if the conscious presence test was used here instead of the line of sight test, the execution would have been valid b/c everyone in bank knew what was going on (small town, etc.), and it was within a reasonable time (UPC approach). 2. Also, argumen argumentt of substanti substantial al compliance compliance was made made here, but but the court court was unwillin unwilling g to vary from the strict requirements of the law. (3) HYPO: A typewritten will has in the testator’s testator’s handwriting, below the testator’s testator’s signature and above the witness’ signatures, signatures, the line: “I give Karen my my diamond ring.” Will entitled to probate? Depends when the sentence was added. (a) If line added after testator’s testator’s signature, will will is valid but sentence is not b/c it’s it’s not a duly executed codicil. (b) If line added before before the testator’s testator’s signatur signature: e: i. Some Some courts courts would would stri strike ke the the entire entire will will b/c b/c the the signat signature ure has has to be at at the end end of the the will will (despite the fact that it was written before testator actually signed). ii. Others Others woul would d probate probate the the will and and just just strike strike the the langua language, ge, especi especiall ally y if the line line relate related d to a disposition. iii. iii. Some Some jur migh mightt give give effect effect to to the lang language uage if if it was was not rela related ted to to a dispos dispositi ition on (but (but only only named an executor, etc.). C) COMPETENCY OF WITNESSES I) THE QUINTESSENTIAL FUNCTION OF A SUBSCRIBING WITNESS IS TO PROTECT THE TESTATOR FROM FRAUD OR OR UNDUE UNDUE INFLUENCE AT THE MOMENT OF EXECUTION . THEREFORE, WITNESSES
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MUST BE DISINTERESTED SO THAT THE TESTATOR ’S BEST INTERESTS ARE LOOKED AFTER .
THIS
FUNCTION IS PERFORMED WHEN THE WILL IS EXECUTED (NOT AFTER ). ).
(1) Estate of Parsons Parsons (a) Facts: 2 of the 3 witnesses signing the will at execution were named as beneficiaries under the will (statute requires 2 witnesses witnesses to sign). After decedent died & will was admitted to probate, one of the witnesses filed a disclaimer (waiving (waiving right to get under the will). Will contested on grounds that it was not duly executed b/c there was only 1 disinterested witness – the other 2 got under the will. (b) Holding: Court held not a validly executed will b/c the statute requires 2 disinterested disinterested subscribing witnesses. The fact that one witness filed a disclaimer after after death doesn’t mean anything, b/c the quintessential function of a subscribing witness is performed at the time of execution – to ensure there is no fraud or undue influence at the moment of execution. If witnesses subscribing at execution are not disinterested, then testator’s interests are not protected at time of execution. (2) Purging Statutes - used to purge an attesting witness of any benefit he or she received under the attested will unless the required # of disinterested witnesses also attested to the will. This is to prevent interested parties from testifying about the will, since they might not testify truthfully. truthfully. Purging statutes are also also used to protect the testator testator from fraud/undue influence at the moment when he executes a will, by ensuring that at least 2 people without any financial motive to defraud the testator are present. (a) At least 2 types of purging purging statutes statutes in existence existence today: i. Firs Firstt kin kind d of of sta statu tute te (lik (likee the the CA stat statut utee in in Parsons) takes from the witness only those benefits that he would have received under the will that exceed the benefits that would have been received if the will had never been executed. ii. Second Second kind kind of statu statute te requi requires res that that any any devise devise to to the attes attestin ting g is voided voided,, such such that that nothing is taken under the will (regardless of whether intestacy laws would have provided the witness something). iii. iii. UPC §2-50 §2-505 5 (which (which some some stat states es follow follow)) has done done away away with with purgi purging ng statu statutes tes such such that that "a "a will or provision thereof is not invalid because the will is signed by an interested witness." This is because witnessing witnessing the will is only about you saying the testator testator signed the will; so who cares if they get under the will or not? D) EXECUTING AND SAFEGUARDING WILLS i) Selection of witnesses (1) Must be disinterested disinterested - shouldn’t shouldn’t be anyone that benefits under the will (2) Get 3 witnesses (maj (maj jur require 2, so 3 just in case there’s there’s a problem with one) (3) If possibility of will contest/challenge, want witness witness who is credible credible & has known testator a long time ii) Present at Execution - Everyone should be present at time of execution (all witnesses, the lawyer, testator & notary, no one else else should be there). Door closed; no one enters or leaves until ceremony done. iii) Testator Recognition of Will & Signature (1) Ask testator: “Is this your will?” Have testator recognize recognize will; make sure that it it is the will testator wants to execute, and that testator understands it. (2) Witnesses should should be positioned positioned so that that they can see testator testator sign. Witnesses don’t need to to know contents of the will. (3) Testator signs on bottom bottom of last page, with all all pages firmly affixed affixed together. Good idea to also initial & date on each page. The will should also also specify how many pages it consists consists of. iv) Witness Attestation (1) In General, General, the Attestation Attestation Clause Clause should say that: that: 12 / 42
(a) Three Three Witn Witness esses es i. Pre Present at the same time ii. ii. Heard Heard the the tes testa tatr trix ix dec decla lare re the the doc docum umen entt to be be her her will will iii. iii. And obs observ erved ed the testat testatrix rix sign sign her her will will in their their presen presence ce (b) And that, that, then and only then: i. Each witness did 1. in the the presen presence ce of each each other other and and the the testat testator or and and 2. at the reques requestt of of the the test testato ator r ii. Sign Sign the will will as wit witnes nesses ses. v) Self-Proving Affidavit – typed at end of the will and signed by testator & witnesses, before a notary, swearing that the will has been duly executed (notary then signs & attaches seal). (1) Purpose: so that after testator's death, witnesses don’t need to testify to the execution of will, b/c already done with the self-proving self-proving affidavit. This becomes important if if witnesses have died or if they moved far away. Although the will is still still valid w/o affidavit, it makes it easier to probate. (2) Self-Proving Affidavit vs. Attestation – attestation serves as evidence that the testator executed the document; the affidavit says that all the other o ther formalities were done (duly executed). Attestation clause Self-proving affidavits prima facie evidence that the testator voluntarily Sworn statements by eyewitnesses that the will signed signed the will in the presence of the witnesses has been duly executed permits probate of a will when a witness forgets Performs all functions of the attestation clause, the circumstances of the will's execution or dies plus has the further effect of permitting permitting probate before the testator without requiring the appearance of either witness the attestant expresses the present intent to act as the affiant swears that the will has already been a witness witnessed (3) Two types of Self-Proving Affidavits Affidavits (UPC § 2-504 2-504 authorizes both types): types): (a) One Step (Combined attestation/affidavit) attestation/affidavit) – the affidavit is part of the will, will, and both affidavit (signed by witnesses, testator & notary) & attestation (signed by witnesses) are one document , so everyone only signs once, and is attached within the will and conclude the will. (b) Two Step – affidavit affidavit is attached but not technically technically part of the will (2 separate docs). The will is duly executed, as is the attestation clause (with witnesses’ signatures) that follows the testator’s signature. signature. Attached to the executed and attested will, will, is the self-proving self-proving affidavit (signed by the testator, the witnesses, and a notary), no tary), which is signed after testator signs the will, and after witnesses sign attestation clause. vi) Duplicates : Testator should not execute more than one copy – too many ambiguities might arise as to why this was done vii) After execution (1) Executed will should be placed somewhere safe; safe; let people know where it is (2) Keeping with atty – looks like like solicitation (b/c client client must come back to see atty again & this implies a continuation of the transaction). E) MISTAKE I) STRICT COMPLIANCE : TO BE VALIDLY EXECUTED , A WILL MUST COMPLY STRICTLY WITH THE REQUIREMENTS SET BY STATUTE. (1) In re Pavlinko's Pavlinko's Estate Estate (a) Summary: Husband & wife sign each others’ wills by mistake. mistake. Will practically identical – left property to each other, and to other family members. Court refuses probate of will. Statute requires that “every will shall be in writing and shall be signed by the testator at the end thereof.” Court refuses to vary from the strict requirements of the law, explaining that 13 / 42
“once a court starts to ignore, alter, rewrite, or make exceptions to clear, plain and unmistakable provisions of the [statute] in order to accomplish equity and justice in that particular case, the [statute] will become meaningless, and the door will be opened wide to countless fraudulent claims which the [statute] successfully bars.” II) CURATIVE DOCTRINES : SUBSTANTIAL COMPLIANCE & HARMLESS ERROR /D /DISPENSING POWER (1) EVEN IF STATUTORY REQUIREMENTS ARE NOT MET, A COURT MAY STILL FIND A WILL VALID, IF CLEAR & CONVINCING EVIDENCE IS SHOWN OF TESTATOR ’S INTENT , OR OR THROUGH THROUGH RELIABLE EVIDENCE OF A VALID TESTAMENTARY SCHEME. (a) The rule is designed to cure the inequity caused by strict strict adherence to to formalities. formalities. Since the primary purpose of the formalities is to to ensure that the document reflects the uncoerced intent of the testator, compliance is not important because of their inherent value, but because literal compliance often frustrates frustrates these of the purpose the purposess they serve . Rigid insistence on literal purposes, so some courts have allowed probate of technically defective wills. (b) Harmle Harmless ss Error Error i. UPC §2-503. Harmless Error 1. Although Although a document document or [codicil [codicil]] was not executed executed in compli compliance ance with [stat [statute], ute], the the document or writing is treated as if it had been executed in compliance with that section if the proponent of the document do cument or writing establishes by clear and convincing evidence that the decedent intended the document or writing to constitute a. the the dece decede dent nt's 's wil will, l, b. a partial or complete revocation of the will, c. an addit addition ion to to or alte alterat ration ion of of the the will, will, or d. a partial partial or complete complete revival revival of his his [or her] her] formerly formerly revoked revoked portion portion of the the will. ii. b e excused if the Rest. (3d) Prop. § 3.3. - A harmless error in executing a will may be proponent establishes by clear and convincing evidence that the decedent adopted the document as his or her will. iii. Note – called called the “dispensing “dispensing power,” power,” The The justif justificati ication on is is that that the purpos purposee of the statute statute is is to protect against fraud. But if evident there’s no fraud, then it’s ok. (c) In re Snide Snide i. Facts: Husband Husband and wife sign each others’ others’ wills wills by mistake; mistake; wills wills were were identi identical cal except except for the differences in names of the donors and beneficiaries beneficiaries on the wills. Court admitted will to probate. Court explained that testamentary intent intent does not attach to the specific specific document signed so long as the testator intended to execute the will. Here, the two wills were practically identical. This clearly evinced a valid testamentary testamentary scheme. Also, no evidence of fraud. 1. Note: This case case is an an exception exception - most most courts courts won’t won’t fix this. this. (d) In re Will of Ranney i. Facts: The will was 4 pages pages & 5th 5th page page was a selfself-provin proving g affidavi affidavit. t. At the execution, execution, the testator signed the 4th page, but the witnesses only signed the 5th page pa ge - the self proving affidavit. The testator and witnesses all thought they were signing and attesting attesting the will. Will then notarized and all 5 pgs stapled together. The affidavit stated that each witness signed the will as witnesses in the presence of the testator (but this didn’t happen b/c actual will not signed). ii. Holding Holding: Will Will admitte admitted d to probate probate,, although although it did not not adhere adhere to the the statuto statutory ry formali formalities. ties. Court explained that the statutory requirements serve an evidentiary e videntiary function (giving court evidence of terms of will & testamentary intent), a ritual function (shows the seriousness of event), and prevents fraud & undue un due influence. The signatures on the self proving affidavits satisfy these requirements. requirements. If the witnesses, with the intent to attest, attest, sign a self-proving affidavit, but do not sign the will or attestation clause, clear and 14 / 42
convincing evidence of their intent should be adduced to establish compliance with the statute. (e) In re Estate Estate of Hall i. Summary Summary: Will #1 executed executed.. 14 yrs later, later, testator testator & wife wife want to execute execute a Joint Will. Will. Joint Will executed, but without required attesting witnesses present. Wife tears up Will #1 at testator’s testator’s direction. direction. Court allowed probate of Joint Will. Will. Although formal requirements are lacking, there was clear & convincing evidence that the testator intended to void Will #1 by destroying it and signing the the Joint Will. By signing the Joint Will, testator intended to validate it. (f) Note: Diff btwn testamentary intent (intent (intent that it be a will) vs. dispositive intent (intent (intent that he wanted her to get).
II.
Holographic Wills F) A TESTAMENTARY DISPOSITION NEED NOT BE SET OUT IN A FORMAL DOCUMENT ; A LETTER CAN ALSO BE A VALID HOLOGRAPHIC WILL, AS CAN A VARIETY OF OTHER DOCUMENTS .
i) Kimmel's Kimmel's Estate (1) Facts: Testator mailed a letter letter to 2 of his children. The letter was written written in Kimmel's handwriting, signed at the end "Father," dated Dec 12, 1921, and contained the following: "I have some very valuable papers I want you to keep fore me so if enny thing happens all [of my property] goes to [my sons] Kepp this letter lock it up it may help you out." Kimmel died the same day he sent the letter. (2) Holding: The Court probated the letter as a holographic will. Court focused on the issue of testamentary intent (to create a will). (a) Here, the words, "if enny thing happens," strongly support the idea of testamentary testamentary intent. (b) Also, he signed it "Father." "Father." When taken in context of the letter, letter, "Father" was intended as a completed signature. ii) Note on Conditional Conditional Wills – “If x happens, I want Y to get everything.” (1) Most courts will presume the condition does not mean that the will is is to be probated only if the stated event happens but is merely a statement of the inducement for execution of the will. G) GENERALLY , A HOLOGRAPHIC WILL: I) MUST BE IN THE TESTATOR ’S HANDWRITING , (1) EXTENT WRITTEN IN THE TESTATOR 'S OWN HANDWRITING : (a) First Generation Statutes - Required that holographs be entirely, written, signed, and dated in the handwriting of the testator. i.
Mere Surplusage ( Estate Estate of Mulkins) – if there is no intent to incorporate the printed material, courts will treat the printed portion as mere surplusage, ignore it, & probate only the handwritten portions. This is b/c the surplusage doesn’t change/affect the disposition that is handwritten. The test is if the holograph can be understood without the printed provisions. ii. With With these these statute statutes, s, courts courts have have stric strictly tly enfor enforced ced the the requir requireme ement nt that that hologra holograph ph is completely in testator’s testator’s handwriting. Examples of holographs struck down: 1. Wher Wheree only only 1 or or 2 prin printe ted d word wordss 2. Where testat testator or stamped stamped the the named of his home home twice withi within n the text text 3. Where testat testator or took handwrit handwritten ten will to local banker, banker, who who added some some markings markings with the consent of the testator; not all in testator’s handwriting (b) Second Generation Statutes (1969 UPC) - Signature & material provisions of the holograph must be must be in the testator's handwriting. Completely ignore printed language.
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i.
When When languag languagee that indi indicat cates es testa testamen mentar tary y intent intent is is printe printed d rather rather than than writt written en by testator: 1. Some courts courts hold hold that a will cannot cannot be admitted to probate probate if the the printed printed words are essential to establish testamentary intent (and are therefore material provisions). a. Estate of Johnson - testator wrote his will on a stationer's form, filling in certain blanks in his own handwriting and then signing it. The handwritten portion, on its own, did not make sense, and did not show testamentary intent. 2. Other courts courts hold hold that handwritten handwritten provisions provisions may may draw draw testamentary testamentary context from both the handwritten and printed language. No need to ignore the preprinted words when the testator clearly did not. a. Estate of Muder - will handwritten on printed will form, signed and notarized b ut with only one witness. No issue as to the testator's intent. A testator who uses a preprinted form, and in his own handwriting fills in the blanks by designating designating his beneficiaries and apportioning his estate among then and signs it, has created a valid holographic will. (c) Third Generation Statutes (1990 UPC) - A will is valid as a holographic will, whether or not witnessed, if the signature and material portions of the document are in the testator's handwriting. Also, the UPC explicitly allows extrinsic evidence to be used to establish testamentary intent (allowed in for context). II) INCLUDE THE TESTATOR ’S SIGNATURE , (1) In almost all states states permitting holographs, a holograph holograph may be signed at the end, at the the beginning, or anywhere on the will, but if not signed at the end there may be doubt about whether the decedent intended his name to be a signature. III) BE DATED , AND (1) some jurisdictions jurisdictions require this also be in testator’s handwriting handwriting IV) MUST ESTABLISH TESTAMENTARY INTENT . (1) In re Estate Estate of Kuralt Kuralt (a) Facts: Testator, married, had a longtime affair with another woman. He was her primary source of financial support. In 1989 he drafted a holographic will bequeathing Montana property to lover. In 1994, he executed a formal will giving to wife & kids, which included no mention of the Montana property. In 1997, he gave lover money & sold part part of Montana prop to her. He planned to make another such transaction, but he got sick before he could do so. In hospital, he wrote a letter to lover indicating his intent to give her the rest of the Montana property, but died before he could arrange it. (b) Holding: Court allows the letter in as a codicil; the evidence clearly establishes establishes this was his testamentary intent. He intended to transfer Montana prop to lover. Evidence to support this: (1) long term relationship, (2) he was her main financial support for her & her family, (3) previously transferred part of the property to her for no real consideration, consideration, (4) sent lover letter indicating he wanted her to have the property. h) Note: Only ½ of states states recognize recognize holographic holographic wills. wills. i) NY only recogniz recognizes es in 2 situatio situations: ns: (1) mariner marinerss at sea, and and (2) soldiers soldiers in in armed combat. combat. ii) States that don’t don’t recognize recognize holographi holographicc wills: wills: (1) ½ of those states will recognize a holographic if it was created in a jurisdiction that does recognize it. (2) If state has adopted UCC 2-503, may still recognize a handwritten handwritten will through the dispensing power (but not as a holograph).
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R EVOCATION EVOCATION I.
Revo Re voca cati tion on by Wr Writ itin ing g or or Phy Physi sica call Act Act A) R EVOCATION EVOCATION BY SUBSEQUENT WRITING EXECUTED WITH TESTAMENTARY FORMALITIES I)
COMMON LAW R EQUIREMENTS EQUIREMENTS : (1) INTENT TO REVOKE (2) A SUBSEQUENT WILL OR CODICIL OR CODICIL , OR ANOTHER OR ANOTHER WRITING DECLARING AN INTENTION TO REVOKE , AND EXECUTED IN THE MANNER IN MANNER IN WHICH THE WILL WAS REQUIRED TO BE EXECUTED (see Thompson v. Royall , infra) ii) UPC §2-507(a)(1 §2-507(a)(1)) - A will or any part thereof thereof is revoked revoked . . .by executing executing a subsequent subsequent will that that revokes the previous will or part expressly or by inconsistency. iii) Revocation Revocation by Inconsis Inconsistency tency (1) A subsequent will wholly wholly revokes the previous will by inconsistency if the testator testator intends the subsequent will to replace rather than supplement the previous will. (2) A subsequent will that does not explicitly revoke the prior prior will but makes a complete disposition of the testator’s estate is presumed to replace the prior will and revoke it by inconsistency. (3) If the subsequent will does not make a complete disposition disposition of the testator’s testator’s estate, it is not presumed to revoke the prior will but is viewed as a codicil. B) R EVOCATION EVOCATION BY A PHYSICA PHYSICAL L ACT ACT SUCH SUCH AS DESTROYING , OBLITERATING , OR OR BURNING BURNING THE WILL I) COMMON LAW REQUIREMENTS : (1) INTENT TO REVOKE, (2) PERFORMANCE OF THE REVOCATORY ACT BY THE TESTATOR OR IN OR IN THE TESTATOR ’S PRESENCE (“LINE OF SIGHT”) BY CUTTING , TEARING , BURNING , OBLITERATING , CANCELING , DESTROYING THE WILL, OR THE OR THE SIGNATURE . [Note: UPC only asks for conscious presence] (a) Harrison (a) Harrison v. Bird i. Facts: Decedent Decedent executed executed a will will in 1989. 1989. Atty retained retained the the will will and and the the duplica duplicate te origina originall given to decedent. In 1991, decedent called her atty and said she wanted to revoke her will. Atty then tore the will into 4 pieces and sent it to decedent along with a letter explaining what had been done, and said "As it now stands, you are without a will." When decedent died, the letter from the atty was found, but the 4 pieces of the will were not. ii. Holding Holding: Under CL, revocation revocation of the the will will must be done done by testator testator or in the the testat testator’s or’s presence. So the act of tearing up the will did not revoke it. However, there is a presumption that the will has been revoked per the lost wills doctrine, since it cannot be found & it was last in testator’s possession. 1. LOST WILLS DOCTRINE - If the evidence establishes that a person had possession of her will prior to her death, but the will is not found among her personal effects after her death, a presumption arises that she destroyed the will. Additionally, if the copy of a will that is in the testator’s possession is destroyed, a presumption arises that the testator revoked the will and all duplicates that may exist. 2. Prob Probat atee of of Lo Lost st Will Willss a. If a will will is lost, lost, destroyed destroyed w/o consent consent of testator, testator, or destro destroyed yed w/ testato testator’s r’s consent but not in compliance with the revocation statute, it can still be admitted into probate if its contents are proved by clear & convincing evidence. b. Some jurisdictions don’t like this approach, and statutes prohibit the the probate of a lost or destroyed will unless the will was in existence at the testator's death (and
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destroyed thereafter) or was fraudulently or mistakenly destroyed during the testator's life. (3) THE PHYSICAL ACT MUST AFFECT THE WRITTEN PORTION OF THE WILL (a) Revocation by Cancellation Cancel lation: If written words are to be used for the purpose of revoking revokin g a will, they must be so placed on the will as to physically affect the written portion; merely writing on blank parts of the paper is not enough. Cancellation includes “any act which would destroy, revoke, recall, do away with, overrule, render null and void, the instrument.” i. Thompson v. Royall 1. Facts: Decedent Decedent executed executed a will, will, then 11 days later later executed executed a codicil. codicil. 4 days days after that, decedent decided will should be destroyed. On the back of the will, someone else (not decedent) wrote that the will is "null and void," and mentioned reason for not actually destroying will was to keep as reference. Decedent signed and dated this; a similar note was made on the back of the codicil. 2. Holding: a. Revocation Revocation by executi execution on of subseque subsequent nt will will – the notati notations ons on the the back must must have been a properly executed will or codicil. Since no witnesses, not an attested will. Since not completely in testator’s handwriting, not a holograph. So not revoked this way. b. Revocation by physical act – the will was in no way destroyed. c. Revocation Revocation by by cancellat cancellation ion – No. Revocation Revocation by cancellati cancellation on contemplat contemplates es marks marks or lines across the written parts of the instrument or a physical defacement, or some mutilation of the writing itself, with the intent to revoke. Null and void written on a blank part of the will (on the back). (b) BUT , UPC § 2-507: "A burning, tearing, or canceling is a 'revocatory act on the will,' whether or not the burn, tear, or cancellation touched any of the words on the will ." However, the words of cancellation must be written on the will itself, not on another document. c) Revocation of a photocopy of the will is not a valid revocation. i) However, However, if evidence evidence of intent intent to revoke, revoke, court court may impose impose a constr constructiv uctivee trust trust In (In Estate of Tolin). d) Partial Revocation by Physical Act i) UPC § 2-507 2-507 and and many states states allow allow partial partial revocation revocation by physical physical act. act. ii) In the states that don’t allow partial revocation by physical act, a will cannot be revoked in part by an act of act of revocation; it can only be revoked by a subsequent instrument. (1) Reasons for prohibiting partial partial revocation by physical act: (a) Canceling a gift to one person necessarily results in someone else taking the gift, gift, and this "new gift" - like all bequests - can be made only by an attested writing. (b) Permitting partial revocation by physical act offers opportunity opportunity for fraud. i. The pers person on who who takes takes the "new "new gift gift"" may have have been been the one who who made made the the mark marking ings. s. (2) If partial revocation by physical physical act is not recognized, the will will must be admitted admitted to probate in the form in which it was originally executed if the original language can be ascertained. iii) Example: (1) T’s will says “I bequeath $1000 to my nephew, Charles Blake." Blake." T crosses out $1000 and substitutes $1500. T writes initials and date in margin. (a) If state state does not permit partial partial revocation revocation by physical physical act: i. If they they don’t don’t permit permit part partial ial revoca revocati tions ons,, then they they will will just just ignore ignore the handw handwri ritte tten n part. part. Therefore, nephew gets $1000. (b) If the state permits permits partial revocation by physical physical act:
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i.
III. II I.
The typew typewrit ritten ten will will $1000 $1000 is is revoked revoked.. Nephew Nephew doesn doesn’t ’t get get the $1000 $1000.. But he he doesn’ doesn’tt get the $1500 either b/c it's considered a new gift which has to be duly attested.
DRR: DR R: Dep Depen ende dent nt Rel Relat ativ ivee Revo Revoca cati tion on and and Rev Reviv ival al A) DRR: IF THE TESTATOR PURPORTS TO REVOKE HIS WILL UPON A MISTAKEN ASSUMPTION OF LAW OR FACT OR FACT, THE REVOCATION IS INEFFECTIVE IF THE TESTATOR WOULD NOT HAVE REVOKED HIS WILL HAD HE KNOWN THE TRUTH.
i) DRR sustains a revoked gift if a testator cancels or destroys a will with a present intention of making a new one immediately as a substitute and either the new will is not made or it fails of effect for any reason. When the gift fails, the law presumes that testator would prefer the original will over intestacy, and evidence of intent is crucial. residuary to nephew. Then, she executed a (1) LaCroix (1) LaCroix v. v. Senecal - Testator's will left part of residuary codicil, revoking the previous residuary clause, & replacing it with an identical one, except that she used nephew's given name, rather than his nickname as in the will. Problem was that the codicil was not properly executed. DRR applies here. It’s clear that the only reason for the change was to clarify the name of the nephew. The testator's intent to revoke the will was conditioned upon the clarifying terms of the codicil (to make sure nephew gets, ge ts, using his legal name) and not to void the existing gift. Therefore, the testator would prefer revival. ii) If a testator revokes a later will under the mistaken belief that by doing so a prior will is reinstated, DRR applies and renders the revocation ineffective and the later will is admitted to probate. explicitly (1) Estate (1) Estate of Alburn Alburn - Testator created Will #1. Then she executed Will #2 which explicitly revoked Will #1 (revocation by subsequent writing). Then she decides to destroy Will #2, intending to bring back Will #1 (mistaken belief that this would happen). DRR applies, and Will #2 is revived. B) R EVIVAL EVIVAL i) Different Diff erent Approa A pproaches ches : (1) (English CL) Will 1 is not revoked unless Will 2 remains in effect until the testator’s death. So, it’s not necessary to revive b/c Will 1 was never revoked (only at death, & then can’t be revived anyway). (2) (Maj CL) Will 2 revokes revokes Will 1 when Will Will 2 is executed. executed. If Will 2 is then revoked, revoked, Will 1 is revived if evidence this was the testator’s intent. (3) (Min CL) – Will 2 revokes Will 1 when Will 2 is executed. Will 1 cannot cannot be revived unless duly re-executed or republished by a later duly executed will. (4) UPC UPC § 2-5 2-509 09 (a) If revocatio revocation n of Will 2 by physica physicall act: If Will 2 wholly revokes Will 1, Will 1 remains revoked unless it is revived. The Will 1 is only revived if evidence shows this was the testator’s intent. If Will 2 partly revokes Will 1, the revoked part of Will 1 is revived unless evidence that testator’s did not intend this. (b) If revocation revocation of Will 2 by subsequent subsequent writing: writing: (Either wholly or partly) If Will 2 that revoked Will 1 is then revoked by Will 3, the Will 1 remains revoked, unless it is revived. Will 1 is only revived by the terms of Will 3. ii) ii) Ex Exam ampl ples es: (1) T gives B $100; $100 $100 is crossed crossed out & changed to $2000. $2000. (a) If the jurisdiction jurisdiction recognizes partial partial revocation, B would not get anything. But you might bring back the Will 1 (giving B $100) with DRR. Different Common Law approaches: •
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1. (Min) Will Will 1 is not revoked revoked unless unless Will 2 remains remains in effect effect until the the testator's testator's death. death. Therefore, revival of Will 1 is not necessary. 2. (Maj) Will Will 2 revokes revokes Will Will 1 at the time time of Will Will 2's executi execution on and Will 1 can can be revived if the testator so intends. Most commonly followed. followed. 3. (Min) Will 2 revokes revokes Will Will 1 at the time time of Will Will 2's executio execution n but cannot be be revived revived unless duly executed or republished.
IV.
Revoca Rev ocatio tion n by Oper Operati ation on of of Law: Law: Chang Changee in Fami Family ly Circ Circum umsta stance ncess a) Divo Divorc rcee: i) Under CL – only only applies applies to wills, wills, not other other nonprobate nonprobate transf transfers ers (life (life ins polici policies, es, etc.) etc.) (1) (Maj) –revokes any provision in decedent’s will for the divorced spouse (2) (Min) – revocation revocation occurs only if accompanied by a property settlement ii) UPC – applies applies to nonprobate nonprobate transfe transfers rs as well well as wills wills (1) Revokes any provision giving giving to divorced spouse, spouse, plus relatives relatives of the divorced spouse b) Marr Marria iage ge : i) (Maj & UPC) - If testat testator or executes executes a will, will, and and subsequentl subsequently y marries, marries, the the will is revoked revoked to the the extent extent of the spouse’s intestate share (spouse will get what they would have gotten under intestacy), unless evidence that indicates testator intended otherwise. c) Birth of Children : i) (Min CL) CL) – marriage marriage followed followed by birth birth of issue issue revokes revokes a will will executed executed before marri marriage age ii) (Maj) – Pretermi Pretermitted tted Child Child Statutes: Statutes: If a child is born born after execution execution of parent’s parent’s will, will, and has not been provided in the will, the child will get a share in the parent’s estate. So, it is a revocation of the will to the extent of the child’s ch ild’s share.
COMPONENTS OF A WILL I.
Integration of of Wi Wills A) ALL PAPERS PRESENT AT THE TIME OF EXECUTION , INTENDED TO BE PART OF THE WILL, ARE INTEGRATED INTO THE WILL.
i) In re Estate of Beale – Testator dictated will to his secretary; will will consisted of 14 pages. Testator then took the 3 copies of the will, and had witnesses sign them. All pages had testator’s initials. Testator then had secretary re-type page 12 and 13 with some changes. Those pages also had testator’s initials. Court held that they would admit the will as it existed before the changes were made, b/c pages 12 and 13 were not present at execution. ii) Integration can bring in a document that has not been duly executed.
II.. II
Repu Re pub bli liccat atiion by Cod odic iciil A) A WILL IS TREATED AS IF IT WERE EXECUTED WHEN ITS MOST RECENT CODICIL WAS EXECUTED , WHETHER OR OR NOT NOT THE CODICIL EXPRESSLY REPUBLISHES THE PRIOR WILL, UNLESS THE EFFECT OF SO TREATING IT WOULD BE INCONSISTENT WITH THE TESTATOR ’S INTENT.
i) Republication applies only to a prior validly executed will , while incorporation by reference can apply to incorporate into a will language or instruments that have never been validly executed. ii) In some jurisdictio jurisdictions ns that don’t recognize recognize incorporation incorporation by reference, reference, courts have sometimes sometimes used republication to give effect to will that are invalid for some reason other than faulty execution. (1) New York – generally doesn’t permit permit incorporation of unattested unattested documents into a will, but a codicil can republish (thus giving testamentary effect) a will that was invalid b/c of mental capacity or undue influence, but a codicil cannot republish a instrument that was never duly executed. 20 / 42
III II..
Inco In corrpo pora rattio ion n by Re Refe ferren ence ce a) UPC § 2-510 2- 510 : A WRITING IN EXISTENCE
WHEN A WILL IS EXECUTED MAY BE INCORPORATED BY
REFERENCE IF THE LANGUAGE OF THE WILL MANIFESTS THIS INTENT AND DESCRIBES THE WRITING SUFFICIENTLY TO PERMIT ITS IDENTIFICATION .
i) A properly executed will may incorporate by reference into its provisions any document or paper not so executed and witnessed, if it was in existence at the time of the execution of the will and is identifiable by clear and satisfactory proof as the paper referred therein. (1) Clark v. Greenhalge – testator executed will in 1977, naming her cousin as executor. The will left everything to her cousin, except for items she designated by a memo & as she otherwise wished (this was referred to in the will). Memo was written in 1972, and modified in 1976. She also had a notebook where she made such entries. One of the entries in notebook gave a valuable painting to her friend; evidence that this was entered in notebook in 1980. In 1980, testator executed 2 codicils to her will. When she died, her cousin refused to give the painting to her friend. The court held that the notebook was incorporated by reference in the terms terms of the will. Although the document was not in existence at the time she executed her will, the court said the codicil was a republishing of the will, giving it effect in 1980, so the notebook predates the will, and is therefore incorporated by reference. ii) UPC § 2-513. A will may refer to a written statement/list to dispose of personal property that is must be signed by the testator not specifically disposed of in a will (except money). The writing must and must describe the items and devisees with reasonably certainty. The writing may be written before or after execution of will, may be altered, & may have no significance apart from its effect on the dispositions made by the will. iii) Johnson v. v. Johnson – testator typed his will – not attested, not dated, not duly executed. Then at the bottom, in his own handwriting, writes “to my brother I give $10 only. This will shall be complete unless hereinafter altered, changed or rewritten.” He signs & dates it (this would be a valid holograph). Court says this is a codicil that republishes the typewritten will, making the typewritten document a valid will. (1) Note: Prof says the law is wrong here – a valid codicil only republishes a validly executed will. A codicil doesn’t create a will. It might have been possible to say the handwritten portion is a holographic will which incorporates by reference the typewritten portion.
IV.. IV
Acts Ac ts of of Ind Indep epen ende dent nt Si Sign gnif ific ican ance ce a) A will may dispose of a property by reference to acts or events that have significance separate and apart from the effect of their disposition made in the will. This is true even though the phrasing of the will leaves it in the testator’s power to alter the beneficiaries or the property by a non-testamentary act. i) Ex Exam ampl ples es: (1) T’s will devises “the automobile I own at my my death” to B. At time time will is executed, T owns a Toyota worth $4,000. T then buys a Cadillac worth $40,000, then dies. B gets the Cadillac. While T’s act in buying the Cadillac had the practical effect of increasing the gift to B, it is unlikely that this is what motivated the purchase; more likely that T bought Cadillac b/c T wanted a Cadillac. ii) UPC § 2-512. Events of Independent Significance (1) A will may dispose of property by reference to acts acts and events that have significance significance apart from their effect upon the dispositions made by the will, whether they occur before or after the execution or the will or before or after the testator’s testator’s death. The execution or revocation of another individual’s will is such an event.
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CONSTRUCTION OF WILLS I.
Mist Mi stak akee or Amb mbig iguo uous us La Lang ngua uage ge a) Traditional: The Plain Meaning Rule I) THE PLAIN MEANING OF A WILL CANNOT BE DISTURBED BY EXTRINSIC EVIDENCE THAT ANOTHER MEANING WAS INTENDED . ONLY WHEN THERE IS AMBIGUITY CAN EXTRINSIC EVIDENCE BE ADMITTED . (1) If there is ambiguity, ambiguity, the burden lies on the contestant contestant of the will to to prove by a preponderance of the evidence that the T meant otherwise. (2) The court will not reform reform a mistaken term in the will to reflect reflect the testator’s intent. intent. (a) Mahone –testator went to atty to draft will and told told him she wanted to give to Mahoneyy v. Grainger Grainger –testator her 25 cousins, for all to share. Atty drafted will to say to to her “heirs at law.” Her only legal heir was her aunt, though, so the cousins couldn’t take. Court held it will not bring in extrinsic evidence that testator meant her cousins. The will document is clear & there is no ambiguity with what “heirs at law” means, so court will not look at extrinsic evidence. (b) In Estate of Smith – testator left to “Perry Manor Inc.” Perry Manor was a nursing home at the time of execution. Perry Manor, Inc. then sold the nursing home to another ano ther corp.; nursing home still called Perry Manor. The bequest went to the corp., although testator intended it go to the nursing home. Court says since there’s no ambiguity on the face of the will, extrinsic evidence to show testator’s intent excluded. (3) Patent Ambiguit Ambiguity y vs. Latent Latent Ambiguity Ambiguity (a) Patent ambiguity – an ambiguity that appears on the face of the will. Increasingly, extrinsic evidence is allowed to aid in interpreting a patent ambiguity, although some jurisdiction still won’t allow allow extrinsic evidence in. Ex: will leaves a specific portion of estate to A, then leaves entire estate to B. (b) Latent ambiguity – an ambiguity that does not appear on the face of the will but manifests itself when the terms of the will are carried out. Oral declarations of intent to scrivener of will admitted in most jurisdictions (scrivener exception). 2 types type s of latent late nt ambiguity ambig uity : 1. Equivocation Equivocation - When When a will clearly clearly describ describes es a person person or thing, thing, but two or more people exactly fit that description. Extrinsic evidence of direct expressions of testator’s intent allowed b/c it does not add anything to the will, it just made the terms more specific. 2. When no person person or thing thing exactly exactly fits the the description description,, but two or more more people people or things things partially fit the description.(more description.(more common) (4) Personal use exception – If extrinsic evidence shows that testator always referred to a person in an idiosyncratic manner, the evidence is admissible to show that the testator meant someone other than the person with the legal name of the legatee. (a) Moseley v. Goodman – Testator always referred Trimble as Mrs. Moseley, Moseley, b/c her husband worked at Moseley’s cigar store. Court allowed the extrinsic evidence to mean Trimble, not the actual Mrs. Moseley – the wife of the store’s owner. b) Leaning Towards Reform: Admitting Extrinsic Evidence to Correct Mistakes W/O Reforming I) A COURT HAS NO POWER POWER TO TO CORRECT OR OR REFORM REFORM A WILL OR OR CHANGE CHANGE ANY OF THE LANGUAGE THEREIN BY SUBSTITUTING OR OR ADDING ADDING WORDS, BUT MAY DISREGARD OBVIOUSLY MISTAKEN REFERENCES WHEN NECESSARY . (1) Arnheit – will referred to the testator’s testator’s interest in “304 Harrison Avenue,” but Arnheiter er v. Arnheiter Arnheiter – testator did not have any interest in 304, but actually 317 Harrison Avenue. Court will not reform •
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(fix) the mistake on the will. Instead, though, Court scratched out the 304, and so it said “my interest in Harrison Avenue,” which was sufficient to identify the property. (2) Estate of Gibbs – Will leaves property to Robert J . Krause, but the person testator intended to leave to was Robert W . Krause. Although court said you cannot reform reform a will and that there was no ambiguity in the will, it still corrected the mistake, explaining that small things like this are susceptible to mistake, so just disregard the middle initial, and the intended beneficiary is clear (the J guy was a stranger). c) Openly Reforming Wills for Mistake I) IF A SCRIVENER 'S ERROR HAS MISLED THE TESTATOR INTO EXECUTING A WILL ON THE BELIEF THAT IT WILL BE VALID , EXTRINSIC EVIDENCE OF THAT ERROR IS ADMISSIBLE TO ESTABLISH THE INTENT OF THE TESTATOR . (1) Erickson v. Erickson – Testator – Testator executed will 2 days before getting married. By law, the will is revoked once married, unless there's a contingency clause in the will. The will specifically mentioned that his property would go to the wife he was about to marry. The atty who wrote the will knew the state law, but didn’t provide a provision in the will addressing addressing it. Court held that a scrivener’s error that has misled the testator into executing a will on the belief that it will be valid is similar to relying on a fraudulent statement, so extrinsic evidence of that error is admissible.
ii) ii) Rest Rest.. 3d 3d Pro Prop. p.:: § 12.1. Reforming Donative Documents to Correct Mistakes (1) An unambiguous donative document may be reformed to conform the test to the donor’s intent if it can be established by clear and convincing evidence (1) that a mistake of fact or law, whether in expression or inducement, affected specific terms of the document; and (2) what the donor’s d onor’s intent was. iii) Some courts have held a validly executed will to be invalid b/c of extrinsic evidence that testator did not intent to execute the will. (1) Fleming v. Morrison – testator formally executed a will leaving property to a girl in his will will with the intention to trick her into sleeping with him. Court Co urt said b/c the lawyer knew the will was drafted only for that reason and that testator did not intend to actually give her anything, court held will invalid.
II.
Lapse: Lap se: Dea Death th of Ben Benefi eficia ciary ry Bef Before ore Dea Death th of Tes Testat tator or a) Introduction I) TO TAKE UNDER A WILL, THE DEVISEE MUST SURVIVE THE TESTATOR . IF A DEVISEE DOESN’T SURVIVE THE TESTATOR , THE DEVISE LAPSES (FAILS ). (1) Voided gifts are treated the same as lapsed gifts (a) Lapse – death death of beneficiary beneficiary before before testator testator (b) Void - invalid gift (to (to dog) or if beneficiary beneficiary dead at time of execution ii) There are all default default rules rules that that apply if the will will does not provide provide what happens happens when a devisee devisee predeceases the testator. b) Analysis i) DETERMINE WHAT TYPE OF GIFT IT IS. (1) Specific - A specific thing (my house, my car, my 100 shares of GM stock, all the money in my bank account) (2) General - Usually money ($1,000, a car, 100 shares of GM stock) (3) Demonstrative – Hybrid; general gift satisfied from a particular fund or source o f property. (“I give $1,000 to D to be paid from the sale of my house on Cherry Lane.”) (4) Residue – the rest of the property that has not been distributed (5) Class Gift – disposition to beneficiaries described as a group label, not by specific names; membership in class may fluctuate “to my children,” etc. (a) Generally, naming an individual in a bequest prevents the gift from becoming a class gift. 23 / 42
(b) Dawson v. Yucus – Will leaves property as follows: ½ to nephew Wilson, Wilson, ½ to nephew Burtle; there is also a residuary clause. Burtle dies before testator. If class gift, gift, all goes to Wilson (other class members); if not, then to residuary. Court says this is not a class gift b/c she specifically stated stated the names of the nephews that would get. So share goes to residuary. residuary. II) COMMON LAW (1) If gift is specific, general or demonstrative → goes to residue or if no residue, to intestacy (2) If gift is residue → lapsed part to intestacy (no residue of residue rule) (a) Estate of Russell – Testator left everything to a close friend Chester and her dog Roxy. Left Russell – jewelry to niece Georgia. Court says testator intended to leave entire estate to Chester & Roxy in equal shares, but the gift to Roxy is void b/c a dog can’t take, so it lapses. Roxy’s share then goes to intestacy (not to Chester, Ch ester, the other residuary). Niece is only heir, so she gets. (3) If class gift → to surviving members of the class (not intestacy) III) ANTI-LAPSE STATUTES (1) First, determine whether anti-lapse statue applies: (a) There must be a protected relationship with the testator Maj – devisee is a descendant of testator 1. Some also permit permit testato testator's r's siblings, siblings, other other relatives relatives,, or relative relative of spouse (but (but not spouse) 9 states – no requirement for protected relationship UPC – grandparents & lineal descendants of grandparents 1. 1990 UPC also also inclu includes des stepchi stepchildr ldren en (b) There is a substitute taker Maj – lineal descendants (surviving issue of deceased devisee) 3 states allow any heir (Iowa, Maryland, New Hampshire) UPC – issue of devisee who survive testator by 120 hours (c) There are no express words of survivorship that preclude use of anti-lapse statute Allen v. Talley Talley - Testator wrote her will "to my living brothers and sisters." At time she executed the will, she had 5 siblings. At time of death, all siblings had predeceased her except one brother. The other siblings left surviving children. So if anti-lapse applied, the siblings’ issue would get too; otherwise only brother gets. Courts says the language “living” are words of survivorship, so no anti-lapse. Only living brother gets. (2) If anti-lapse applies: (a) If gift is specific, general or demonstrative → to substitute taker or intestacy (b) If gift is residue → lapsed part to substitute taker or intestacy (not other residuary) (c) If class gift → to substitute taker or other class members •
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CL (min jur) Anti-lapse (maj jur) UPC
Specific or general bequest to residuary or intestacy
If devisee is descendant, then to substitute taker (issue) or intestacy If devisee is grandparent or lineal descendant of grandparent, then to substitute taker (issue)
Residue No residue of residuary – to intestacy lapsed part Lapsed part to substitute taker or intestacy (not other residuary) Lapsed part to substitute taker or other residuary takers
Class Gift To the surviving class members To substitute taker or other class members
To substitute taker or other class members
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III. II I.
Chan Ch ange gess in Pro Prope pert rty y Afte Afterr Exec Execut utio ion n a) Types of Devise D evisess: i) Specific Devise – disposition of specific piece of testator’s property ( my diamond ring) ii) General Devise – when testator intends to confer a general benefit and not confer a specific asset (money, a diamond ring) iii) Demonstrative Devise – general devise, payable from a specific source. iv) Residuary Devise – whatever is left over b) Ademption i) What happens if a will includes a specific devise, but that specific item is not in the testator’s estate at death (testator sold it or gave it away). (1) ADEMPTION BY EXTINCTION - Only applies to specific devises. There are two approaches – identity and intent. (a) Identity Ident ity Theory Theor y (maj) – if the specific gift is not in the decedent’s estate, the gift is extinguished. 1969 UPC 2-609 – identity theory, but with 5 exceptions for beneficiary to still get if specific property not in testator’s estate: 1. the remaining remaining balance balance on on purchase purchase price price of specifi specificc property property sold sold 2. unpaid unpaid amou amount nt of of conde condemna mnati tion on award award 3. unpaid unpaid insura insurance nce procee proceeds ds after after destru destructi ction on 4. property property owned owned by testator testator as as a result result of foreclosin foreclosing g on a mortgage mortgage 5. sale price price of of specifi specifically cally devised devised property property by conserv conservator ator Wasserman v. Cohen – decedent created a trust, to be funded by a specific piece of property. She never conveyed her interest in the property to the trust, and later sold that property. Court says since it’s a specific devise, the gift is adeemed b/c it no longer exists in the decedent’s estate. (b) Intent theory – if the specific gift is not in the decedent’s estate, the beneficiary beneficiary may still be able to get the cash value of the specific item, if he can show this is what testator wanted 1990 UPC 2-609: lean towards intent theory. Devisee gets: 1. the specif specifica icall lly y devis devised ed prop propert erty y 2. the amount amount generated generated (paid (paid or unpaid) unpaid) by its its sale or or destructi destruction on 3. the propert property y owned by the testator testator acquire acquired d as a replacement replacement;; or 4. if devisee devisee recovers recovers nothing nothing under under the above factor factors, s, the value value of the specifi specifically cally devised property unless evidence indicates the testator intended ademption. a. Note also also: Under this this provision, provision, where where property property was sold or destroyed destroyed by a conservator, the devisee has a right to a general pecuniary devise equal to the net sale price of the specified gift. (2) ADEMPTION BY SATISFACTION – Generally Generally applies applies to general to general devises, devises, but might also apply to demonstrative and residuary gifts. (a) If the testator makes makes an intervivos transfer transfer to the devisee after after executing the will, will, there is a rebuttable presumption that the gift is in satisfaction of the gift made by the will. Ex: T’s will gives $50,000 to A. After executing will, T gives A $30,000. Presumption that this gift was in partial satisfaction of will’s bequest, so A gets $20,000 a t T’s death. (b) Under UPC 2-609, no presumption. Requires evidence of intention of testator to adeem by satisfaction. c) Exoneration i) When a will makes a specific devise of property that is subject to a mortgage, it is presumed that the testator wanted to debt to be paid out from the residuary estate. (1) This is subject subject to language in in the will indicating otherwise. •
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(2) UPC - you get the property property it with with the mortgage mortgage d) Abatement i) When the estate has insufficient assets to pay debts as well as all devises; some devises must be abated (reduced). (1) Order of abatement: (a) Intest Intestate ate (b) Resid Residuar uary y (c) (c) Ge Gene nera rall (d) Specific/demon Specific/demonstrative strative – divided divided pro rata (2) This is default default only – only only applies unless will indicates otherwise (3) However, if the testamentary testamentary plan would be defeated by the usual order of abatement, the order of abatement may change to give effect to testator’s intent. (a) Ex: testator gives sum of money to charity and residue residue to son. If there aren’t enough assets in the estate, the son may take nothing, and this is probably not what the testator intended. e) Addition/Accretion i) What happens when assets increase in value or generate income? (1) Cash dividends dividends - goes goes to residuar residuary y (2) Stock Stock divid dividends ends (a) Old view - residuary takes b/c what was given has changed, it's not the same thing. (b) Modern view - to beneficiary b/c it's a change in form, not substance. (3) Stock Stock spli splits ts (a) Old view - approach depends on how stock stock splits viewed viewed in jurisdiction jurisdiction If viewed as specific gift (change in form, not substance) - not adeemed, beneficiary gets If viewed as general gift - adeemed, residuary gets (b) Modern view - not adeemed; for for the most part, beneficiary beneficiary takes, unless evidence of intent otherwise • •
INTESTATE AND FORCED SHARES I.
Introduction a) Most people people die without without a will b/c b/c they: (1) never never wrote a will, will, (2) wrote wrote a will that does not not completely completely dispose of their estate, (3) wrote an invalid will, and/or (4) wrote a valid will with invalid portions. In this case, intestacy laws govern how decedent’s property is to be distributed. b) Terminology: i) Direct Direct bloodline bloodline → Issue Issue (descending (descending line); line); Children Children (first (first generat generation ion of issue) issue) ii) Collateral Collateral bloodline bloodline → relative relative who is descended descended from a common descendant descendant of the decedent. decedent. c) Genera Generall Princi Principle pless of Inte Intesta stacy cy Law Law i) Rigid Rigid schem schemee – testat testator’ or’ss intent intent irr irrele elevan vantt ii) Preference Preference for descendants descendants over ancestors ancestors iii) Applies only to probate property (other (other than property that passes by will, joint ownership, insurance policies, etc.) iv) Every jurisdict jurisdiction ion has a statute of descent. descent. Provides: Provides: (1) Who is eligible eligible to take (2) The order order in which which people people take (3) The allocation allocation of shares shares among takers takers (4) Whether Whether remote collatera collaterall relatives relatives take all 26 / 42
v) Law of the state where decedent was domiciled at death governs the disposition of personal property; law of state where real property was located governs real property.
II.
The Basic Scheme a) Who is eligible to take? i) Those who are not specifically disinherited (the negative will – “I don’t want A to take”) (1) CL did not recognize negative will, unless unless they offered another scheme for distribution; so disinherited could take under intestacy. (2) UPC recognizes negative wills; gives effect to testator’s testator’s intent, even w/o alternative alternative scheme ii) Those who survive the decedent (or issues) (1) Surviv Survivee by how much? much? (a) First approach - Uniform Sim ultaneous Death Act (USDA) – if there is no sufficient evidence of the order of deaths, the beneficiary is presumed to have died before the donor. The problem of simultaneous death: 1. Janus v. Tarasewic Tarasewicz z – – husband & wife die almost at the same time. Life insurance proceeds go to wife if she survives husband, or else to husband’s mom. If they died simultaneously, proceeds go to husband’s mom; if husband died before wife, proceeds go to wife’s dad by intestacy. Medical evidence shown to prove she lived a little bit longer than him, so wife’s dad gets. (b) (USDA 1991 amendment/UPC) – clear and convincing evidence that the beneficiary survived the donor by 120 hours (5 days) 1. Note: If If Janus Janus applied applied this standard, standard, husband’s husband’s mom would would have gotten. gotten. b) Shares of Surviving Spouse – most intestacy statutes protect the spouse i) Under Under Commo Common n Law, Law, survi survivin ving g spous spousee gets: gets: (1) The common common distributi distribution on scheme: scheme: (a) 100% if → no parent parentss and no issues issues of decedent decedent some states: presume spouse will provide for children, so give all to surviving spouse (b) 1/2 if → one survivi surviving ng child child (c) 1/3 if → one or more surviving surviving children children (children (children get remaining remaining 2/3) (d) 1/2 if → no issue issue but parents parents or sibli siblings ngs only concerned with parents if there are no issue; if issue, then don’t look at parents at all (e) Note: spouse's share may vary depending on decedent's estate size, and/or existence existence of mutual/non-mutual children ii) Under UPC 2-102, surviving surviving spouse spouse gets: gets: (1) 100% if → no surviving descendant or parent parent of decedent – or – all surviving descendants are also descendants of surviving spouse & no other o ther descendant of surviving spouse that survive decedent [note: parents don’t matter; only mutual children] (2) $200k + ¾ of remaining intestate estate estate if → no surviving descendant, but there’s there’s a surviving parent (3) $150k + ½ of remaining intestate estate estate if → all surviving surviving descendants are also descendants of surviving spouse & surviving spouse has other descendants (not decedent’s) that survive decedent [note: mutual children and one (+) step-child] (4) $100k + ½ of remaining intestate estate estate if → decedent has surviving surviving descendants that are not surviving spouse’s descendants c) Shares of Descendants i) In all jurisdict jurisdictions, ions, after after the spouses spouses share share is set aside, aside, issue/desce issue/descendents ndents take take the remainder remainder of the property to the exclusion of everyone else. ii) Three basic basic systems systems to distri distributin buting g shares to to descendants: descendants: (1) Strict per stirpes – treats each line of descendants equally eq ually •
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(a) Dividing: (1) divide first line line of descendents (even if if all dead) then (2) divide according to to the first line (2) Modern per stirpes (per capita with representation) (a) Dividing: Start with first line line of living takers, then same as strict per stirpes stirpes (b) So, if equally distant from testator, then equal distribution. Not fair under strict per stirpes that some have more children than others, and so those who have more siblings take less. (c) Most jurisd jurisdicti ictions ons follow follow this. (3) Per capita at each generation (a) (a) Divi Dividi ding: ng: Start with the first line where there is a live taker – the live taker gets share as divided among all in that same line Then lump together all dead on same line as that first live taker, take that share, and divide equally among lower (next) line (b) Only a few jurisdic jurisdictions tions adopt adopt this. b/c there is still problems that takers equally equally distant from testator taking diff shares exists exists under the modern per stirpes, this tries to fix this problem. •
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Note: survivors are are underlined Strict per stirpes: D=1/2 E=1/3 F=1/3
Modern per stirpes D=1/3 E=1/3 F=1/3
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Note: survivors are are underlined Strict per stirpes: D=1/3 E=1/3 F=1/6 G=1/6
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Modern per stirpes D=1/3
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E=1/3
F=1/6
G=1/6
F=1/6
G=1/6
Per Capita D=1/3
E=1/3
d) Shares of Ancestors and Collaterals i) When survived survived by a descendan descendant, t, ancestors ancestors and collat collaterals erals do not not take. If there are are no descendants descendants & no surviving spouse – takes next? (1) First Line – Ancestors (in (in ascending order → parents, siblings, nephews/nieces) (2) Second Line – Collateral Collateral (if no first first line takers) takers) (a) Two approa approaches ches:: Parentelic System - estate passes to grandparents and their d escendants, and if no grandparents then to great grandparents and their descendants, and so on… Degree of Kinship - estate passes to closest of kin counting co unting degrees of kinship (count steps on table of consanguinity). ii) UPC 28 / 42 •
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(1) For descendants descendants – distribute distribute by representation representationss (a) If no descendent descendentss to parents parents equally equally If no parents & no issue - goes g oes to descendents of parents (siblings) 1. If nothing nothing there there - but but you find find descendents descendents on each grandpar grandparents ents side side a. 1/2 to materna maternall grandpar grandparents, ents, 1/2 paternal paternal grandpa grandparents rents.. i. If only only one matern maternal al grandparent grandparent,, and 2 paternal paternal grandpar grandparents ents - still still split split equally on each side •
III.
Transfers to to Ch Children A) ADOPTION
i) Adopted Children – Different Approaches (1) Retention Retention of full inheritance inheritance rights with adopted adopted child (a) Some jur: StrangerStranger-to-Ad to-Adoption option Rule Rule → cannot inherit inherit through adoptive parents since the relatives did not adopt (2) Eliminati Elimination on of all ties with adopted adopted child (a) Hall v. Vallandingh Vallandingham am – Earl and Liz marry and had four children. Earl dies; Liz marries Jim who adopts the four children. 25 years later, Earl’s brother Will dies intestate, childless and single. Court said children cannot take through through intestacy from Will. Will. Because an adopted child has no right to inherit from the estate of a natural parent who dies intestate, it follows that the same child may not inherit through the natural parents by way of representation. Under UPC, children could have taken. (3) Adopted child inherit from natural parents but not from natural parents’ parents’ kin (4) Natural parents prohibited from from inheriting from adopted child child while adopted child inherits from them (5) (UPC) Adopted child cannot inherit from from natural parent except where other natural natural parent marries and the stepparent adopts the child. ii) Adult Adoption (1) Most states treat treat just like regular adoption; adoption; typically done to avoid will contest. (a) But, adoption of an adult for the purpose of bringing that person under the provisions of a preexisting testamentary instrument, instrument, when he clearly was not intended to be so covered, should not be permitted. Minary v. Citizens Citizens Fidelity Fidelity – mom left will that paid to income to husband & sons, then to be distributed to surviving heirs. Son adopted his wife so she could inherit. Court said no, that’s not what’s meant when they usually give the same legal effect to adopted ado pted children; this is a subterfuge that thwarts the intent of the testator. iii) Virtual (Equitable) Adoption (1) Requir Requireme ements nts (a) Must be an agreement between natural parents and adoptive parents parents to adopt a child O’Neal v. Wilkes – Hattie born out of wedlock; her mom died, her dad did not recognize her as his child at all. She was shuffled around to several people – maternal aunt, then Louise, then Page (biological father’s sister) and she finally ended up with the Cooks. The Cooks raised raised her as their own daughter, but never formally adopted her. When Cooks died, Hattie wanted to inherit. Court said that Page did not have legal custody of Hattie, she could not transfer custody to the Cooks. (b) The natural parents must fully perform (turn over child) to adoptive parents (c) The child fully fully performs performs by moving in with the adoptive adoptive parents parents (d) The adoptive adoptive parents parents die intestate. intestate. b) POSTHUMOUS CHILDREN - Usually where child is conceived before, but bu t born after, her father’s death. They are treated as being a child from the time of conception. co nception. •
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C) NON-MARITAL CHILDREN
i) In all all states states,, child child can inher inherit it from from the the mother mother.. ii) Majority Majority of states states permit permit inheritance inheritance of father father where where there is: (1) Evidence Evidence of a subsequent subsequent marria marriage ge (2) Acceptance Acceptance by the father father (3) By adjudicatio adjudication n during the life life of the father father or (4) By clear and convincin convincing g evidence after after death. d) ADVANCEMENTS (similar to ademption by satisfaction) i) UPC § 2-109 – Transfe Transfers rs to heirs heirs during during the decedent’s decedent’s life life are advancem advancements ents only only if there there is proof this was intended (by a writing indicating this) ii) Common Law Law – any lifetime lifetime gift gift to a child child is presumed presumed an advancem advancement ent iii) If gift is treated as advancement then → how do you calculate shares at death? (1) T has 3 surviving children, children, no spouse. Estate at time time of death is valued at $500k. While While T was alive, child A received $100k. (a) Regular distribution → advancement deducted from the inheritance. $500k divided by 3 - $167k is what it would be without advancement. The $100k is deducted from this, so A gets $67k. (b) Hotchpot distribution → A gives back advancement first, then calculated $500k + $100k (advancement) = $600k estate created The $600k divided by 3 = $200k each Then deduct advancement $100k → A would get $100k under hotchpot. (2) Sometimes it’s not worth it to take part in hotchpot. For example, if estate at death worth $125k, and A rec’d $100k during lifetime: (a) No hotchpot → $125k/3 $125k/3 = $41k. Nothing extra, extra, A already took. But A has the $100k. (b) Hotchpot → $125k + $100k = $225k / 3 = $75k (instead of $100k under reg distribution) E) GUARDIANSHIP AND CONSERVATORSHIP OF MINORS i) If minor’s minor’s parent parent die and and do not appoint appoint a guardian guardian in the will, will, the the court will will appoint appoint one for them. them. (1) Guardianship terminates when the child becomes of age; dies; or is adopted. ii) If designated designated by will, courts courts look with deep suspicion. Must have sufficient recording requirements. requirements. iii) Property Property Management Management Options Options (1) Guardianship of Property – wards until child is of age; no investment powers (2) Conservatorship – gives guardian trustee powers powers with the authority to control investment (a) Appointment Appointment and supervisi supervision on by the court is required required (3) Custodianship – person given property to hold for benefit of minor. Essentially the money is given to the custodian for benefit ben efit of child. (4) Trusts – testator testator can tailor bequest with the the most amount of flexibility flexibility F) BARS TO SUCCESSION /DISCLAIMING i) Involuntary - Homicide (1) Three Three approach approaches: es: (a) Legal title still still passes to slayer → Person who committed committed crime already penalized penalized (criminal prosecution) - why should slayer be penalized again? (b) Legal title does not pass to slayer → Should not be able to benefit from wrongful conduct. Some jurisdictions will even bar next of kin (heir of slayer) (c) Legal title passes to to slayer but holds as a constructive trust for for heirs or next of kin of decedent In re Estate Estate of Mahoney Mahoney – Wife killed husband and then wanted his inheritance. Court ruled that she held the inheritance in constructive trust for heirs or next of kin. Issue turns on whether slaying was intentional or unintentional. Involuntary manslaughter would not • •
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provide constructive trust because there is no intent. Standard of proof – conviction is sufficient. (2) UPC: Slayer also barred from nonprobate transfers → killer cannot profit from his wrong. (a) Killer is treated as having disclaimed the property, property, and disclaimant is treated as having predeceased the decedent. Some jurisdictions permit the next of kin to take, others do not. ii) Voluntary – Disclaimer → when person in line to take inheritance declines (1) CL – cannot disclaim; if heir refuses to accept, law treats it as passing through disclaimer then then to next intestate successor (2) Modern trend/UPC – allow disclaimer; disclaimer treated as if he died before decedent (3) Why disclaim disclaim an inherita inheritance? nce? (a) (a) Tax Tax purpos purposes es (b) Property Property too too encumber encumbered ed (c) Avoid Avoid cred credit itors ors But, when the creditor is the IRS - Cannot disclaim •
1. Drye v. U.S . – testator dies, leaves property to son, Ron. Ron tries to disclaim, so his daughter would get the money and and not his creditors (IRS). Court said the IRS can reach the disclaimed disclaimed assets because Ron ultimately had control of the property.
IV.
Rights Rig hts of Surv Survivi iving ng Spou Spouse, se, Omi Omitte tted d Spous Spousee and and Famil Family y Memb Members ers A) SPOUSAL PROTECTION SYSTEMS
i) Separate property – husband and wife own separately all property each acquires (1) Dower & Curtesy (a) Dower – entitled widow to to a life estate in in 1/3 of husband’s interest interest in qualifying land Advantage → right to dower superior to creditors; Disadvantage → wife cannot pass it on; since maj property today is not land, no adequate protection of spouse Mostly abolished → 2 states dower only; 2 others o thers dower w/elective share (more than just land; fee simple 1/3) (b) Curtesy – husband has a support support interest in wife’s wife’s land (only 2 states) states) (2) Support vs. Partnership theory (a) Support Support → must support support purely purely b/c you got married married (b) Partnership → not entitled entitled to support just b/c got married, but b/c built built life together (3) Rights of the Surviving Spouse to Support (a) Social Security → support theory - surviving spouse entitled to social security benefits; doesn’t matter who wage earner was. Cannot transfer social security benefits to someone else - can only be to surviving spouse. If previous marriage, & both spouses survive, must share between both. (b) Private Pension Plans → Support theory - ERISA dictates surviving spouse entitled to benefits under plans, no matter who the wage earner was. Divorce alone does not revoke beneficiary designation irrespective of what state law says. Husband still collects collects unless wife changes the the named beneficiary. ERISA preempts state law. If wife remarries remarries - Husband #2 takes, no matter if named beneficiary is husband #1. The current husband at death takes. If divorce Husband #1, then changed beneficiary to sister - Divorced husband gets nothing, sister takes. But then if wife remarries, husband #2 gets. (c) Homestead → Surviving spouse & children have an interest in the home. Right to protect from predators; right to occupy home during lifetime. lifetime. Note: you don’t need this right if house owned jointly b/c spouse gets it anyway. •
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(d) Personal Property Set-Aside → Certain personal property set aside for surviving spouse of a certain amount. (e) Family Allowance → Sometimes probate takes several years, until estate is probated, property given to family as maintenance. ii) Community property – husband and wife own all acquisitions from earnings after marriage in equal undivided shares B) SPOUSAL ELECTIVE SHARE i) Almost Almost all separate separate propert property y states states give survivin surviving g spouse an an elective elective (forced) (forced) share. share. (1) There is huge variation in the the statutes. Also statutes statutes are generally inflexible inflexible – it doesn’t matter matter why you married or if you came into marriage with money. (2) The court may elect for the surviving spouse to take against the will and take her intestate share instead, if it finds that it is necessary to provide adequate support for the surviving spouse. (a) In re Estate surviving Estate of Cross Cross – Will leaves everything to testator’s son, & nothing to surviving spouse. Wife suffers from Alzheimer’s and lives in a nursing home paid for by Medicaid. Court did what she would have done if she had been competent to make a decision, finding this was necessary to provide for her financial support. (3) To qualify as a surviving spouse, you must be legally married; life partner, etc. doesn’t count. (a) In re Estate Estate of Cooper Cooper – testator left everything to his homosexual lover except for a valuable piece of real estate. Lover wanted to elect against the decedent’s deced ent’s will. Court said no, the term “surviving spouse” does not include lie partners for purposes of the elective share statute. (4) Not immune immune to creditors creditors (unlike (unlike dower). dower). ii) Traditional statutes provide the surviving spouse with an election: (1) The spouse can take under the decedent’s will; or (2) The spouse can renounce the will and take a fractional share of the decedent’s estate. iii) Underlying Under lying Policy : (1) Justification: the surviving spouse contributed to to the decedent’s acquisition of wealth wealth and deserves to have a portion of o f it; also to provide spouse with adequate support. (2) Support vs. Partnershi Partnership p theory (3) Support Support → righ rightt to support b/c need of support, so if wife if wife dies shortly after husband, w/o having gotten share, wife’s heirs not entitled, b/c she no longer needs it (4) Partnership → wife’s share is her share share and she would be able to pass on to her heirs iv) Contrast Contr ast with Intestat Int estatee Share : (1) Intestate Intestate deals deals with when when there's there's no will will (a) You're entitled to half if there there are mutual children; if parent & no children, children, etc. (b) Only getting probate assets – but, some jur start start to include nonprobate assets b/c testator would transfer assets to nonprobate so they don’t leave to surviving spouse intentionally. v) UPC (1990) approach – gives the surviving spouse a sliding-scale percentage of the elective share amount, based on the duration of the marriage (>1yr=3%, >15yrs=50%) vi) HYPO: H & W married married for 50 yrs. Agreed that that H is wage-earner, W is homemaker. H attempts to disinherit W in will (1) In intestacy, W would get ½. ½. But no intestacy b/c there’s there’s a will in in place. (2) W entitled entitled to an elective elective share share – 1/3. (a) 1990 Sliding Sliding scale scale – B/c it’s a 50 yr marriage, marriage, W entitled entitled to more more (b) In community community property property jur jur – W would get get ½ C) PROPERTY SUBJECT TO ELECTIVE SHARE i) Nonprobate Transfers 32 / 42
(1) Assets held in an inter vivos trust are not part of the estate for purposes of the surviving spouse’s elective share, as they are nonprobate assets. (a) Sullivan v. v. Burkin – During his lifetime, husband created a trust under which he transferred real estate to himself as sole trustee; then to go to his sons. When he died, he left a will intentionally disinheriting disinheriting his estranged wife. Wife wanted to invoke her elective elective share, but court said the inter vivos trust is not considered part of the elective share. Prof says: not really equitable, but court doesn’t doe sn’t want to go against precedent. In divorce, the transfer would be counted as marital prop & wife could still take. Doesn’t make sense that entitled to it at divorce, but not at death. (2) Trusts created from assets acquired outside of marriage not eligible for the elective share. (a) Bongaards v. Millen – mom created trust for benefit of her daughter. Daughter had a limited power of appointed. Daughter then doesn’t leave trust to her husband, but to her sister. Husband wants his forced elective share. Court says not an asset for elective share purposes – asset not created during marriage. (3) Three different tests to determine when nonprobate transfers transfers are subject to elective elective share: (a) Illusory Transfer - court looks at whether it's a good faith transfer or divestment, or made solely to disinherit spouse (b) Intent to Defraud - court looks at the state of mind of the person making an inter vivos v ivos transfer - whether transferor intended to defraud surviving spouse (c) Donative intent - looks at whether the transferor intended to make a present gift (4) Statutory Schemes (a) NY – specifically lists lists which nonprobate transfers subject to the elective elective share (b) Delaware – property subject to to elective shares is all all property includible in the the decedent’s gross estate under fed estate tax (c) 1969 UPC – survivi surviving ng spouse spouse entitled entitled to 1/3 of augmented estate, which includes the probate estate and certain nonprobate & inter vivos transfers made without consideration during the marriage. (d) 1990 UPC – more like community community property system – all up all property of both spouses spouses and slit it according to a percentage based on length of marriage. •
TRUSTS I.
Introduction a) A trust is a device whereby a trustee manages property as a fiduciary for one or more beneficiaries. i) The Parties Parties to a Trust Trust – must have have these these for for trust trust to to be valid valid (1) Settlor (Grantor) - the person who raised the trust - puts assets in the trust (2) Trustee – holds legal title to the property in trust; the person who has the fiduciary obligations; can usually sell trust property and replace it with more desirable property. (3) Beneficiary – holds equitable title to the trust; benefits from the trust (entitled to trust income) (a) Rights of Beneficiaries - Can go after after trustee for breach of duty; Beneficiaries have access, when there's a breach, to the trust raised. ii) No real statutor statutory y formalitie formalitiess requirements requirements for for creation creation of a trust (1) A trust is often evidenced by a written document (although not always) (2) Can be created by an oral declaration declaration except for real property - statute statute of frauds 33 / 42
iii) Fiduciary Duty → central to a trust. So, you can create a trust where you name yourself as trustee, and also as beneficiary. But, you need to also have another beneficiary beneficiary - b/c there needs to be a fiduciary relationship to be able to hold ho ld someone liable for breach of the fiduciary duty. iv) Inter vivos trust – created during life; testamentary testamentary trust – given after after death, usually by will b) Three General Rules: i) If the trustee trustee is is also the the beneficiary beneficiary,, you need another another beneficiar beneficiary y due to fiduciary fiduciary duty duty requirements. ii) A trust trust will will not fail for want want of a trustee trustee (1) If settlor doesn’t name a trustee or if the trustee named waives or doesn’t want to do it - Court can always appoint someone as trustee who can fulfill the role (a) Note: personal trustee exception exception - If settlor gives some inclination that this is the person person that he wants to be the trustee, and that person can’t/won’t do it then court would find that the trust fails. iii) If grantor/trustee as with a declaration of trust, trust, you do not need formal transfer/delivery transfer/delivery of the property (1) This is b/c trustee/grantor trustee/grantor same person. So not necessary. (2) Note: NY exception - Still need to to go through the formal procedure
II.
Creation of a Trust a) Introduction i) Four Consid Considera erati tions ons for for Trus Trustt Valid Validit ity y (1) Whether there was intent to create create a trust by the settlor. settlor. (2) Whether there was trust property (trust raised) (3) Whether Whether there are (valid) trust trust beneficiaries beneficiaries (4) Whether the trust instrument instrument was in writing, writing, if [writing [writing is] required. b) Intent to Create a Trust i) No particular words are necessary to create a trust → look at language to see if there was evidence indicating that settlor wanted the person to whom property is being transferred to be for the benefit of someone else. (1) Factors to Consider leanings towards creation of a trust: (a) The person person wished wished to create create duties (b) The express goal would be best implemented by finding finding a trust (c) The person person wished to create create a legal obligati obligation on Precatory Language → nonbinding/nonenforceable language – “I hope, “I recommend” Equitable Charge - If a testator devises property to a person subject to the payment of a certain sum of money to a third person, the testator creates an equitable charge. 1. Equitable Equitable Charge Charge creates creates a security security interest interest in in the transfer transferred red property property 2. No fiduciary fiduciary duties duties - the relati relationshi onship p is more in the the nature nature of a debtor and and secured secured creditor. (2) The language language “shall be maintained” maintained” and “shall not be sold” is strong strong indication indication of intent to create a trust (a) Lux v. Lux – will – will said "shall be maintained for the benefit of said g randchildren and shall not be sold until the youngest of said grandchildren reaches" 21 yrs. Issue is it outright gift or a trust – court ays the language indicates intent to create a trust. (3) The words “in trust” trust” not necessary to create create a trust so long as the transfer was made with with the intent to vest ownership in a third party. (a) Jimene Jimenezz v. Lee – Father was given money from grandma as a gift to his children; dad took money and invested in stock. Gifts never given using the words “to be held in trust.” Court says a trust was created & dad had ha d a fiduciary duty as trustee. So although dad says he used money to pay for various things for daughter, court says as a trustee, your fiduciary duty 34 / 42 • •
includes the duty to do the accounting. accounting. Daughter not entitled to entire entire proceeds from stock dad used with trust money – need n eed to take out what was wa s used for her education. ii) Trust vs. Gift (1) To make an outright gift of personal property, as compared to a gift in trust, the donor must deliver the property to the donee, and the donee must accept the gift. So if you die before you give a gift, it does not have to be given, but if it were made in trust, then it must be devised. (a) Delivery Delivery need not be physical physical Constructive delivery – something that gives you access to the gift (keys) Symbolic delivery – symbolic of the gift (a picture of the gift) (b) The mere intent intent to give property to someone someone else is not enough to create a trust when when the property has not changed hands; there must be a clear intent to impose the duties of a trustee on the donor. The Hebrew University Association v. Nye – woman went to school in Israel & said she was going to give the school some books (announced at a banquet), but died before she could give them away. Court will not save a gift that fails of delivery by imposing a trust where no facts indicate a trust was intended. For the oral declaration to have created a trust, there must have been obvious intent that widow was imposing on herself the enforceable duties of a trustee. trustee. However, court said this this was a valid inter vivos gift, b/c symbolic delivery was made when she announced she was giving it to them, as actual delivery would have been impractical. c) Necessity of Trust Property i) To create a trust there must a formal declaration of trust and a separate allocation of trust property. (1) Unthank v. Rippstei v. Rippstein n – Decedent had promised to pay $200 per month as long as Δ lived. After his death, Δ tried to get estate to pay it, as a trust. Court says there no trust property. Decedent failed to separate a portion of the estate to serve as the trust res (property). (2) Trust Trust v. v. Debts Debts (a) Trust is a particular particular carved out property to which which trustee must handle in a specific way to satisfy fiduciary duty. Beneficiary receives the increase or decrease of the trust property. (b) Debt is is an obligati obligation on to pay. pay. Only receive receivess amount owed. (3) What happens to trust res res if the trust fails for some reason? (a) To settlor - reversionary reversionary interest - an outright transfer transfer (b) Resulting trust - some courts will impose this for successor; trustees appointed (instead of reversion) - goes back to grantor's heirs in trust (c) Purcha Purchase se money money trust trust ii) What can be trust property: (a) Generally, any recognized "property interest" - Cash/check/money order/debt/obligations/real order/debt/obligations/real property (b) Future profits – can be used as trust property if there is a legal right to receive the future profits and a real expectation to receive them. – 1927 oral declaration of trust; 1928, Π traded stock & made Brainard v. Commissioner – money. Π says the profits he made were in trust, so IRS can’t touch. Court just thinks this is shady. They find no trust raised b/c in 1927 when he made the oral declaration of trust, the property didn’t exist. Note: it’s not that future profits can’t be p ut in trust, this case is just problematic – very suspicious – trying to get out of taxes. • •
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Speelman v. Pascal – writer and owner of license of “My Fair Lady” gives as a gift to his Speelman secretary 5% of the future future profits. Since he owned the rights to to receive future property & there is a real expectation of it, then ok to use future profits as trust raised. iii) Pour Over Will: Exception to requirement that there must be trust raised - funding trust from assets distributed by the will. Although trust not raised inter vivos, it will will be once settlor dies, by will distribution. d) Necessity of Trust Beneficiaries i) Beneficiary must be ascertainable – doesn’t have to be named, but you have to be able to figure it out (1) A bequest to an indefinite indefinite person person or group group is invalid. (a) Clark v. Campbell – – testamentary trust; will said said assets to go to decedent’s “friends,” whoever are determined to to be his friends. The rest goes to residuaries. Friends are not ascertainable, unlike relatives which the law can figure out. (2) Pet Beneficiar Beneficiaries ies – An animal animal cannot be a beneficiary beneficiary b/c it it cannot hold hold the trustee trustee accountable. (a) Exception: Exception: Honorary Honorary Trust Trustss In re Searight's Searight's Estate Estate – testamentary trust created to be paid to Florence at a specific • rate to care for decedent’s dog. Court creates an honorary trust. Florence put in charge of the dog. But no fiduciary duty here, so if Florence no longer wants to take care of the dog, the $1000 goes to the resulting trust - reverts back to settlor's estate (for settlor's heirs). e) Necessity of a Written Instrument i) In general, a trust does not need to be in writing requirement unless it is 1) a testamentary trust (will requirement) or, 2) are a trust involving real property (statute of frauds). •
(1) Oral Inter Inter Vivos Vivos Trust Trust of Land Land (a) Some jurisdictions will use a constructive constructive trust to validate validate an oral trust of land if the trustee is in a confidential relationship with the transferor
Hieble v. Hieble – mom thought cancer would come back & she was near death. She makes an oral trust of property. She transfers the property jointly to her daughter & son. She also says if she she survives, to give it back to her. She survives, but son refuses refuses to transfer it back to her. Court says it’s not a valid trust; trust; b/c must be in writing. Instead, court imposes a constructive constructive trust b/c there is a confidential, fiduciary relationship. relationship. It's her son, she is ill, weak, son reassures her of his loyalty. (2) Oral Trust Trust for Disposit Disposition ion at Death (a) Olliffe v. Wells – will gave residuary estate to Reverand Wells to distribute distribute as he saw fit to carry out her wishes as expressed or shall be expressed to him (orally). Types of trusts court identifies here: • 1. Secret trust – beneficiary appears to have rec’d property for his own use, but decedent & beneficiary have previously orally agreed that it be held in trust for some secret purpose. Court will allow extrinsic evidence that sheds like on what was meant. 2. Semi-secret trust –will appears to create a trust with the beneficiary under will as trustee but purpose of trust not identified. Court will not allow extrinsic evidence. Court says this is a semi-secret trust and won’t allow EE. Instead there is a resulting trust, • where property goes back to estate for for the benefit of the settlor's estate. This is because there's no possibility of unjust enrichment - it would just go back to the heirs. •
III.
Types of Trusts a) Introd Introduct uction ion - Types Types of of Trust Trustss i) Revocab Revocable le trust trust - sett settlor lor reta retains ins a lot lot of powe power r 36 / 42
ii) Irrevocable Irrevocable trust trust - gives truste trusteee all the power; power; you can have more than than 1 trustee iii) Dynastic trust - leaving leaving for all descendents only - keep money in the family - you can't will it to someone else iv) Charitable trust - put stuff in trust trust for a charitable purpose purpose (which is defined by statute) statute) v) Discretion Discretionary ary trust - set up trust trust giving certain certain discretiona discretionary ry powers to trustee. trustee. b) REVOCABLE TRUSTS (aka Will Substitute) – way to distribute property at death, other than by will i) How a Revocabl Revocablee Inter Inter Vivos Vivos Trust Trust typicall typically y works: (1) Settlor Settlor and trustee are usually usually different different (2) Settlor executes a deed of trust trust retaining the power to revoke revoke or amend with right to to income for life (3) On settlor's death, trust trust assets distributed distributed or held in further further trust ii) The retention of the power by the trustee to revoke & to have a life interest in it does not make a trust invalid just because there is no will. (1) Note: Since it's not much different different from owning it outright, CL didn’t recognize revocable trust. CL says it's like a will, but without abiding by requirements of a will. will. All jur except TN recognize revocable trusts. (2) Farkas v. Williams – Settlor is also trustee. During life, life, settlor retains all benefits, but then transfers to beneficiary at death (much like a will). The court here distinguishes it from a will, though, by saying that it is a trust b/c the beneficiary must get something now – an interest. He still had the same rights as a beneficiary, even though in reality he could not exercise those rights, b/c settlor can just revoke. But it’s enough. iii) Where the settlor reserves a power to revoke a trust in a particular manner, he can only revoke it in that manner (diff from revocation of wills). (1) In re Estate Estate and Trust Trust of Pilafas Pilafas - Decedent created both will and trust. Both could not be located upon death. Court said will revoked per the lost will will doctrine. But cannot revoke the trust in just any old way. Beneficiaries’ interests cannot be taken from them unless in accordance with trust provisions; trust required written notice to beneficiaries, which was not given. iv) Impact Impact on Credi Creditor torss (1) State Street Bank & Trust Co. v. Resier - Wilfred created trusts using stocks. Took out unsecured loan. Estate doesn’t have enough to pay back creditors - they want to reach the trust. If you retain control over inter vivos trust while you're alive, the creditors should be able to reach it to pay your debts. If you can live off the trust, why can't you pay off your debts from it? c) POUR OVER WILLS – set up trust trust and trust trust property property comes from will will devise (so don’t need trust raised for this). Same result by creating a testamentary trust. Most jurisdictions jurisdictions allow pour over will. i) Two Two appr approa oach ches es: (1) Incorporation Incorporation by reference reference - Requires that the trust instrument instrument be in existence existence at the time the will is executed. (a) If the trust instrument is in in existence at the time the will is executed, and the will will incorporates the trust instrument by reference, it creates the trust (b) If trust trust amended after after will is executed executed:: Give effect to the trust as it was at the time time of will execution. But if court finds it inconsistent with intent of testator, the trust doesn’t come in at all, no pour over will, and estate passes through intestacy. (2) Independent Independent significance significance - Requires that some property property is transferred transferred to it during life (a) What is required is is that at time of the reference there has to be trust raised - prior to testator's testator's death. This is what gives it independent significance. (b) Diff from incorp by reference b/c the trust can be created or amended after the will will is executed. •
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ii) Clymer v. Mayo - Clara names her husband James as the primary beneficiary to her life insurance policy, pension plan and will. She then creates a trust to be funded from those sources, and her husband was named beneficiary of the trust. They get divorced. Clara changes beneficiary on pension plan, but doesn’t change husband as beneficiary of the trust. (1) Trust is valid b/c it's to be funded not only by pour over will, but also by the insurance policy proceeds. (2) Husband’s interest was revoked as a result of the the divorce. Generally when people get divorced they don't like each other, and wouldn’t want the ex-spouse to get under the will. So under law of wills, the ex-spouse can no longer get ge t although will still names them. So the pour over will that gives assets to the trust is void b/c it's benefiting the ex-spouse, so husband can't get. IGHTS OF BENEFICIARIES /CREDITORS TO DISTRIBUTIONS FROM THE TRUST D) R IGHTS i) Mandatory Trust -- The trustee has no discretion to choose either the persons who will receive the income or the amount to be distributed (1) Beneficiaries have right to alienate – can sell it, it, satisfy debts (2) Therefore, creditors may also reach the trust trust assets assets ii) Discretionary Trust -- Trustee has discretion over payment of either the income or the principle or both. Beneficiary cannot get until trustee gives it (so creditors creditors can’t get either, until trustee gives to beneficiary). Trustee determines to whom, and how much he pays and does NOT have to pay all of it (1) Duties Duties of Tru Trustee stee (a) Duty to inquire into financial status status of beneficiary beneficiary - If beneficiary is ambiguous ambiguous about financial report, trustee must clear it up (b) Duty to act reasonably (unless it is sole and absolute discretion, explicitly stated) stated) (c) Fiduci Fiduciary ary Duty Duty Marsman v. Nasca – discretionary/support trust. Beneficiary goes to trustee and says that he is running low on funds and trustee said to put it in writing and he will consider it. Beneficiary never did and lived in a state of poverty. Trustee never inquired into his financial situation, never gives more more money. Court says when trustee trustee failed to check up on beneficiary and denied more payouts, this was a breach of the fiduciary duty. (2) Purely Discretionar Discretionary y v. Discretionary Discretionary with a support standard standard (a) Purely discretionary - trustee has discretion over income or interest Creditor of the beneficiary cannot reach the trust assets, since beneficiary doesn’t have a recognizable interest. Trustee doesn’t have to make a payment. (b) Discretionary trust with support standard (Support (Support Trusts) – requires trustee to make payments of income to the beneficiary in an amount necessary for education or support of beneficiary •
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Support Trust i. A support support trust trust directs directs the trustee trustee to to pay only so much much of the income income or princip principal al as is necessary for the beneficiary’s support or education ii. Support trust trust is a form form of discretiona discretionary ry trust, trust, but not a TRUE discreti discretionary onary trust trust because because amount necessary is not in trustee’s judgment it is an objective standard 1. I.e Anyone, Anyone, can figure figure out out how much much to give give as opposed opposed to saying “enough to to make X comfortable”. iii. General General View is that bfs bfs cannot alienate alienate support support trusts trusts so creditor creditorss cannot reach reach bfs interest iv. Exception (who can reach bfs interest): 1. Suppl Supplie iers rs of of nece necess ssit itie iess a. Always Always in the UTC and Restat Restateme ement nt 38 / 42
b. Does not apply for purely discretionary trusts for the UTC 2. Children Children and spouse spouse my enforce enforce claim claim for child child support support and alimony alimony against against bfs bfs interest in a support trust. a. Under Under UTC, UTC, court court can can direc directt trust trustee ee to pay pay amount amount.. b. Does not apply for purely discretionary trusts for the UTC b. Sp Spen endt dthr hrif iftt Tr Trus usts ts i. A spendthri spendthrift ft trust trust precludes precludes the the benefici beneficiary ary from: from: 1. VOLUNTARILY alienating interest (beneficiary can’t transfer) 2. INVOLUNTARI INVOLUNTARILY LY alienating interest (creditors can’t seize) (THIS IS HUGE) ii. Spendth Spendthrif riftt clause clausess are a rest restrai raint nt on both voluntary and involuntary alienation. 1. But for public policy reasons, if you only restrain one and not both, then you can only restrain voluntary alienation. a. Ex: Dad Dad makes makes trust trust for for son and wants wants son to be respons responsible ible b. Thus, he restrains voluntary transfers (he cannot alienate his property) property) c. BUT, he lets lets involunta involuntary ry transfers transfers (credit (creditors ors can attach attach to trust trust property) property) iii. Scheffel v. abusing her son and she gets a 500K judgment. judgment. He v. Krueger -- P sued D for abusing has a trust and P wants to attach trust to to judgment. Court found that the language created a spend thrift trust. Court found that P could not take or attach trust asset. asset. What was the legal authority the court used. There are only two exceptions: One is if the bf is the settlor and the trust is not a special need trust established established for a person with disabilities and second, for fraud. None of these exist. Even though they had a judgment they could not collect on the trust. Settlor can put a restraint restraint of alenination iv. Shelley v. Shelley trust was this? Mandatory trust with discretionary Shelley – What types of trust clause. It was also a spendthrift spendthrift clause. BF was married married and divorced. He was supposed to pay child support and alimony alimony which he did not do. Children and wives wanted a claim to trust funds. Trust established for bf was subject to claims by their children and former wives. Children and wives can take on income income but not on corpus because it was discretionary. Can the children take under the discretionary part? Not as creditors but as bf in case of emergency. Because Grant abandoned them the court concluded there was an emergency v. Rule: Childr Children en and wives have a claim claim on income from from spendthri spendthrift ft trusts trusts (but (but not corpus?) vi. Rule: Tort credtors credtors cannot cannot reach reach spend spend thrift thrift provision provision vii. Pension Pension plans plans may may not not be assigned assigned or or alienat alienated ed iii) Mandatory v. Discretionary (makes the the diff on whether creditors can reach beneficiaries of the trust) (1) Support Trusts - mandatory trust payout, so creditors can attach (creditors can also attach if it’s a revocable trust made to settlor/beneficiary) (2) Discretionary Trusts – combines an explicit statement of discretion with a stated support standard; whether creditors can reach assets depends. (a) Trustee has discretion discretion over the distribution over income or interest, interest, and sometimes even to who are the beneficiaries. iv) Charitable Trusts (1) To qualify as a charitable charitable trust, the trust must have a charitable purpose, rather rather than merely being benevolent. Charitable purposes include: (1) relief of poverty, (2) advancement of education, (3) advancement of religion, (4) promotion of health, (5) gov’t or municipal purposes, and (6) other purposes that are beneficial to community. Shenandoah (2) Cy Pres: If the settlor’s settlor’s exact charitable purpose purpose cannot be carried out, the ct may may direct the application of the trust property to another charitable purpose p urpose that approximates the settlor’s intention. In re Neher 39 / 42
(a) 1stStep: If there a charitable charitable Purpose? nd (b) 2 Step: Whether the trust was for a general charitable purpose or a specific charitable purpose. If general, trust can be modified; if specific, cannot be modified. (c) 3rd Step: Is it impracticable to give effect to what she wanted?
IV.
Modification and Termination a) Irrevocable Trust (usually testamentary) - If settlor & all BFs consent → may be modified or terminated. Trustee cannot object b/c he has no beneficial interest. If settlor is dead → trust cannot be terminated/modified before time fixed for termination, even if all BFs agree, if termination/modification is contrary to material purpose of settlor (Claflin Doctrine) b) Revocable Trust – can be modified/terminated if settlor consents. c) Modification i) CL Appr Approa oach ch: Th Thee Claflin Doctrine – Cannot terminate/modify terms of the trust prior to natural expiration even though all BFs agree, if it is contrary to settlor’s intent. Can only modify for administrative purposes not related to dispositional aspect. (Stutchell mentally handicapped) (1) Exception (NY) (NY) Poor surviving spouse & Trust protectors ii) UTC § 412: Ct can modify both admin & dispositional terms or terminate, if changed circumstances not anticipated by settlor, & to further the p urpose of the trust (settlor’s probable intention). Modify admin terms if impracticable or wasteful or impair trust (settlor’s intent irrelevant for admin). d) Termination Generally, a trust cannot be terminated if → spendthrift trust, if delays receipt of principle until certain age, if a discretionary trust, or support trust. This is b/c these types of provisions are considered (presumptively) the material purpose of settlor.Trust may not be terminated early even if all BFs agree, unless all material purposes of trust are achieved. (Brown) e) Trustee Removal - Removal of trustee if a remedy for breach of trust, not modification of trust terms. i) Traditional Traditional Approach Approach: Cts are authorized authorized to remove remove a trustee who is dishonest dishonest or if serious serious breach of trust. Cannot remove if not a serious breach or if a simple disagreement with BF. If settlor chose trustee – even harder to remove, and never if basis for removal was aware to settlor when he named the trustee, unless trustee entirely unfit to serve. ii) UTC Approach: can remove if (1) serious breach of trust, trust, (2) lack of cooperation among cotrustees cotrustees impairs admin of trust, (3) trustee is unfit, unwilling, or persistently fails to administer trust effectively & ct determines removal in best interest of BFs, or (4) substantial change in circumstances or all BFs request removal, & ct finds in best interest & not contrary to material purpose of trust, & other trustee available.
V.
Future Interests and Limits of Trust Duration a) Types of Future Interests i) Reversion – interest that the grantor retains when he gives away less than what he has (gives away life estate in entire prop, grantor has the rest of the interest – the fee simple when life estate ends). e nds). (1) Rule: if you have a contingent remainder, followed by another contingent remainder, then O always has a reversionary interest. ii) Remainders – future interest in transferee that will become possessory, if at all, when all prior interests expire. Need not be certain, but only possible that FI will become possessory. iii) Indefeasibly Vested remainder – (1) given to a presently ascertained person, and (2) not subject to a condition precedent (other than end of previous estate) iv) Contingent remainder – (1) not given to a presently ascertained person, or (2) is subject to a condition precedent. To A for life, life, then to B if B survives A. (1) Rule: Contingent remainders usually follow life estates/other contingent remainders. v) Remainder vested subject to divestment – (1) given to an ascertained person, and (2) subject to a condition subsequent . To A for life , then to B, if B survives survives A. Rule: an executory interest interest more than likely follows a vested remainder subject to divestment 40 / 42
(1) Vested Remainder Subject to Open – (1) not subject to condition precedent, but (2) class has some ascertainable members, but subject to open to let in more class members. To A’s children, A is living and has 3 children. 3 ascertainable children; A can have more. (2) Executory Executory interest interest – cuts off precedin preceding g estate (a) Shifting executory interest – if an event happens, happ ens, transfers from one transferee to another transferee (A for life, then to B, but if B doesn't d oesn't survive A, to C). (b) Springing Executory Interest - if an event happens, transfers from transferor to transferee (O conveys land to A when A marries B). Rule: Executory interest usually never follow life estates/contingent remainders but do often follow vested remainders subject to complete divestment. b) Class Closing Rules (when does class close so that property can be distributed) distrib uted) i) When Feeder Dies (so no more children) ii) Rule of Convenience – class closes when a member of the class is entitled to take; the relevant time is when member is entitled to demand payment, not when interest vests (1) Imm Immedi ediate ate Gifts: Gifts: (a) T bequeaths $10k "to the children of B who reach 21." B has children children alive, but no child is 21 at T's death. Class closes when the first of B’s children reaches 21. At that point no more members can join (after born children cannot take). (b) T bequeaths $10k "to the children of B, to be paid to them in in equal shares as they respectively reach 21." Condition subsequent – so more like vesting. Class closes when all children reach 21; if one child dies before reaching 21, the class closes when they would have turned 21. (2) Postpo Postponed ned Gifts Gifts (a) Class will not close until until the life tenant dies. If jur applies applies rule of convenience, convenience, must wait until one member is entitled to possession. (b) T bequeaths $10k "to A for life, life, then to the children of my daughter B." B survives A. Class def won’t close until A dies. If at A’s death, B has a child alive, class will close. If there was a child of B's that was born, but bu t died before T, then anti-lapse a nti-lapse statute applies - class closes then too. If a child of B was born after T's death, but died before before A died. Then class still closes at A's death. c) Trust Duration and the Rule Against Perpetuities i) A gift violates RAP if it is not certain to vest or fail within 21 years after the death of some life in being. ii) ii) RAP RAP Anal Analys ysis is:: (1) What are are the interests? interests? (2) Which interest interestss are subject subject to RAP? (a) RULE RULE:: RAP RAP only applies to contingent remainders, executory interests and vested remainders subject to open. (3) When does the the clock for RAP start start running? running? (a) Generally, the perpetuities period period begins when the instrument takes effect. Will → testator’s death Deed/Irrevocable Trust → settlor’s death Inter vivos revocable trust → when power to revoke terminates (usually settlor’s death) (4) What are are the lives lives in being? being? (a) Measuring/Validating Life Life - the life life in being can be any person that affects the interest. interest. Life in being must be a person alive at the creation of the interest – when the perpetuities period starts to run (includes gestation period). (5) Do the interests that that are subject to RAP vest within any of those lives? lives? •
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(a) Note: after-born scenario – red flag! No matter how improbable, an interest that might not vest or fail within 21 yrs is void Fertile octogenarian – anyone alive is capable of bearing children Posthumous conception Precocious toddler – issue: when does law presume a child can bear children? Unborn widow – law presumes that life in being can marry someone who was not yet born at creation of interest. 1. Dickerson v. Union National Bank – will creates trust to continue until A, B, & B’s widow (not otherwise identified) died, then to A & B’s heirs. Violates RAP. B’s widow is unascertainable, so cannot be life in being. B is life in being. Unborn widow scenario – B’s widow can die more than 21 years after B, only after which will the gift finally vest. Slothful Executor – executor does not probate estate for many years after testator’s death FOR CLASS GIFTS - two additional questions: q uestions: (6) When does does the the class class close? close? (a) Physically Physically close close & rule rule of convenience convenience (7) Is the condition condition precedent precedent satisfied? satisfied? (a) T bequeaths property in "for A for life, then for for A's children for life, life, then for A's grandchildren." A is measuring life. A's children - we will know within 21 yrs of A's death who A's children are. A's grandchildren - violates RAP - we won't necessarily know if vests/fails within 21 yrs of A's death. Class close - will close close physiologically when all of A's A's children die. So possibility that it won't close within within 21 yrs of life in being (A's life) (after-born (after-born problem). • • • •
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