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Trusts & Estates – Flashcards

Collin Foley

7 July 2022

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Shapira v. National Bank

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Facts: Testator's will required his son to marry a Jewish girl to receive a bequest. His son sued to have the condition invalidated as an unconstitutional restraint of marriage. Issue: Was the condition constitutional? Held: Yes, the condition was constitutional. Discussion: By choosing to uphold the condition, the court showed the high importance the U.S. places upon freedom of disposition. A partial restraint of marriage that imposes only REASONABLE restraints does not violate public policy. Here, the son still had the right to marry whoever he wanted; thus, the court was not preventing him from marrying, but merely guarding the testator's freedom of disposition. Had the issue been about race, and not religion, the court likely would have invalidated the provision.

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Incentive Trusts

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People usually make conditional gifts by using "incentive trusts."

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Lifetime v. Testamentary Conditions

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Courts are likely to be more flexible with hard-line provisions regarding marriage and religion. During life, the testator would probably have been flexible with the intended beneficiary had a difficulty with the provision arisen.

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Restraints on Marriage

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Majority rule is that "restraint UNREASONABLY restricts the right to marry if a marriage permitted by the restraint is NOT likely to occur." E.g., if the son in Shapira had been gay and told to marry a woman, that would be unreasonable.

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Contrary to Public Policy

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Generally, courts don't enforce conditions that are contrary to public policy. E.g., a condition that prohibits a widow or widower from remarrying. E.g., any condition that disrupts marital harmony.

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Rest.3d on Deadhand control

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Rest.3d advises courts to invalidate unreasonably punitive or intrusive decisions, thus limiting deadhand control. Many courts decline to follow this and honor the deadhand. E.g., most still uphold marriage restraints (esp. based on religion) as valid

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Destruction of Property at Death

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Most courts will decline to order the destruction of an asset at death because it is viewed as "unnecessary waste." It might be allowed if the item truly lacks value to others.

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Probate

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Property passes by way of will or intestacy. Three core functions: (1) Evidence of transfer of title--property becomes marketable again (2) Protection for creditors--executor/administrator must pay off debts (3) Distribution of property

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Nonprobate

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Property passes by way of a will substitute. Used much more frequently than probate.

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Inter Vivos Trust

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Established during the life of the settlor. Nonprobate instrument.

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Testamentary Trust

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Established by the testator in his will, and thus goes through probate

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Domiciliary Jurisdiction

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The law of the state where the decedent was domiciled at death governs the disposition of personal property

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Ancillary Probate

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Real property is governed by the state in which it is located. It must pass through ancillary probate. It's better to put real property into an inter vivos trust to avoid these costs and delays.

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Letters of Administration / Letters Testamentary

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Letters of administration appoint an administrator. -the court appoints an administrator Letters testamentary appoint an executor. -the testator appoint an executor

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Common form probate

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No notice or process issued to anyone. Execution of the will was proved by oath of the executor. The will is immediately admitted to probate.

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Solemn form probate

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Notice given by citation. Due execution of the will proved by attesting witnesses. More court involvement

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Formal Probate

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UPC requires judicial determination after all interest parties have received notice.

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Informal Probate

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UPC does not require proof by witnesses. The will only requires signatures and an attestation clause. The personal rep must put all parties on notice.

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Supervised Administration

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Probate court supervises the personal representative. Costly and time-consuming. The representative cannot make a distribution to beneficiaries without court approval. Court must discharge personal representative before probate officially closes.

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Unsupervised Administration

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Representative administers the estate without court supervision or approval. Most people used unsupervised administration, but an interested party can petition for supervised at any time. To close probate, the personal rep can file a sworn statement that he has published notice to creditors, administered the estate, paid all claims, and sent a statement and accounting to all known distributees.

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Nonclaim Statutes

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Every state, like the UPC, has a nonclaim statute that requires creditors to file claims within a specified time period, or the claims are barred. Two basic forms: (1) Bars claims not filed within a relatively short time-period (four months under the UPC) --Creditors receive publication notice after probate opened (2) Self-executing statutes bar claims not filed within a longer period after the decedent's death (usually one to five years) --One year under the UPC --Protection provided after end of period, regardless of whether probate has even commenced The Due Process Clause requires all known or reasonably ascertainable creditors receive ACTUAL notice before being barred.

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Responsibilities of a Personal Representative During Probate

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1) Identify and pay creditors 2) Pay taxes 3) Distribute assets

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Costs of Probate

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The main costs of probate are court fees, the commission of the personal representative, the attorney's fee, and sometimes, an appraiser or guardian ad litem fee.

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Avoiding Probate?

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The majority of states and the UPC permit the decedent's successors to avoid probate if the value of the estate is small. Thus, if the estate values usually between $25k and $50k, there can be a SUMMARY ADMINISTRATION. There are many special statutes allowing for special transfers of items with title outside of probate. --E.g., cars

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Universal Succession

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Louisiana and Europe follow this. The heirs or residuary devisees step into the shoes of the decedent at the decedent's death, taking the decedent's title and assuming all his liabilities and obligations. The UPC authorizes universal succession as an alternative to probate administration.

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Simpson v. Calivas

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Facts: Testator wanted to leave his wife a life estate in the house and everything else to his son. The drafting lawyer used the term "homestead" to describe the wife's bequest, which led to confusion. The wife ended up with everything, while the son was essentially disinherited. The son then sued the lawyer for malpractice. Issue: Does a drafting attorney owe a duty of reasonable care to intended beneficiaries of a will? Held: Yes, he does. Discussion: Drafting attorneys owe a duty of reasonable care to a will's intended beneficiaries because they can easily foresee doing them harm by poorly drafting the will. Intended beneficiaries state a cause of action simply by pleading facts sufficient to establish the attorney negligently failed to effectuate the testator's intent as expressed to the attorney. This is an exception to the general rule that a nonparty to a contract has no remedy for breach. Intended beneficiaries have the right to enforce the TESTATOR's contract with the lawyer as third-party beneficiaries. Thus, look to whether the lawyer effectuated the TESTATOR's intent.

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Privity Defense

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Only a minority of states (9) hold that a will's intended beneficiaries can't sue a lawyer for malpractice in writing the will

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Malpractice and Law Reform

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Today, courts and legislatures are increasingly willing to forgive mistakes. E.g., increasingly willing to correct mistakes by lawyers in drafting the instrument to allow the testator's intent to be carried out. E.g., to reform wills or trusts after the decedent's death to allow tax advantages

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A. v. B.

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Facts: A man and wife together employed a law firm to engage in estate planning. Neither the wife nor the firm realized that the firm was representing the mother of the man's illegitimate child against the man in a paternity suit. When the firm found out, it dropped the mother as a client and sought to tell the wife about the child because it could affect the dispositions she had arranged for her property after her death. Issue: Was the firm allowed to tell the wife of the husband's child? Held: Yes, it was. Discussion: The court decides the possibility of the extramarital child inheriting from the wife was too remote to allow the firm to tell the wife on those grounds. However, the court holds that the man committed fraud upon the wife by not revealing his extramarital child. This, bolstered by the fact the firm learned of the child before the paternity suit began and outside its attorney-client privilege with the man, gave the firm discretion on whether or not to tell the wife.

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Multiple Clients and Engagement Letters

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Firms need to be up front in explaining both the advantages and disadvantages of joint representation for family members. Ethical obligations compel firms to reveal private information about either spouse to the other when the information could affect the other's interests.

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Intestacy

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Governed by statutes of descent and distribution, which attempt to make property pass according to the majority of people's preferences. -Favors spouse, then descendants, then parents, then collaterals. -POLICY: Protect the economic health of decedent's family. Intestacy is the background law that applies when the testator doesn't have a will.

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Escheat

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If you don't have any heirs at law or next-of-kin to receive your property through intestacy, then your property escheats to the state

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Heirship and Heirs Apparent

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A living person does NOT have heirs. He only has heirs apparent, or people that would presumably inherit his estate should he die. --heirs apparent have an expectancy that is contingent upon surviving the intestate person --these expectation interests CANNOT be legally transferred because the interest has not yet actually vested. Only decedents have HEIRS because only then can the statutes of descent and distribution determine who should receive the property. *Remember: A person named in a will is called a devisee, legatee, or beneficiary, not an heir.

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Structure of Intestate Succession

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The majority of states share two things in common: (1) descendants are usually favored over ancestors and collaterals; and (2) blood relations and spouses are favored over non-blood relations (e.g., stepchildren) and cohabitating partners. States have SPLIT on two main points: (1) the size of the spouse's share; and (2) methods of representation in determining share size.

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UPC -- Intestacy & Surviving Spouses

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UPC 2-102(1): If all the decedent's descendants are from the spouse, and the spouse has no other descendants (outside of the decedent), then the spouse gets the entire estate. UPC 2-102(2): if the decedent has no descendants, then the spouse shares with the decedent's parents. --if no parents, then it all goes to the spouse at the expense of the collaterals.

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Domestic Partners and Same-Sex Marriage in Intestacy

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A large portion of states recognize inheritance rights for same-sex couples --for some, the couple must register with the state The U.S., as a whole, is inconsistent with how it treats this issue

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Uniform Simultaneous Death Act (USDA)

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if there is no sufficient evidence of the order of deaths, each spouse is deemed to have predeceased the other, SO NEITHER SPOUSE inherits. 1/2 of the property is distributed as though Spouse A survived, while the other 1/2 is distributed as though Spouse B had survived When an insured or third-party beneficiary dies simultaneously, the proceeds are distributed as though the insured had survived

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UPC -- Ancestors, Collaterals, and Others in Intestacy

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Parents: if there are descendants, then the parents don't take at all. -- if there aren't any descendants, and the spouse has already taken his or her share, the rest goes to the parents. Brothers and sisters ("descendants of the decedent's parents") are FIRST-LINE collaterals. Aunts and uncles ("descendants of the decedent's grandparents") are SECOND-LINE collaterals. If the decedent didn't have a spouse, descendants, or parents, his siblings take -- if siblings have passed, then their children (decedent's nieces and nephews) take by representation If there are no FIRST-LINE collaterals (brothers and sisters), states are split: -- Parentelic system -- Degree of Relationship System

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Parentelic System

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If a decedent has no spouse, no descendants, no parents, and no brothers and sisters, then some states: pass the estate to the grandparents or, if they are no longer living, to the grandparents' descendants. If not grandparents, then to great-grandparents and their descendants

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Degree of Relationship System

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An alternative to the Parentelic System. If a decedent has no spouse, no descendants, no parents, and no brothers and sisters, then the other half of states: pass the estate to the closest of kin, counting degrees of kinship.

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Intestacy -- Laughing Heirs

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A bit more than half of states limit succession to grandparents and grandparents' descendants (so no great-grandparents' descendants) to permit laughing heirs UPC also does this

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Intestacy -- Stepchildren and In-Laws

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Only a minority of states recognize stepchildren as heirs UPC allows stepchildren to take if there are no grandparents, no descendants of grandparents, and no more closely related kin.

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Intestacy -- Half-bloods

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The majority of states and the UPC treat half- and whole-bloods the same The minority of states follow the Scottish rule, which gives half-bloods half a share

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Disinheritance by Negative Will

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the UPC authorizes disinheritance by a negative will. This means the testator expressly states in the will that a person is barred. The barred heir is treated as though he disclaimed his share, which means he is treated as though he predeceased the testator.

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Guardianship and Conservatorship of Minors

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A minor doesn't have the legal capacity to manage property or where or how to live. Thus, they need a: (1) Guardian of the Person, whom the court chooses. The parents' choice (usually in will) is deeply persuasive; or (2) Property Management options -- Guardians have no authority to deal with the child's property, so they need a Guardian of Property -- cannot change investments without a court order -- can only use income from property to support the ward -- strict approval is required to use the principal Guardianship of Property should be avoided because it is like constant probate (3) Conservatorship, which is more like a trust. -- holds property for minor under the Uniform Transfers to Minors Act (UTMA) -- no need for trust instruments because gifts and property are devised to the custodian for the benefit of the minor -- custodians can spend for a minor's benefit -- they have the right to manage and reinvest property -- ideal for modest gifts (4) Trusteeship, which is the most flexible arrangement

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Hall v. Vallandingham

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Facts: When their father died, the children's mother remarried another man, who adopted them. When their biological father's brother died, they wanted to inherit in their father's place, but the statute of descent and distribution cut off adopted children's inheritance rights from their biological parents. Issue: Does the statute validly cut off an adopted child's inheritance rights to his natural parent? Held: Yes. Because the statute cut off the right to inherit from the natural parent, it also cut off the right to inherit through the natural parent's relatives by way of representation. Discussion: The statute in question made the assumption that the biological father's family is cut off completely after the adoption. This assumption is very incorrect in this case. The right to receive property by descent, however, is not a natural right: it is a privilege that the state can give or take away. Here, the state wanted to prevent "dual inheritance," in which an adopted child gets a windfall by inheriting from both his biological and adopted relatives.

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UPC on Adopted Children and Inheritance

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UPC allows a child adopted by his natural parent's spouse to retain inheritance rights from both his natural parents. So in Hall, the biological mother's new husband adopted the children . . . if the UPC were followed, they would have inherited from the uncle. If a child is completely adopted by an entirely new set of parents, however, all inheritance rights to the biological parents are lost. The 2008 Amendments allow inheritance if there is a parent-child relationship. -- if a child is adopted by the spouse of a genetic parent, by a relative of one of the genetic parents, or after both genetic parents have passed, then there is still a parent-child relationship and the child can inherit from the biological parents -- however, biological relatives CANNOT inherit from the child because of the adoption

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States on Adopted Children and Inheritance

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States vary: -- some hold adopted children inherit only from adoptive parents and relatives -- in others, an adopted child inherits from both adoptive and genetic parents and both of their relatives -- finally, some others have adopted the UPC view

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Adult Adoption

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Adults can be adopted as legitimately as children. They can lose inheritance rights to their genetic family's estate in the process, too. States are split over whether you can adopt your lover, though. Some allow it, while others don't. You CAN adopt someone to kill your collateral relatives' standing to inherit. --E.g., if you have no children, but adopt an adult, your collateral relatives can't challenge your will because they will have no standing Adopted adults, unlike adopted children, don't necessarily get the inheritance unless absolutely specified, though

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Adoption and Wills and Trusts

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An adopted child is entitled to take under the will or trust of an adoptive parent the same way a genetic child can. The rule presumes the adoption itself evidenced the decedent's donative intent. In most states, minors who have been adopted are PRESUMPTIVELY included in a gift to "my children." --Policy: A true parent-child relationship likely exists between the minor and adoptive parent

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Minary v. Citizens Fidelity Bank & Trust Co.

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Facts: Testator created a testamentary trust to pay the income of her children until their deaths, at which point it was to be distributed to heirs at law. One of the children adopted his wife to allow her to become a beneficiary of the res. Issue: May an adult be adopted so as to become an heir and claimant to the estate of an ancestor under the terms of a testamentary trust? Held: No, she may not. Discussion: The court goes against the express words of the relevant statute to hold that adopting an adult to make them an heir to the property of an adoptive parent's ancestor is FRAUD because it denies the rightful heirs their full bequest. Thus, the practice was disallowed.

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Adult Adoption as a Power of Appointment

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Using adult adoption to create a legal child to come within a class gift is, in effect, using adoption as a power of appointment. A power of appointment enables the holder of the power to designate who will take the property. Trusts today often given life tenants a power of appointment over the remainder at the death of the life tenant.

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Strategic Adult Adoption and Class Gifts

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The courts are split on whether an adult adoptee gets included in a class gift made by an adoptive relative OTHER than the adoptive parent. The UPC presumptively EXCLUDES a person adopted after reaching age 18 from a class gift to the adoptive parents' issue. --Policy: Prevent adult adoption's power of appointment. You should ALWAYS include whether or not an adopted adult will inherit in order to avoid litigation.

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O'Neal v. Wilkes

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Though decedent never formally adopted the girl, he referred to her as his daughter and to her children as his grandchildren. She wanted the court to declare an equitable adoption. Issue: Was she equitably adopted? Held: No. Discussion: The court decides that her aunt, who gave her over to the decedent, was only a legal custodian and did NOT have the power to enter into an adoption contract with the decedent. Thus, there could be no equitable adoption.

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Equitable Adoption Doctrine

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The majority of states recognize equitable adoption, but the details vary. Many states view it as a contract relationship, similar to the court in O'Neal. If the two parties didn't have standing for the adoption contract, it couldn't happen. The minority view it as a parent-child relationship occurring.

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Posthumous Children

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the Uniform Parentage Act establishes a rebuttable presumption that a child born to a woman within 300 days after the death of her husband is a child of that husband. Typically, a child conceived before the death of the father will be treated as coming into being at conception, rather than birth, if it is advantageous to the child.

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Nonmarital Children

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All states now permit inheritance by a nonmarital child from the child's mother. Most states permit it through the father if evidence establishes paternity. -- look to subsequent marriage of the father to the mother, acknowledgement of the child by the father, or adjudication during the life of the father. Paternity tests are the best way

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Testamentary Capacity

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Requires that the testator generally know and understand: *(1)* the nature and extent of his property; *(2)* the natural objects of his bounty; and -- must know who his heirs are and be competent to recognize them / know who they are to name them in a bequest *(3)* the dispositions that he or she is making of that property Test is not one of *actual* knowledge—you just must have the capacity to do so

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In re Wright's Estate

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*Facts:* The court would not let testator's will into probate evidence because it claimed he didn't have testamentary capacity. Three separate witnesses to the will—the drawer of the will, a notary public, and a realtor—attested to the testator's lack of capacity. *Issue:* Did the testator have testamentary capacity? *Held:* Yes, the testator did have testamentary capacity. *Discussion:* Courts will presume a testator to have testamentary capacity. Simply being an unstable or weird person (as here) doesn't mean a person lacks testamentary capacity . . . In order to impeach testamentary capacity, a will's contester must show evidence of an unsound mind that would bear directly upon the requirements for testamentary capacity. Witnesses have a duty to be assured of competency before they sign.

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Testamentary Capacity v. Capacity to make an Inter Vivos Gift

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Testators require less capacity than do individuals entering a contract or giving a lifetime gift. *Reason:* Decedents don't need protection from economic loss or impoverishment. Also applies to the creation of revocable trusts . . .

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Lee v. Lee

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A testator might have testamentary capacity during lucid intervals, even if during the majority of the time he lacks capacity.

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Wilson v. Lane

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*Facts:* The testator had a head injury and was quite eccentric during life. A contestant challenged the will on the grounds that the testator lacked testamentary capacity. *Issue:* Did the testator possess testamentary capacity? *Held:* Yes, the testator did possess testamentary capacity. *Discussion:* A person is mentally capable if he has "sufficient intellect to enable him to have a decided and rational desire as to the disposition of his property." For a will to be valid, the testator only needs to be shown to have had a rational desire with respect to the disposition of his assets. Here, none of the testimony was able to impeach the testator's capacity to make a will. There must be proof that she cannot meet the requirements of testamentary capacity—simply calling someone "senile" isn't enough.

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Standing to make a Claim against a Will

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You need a pecuniary interest in order to have standing to contest a testator's capacity.

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Burden to Prove Testamentary Incapacity

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UPC and the majority hold that the contestant has the burden of proof. The minority of jurisdictions hold the proponent of a will has the burden of proof.

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Insane Delusion

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Even if a testator has testamentary capacity, a court may still choose not to honor the will because the testator was under an *"insane delusion." —if there is *any* evidence to support the testator's delusion, then it is not insane and is instead a mistake **Courts invalidate wills made under insane delusions, but uphold wills made under mistake —typically, involves a false belief about a member of a testator's family "Insane delusion" = a persistent belief in that which has no factual basis, and which is adhered to against all evidence

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In re Strittmater's Estate

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*Facts:* Contestant challenges will on the grounds the testatrix was insnae. *Issue:* Should the will be invalidated because the testatrix wrote it while under an insane delusion? *Held:*Yes, the will should be invalidated because testatrix wrote it while under an insane delusion. *Discussion:* Strittmater, the testatrix, was an extremist feminist with a brutal hatred of all men. The court ruled that her man-hate was a delusion that invalidated her will, in which she left everything to the National Women's Party

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Breeden v. Stone

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*Facts:* After killing a man in a hit-and-run accident, the testator executed a holographic will (i.e., a handwritten will) to replace his prior, formally created will. He then committed suicide. *Issue:* Was the testator suffering from an insane delusion when he executed the holographic will? *Held:* No, the testator was not suffering from an insane delusion while writing his will. Thus, the holograph remains valid. *Discussion:* Contestants of a will have the burden to prove testamentary incapacity by a preponderance of the evidence. Typically, a testator must: (1) understand the nature of the testamentary act; (2) know the extent of his property; (3) understand the proposed testamentary dispositions; (4) know the natural objects of his bounty; and (5) have crafted the will to represent his wishes. (Cunningham). *Insane Delusion Test*—the insane delusion must MATERIALLY affect the dispositions made in the will. The court upholds the trial court's use of these tests: first, using *Cunningham* to determine whether the testator was of sound mind; and second, using the insane delusion test to show that, although he was delusional at execution, testator's particular delusions had no impact on the disposition of his property.

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Strittmater compared to Breeden

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The reason Strittmater's will was invalidated was that her insane delusion against men presumably MATERIALLY affected her will's dispositions. In contrast, though the testator of Breeden was definitely suffering from insane delusions at the time, those delusions did NOT materially affect the dispositions he made. Thus, that will was upheld as valid.

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In re Honigman's Will

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If a testator has been shown to have be experiencing an insane delusion, the will's proponent has the burden of showing any unnatural dispositions were not the result of the delusion.

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Undue Influence

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Undue influence is meant to protect testator's who are weak or infirm in someway, thus being vulnerable to "undue influence." A transfer is made under undue influence when "the influence overcomes a donor's free will and causes the donor to make a transfer that the donor would NOT have otherwise made." —the problem is that this is a murky standard and opens the doorway to lots of will contests

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Factors of Undue Influence

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A contester has the burden to show undue influence in the creation of the will. Contesters typically rely on the follow evidence: (1) donor was *susceptible* (2) wrongdoer had *opportunity* (3) wrongdoer had the *disposition*; and (4) the *result* appears to be from undue influence.

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Presumption of Undue Influence

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The *majority* of jurisdictions allow a presumption of undue influence IF the contester shows: (1) the existence of a *confidential relationship* between the influencer and testator; and (2) a *suspicious circumstance* was present.

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Estate of Lakatosh

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*Facts*: Roger became close with old lady Testatrix, who left him all her property by will. Suspiciously, Roger's attorney cousin declared her competent and executed the will, yet later attempted to have her declared incompetent. By the time of her death, Testatrix was living in squalor because Roger had taken so much of her money. *Issue:* Was there undue influence? *Held:* Yes, there was undue influence. *Discussion:* To shift the burden of proof in an undue influence case, the contester must show by *clear and convincing evidence* that: (1) there was a confidential relationship between the influencer and the testator; (2) the influencer received the bulk of the estate; and (3) the testator's intellect was weakened. A confidential relationship exists "whenever one has a special confidence in the other, such that the parties don't deal with each other on equal terms." This relationship may be due to dominance by one party, or weakness or justifiable trust on the other's part. Here, the three factors are clearly met: (1) Roger's power-of-attorney showed a *clearly* confidential relationship; (2) Roger received the bulk of Testatrix's estate; and (3) an audiotape of the will's execution shows Rose was easily distracted and mentally weak; moreover, her living in filth was further indication of her weakened mind. Thus, the burden of proof shifted from the contester to Roger, who could not meet his burden . . . And the will was invalidated.

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Confidential Relationships

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Three types of confidential relationships: *(1) Fiduciary*—when there is a fiduciary relationship, such as power of attorney. *(2) Reliant*—question of fact. Contester must show a relationship of trust, where the testator was guided by judgment or advice of the undue influencer. —financial client to adviser, doctor to patient, etc. *(3) Dominant-subservient*—question of fact. Contester must show donor was subservient to wrongdoer's dominant influence. —caregiver to ill or feeble donor; adult child to ill or feeble parent

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Confidential Relationship Factors

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(1) whether one party has to *take care* of the other; (2) whether the parties have a *close relationship*; (3) whether one party provides *medical care and transportation* to the other; (4) whether the parties maintain *joint accounts*; (5) whether one party is *physically or mentally weak*; (6) whether one party is of *advanced age or poor health*; and (7) whether one party has *power of attorney* over the other

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Suspicious Circumstances in Undue Influence

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(1) Extent to which the donor was *weakened condition*; (2) Extent to which the *influencer helped prepare the will*; (3) Whether the donor received *advice from an attorney* or other disinterested adviser; (4) Whether the will was prepared in *secrecy or haste*; (5) Whether the *donor's attitude changed toward others* because of his relationship with the influencer; (6) Whether there is *discrepancy* between new and old wills; (7) Whether there is a *continuity of purpose indicating a settled intent* in disposition in previous wills; (8) Whether the disposition would be regarded as *unjust, unnatural, or unfair* by a reasonable person —e.g., a family member was abruptly disinherited without apparent reason

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In re Estate of Reid

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*Facts:* A young man starts sleeping with the old Testatrix. He tries to get adopted, then helps her compose a holographic will. Moroever, Testatrix did not receive independent counsel—the same firm represented them both. After he graduated law school, the young man was both her attorney and her fiduciary. Eventually, Testatrix did adopt the young man. *Issue:* Was there undue influence in the creation of the will? *Held:* Yes, there was undue influence. *Discussion:* A higher court will only overturn a trial court's decision of undue influence if there was "clear error." The trial court had found a confidential relationship, which creates the *presumption* of undue influence with inter vivos gifts. To overcome the shifted burden, the proponent of the will must show: (1) the influencer's good faith; —who initiated the gift, who provided consideration, was it in secret? —Here, the young man did everything in secret (2) donor had full knowledge and understood the consequences of her actions; (3) donor gave independent consent and action. Secondly, heirs of a decedent who adopted an adult *do have standing* to attack the adoption.

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Intent v. Capacity

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One needs to be careful to prevent the Court from finding lack of capacity when there was simply an changed intent.

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Presumption without Suspicious Circumstances

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The Rest.3d only shifts the burden of proof from the contester to the proponent of a will if there were suspicious circumstances If there are no suspicious circumstances, the contester of a will retains the burden of proof

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Punitive Damages in Undue Influence

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Punitive damages are available when "clear and convincing" evidence shows that the influencer's actions were motivated by malice or "wanton and willful" disregard of persons who might be harmed.

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Lipper v. Weslow

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*Facts:* Testatrix's will disinherits her deceased son in favor of her remaining two children, meaning her grandchildren by the deceased son will not inherit by representation. The grandchildren challenged the will. *Issue:* Was there undue influence? *Held:* No, there was no undue influence. *Discussion:* The test for undue influence: *Did an influencer exert control over the testator's mind so as to convince her to dispose of her property in a way she would not have otherwise done?* Here, there were lots of red flags to raise suspicion. First, her surviving son was a lawyer and prepared the will. Second, the surviving son received a larger share than he would have otherwise received. Third, the Testatrix did not discuss the will at all when she executed it. But in the end, the court decides there was no undue influence for equally persuasive reasons. First, the Testatrix seemed to be of sound physical and mental health at the will's execution. Second, multiple witnesses claimed that she spoke of disinheriting that side of the family even before the will was drafted. Third, the will explained at length why she chose to disinherit them. *So undue influence is more a balancing test than anything*

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No-Contest Clauses

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When a contester challenges the will, he loses his inheritance if his challenge is unsuccessful. The majority of states and the UPC enforce these clauses *only if* the unsuccessful contestant LACKED PROBABLE CAUSE for bringing the contest. The minority of states either: (1) do not enforce them at all; or (2) enforce them unless the contestant alleges forgery or subsequent revocation.

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Bequests to a Drafting Lawyer

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Courts presume undue influence when the drafting lawyer receives a bequest from a will —unless the lawyer is closely related to the testator. —Remember: Only "clear and convincing" evidence can serve to rebut a presumption of undue influence.

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Drafting Lawyers and Professional Conduct

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The Model Rules of Professional Conduct *FORBID* a lawyer from drafting a client's will in which he receives a bequest —unless he is related to the client Similarly, a conflict of interest might be present when a lawyer drafts the instrument that appoints himself as a fiduciary

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Living Probate

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A minority of states allow testators to institute adversary proceedings to have their wills declared valid during their lives

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Wills Act Formalities

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The testator is always the best person to authenticate a will. But by the time the will is an issue, the testator is dead. The Wills Act's formalities get around the authenticity problem

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The Core Formalities

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(1) A writing (2) Signature —the Wills Act requires "subscription," or signing the will at the *end* of the will —the UPC allows a signature anywhere (3) Attestation —the Wills Act requires 2 witnesses, but they must see each other sign at the same time —the UPC requires 2 witnesses *or* notarization within a reasonable time after execution

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Functions of the Formalities

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Formalities enable a court to decide whether a will is authentic without the benefit of the testator's live testimony. *(1) Evidentiary*—formalities offer courts proof that the will is real and accurate; *(2) Ritual* (cautionary)—impress upon the testator the significance of his actions so that the courts can find the will was intended to be operative *(3) Protective*—protects the testator from undue influence at the time of execution *(4) Channeling*—formalities help standardize a will's format, making it easier for the courts to adjudicate on its validity quickly and cheaply

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Strict Compliance Rule

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Any wills not meeting the formalities are conclusively presumed to be *invalid*

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In re Groffman

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*Facts:* Testator asked two of his friends to witness his will. Two of them walked to the dining room and signed, while the third lagged behind and did not see the other two signing. The first witness signed and left the room; then the second witness came in. *Issue:* Was the will properly witnessed? *Held:* No, the will was not properly witnessed. *Discussion:* Even though the court acknowledged that the will was definitely what the testator wanted, it invalidated the will because the witnessing requirement was not strictly met. —the witnesses needed to see the testator sign the will *at the same time.* —they did not need to see each other sign, though.

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Attestation Clause

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No state requires the use of an attestation clause, but the use of such a clause creates a rebuttable presumption of due execution —the UPC allows the will to be admitted to probate because of the attestation clause, despite a witness's contrary testimony

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Stevens v. Casdorph

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*Facts:* Testator went to the bank to have a notary public witness the will. After he signed, she took it out of his presence for other bank employees to witness. Disinherited family members challenged the will. *Issue:* Was the will invalid because the witnesses did not see the testator sign the will? *Held:* Yes, it was invalid because the witnesses did not see the testator sign the will. *Discussion:* Even though the will was the Testator's true intent, the court invalidated it because the witnessing requirement were not strictly met: he needed to acknowledge the will in front of the witnesses *at the same time*, not just in front of one witness. —this was a result of the language of the statute. *SO PAY ATTENTION TO THE STATUTORY LANGUAGE!* It will determine how one must sign and have the will attested to.

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The Meaning of "Presence"

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A testator must sign in the presence of the witnesses. The witnesses must sign in the presence of the testator and in *each other's* presence. But what does presence actually mean? *(1) Line of Sight Test*—followed by a minority of states. Requires the testator actually be able to SEE the witnesses sign —if the testator is blind, he must be in a position where he COULD see them *(2) Conscious Presence*—the majority of states follow this test. The witness is in the conscious presence of the testator if the testator, through his senses or general consciousness, comprehends the witness is signing the paper *(3) UPC Test*—the UPC does not require witnesses to sign in the testator's presence

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Signature Requirement

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All states and the UPC require the testator to sign the will because it provides evidence of finality and genuineness. *Signature by Mark with Assistance or by Another*— Although full signatures are preferable (and almost always satisfy the signature requirement), marks, abbreviations, etc. are still sufficient. —as long as the other elements are satisfied, you can even use a computer to make a mark. *Order of Signing*—In general, testators must sign BEFORE the witnesses attest. *Delayed Attestation*—the UPC allows witnesses to sign within a reasonable time after the testator signs. —UPC says it could even extend to after the testator's death.

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Meaning of "Writing"

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Does not have to be written on paper. The only requirement is that it be a reasonably permanent record of the markings that make up the will. Not all courts allow video wills. Some states allow electronic wills but require strict adherence to certain requirements —Probably doesn't satisfy the writing and signature requirements of the ordinary Wills Act, so it wouldn't be admissible under strict compliance —But electronic wills are probably allowed into probate under substantial compliance or harmless error

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Estate of Morea

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*Facts:* Two of testator's three witnesses are beneficiaries of the will. *Issue: Does this mean that one of the beneficiary-witnesses is disinherited? *Held:* No. *Discussion:* The relevant statute required at least 2 witnesses receive nothing to be valid. Yet, because the son (also a witness and beneficiary) received less of an inheritance under the will than under intestacy, the court does not enforce the statute. REMEMBER: *READ THE STATUTE THOROUGHLY!* —the most common mistake on the exam is to declare the ENTIRE will void because of a purging statute. But that's not how it works. —A purging statute only invalidates a bequest to an interested party-witness. It does not invalidate the entire will.

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Disqualification and Purging Statutes

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Under a purging statute, a beneficiary-witness (an interested witness) *may* attest to the will —but any bequest to such an interested witness is void Only a minority of states have purging statutes —But they usually only purge the *excess* of what the interested witness would have received from intestacy. Only a TRUE minority of states purge the ENTIRE bequest *If a sufficient number of disinterested witnesses attest to the will's validity, the interested witness is SUPERNUMERARY and may take the full devise*

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Interested Witnesses and Purging Statutes under the UPC

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The UPC does not require disinterested witnesses at all —Only a minority of states follow the UPC's viewpoint on this —Another minority adopt a middle-ground: a devise to an interested witness triggers a rebuttable presumption of undue influence, duress, or fraud.

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Model Execution Ceremony

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The *majority* of states have a statute that recognizes the validity of a will executed with the formalities required either by the state where the testator was domiciled at death, the state where the will was executed, or by the state where the testator was domiciled when the will was executed.

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Self-Proving Affidavit

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A self-proving affidavit is a statement in the will that all the requirements of due execution have been met. —it's very useful when all the attesting witnesses have died before a will contest —the *majority* of states recognize self-proving affidavits

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UPC and Self-Proving Affidavits

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The UPC allows for two kinds of self-proving affidavits: *(1) One-step self-proving affidavit* —combines an attestation clause and the self-proving affidavit —testator and witnesses sign only once *(2) Two-step self-proving affidavit* —a separate self-proving affidavit must be affixed to an already-signed and attested-to will —the affidavit must be signed by the testator and witnesses in front of a notary *after* the testator and the witnesses have already duly executed the will Majority of states use a two-step self-proving affidavit

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UPC and contesting self-proved affidavits

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Under the UPC, you can't contest a will's due execution if it has a self-proving affidavit —UNLESS there is evidence of fraud or forgery of the affidavit You can still contest the will on the grounds of undue influence or lack of capacity

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Safeguarding a Will

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Many states and the UPC require a testator deposit his will with the clerk of a probate court before death

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In re Pavlinko's Estate

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*Facts:* A husband and wife mistakenly sign each other's wills. The wife dies, but no will is submitted to probate. Later on, when the husband dies, the wife's brother tries to submit the wife's will (but signed by the husband) to probate because it left him everything. *Issue:* Was the wife's will, signed by the husband, a valid will for the husband? *Held:* No, it was not. *Discussion:* The signature on the will was invalid because it was not meant for that specific will; thus, the will itself was invalid for not satisfying the core formalities. —the testator's signature must be on the will that matches his testamentary intent. To allow the will to enter probate would undermine the Statute of Wills *But compare with In re Snide*

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In re Snide

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*Facts:* Husband and wife accidentally sign each other's wills. *Issue:* Were the wills valid? *Held:* Yes, they were valid. *Discussion:* The will was admitted to probate because the two wills had identical bequests and were executed at the same time, with husband and wife in each other's presence. Clearly, the husband had intended to execute the will in question and, given the circumstances, there was no danger of fraud. *So in a case like this, make sure to check for suspicious circumstances indicating fraud*

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Curing Defective Execution

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There are two different ways of dealing with the switched wills problem: *(1)* Probate the decedent's unsigned will (i.e., the one signed by his partner) —breaks strict compliance. Instead, doing this would utilize "substantial compliance" or "harmless error" *(2)* Probate the will that was actually signed. —substituting the names in the text (i.e., switching the testator's name for the decedent's name, but keeping the bequests)

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Substantial Compliance and the "Switched Wills" Problem

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The key question is whether the manner in which the instrument was executed satisfies the *purpose* of the Wills Act's formalities. Must determine: (1) Does the document express the decedent's intent? (2) Does it sufficiently approximate with Wills Act formalities to enable the Court to decide it serves the purpose of the Wills Act? *A will not strictly satisfying the Wills Act formalities has a rebuttable presumption of invalidity*

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Harmless Error v. Substantial Compliance

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Harmless error allows a court to probate a will it was satisfied that the deceased intended to be his will —i.e., harmless error allows a court to *excuse noncompliance* In contrast, courts *deem noncompliant wills to be compliant* through substantial compliance. —so, they create the fiction that the will is compliant Harmless error does NOT extend to oral wills—forgetting to put your will onto paper is NOT harmless. —not signing the will, however, is middle-ground: an unsigned will is presumptively invalid under harmless error, but that can be rebutted Under harmless error, the witnessing requirement is the least strictly enforced

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The Harmless Error Rule

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UPC § 2-503 codifies the harmless error rule. —*Only 10 states have adopted the harmless error rule* Requires "clear and convincing" evidence that the decedent intended the document or writing to be: *(1)* his will; *(2)* a partial or complete revocation of the will; *(3)* an addition to or an alteration of the will; *or* *(4)* a partial or complete revival of a formerly revoked will or of a formerly revoked portion of the will Places the *burden of proof on the proponent of a defective will* to show, by clear and convincing evidence, that the document was intended to be the will Compare this with Kuralt —In Kuralt, the court watered down the standard by looking at whether Kuralt generally desired to bequeath the Montana property, *not* whether his letter was actually meant to be a will —so the court got it wrong

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In re Estate of Hall

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*Facts:* Testator made a will. Thirteen years later, he gave his attorney a draft of a joint will, in which he disposed of his property with his wife. He wanted the draft to be valid until the final version was finished, so he notarized it, but no witnesses were present. When the Testator died, a daughter from a previous marriage contested the will. *Issue:* Was the will valid despite the lack of witnesses? *Held:* Yes, it was. *Discussion:* The court uses "harmless error" to decide the joint document was valid because the Testator had *intended* for the *document* to be his will. The fact that the will itself invalidated previous wills and the Testator told his wife to destroy previous versions acted as "clear and convincing" evidence that the joint will was the valid expression of the Testator's intent.

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Clear and convincing evidence

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Lack of a signature is NOT harmless error. The will probably won't be probated in that instance without some particularly strong evidence of validity.

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Harmless Error and the Formalities

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There must *always* be a written document. Harmless error can never be used to excuse lack of a written instrument. Unsigned wills raise serious doubts—there must be strong evidence for lack of a signature to be allowed. —often only works in the "switched wills" context Attestation is usually the only excused formality

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Notarized Wills

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The UPC allows the option between two witnesses or notarization. *Only Colorado and North Dakota have adopted this provision* —i.e., the *majority* of states require attestation by at least 2 witnesses

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Holographic Wills

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A slight majority of states allow holographic wills. Holographic wills must be handwritten and signed by the testator. —in almost all states, a testator may sign anywhere on the document —if the signature doesn't appear at the end, there could be doubt as to whether it was meant to be a validating signature.

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Holographic Wills and the Extent of the Testators Handwriting

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A minority of states require the entire holographic will to be in the testator's handwriting Another minority requires the "material provisions" of a will are in the testator's handwriting —*Surplusage Theory*—the handwritten portions of a will should be given effect if they make sense without the text not handwritten by the testator The *majority* requires only the "material portions" of a will be handwritten —immaterial parts of the disposition are not required to be in the testator's handwriting

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In re Estate of Kuralt

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*Facts:* Testator executed a holographic will to convey his home in Montana to his mistress. Afterward, he executed a formal will that did not mention her or the property. Years later, he wrote her a letter indicating that he wished to leave her his home in Montana. She tried to probate the letter. *Issue:* Was the letter valid as a holographic will? *Held:* Yes, it was valid as a holographic will. *Discussion:* The court looks at all the circumstances (as it was allowed to do under the 1990 UPC) and decides the letter was truly and expression of the Testator's intent. The appellate court reverses the trial court and holds it was a will based on: (1) Kuralt and his mistress's close relationship; (2) the fact he already bequeathed 20 acres; and (3) that he was trying to hide the affair from his wife. *The court got it wrong because the letter was an expression of FUTURE intent* —it was not an intent to make that letter the operative will, which is what harmless error requires

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Revocation of Wills

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Wills are meant to be *ambulatory*, meaning "subject to modification or revocation by the testator at any time prior to death."

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Revocation by Writing or Physical Act

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All states permit revocation by: (1) a subsequent writing executed with Wills Act formalities; and (2) a physical act destroying, obliterating, or burning the will. —orally revoking the will isn't enough. Unless the will is revoked according to the statute, it must be admitted to probate, even if the testator orally revoked it The majority of states allow revocation by physical act even when the act does not touch any of the words of the will

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Express and Implied Revocatory Writings

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*Express revocation*—specifically revokes all prior wills *Implied revocation*—contrary bequests in later wills can revoke earlier dispositions —must decide whether the testator intended the subsequent will to replace the prior will in whole or in part, or simply to supplement it *Complete disposition*—subsequent wills that do not expressly revoke prior wills, but make a complete disposition of the testator's estate, presumptively revoke the entire will by inconsistency —the modern view adopted by the UPC If the new will does not make a complete disposition of the testator's estate, it is instead viewed as a *codicil*, and any property not disposed of under it is disposed of in accordance with the prior will

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Thompson v. Royall

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*Facts* Instead of destroying her will, Testatrix decided to keep the will as "memo" and signed a statement on the back, where none of the will's text was written, that revoked it. *Issue:* Was the will properly revoked? *Held:* No, it was not properly revoked. *Discussion*: The state's statute required: (1) physical act with intent to revoke; or (2) a formally attested to revocation. Here, although there was a written revocation, there was no signed attestation by witnesses . . . Had she written the revocation clause herself (the attorney wrote the actual revocation clause in his own handwriting), it might have been accepted as a holographic revocation. Unfortunately, it was not. Thus, the only option left was revocation by a physical act . . . In order to have been a valid physical revocation, however, the text of the will must have been defaced in some way (i.e., the physical act—the revocation clause—must have come into contact with the original words in some way). Otherwise, the revocation statement must be treated as a similar writing on a separate piece of paper. *Keep in mind, even though the court knew the testatrix had intended to revoke the will, it does not honor her intent because it would undermine the Wills Act and lead to a slippery slope. *The UPC gets rid of Thompson's rule and does not require the physical act touch the actual words of the will*

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In re Estate of Stoker

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*Facts:* Testator made a will. After his wife cheated on him, he urinated on and burned a COPY of the will. He also made a new, handwritten will (that was written like a letter) that expressly revoked the trust in the earlier will. The problem was that it was not attested to by witnesses signatures, and the will had a lot of ambiguities. Alone, the letter/will probably would not have revoked the will. Two witnesses, however, did testify they saw the Testator sign it. *Issue:* Was the letter a valid holographic will? *Held:* Yes, it was a valid holographic will. *Discussion:* The relevant statute adopted the harmless error rule, which allowed a noncompliant will's lack of formalities to be excused. Here, the intent was clear—the letter explicitly revoked the former will. Plus, the court was right to admit extrinsic evidence of testamentary intent; i.e., the witnesses' testimony in court. A will may be revoked where the testator executes a subsequent inconsistent will or where he or she burns or destroys the will. The problem here was the Testator burned a COPY, and not the original. *The main difference between this case and Thompson was that the new statute adopted the "harmless error" rule* The revocation by physical act was not successful. The original will was only revoked because harmless error excused the letter/will's lack of formalities

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Revocation by Physical Act on a Copy?

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Performing a revocatory act on another document or on an unexecuted copy of the will is insufficient to revoke the will. —if the intent to revoke is proved by "clear and convincing" evidence, the failure to destroy the original copy can be excused . . . but *only* if the jurisdiction has adopted the *harmless error rule* It's uncertain whether the harmless error rule applies to a botched revocation by physical act —Rest.3d supports harmless error for botched physical revocation, while the UPC is unclear The UPC *does* support harmless error for revocation by writing

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Harrison v. Bird

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*Facts:* Testatrix calls her lawyer, directing him to destroy her will. The lawyer rips the will to pieces and mails her the remains. At her death, the letter confirming the destruction, but not the pieces of the will, is found. *Issue:* Was the revocation valid? *Held:* Yes, it was valid. *Discussion:* If a testator possess his will, but the will cannot be found after his death, it is presumed that he destroyed it. Furthermore, if the testator destroys a duplicate, then a presumption arises that he revoked the original and all other duplicates. These presumptions are rebuttable, however. In this instance, Alabama statute required the destroying individual to *be in the presence of the testator*. Because the lawyer was not in the presence of the Testatrix but on the phone, the will was not revoked when it was destroyed. The court permitted revocation because of the presumption that the *Testatrix* had destroyed the will. This presumption arose because the will could not be found at her home. Thus, it was presumed that SHE destroyed the will.

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Lost Wills and the Presumption of Revocation

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The most recent rend is to only require a "preponderance of the evidence" to rebut the presumption of revocation when the will, last in the testator's possession, cannot be found. If a lost or mutilated will was last known to have been in the possession of someone other than the testator, there is no presumption of revocation.

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Partial Revocation by Physical Act

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The majority of states and the UPC allow *partial revocation by physical act*. —a small minority of states only allow revocation by writing, and not by physical act Rest.3d endorses the majority view. It disapproves of any distinction between a complete devise and rearranging shares within a single devise, or otherwise rewriting the terms of the will by deleting selected words.

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Dependent Relative Revocation

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If a testator revokes his will based upon a mistaken assumption of law or fact, the revocation is ineffective *if the testator would not have revoked the will but for that mistaken belief.* DRR is *not* about the intent to revoke—it is a "mistake correction" doctrine

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LaCroix v. Senecal

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*Facts:* Testatrix properly executed a will in which she gave half her property to her nephew and the other half to her friend. She then revised it under a codicil. The codicil left the will unaltered, but her friend's husband was a witness. Thus, the bequest to her friend was void under the codicil because of the purging statute (but the whole will, outside of this particular bequest, was STILL VALID). Testatrix's niece, who was the next heir at law and not supposed to have anything, sued to take the bequest. *Issue:* Was the original bequest to the friend in the will still valid? *Held:* Yes, the bequest to the friend was still valid. *Discussion:* Dependent relative revocation holds that "where the intention to revoke is conditional, and the condition is not fulfilled, the revocation is not effective. Here, the Testatrix revoked the portion of the will granting the friend a bequest under the mistaken impression that the codicil would still convey a bequest to her friend. Because she would not have made the revocation but for this mistaken belief, the provision granting the friend a bequest was still valid. *When a testator repeats the same plan from an old will in a new one, revocation of the old one by the new depends upon the validity of the new*

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Rest.3d on Dependent Relative Revocation

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A partial or complete revocation of a will is presumptively ineffective if the testator made the revocation: (1) in attempt to achieve an objective that fails under the applicable law; or (2) because of a false assumption of law, or because of a false belief about an objective fact, that is either recited in the revoking instrument or established by "clear and convincing" evidence The presumption is rebutted if allowing the revocation to remain in effect would be more consistent with the testator's probable intention

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Limitations on Dependent Relative Revocation

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DRR applies only: (1) if there is an alternative plan of disposition that fails; or (2) if the mistake is recited in the terms of the revoking instrument or established by clear and convincing evidence. *In other words, courts apply DRR very narrowly*

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In re Estate of Alburn

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*Facts:* Testatrix wrote a valid will; she expressly revoked it in a later will. Eventually, she rips up the later will (revoking it by a physical act) in hopes of reviving the first will. The trial court used DRR to hold the later will was still valid—the testatrix's belief that destroying the later will would revive the first was mistaken. *Issue:* Was the previous will valid? *Held:* Yes, the previous will was valid under DRR. *Discussion:* At the time this case was decided, Wisconsin didn't have a statute that provided for the revival of revoked wills; it actually adhered to the *no-revival* rule. So Testatrix could not revive her first will by revoking the second . . . Meaning, but for the court's actions, she would have been intestate. Luckily, the court uses DRR to revive the first will. First, the court looks at the evidence surrounding the revocation and drafting of each will, especially the dispositions made within each one. The main beneficiaries of both wills were the same . . . Second, it compared these dispositions to what would happen under intestacy. *Essentially, the court decided whether the first will or intestacy would better effectuate the testator's intent.* The court decides the testimony stating the Testatrix's desire to use the previous will, the inference that she didn't want to die intestate, and the fact that she took no steps to draft a new will indicated that she mistakenly believed the previous will would be valid with the destruction of the new will. *The main point is that DRR should not be applied indiscriminately in every case . . . The court's most important goal should be to effectuate the testator's intent*

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Revival

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Revival automatically revalidates an expressly revoked will if the instrument that revoked it is itself revoked. The majority of states hold that a prior will is automatically revived if the testator intends it —depends upon extrinsic evidence surrounding the will —UPC takes this view Only a *minority* of states hold to the *no-revival rule*: a revoked will cannot be revived without re-execution according to testamentary formalities

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Revival under the UPC

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Three situations: (1) if a prior will is WHOLLY revoked by a subsequent will, then it does NOT get revived just because the subsequent will gets revoked —the surrounding circumstances need to show the testator INTENDED the revocation of the subsequent will to revive the first —thus, the presumption is against revival (2) if a prior will is PARTIALLY revoked by a subsequent will, then it DOES get revived if the testator revokes the subsequent will —to prevent revival, the surrounding circumstances need to show the testator did NOT intend to revive the prior will —thus, in this situation, the presumption is FOR revival (3) if a prior will is revoked, either in whole or in part, by a subsequent will . . . which is ITSELF revoked by another, even later will . . . the first will remains revoked. —unless it appears from the terms of the last will that the testator intended the previous will to take effect

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Revocation-on-Divorce

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A majority of states have statutes that revoke any provision to a decedent's ex-spouse after divorce. —a minority of states provide that revocation occurs only if the divorce is accompanied by a property settlement. The UPC follows the majority

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Premarital Wills

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A minority of states automatically revoke premarital wills upon marriage. In the majority of states, a premarital will is valid, but a surviving pretermitted spouse is entitled to an intestate share —UNLESS it appears from the will that the omission was intentional OR the pretermitted spouse is provided for in the will or by will substitute UPC revokes the will to the extent of the pretermitted spouse's intestate share. —if the spouse can't take an intestate share because of the exceptions applies, an elective or forced share of the decedent's spouse's state might be available.

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Birth of Children and Premarital Wills

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The minority of states provide that the birth of a child revokes a premarital will. This view is rapidly disappearing, though. The majority of states have *pretermitted child statutes*, which give a child born after the execution of a parent's will and not mentioned in the will a share of the parent's estate —revokes the parent's will to the extent of the child's intestate share under the statute UPC follows the majority with a pretermitted child statute *So really, the choice between the majority and the minority is whether to revoke the will entirely. The minority revokes the entire will when there is a pretermitted child, but the majority only revokes it insofar as needed to supply a pretermitted child with his intestate share*

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Integration

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All papers present at the time of execution that are intended to be part of the will are *integrated* (or treated as part) of the will.

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In re Estate of Rigsby

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*Facts:* A widower found his wife's two-page holographic will. The first page was signed and contained some arrangements. The second page was not signed, but it linked certain individuals with certain pieces of property. Some of these bequests conflicted with the first page. Neither page referenced the other at all. So, aside from being found together, nothing else indicated they were to be part of the same will. The court did not allow the second page into probate. *Issue:* Should the second page have been probated? *Held:* No, the trial court correctly denied the second page admission to probate *Discussion:* Where an instrument consists of more than one page, it must be *clearly apparent* the testator intended that the pages should together constitute a will. Here, the second page wasn't signed and even contradicted the first page. Neither page referenced the other. That was enough to keep the second page out and the first, signed page in.

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Republication by Codicil

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Publication of a will occurs when a testator conveys to the witnesses, by words or by action, that a document is the testator's will. Under the doctrine of *republication by codicil*, a validly executed will is treated as re-executed (i.e., republished) as of the date of the codicil, regardless of whether or not the codicil expressly republishes the prior will —UNLESS republication would be against the testator's intent, given the circumstances Ex.: A testator revokes his first will by a second will. He then executes a codicil to the first will. If the first will is republished, the second will is revoked by *implication* ("squeezed out") Republication by codicil is applied *only* if updating the will carries out the testator's intent *If a testator scratches out or changes things in his own handwriting, as well as acknowledges it through a brief note in his writing with a signature and date, it counts as a republication through a holographic codicil* —e.g., Estate of Nielson. In Nielson, the testator drew lines through dispositive provisions of his typewritten will and wrote in handwriting different bequests. He wrote a note that said "Revised by [testator's name]" and signed and dated it. —the court held the will was republished by a holographic codicil

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Republication by Codicil Example

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Pretend you are in a jurisdiction with a purging statute. A makes will and makes a bequest to B, with B and C as witnesses. A then executes a codicil giving $500 to C, with C and D as witnesses. Both the bequest to B and the bequest to C are purged. BUT, if A then executes a *second* codicil that gives D $500 and is witnessed by both E and F, then the will and the first codicil are *republished* with disinterested witnesses. Thus, none of the bequests are purged.

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Incorporation by Reference

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A writing that was in existence at the time of the will's execution can be absorbed into the will, even if that writing wasn't present at the execution or itself executed with any formalities at all UPC: A writing can be absorbed if the language of the will: (1) manifests this intent; and (2) describes the writing sufficiently to identify it

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Clark v. Greenhalge

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*Facts:* Testatrix's will bequeathed all her property to her cousin, specifically stating that anything found in her "memorandum" was to be excluded from the will's bequest and disposed of accordingly. Along with the memorandum, there was a notebook full of bequest. The cousin, also the executor, refused to give on of the beneficiaries the painting given to her by the notebook. This beneficiary contested. The probate judge included the memorandum in probate. *Issue:* Did the trial judge correctly include the notebook/memorandum? *Held:* Yes, they were properly included. *Discussion:* An unattested document may be incorporated by reference if: (1) it was in existence at the time of the execution of the will; and (2) it was identified by clear and satisfactory proof as the paper referred to in the will. Here, the memorandum was validly included by these criteria. The notebook of bequests, however, was neither referenced by the will nor created before the will's execution. Yet the court desires to punish the executor for bad behavior, so it displays *"extra-stretchy compliance."* First, the court declares the notebook served the function of a memorandum, and therefore can be included as such (despite the fact that it doesn't fit the description). Second, it uses two subsequently executed codicils to republish the portions of the will referring to the memorandum. Thus, the notebook itself became the memorandum and was incorporated by reference through the codicils.

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Incorporation by Reference and Other Documents

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Wills that reference other documents can sometimes get around tricky legal rules about bequests. See Estate of Dimmitt, (including by reference a deed to property that was not properly delivered, thus validating the property transfer).

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Incorporating Printed Text into a Holographic Will

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Authorities contradict each other over whether a testator can reference a typed paper in his holographic will and have the typed page be valid. Johnson v. Johnson, (holding the testator's signed, holographic codicil at the end of his typed will incorporated by reference and republished the will). Berry v. Trible, (refusing to probate a typed will that was holographically altered because the typed text and handwriting were interwoven "both physically and in sequence of thought").

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Plain Meaning and No Reformation rules

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A majority of states follow the *plain meaning rule* and the *no reformation rule* *Plain Meaning* rule—extrinsic evidence may only be admitted to resolve ambiguities, but the plain meaning of the words of a will can't be changed —doesn't matter if the testator actually intended another meaning *No reformation* rule—courts may not reform a will to correct a mistaken term to reflect what the testator intended the will to say

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Mahoney v.Grainger

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*Facts:* Testatrix wanted to leave her property to her aunt and her 25 cousins. At the time, her aunt was her only living "heir at law." Testatrix's lawyer drafted a document leaving her property equally to "all her heirs at law," intending for her cousins to be included. The court took this to mean only the aunt. A few of the cousins contested this. *Issue:* Should the court interpret the will to include the cousins? *Held:* No, it should not. *Discussion:* Under the plain meaning/no reformation dichotomy, a court must interpret the will using only the plain, ordinary meaning of the language without any extrinsic evidence. Here, "heir at law" is a common, clear term without any ambiguity—it could only be the aunt. Even though the Testatrix had clearly meant all her cousins, the court would not accept any extrinsic evidence of her intent and went by the plain meaning of the language. Extrinsic evidence is ONLY allowed when the plain language of the will is *ambiguous*. Here, there was no ambiguity, so the disposition stood as it was.

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Testamentary Intent

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Extrinsic evidence may be used to show a lack of testamentary intent no matter what —see Fleming v. Morrison, (denying probate to a will because the drafting lawyer testified the testator only wrote it to get its beneficiary to have sex with him).

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In re Estate of Cole

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*Facts:* Testatrix's will left the beneficiary "two hundred thousand dollars ($25,000)." Notice the discrepancy. When the court decided to consider extrinsic evidence, the beneficiary contested the decision. *Issue:* Was the trial court allowed to consider extrinsic evidence of the Testatrix's intent concerning how much was to be left? *Held:* Yes, the trial court could consider extrinsic evidence. *Discussion:* The court in this case rejects the difference between patent and latent ambiguities, opening the door to extrinsic evidence. At the same time, the court desires to limit its entrance: (1) when an ambiguity pops up, courts should first use the surrounding circumstances to determine the testator's intent; and (2) if the ambiguity remains, *only then* should courts consider extrinsic evidence of the testator's intent. —the evidence was only allowed in to clear up what the Testatrix meant by the *actual text* of the will

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Patent Ambiguity

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Patent ambiguities are evident from the face of the will. Under common law, extrinsic evidence is not allowed to clear up a patent ambiguity. *Most courts, however, tend to allow extrinsic evidence in to clear these problems up*

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Latent Ambiguities

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Latent Ambiguities only come to light when the terms of the will are applied to the facts. Usually takes one of two forms: *(1) Equivocation*—a description for which two or more persons or things fit exactly *(2)* a description for which NO person or thing fits exactly, but two or more things fit partially The majority of states allow extrinsic evidence to resolve latent ambiguities

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Personal Usage

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Courts allow extrinsic evidence to prove what a term meant when the testator used the term idiosyncratically

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Collapsing the Distinction between Patent and Latent Ambiguities

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Whether an ambiguity is latent or patent is often a matter of opinion —Thus, modern courts increasingly allow extrinsic evidence to resolve both The Rest.3d supports this trend Some jurisdictions have altogether abandoned the distinction between latent and patent ambiguities

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Malpractice Liability for Ambiguity

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Lawyers don't have to draft a document without ambiguity because it's nearly impossible to do so

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No Reformation Rule benefits

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The *no reformation* rule protects the court against mistakenly finding an error within the will. —in reality, courts often use the extrinsic evidence rule to correct a will to reflect the testator's true intent, even though they are allegedly bound by the no reformation rule

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Arnheiter v. Arnheiter

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*Facts:* Testatrix's will stated that her house at 304 Harrison Avenue should be sold, and the profits used to create a trust fund for her nieces. The only real estate the Testatrix owned, though, was actually at 317 Harrison Avenue. . . The executrix petitioned to have the court correct this error. *Issue:* Was the court able to correct this obvious mistake, despite the no reformation rule? *Held:* The court may correct the error, but only through rules of construction. *Discussion:* The easy answer cannot be used: the *no reformation* rule actively forbids the court from correcting the text of the will. Thus, it could not simply change 304 to 317. Moreover, without any actual ambiguity in the will, it could not use any extrinsic evidence to determine the Testatrix's intent. The court, however, uses the rules of construction to fix the problem. *"Mere erroneous description does not vitiate* the will." This rule of construction permits a court to discard "less essential particulars," or details of identification. Thus, the *no reformation* rule continued to have effect, but the rules of construction served to allow a "stretchy construction" of that no reformation rule. Here, the court simply *removed* 304 from the will . . . It did *NOT* replace 304 with 317. This only worked because the Testatrix only had one property on Harrison Avenue—had there been more, it would have been equally confusing.

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"Mere Erroneous Description Does Not Vitiate"

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Where a description of a thing or persons consists of several particulars, and all of them do not fit any one person or thing, less essential particulars may be rejected provided the remainder of the description clearly fits.

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In re Gibbs's Estate

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*Facts:* Testatrix left a bequest to "Robert J. Krause of 4708 North 46th Street, Milwaukee." She actually meant to write "Robert W. Krause," who had never lived at that address and was a longtime employee of the Tesatrix. Extrinsic evidence made it obvious the Testatrix had meant the bequest for Robert W. *Issue:* Was the court allowed to use extrinsic evidence to disregard the erroneous portions of the will? *Held:* Yes, the court was allowed to use extrinsic evidence to disregard the will's obvious errors? *Discussion:* Unless ambiguity plagues the will, extrinsic evidence will not be admissible to determine the testator's true intent. With that in mind, courts were traditionally forbidden from reforming wills to fix even obvious mistakes. Yet the court decides that "details of identification," such as middle initials, street addresses, etc. should not be used to frustrate the "clearly demonstrable intent" of the testator. Courts may disregard these details when the proof shows, "to the highest degree of certainty," that the will contains a mistake. *Gibbs isn't really an exception to the no reformation rule. The court gives the rule lip-service while simultaneously ignoring it*

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Openly Reforming Wills for Mistake

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A *minority of states* are willing to openly reform a will for mistake when they have been presented with "clear and convincing" evidence that the will is mistaken. Both the Rest.3d and the 2008 UPC support this

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In re Estate of Herceg

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*Facts:* Testatrix revoked her old will when she created a new one. While her old will had the name of her intended residuary, the new will did not. The drafting lawyer testified that he had simply forgotten to include the residuary clause. None of the heirs at law of the residue contested when the residuary petitioned to have the new will corrected. *Issue:* Was the court able to correct this mistake by openly changing the text of the will? *Held:* Yes, the court was able to openly change the text of the will. *Discussion:* The court goes against the no reformation rule, holding that: (1) missing names of beneficiaries can be supplied by construction or reformation; and (2) extrinsic evidence can be admitted even without ambiguity. The mere fact that the testator executed a will generates a strong presumption against intestacy. The court found by "clear and convincing" evidence that the residuary was intended to receive the residue. Evidence such as: (1) identical residuary clauses in previous wills; (2) the fact that the residuary remained the alternative executrix proved she had not fallen out of favor; and (3) the lawyer's testimony that he forgot the clause

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UPC 2-805, "Reformation to Correct Mistakes"

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The court may reform the terms of a governing instrument, even if unambiguous, to conform the terms to the transferor's intention *if it is proved by clear and convincing evidence* what the transferor's intention was and that the terms of the governing instrument were affected by a mistake of fact or law

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The Contrary View to UPC 2-805

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Strong policy reasons stand against adopting the minority's view that wills can be reformed: *(1)* Violates the Statute of Wills *(2)* Opens the floodgates of litigation *(3)* Leads to confusion in the probate of wills *(4)* Increases the number of groundless will contests

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Inter Vivos Trusts and the UTC

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Reformation has been available to correct mistakes in inter vivos trusts, deeds of gift, and other nonprobate transfers for a long time. Of note is the fact that inter vivos trusts with the same mistakes as a testamentary will can be reformed. UTC § 415, adopted by a bit more than half of states, authorizes reformation for mistakes in a trust, *including* testamentary trusts

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Reformation (and Modification) for Tax Advantages

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Modern courts routinely reform a will or other donative instrument to correct a mistake that would prevent a tax advantage sought by a donor. They will also modify an instrument to achieve a subsequent tax savings that is consistent with the donor's probable intent —UPC § 2-806 and UTC § 416 codify this

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Antilapse Statutes and Lapsed and Void Devises

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If a devisee dies before the testator, the devise fails (i.e., it *lapses*) —the *majority* of states have antilapse statutes

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Antilapse Statutes

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When a beneficiary of a will dies before the testator, antilapse statutes substitute another beneficiary for the gift instead of having it lapse —only applies in certain circumstances

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Common Law and Lapse

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If the will does not provide otherwise and there is no antilapse statute at play, these common law rules apply: (1) If a specific or general devise lapses, it falls into the residue; (2) If the residuary devise lapses, the heirs at law take by intestacy. (3) If a devise is to a class of persons, and one member of the class predeceases the testator, the surviving members of the class equally divide the gift (4) If an intended beneficiary is dead at the time of the will's execution, or the devisee is an entity incapable of taking (such as an animal or inanimate object), the devise is VOID. —the same previous rules apply to VOID devises, as well

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"No Residue of a Residue" Rule

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If only a share of the residue lapses, such as when one of two residuary devisees predeceases the testator, the heirs at law (and not the other residuary devisee) get it by intestacy *Most courts have overturned the "no residue of a residue" rule by statute or judicial decision

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In re Estate of Russell

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*Facts:* Testatrix created a holographic will in which she left the residue of her estate, which was pretty much everything, to "Quinn & Roxy." Quinn was a friend and Roxy was Testatrix's dog. The court decided the entire estate went to Quinn, and the language "& Roxy" simply indicated Quinn was to care for her. Her only heir at law, a niece, contested the will as invalid. She claimed the bequest was meant to be split equally between Quinn and Roxy, which would mean Roxy's share would be void because Roxy was a dog. As a result, the niece would get the dog's portion through intestacy. Quinn offered extrinsic evidence to show that the bequest was meant only for him for the purposes of caring for Roxy. *Issue:* Should Quinn's extrinsic evidence have been excluded? *Held:* Yes, it should have been excluded. *Discussion:* Even under the plain meaning rule, extrinsic evidence is admissible to show: (1) there is a latent ambiguity in the will; and (2) to resolve that latent ambiguity. Thus, the niece was allowed to offer *her* extrinsic evidence to show there was an ambiguity (Roxy's identity) and that Roxy was a dog (resolving the ambiguity). Quinn tried to offer extrinsic evidence that when the testatrix wrote "to Quinn & Roxy," she actually meant "to Quinn *for* Roxy." Unfortunately for Quinn, this was not actually an ambiguity—the meaning of "and" is completely clear and can't be argued. The court moves a *little bit* away from the plain meaning rule by allowing extrinsic evidence to show what a testator meant by a specific word, *but only if that word is reasonably susceptible to 2 or more meanings.* Thus, "and" was not susceptible to 2 or more meanings

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In re Estate of Russell and the No Residue of a Residue Rule

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The court in Russell followed the "no residue of a residue" rule, which meant that Roxy's void devise did not automatically go to Quinn; instead, it went to intestacy. Had the court, like the majority of courts, struck down the rule, Quinn would have received the gift without any problem

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Antilapse Statute

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Antilapse statutes substitute other beneficiaries for a predeceased beneficiary —usually, the predeceased beneficiary's descendants

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UPC 2-605, "Antilapse"

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If a devisee who is a grandparent or a lineal descendant of a grandparent of the testator is dead at the time of the execution of the will, fails to survive the testator, or is treated as if he predeceased the testator, the issue of the deceased devisee who survive the testator by 120 hours take in place of the deceased devisee and if they are all of the same degree of kinship to the devisee they take equally, but if of unequal degree then those of more remote degree take by representation. One who would have been a devisee under a class gift if he had survived the testator is treated as a devisee for purposes of this section whether his death occurred before or after the execution of the will *In other words, the statute only works if the beneficiary is related to the testator by the testator's grandparents.* —If that's the case, then the beneficiary's issue take —but if they are of an equal relationship to the beneficiary, they take equally

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Antilapse Statutes and Presumed Intent

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Antilapse statutes *presume* the *testator* would have *intended* the devise to go to one of the predeceased beneficiary's descendants. E.g., T leaves 1/2 of her residue to A and 1/2 to B. B has a child, C, but dies before T. —under normal common law, the residue goes to intestacy —if the "no residue of a residue" rule does not apply, it all goes to A —If there is an antilapse statute, 1/2 goes to A and 1/2 goes to C

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Scope of Antilapse Statutes

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An antilapse statute applies *only if* the devisee bears the particular relationship to the testator that the statute specifies. —some statutes give the bequest to descendants; others, to parents, grandparents, etc. —*YOU MUST READ THE STATUTE TO BE SURE WHO WILL TAKE IN THE PREDECEASED BENEFICIARY'S PLACE* E.g, the UPC allows lineal descendants of the testator's grandparents' to take. *So if the beneficiary is NOT a relative of the testator, antilapse statutes do not apply BECAUSE the Legislature has presumed that the testator would not make the gift to the beneficiary's descendants in that case*

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Antilapse Statutes and Default Rules

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Testator's can dispose of property contrarily to the statute —e.g., if T grants A and B each a 1/2 interest in her property, she can have either of their shares go to someone not designated by the statute should they predecease her if she wills it Sometimes, it can be unclear whether the language of a will intends a survival disposition contrary to an antilapse statute —E.g., Allen v. Talley, (holding will's language "my living brothers and sisters shall share and share alike" to mean that, should one of the siblings predecease the testator, the remaining siblings would equally split the inheritance). —But see Belardo v. Belardo, (applying the antilapse statute because the will's language "my brothers and sisters shall share and share alike" did not impose the same survival requirement). —In re Estate of Raymond, (holding will's language "to my brothers and sisters that survive me" imposed a condition of survival precluding the antilapse statute). *So if the will's language at all suggests the beneficiary MUST SURVIVE the testator to inherit, the antilapse statutes cannot apply*

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Ruotolo v. Tietjen

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*Facts:* Testator willed property to his stepdaughter with the words "if she survives me." His stepdaughter died before him. The antilapse statute gave any such property to a predeceased beneficiary's children if the will did not provide a "contingency" for the beneficiary's death. *Issue:* Were the words "if she survives me" a contingency? *Held:* No. *Discussion:* The court here adopts the minority view that words of survivorship do not defeat antilapse statutes. The *majority* view is that words of survivorship DO defeat antilapse statutes. The court focuses on whether the testator *intended* to circumvent the antilapse statute. To defeat the antilapse statute, a testator's intention must be shown with "reasonable certainty." Thus, the party seeking to invalidate the statute's application has the burden of showing this intent. I.e., they assume the words of survivorship are boilerplate *The point is that the minority of jurisdictions do NOT allow words of survivorship to defeat antilapse statutes. If they are to do so, the court must receive evidence so as to be "reasonably certain" the testator intended to circumvent the statute.

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Class Gifts

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If a class member predeceases the testator, the surviving members of the class divide the total gift UNLESS an antilapse statute applies. *So antilapse statutes take precedence over class gifts*

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What is a Class Gift?

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A class gift arises if the testator was "group minded." A testator is group-minded if he uses a class label in describing beneficiaries. —e.g., "to A's children" or "to my nieces and nephews." A gift to named beneficiaries who form a natural class may be deemed a class gift IF the court decides the testator would have wanted the survivors to divide the share of a predeceasing beneficiary rather than for it to lapse —i.e., if a testator specifies the individual beneficiaries by name ("to Paul and Mary"), there is a presumption that he did NOT intend a class gift. But, if these beneficiaries happen to form a natural class and the court decides the testator would have preferred the survivors take the remainder, then the court can declare that they take as a class

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Rest.3d on class gifts

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§ 13.1(a)—taking as a group means the identities and shares of the beneficiaries are subject to fluctuation —(b): a class gift is presumed when the disposition refers to the beneficiaries only by terms of the relationship or other group label. This is a rebuttable presumption if the opposition can prove the testator meant for the identities to be fixed. In other words, if the testator did not intend for there to be any new takers, there is no class gift §13.2(a)—no class gift if the identities of the beneficiaries are fixed —(b): to determine whether the identities are fixed: (1) if the terms of the disposition expressly fix the identities, then it is fixed and not a class gift (2) if the beneficiaries are identified by name in any capacity, it is presumed to be fixed. The presumption is rebutted if the language or circumstances establish the testator intended the beneficiaries to take as a class.

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Dawson v. Yucus

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*Facts:* Testatrix received a farm from her late husband's will. She wanted to restore it to his side of the family at her death, so she willed 1/2 of the farm to each of her two nephews. She willed the residue of the estate to two friends. One nephew predeceased her, though, and the friends sued to take that nephew's share, which would have passed into the residue by intestacy. *Issue:* Did the Testatrix intend a class gift, despite the fact that she named names? *Held:* No, she did not intend a class gift. *Discussion:* Because the two nephews are not related to one of Testatrix's grandparents—they are from her husband's side of the family—the antilapse statute did not apply. Although it was clear that Testatrix did NOT intend the gift to lapse, the only way to have saved it would have been to have found a class gift among the nephews . . . but the court does not engage in such a stretchy construction. The court looks at the language of the will to decide whether the bequest was meant to be a class gift. If the language is such that the number of beneficiaries is uncertain, they'll take as a class; but where the number of beneficiaries is certain, and therefore the amount of shares is certain, it is not a class gift. Here, the Testatrix knew how to create a class gift—she created one later on in her will—but did not here. Thus, it is unlikely she meant to do so when she specifically named the nephews as beneficiaries. More importantly, the Testatrix HAD other nephews from her husband's side that she SPECIFICALLY EXCLUDED. Thus, it was not a class gift.

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Sullivan v. Sullivan

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Holding a class gift was created despite the beneficiaries being named, receiving fixed shares, and the fact that other individuals that should have been members of the class were specifically excluded. Sullivan is the ultimate stretchy construction case: the court admits it is defying typical construction rules, but justifies itself by claiming to effectuate the testator's intent.

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Application of Antilapse Statutes to Class Gifts

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Almost all states apply their antilapse statutes to a single-generational class gift, such as to "children" or "siblings" —UPC § 2-605 provides for this —*Policy:* Courts reason a testator would prefer a predeceased beneficiary's share to go to his descendants rather than to the surviving members of the class. A *minority* of states do NOT apply antilapse statutes to predeceased members of a class gift. —i.e., the descendants will not share if the beneficiary died before execution —p. 372, case 10

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Ademption by Extinction

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If the testator no longer owns the property given away in a *specific devise*, the property is said to be *adeemed* (i.e., "taken away") —e.g., T gives Blackacre to A but sells it before she dies Ademption does NOT apply to general, demonstrative, or residuary devises. —A devise is general if a testator intends to confer a general benefit and does NOT intend to give a specific asset —e.g., cash is always a general devise. so if the testator didn't have the cash he willed, other assets would be sold to get the cash because *general devises are never adeemed* A demonstrative devise is a hybrid: it is a general devise payable from a specific source —e.g., "$100,000 to be paid from the sale of my Apple stock" —if the testator didn't have $100,000 of Apple stock, other items would need to be sold to pay it A residuary devise conveys whatever portion of the testator's estate that wasn't effectively given over in other parts of the will

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Two Theories of Ademption

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*Identity Theory*—if a specifically devised gift is not part of the testator's estate, it is adeemed *Intent Theory*—if the specifically devised item is not part of the estate, the beneficiary may still be entitled to the replacement or item's cash value —but the beneficiary must show the testator would have intended this substitution

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In re Estate of Anton

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Testatrix owned a duplex and, when she wrote her will, she gave her stepdaughter and biological son each a 1/2 interest in it. After she entered a nursing home, her biological daughter began selling off Testatrix's properties to pay the bills without consulting her. The daughter eventually sold the duplex, despite the stepdaughter's interest in the property. It was uncertain whether the Testatrix was of sound mind at the time of the sale. *Issues:* (A) Does the sale of a specific bequest by an attorney-in-fact result in ademption by extinction when the testator did not know of the transaction?; (B) How much would the beneficiary be entitled to if it was not adeemed? *Held:* No, the sale does NOT adeem the property from the estate. *Discussion:* (A) The analysis focuses on the testator and NOT the attorney-in-fact (or whatever agent sells the property). According to the *modified intention theory*, ademption can only occur where: (1) the testator had contemporaneous knowledge of the transaction; (2) realized the effect of the transaction on his estate plan; and (3) had an opportunity to revise the will. Assuming the Testatrix was incompetent at the the time of the sale, she could not have had the capacity to meet the three factors that would signal her intent. Thus, the 1/2 interest in the duplex meant for the stepdaughter could not have been adeemed by extinction, and the stepdaughter would be entitled to the cash equivalent. Even if the Testatrix WERE to have been competent when the duplex was sold, she did *NOT* have *contemporaneous knowledge* of the transaction. Merely having given consent in the past to the general idea of selling her assets isn't enough to satisfy the three factors lad out by the court. It doesn't matter whether or not the Testatrix *would* have given her consent *had* she known, but whether or not the Testatrix *actually had an opportunity to change her will*. Here, she didn't, so the bequest can't be adeemed. (B) The beneficiary is entitled only to the proceeds that have not been expended on support of the testator. In other words, because the duplex was sold to support Testatrix, she still has to split it with the biological son and is not entitled to the full value of her share.

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The Identity Theory—A Rule Tempered By Exceptions

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The *majority* of states follow the *intent* theory. A *minority* of states still follow the *identity* theory, but they include "escape hatches" to avoid ademption when: (1) someone other than the testator gets rid of the bequest; or (2) the facts of the case indicate a high likelihood that the testator did not intend ademption. Many courts and the UPC give the devisee any unpaid amount of a condemnation award for the property or any unpaid casualty insurance proceeds after the property has been destroyed. —e.g., T wills A his plane. Though T dies by crashing and destroying the plane, A would get the insurance payouts on it. Courts will sometimes classify a specific devise as a general or demonstrative one to avoid ademption —e.g., "100 shares of Tigertail Corp. stock" would become the cash value of those shares if it was a widely held stock —but if the will said "*my* 100 shares of Tigertail Corp. stock," it would HAVE to be a specific devise and would adeemed Most courts hold that corporate mergers or reorganizations only change the form, not the substance of stock —thus, even if 100 share of Tigertail become 76 shares of Lion Share stock, the devisee would still get them. Some things are iffy and courts disagree, such as when T wills an account at one bank, closes it, then opens it with the same funds at another bank —Ruby v. Ruby, (holding it to be a change in form only and not adeemed) —Church v. Morgan (change in substance, adeemed)

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Stock Splits and the Problem of Increase

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If T leaves A "100 shares of Tigertail Corp. stock," and Tigertail then does a stock-split, how many stocks does A get? —e.g., 3-1 split, so 100 shares becomes 300 shares The traditional method was to decide whether it was a specific or general bequest —if a specific bequest, A would get all 300 —if a general bequest, A would only get 100 The modern method, used by the *majority* of courts, grants A the entire 300 —but this is a rebuttable presumption The UPC follows the majority method

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Ademption by Satisfaction

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When a testator transfers property to a beneficiary in a will, but gives that same (or substantially similar) property to the beneficiary in an inter vivos transfer, there is a rebuttable presumption that the gift is "in satisfaction of the devise made by the will." —i.e., if the beneficiary gets it while the testator is alive, the courts won't pay him out again —usually applies to general pecuniary bequests (i.e., cash), but not to specific bequests E.g., T wills A $50,000. While alive, T transfers $30,000 to A. A will only get $20,000 from the operation of the will unless A can rebut the presumption the $30,000 he received from T was separate from the devise. When a *specific* bequest is transferred inter vivos to the beneficiary, it is adeemed by extinction, not by satisfaction. —some states and the UPC requires that the testator put his intent to adeem by satisfaction into writing.

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Exoneration of Liens

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What happens when T wills her house to A, but the house is subject to a mortgage when T dies? —some states still follow the common law *exoneratino of liens*, which holds that A would take the house free of the mortgage —other states and the UPC hold the opposite, forcing A to take the home subject to the mortgage

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Abatement

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*Abatement* arises if an estate lacks sufficient assets to pay the decedent's debts, in addition to all the devisees. —In that situation, some devises must be *abated*, or reduced Devises usually abate in the following order: (1) residuary devises are the first to be reduced; (2) then the general devises; and (3) finally, the specific devises are the last to be abated and are reduced pro rata. —this is believed to be in line with the testator's intent —the problem is that the residue is often the largest and most important part of the will UPC § 3-902: if the testamentary plan would be defeated by the usual order of abatement, the shares of the distributees abate as may be necessary to give effect to the intention of the testator

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Trusts: Generally

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A *trust* is a legal arrangement created by a *settlor* in which a *trustee* holds property as a *fiduciary* for one or more beneficiaries. *Bifurcation* —the trustee takes *legal title* to the res, which allows the trustee to deal with third parties as owner of the property —the beneficiaries have *equitable title*, which allows them to hold the trustee accountable for breach of the trustee's fiduciary duties

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Types of Trusts

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*Testamentary trusts* are created by will and arise in probate —testamentary trusts are irrevocable *Inter vivos trusts* are created during the settlor's lifetime —created by: (1) *declaration of trust*—settlor declares himself to be trustee of certain property (2) *deed of trust*—settlor transfers the res to a trustee to be held in trust Trusts are will substitutes and avoid probate *Discretionary Trusts*—trusts where the trustee has discretion to pay income or principal from the res to the beneficiaries —provides PROTECTION from creditors —provides PROTECTION from the income tax because it allows a trustee to distribute funds to the beneficiaries in the lowest income bracket *Testamentary Marital Trusts*—avoid estate taxes by using a will to hold property in trust for a spouse and then, at the spouse's death, to give it to the children

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Trustees and Fiduciary Duties

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A trustee has "all the powers over trust property that a legally competent, unmarried individual has with respect to individually owned property." To protect the beneficiaries from this power, the trustee has *fiduciary duties* to them: *(1) Duty of Loyalty*—the trustee must administer the trust solely in the interest of the beneficiaries *(2) Duty of Prudence*—the trustee is held to an objective standard of care and must administer the trust in a manner suited to the purpose of the trust and the needs of the beneficiaries *Subsidiary rules:* —*Duty of Impartiality* between beneficiaries —*Duty not to Commingle* the res with the trustee's own property —*Duty to Inform and Account* to beneficiaries

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Remedies for Breach of Trust

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(1) Compensatory damages to restore the res and trust distributions to what they would have been but for the breach (2) Disgorgement by the trustee of any profit to the trustee owing to the breach —This is a restitutionary remedy arising in equity to prevent unjust enrichment

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The Four Functions of Trusteeship

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(1) Custodial—taking custody of and safeguarding the trust property (2) Administrative—accounting, recordkeeping, and paying taxes (3) Investment—investing the funds for the beneficiaries' benefit (4) Distribution—paying out either income or principal from the trust to the beneficiaries *It has become increasingly common to divide these four functions among multiple professional trustees*

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Trusts vs. Legal Life Estate

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Trusts usually create equitable future interests *and* a present interest in income

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Legal Life Estate

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A legal life tenant has no power to sell a fee simple unless such a power is granted in the instrument creating the life estate. To sell, all the persons (remaindermen included) must agree, or the life tenant must gain judicial approval. —on real estate, the life tenant has a duty to pay taxes and keep the property in repair —if the life tenant gets into debt, creditors can seize the life estate *Basically, a life estate tenant gets WAY too much responsibility without much reward*

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Equitable Life Estate—Trusts

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All of the difficulties described for a legal life estate are resolved or mitigated by using a trust. The trustee has wide powers to allocate costs between all the beneficiaries, deal with third parties, make speedy repairs, and even sell the property if need be. *The greatest benefit to an equitable life estate is that it is out of the reach of any creditor.*

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Creating a Trust

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Three requirements to create a trust: *(1)* the settlor intends to create a trust; *(2)* ascertainable beneficiaries who can enforce the trust; *(3)* specific property ("res") to be held in trust. A *testamentary* trust requires a writing to satisfy the Wills Act or the Statute of Frauds —but an inter vivos trust does NOT require a writing

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Intent to Create a Trust

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No specific words are needed—not even the words "trust" or "trustee." The settlor only needs an intent to create a fiduciary relationship

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Testamentary Trust and Intent to Create a Trust

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Testamentary trusts are created by a testator's will. If the intent to create a trust is not clear, the court must look at the language and structure of the will to decide whether or not to infer the intent in light of ALL of the circumstances —Lux v. Lux, (holding will's language and circumstances created trust, despite not naming a trustee). —if no trustee is named, the will's executor becomes the trustee

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A Trust will NOT fail for want of a trustee

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If the named trustee refuses his appointment, the court will appoint a successor. If the will does not name a trustee at all, the court will appoint one (usually the executor)

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Active Duties of a Trustee

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Under the UTC, the trustee must have some *active duties* to perform. Otherwise, the trust is said to be "dry" or "passive," and it fails. In that instance, the beneficiaries would take legal title right away

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Precatory Language

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Mere language that expresses a "hope," "wish," or "recommendation" that the property be used by the devisee in a particular manner does NOT clearly differentiate whether the testator intended a trust or an unenforceable moral obligation —if it's a moral obligation, then it is called a *precatory trust*. —but courts can go either way on unclear language, so the most important lesson is to be resoundingly clear with your language

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Jimenez v. Lee

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*Facts:* Two separate donors gave funds to the Defendant, putting gifts in both Defendant and Plaintiff's names. Although it was clear these gifts were intended for Plaintiff's schooling, Defendant took the funds and used them on himself as the "custodian" rather than the "trustee." The Plaintiff contended that the donors intended to create an inter vivos trust, with the Defendant as trustee and the Plaintiff as beneficiary. *Issue:* Although they didn't use specific words to create a trust, did the donors intend to create a trust in benefit of the Plaintiff for her educational needs? *Held:* Yes, they did. *Discussion:* No specific words are required to make a trust; a trust is made when the donor transfers property with the intent to vest beneficial ownership in a third-person. Here, this was clearly the case, and the Defendant violated his duty of loyalty. The defendant is personally liable for all the money he used outside of the intent of the trust, as well as for all the money that would have accrued from the inter vivos res (which were held in stock). A trustee has to maintain strict records of all the expenditure's made in favor of the trust.

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Wrongful Alienation of a Res

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If tangible trust property is wrongfully sold or disposed of, the beneficiary can reclaim it unless it has been sold to a bona fide purchaser for value. —if the trustee purchased new property with the proceeds from the sale of the trust property, the beneficiary could enforce the trust on the newly acquired property

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Accepting Trusteeship

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Under UTC § 701, a named trustee does not have to accept his role, because the duties of a trustee are sometimes onerous and expose him to personal liability Once a person does accept trusteeship, only the beneficiaries or a court order can release him. —UTC § 705 modifies this rule by allowing resignation if the trustee provides 30 days' notice to all interested parties

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Trust Distinguished from Equitable Charge

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If a testator devises to a person a property subject to the payment of a certain sum of money to a third person, the testator creates an equitable charge. —this creates a security interest in the transferred property, with no fiduciary relationship at all —the relationship between the holder and the beneficiary is more a debtor to a secured creditor

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Declaration of Trust

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Under a declaration of trust, the settlor simply declares *himself* to be the trustee of certain property. The settlor MAY ALSO BE the beneficiary. —for the trust to be valid, though the trustee must owe a fiduciary duty to someone other than himself. Otherwise, it's an invalid trust because equitable and legal title would merge, as under the UTC § 402(a)(5). —e.g., if a settlor makes himself the beneficiary but does not give anyone else an interest, the trust fails. But if he does this and gives his children a remainder interest in the res, the trust survives. *It's a REQUIREMENT that the settlor manifest the intention to hold certain property in trust for an ascertainable beneficiary*

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Trust Property

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A trust cannot exist without a res, which can be literally any type or transferrable interest in property

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Unthank v. Rippstein

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*Facts:* Man writes letter to Plaintiff in which he cites his desire to transfer $200 to her each month for 5 years. The plaintiff sued for continued payment after his death, claiming that he created a trust, and that the res was the man's entire estate. *Issue:* Did this letter create a trust? *Held:* No, it did not. *Discussion:* The letter could not be a will because the payments were meant to begin while the man was alive—thus, it could not be testamentary. Also, it could not be a valid gift because gifts require DELIVERY. Whatever payments made while the man was alive were a gift, but the rest of the payments were only a PROMISE to make a gift, which is not enforceable. Finally, no trust was created because: (1) the man did not set aside a SPECIFIC res to be held in trust, though he easily could have done so; and (2) there is no indication he would have violated any fiduciary duty to the plaintiff by using any portion of his property as he pleased under the language of the letter. The court didn't want the man to unwittingly have made himself a trustee without some more substantial indication. Ironically, there is no doubt that the man really did intend to create a gift because of his language: "I bind my estate." This guy's intent is much clearer than Kuralt's intent. In reality, it was just likely he wasn't knowledgeable enough to know that he needed to declare a specific res. So here, the court manufactured formalities where they didn't exist because it needed something more substantial, but ended up defeating the would-be settlor's intent.

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Res requirement and Donative Intent

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*JANE B. BARON ARGUES THAT THE TRUST RES REQUIREMENT OFTEN DEFEATS DONATIVE INTENT*

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Trust Distinguished from Debt

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The crucial distinction between a trust and a debt is whether the recipient of the assets is entitled to commingle them with his other assets and use them for his own purposes

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Resulting Trust

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A resulting trust is an equitable reversionary interest that arises by operation of law in two situations in favor of the transferor of property: 1) an express trust fails or makes an incomplete disposition; or 2) if one person pays the purchase price for property and causes title to the property to be taken in the name of another person who is not a natural object of the purchaser's bounty —i.e., it does not go to the trustee, but to whoever initiated the transfer (the settlor or the settlor's heirs)

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Future Profits and Other Expectancies

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You can't declare a trust on property you haven't yet acquired. —"An expectation or hope of receiving property in the future, or an interest that has not yet come into existence or has ceased to exist, cannot be held in trust." Rest.3d of Trusts.

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A Written Instrument?

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A settlor doesn't need to have a writing to create a valid trust—an oral inter vivos trust of personal property, whether by declaration or transfer to another as trustee, is enforceable Testamentary trusts, however, *must be in writing* to satisfy the Wills Act An inter vivos trust of land *must be in writing* to satisfy the Statute of Frauds

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UTC § 407

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No trust instrument is needed for the creation of a trust, but an oral trust may only be established by *CLEAR AND CONVINCING* evidence

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In re Estate of Fournier

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*Facts:* Man gave money to his friend and asked the friend to hold it until his death, at which point he desired it to be given to his sister. He reserved the right to change his mind at any point up until his death—basically, it was the oral equivalent of a will. The sister needed to make sure that she got the property in trust, and not through the residuary estate, because the man split his residuary estate among all his siblings in his will. *Issue:* Was there an oral trust? *Held:* Yes, there was an oral trust. *Discussion:* This case turns on the difference between oral wills and oral trusts. An oral will is *invalid* . . . so if he simply said, "I give $400k to Faustina at my death," it would be invalid. But since he orally gave the funds "in trust" to Faustina, with his friend as the trustee, it was valid—trusts do not have the same writing requirement as wills. Basically, the man told his friend to hold it for his sister and affirmed that he did not want the money for himself, but for his sister. To his friend, he clearly disclaimed any right to use it as he saw fit, establishing the friend as the trustee to hold the property for the sister. The court thought this was *clear and convincing evidence*.

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Oral Trusts

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Oral trusts require *clear and convincing evidence* to be valid. This "clear and convincing evidence" can come in the form of oral testimony

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Olliffe v. Wells

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*Facts:* Testatrix left the Executor her residue to be distributed according to oral wishes, which she had communicated to him before her death. Her heirs sued, claiming he should be forced to distribute the residue to them. All of the parties agreed that the Testatrix and orally told the executor to give it to charity. *Issue:* Was there a valid oral trust? *Held:* No, there was not. *Discussion:* Testamentary trusts *must be in writing* to satisfy the Wills Act. Here, although the testatrix orally communicated to the executor that she wanted to create a trust, she used her will as the instrument to actually transfer the res and create the trust. Because her WILL created the trust, its parameters needed to be in writing to satisfy the Wills Act and be valid.

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Secret and Semisecret Trusts

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The trust in Oliffe was a semisecret trust because, in her will, she mentioned the trust without providing any information about the beneficiaries, etc. If the testatrix had orally created the trust, devised the the executor her property in the will, and not mentioned the trust in the will at all, it would have been a *secret trust* and completely enforceable. —construction trust would have been imposed to prevent unjust enrichment When the will indicates there a trust was created but doesn't specify the parameters (e.g., the beneficiaries), a *semisecret trust* is created —some jurisdiction follow Olliffe, where no extrinsic evidence is allowed to show the semisecret trust The modern trend, however, is to treat both secret and semisecret trusts the SAME —modern courts allow extrinsic evidence for BOTH secret and semisecret trusts

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Oral Inter Vivos Trusts of Land and the Statute of Frauds

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Suppose S conveys land to X upon an oral trust to pay the income to A for life and, upon A's death, to convey the land to B. —this would be invalid because any time a trust has a res of land, the trust must be in writing to satisfy the Statute of Frauds Does this mean X is permitted to keep the land? —Cases are split between: (1) permitting X to retain the land; and (2) allowing relief in restitution by way of constructive trust to prevent unjust enrichment —constructive trusts are imposed when: (a) the transfer was obtained by fraud or duress; (b) if X was in a confidential relationship with S; or (c) the transfer was made in anticipation of S's death Hieble v. Hieble, (holding a constructive trust was imposed when a son orally promised his mother to return his interest in property after she made him a joint tenant because of the confidential relationship of the parties). Pappas v. Pappas, (holding there was no constructive trust imposed on a son when the father gave him property, which the son orally promised to return once the father's divorce proceedings where over, because the father had misrepresented the transfer during his divorce proceedings).

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Legal Questions Raised by Nonprobate Succession

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The modern view is that a will substitute is valid even if not executed with Wills Act formalities. At the same time, courts and legislatures have increasingly subjected will substitutes to the subsidiary law of wills Most pensions and life insurance policies obtained as a benefit of employment are governed by federal law, which preempts state law.

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Revocable Trusts

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Revocable inter vivos trusts are the most flexible of all will substitutes because the settlor can draft its provisions to his liking —remember, the settlor may revoke the trust at any time and for any reason

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Wills Act and RIVTs

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Revocable trusts can be created by a *deed of trust*, whereby a settlor transfers property to the trustee to be held in trust. On the settlor's death, the res is distributed according to the terms of the trust. —Every state allows a RIVT to be created by deed of trust WITHOUT Wills Act formalities A trust can also be created by a *declaration of trust*, whereby a settlor simply declares himself to be trustee of certain property for his own benefit during his lifetime, with the remainder to pass at his death in accordance with the terms of his declaration —settlor has the power to revoke and, as the trustee, control the management of the res

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UTC § 403, Settlor's Powers; Powers of Withdrawal

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(a) So long as a trust is revocable, the beneficiaries' rights are subject to the control of, and the duties of the trust are owed exclusively to, the settlor (b) During the period in which revocation may be exercised, the person with this power has the rights of a settlor of a revocable trust

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Moon v. Lesikar

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*Facts:* Settlor created a revocable trust, of which he was the sole beneficiary. His children had a contingent remainder in the property; in particular, his son had a contingent remainder in the stock. Later on, before his death, he decided to put the stocks in a separate trust for his son's children. He then revoked the trust and made a new one, which did not mention the stocks at all. The settlor's daughter sued for a portion of the stocks, claiming the new trust was in effect at the time of the settlor's death, and that the stocks were part of his residuary estate because this trust did not mention them at all. *Issue:* Can the contingent beneficiary of a revocable trust have standing to challenge a transaction made by the settlor before his death? *Held:* No, she cannot. *Discussion:* Basically, the settlor had absolute power over the assets before his death because the trust was revocable and, thus, the daughter's interests did not actually vest until his death. In other words, the daughter did not have a present interest in the property at the time of the transfers and so could not challenge the transaction. Further, the settlor could revoke at any time without written notice because he was also the trustee; when the trustee is also the settlor, the settlor is not required to serve notice on himself

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No Present Interest

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Both the majority of courts and the UTC hold that a beneficiary has no legally enforceable interest while a trust is revocable. —thus, when the settlor is also the trustee, any action that diminishes the interest of a beneficiary cannot be a breach but rather is an implied revocation Only a *minority* of courts require disclosure to beneficiaries of changes to their interests —the *majority* of courts hold the trustee only has a duty to the settlor when the trust is revocable

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Third-party trustees and settlor incompetence

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When property is removed from a revocable trust by the trustee or another party *without the settlor's knowledge* or approval and used for a purpose outside of the trust's scope, the intended beneficiaries may challenge the transaction. (Siegal v. Novak)

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Revoking or Amending a Revocable Trust

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The *majority* view, shared by the UTC, is that an inter vivos trust is *revocable* UNLESS declared to be irrevocable. The *minority* view is that trusts are presumptively irrevocable. The *majority* hold that, in keeping with the UTC, a revocable trust can be amended or revoked in any manner that clearly manifests the settlor's intent to revoke, UNLESS the trust instrument itself specifies a particular method of amendment or revocation and *EXPRESSLY* makes that method exclusive —the *minority* requires precise statutory methods —the majority's policy reflects the acceptance of the idea that a revocable trust is a will substitute

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UTC § 602, Revocation or Amendment of Revocable Trust

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(a) Unless the terms of the trust expressly specify that the trust is irrevocable, it is presumed to be revocable. (c) The settlor may revoke or amend a revocable trust by: —substantial compliance with a method provided in the terms of the trust; or —if the terms of the trust do not provide a method or the method provided in the terms of the trust is NOT expressly made exclusive, then by: (1) a later will or codicil that expressly refers to the trust or specifically devises property that would otherwise have passed according to the terms of the trust; or (2) any other method manifesting *clear and convincing evidence* of the testator's intent

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Patterson v. Patterson

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*Facts:* Settlor created a revocable inter vivos trust, which states that "revocation or amendment . . . may be in whole or in part by written instrument." The trust also provided that the beneficiaries' interests would continue until the trust was "revoked or terminated other than by death." She later executed an amendment to the trust that divested her son's interest. Her son sued, claiming the amendment violated the terms of the trust because it did NOT revoke the trust. *Issue:* Was the son's interest properly divested? *Held:* Yes, the son's interest was properly divested. *Discussion:* The son's argument was that the divestment of his interest was invalid because it did not REVOKE the whole trust, as required by the trust. The court decides that the trust did not expressly make revocation of entire trust the ONLY way to divest an interest. Thus, any method showing *clear and convincing* evidence that the testator intended to divest the interest was sufficient to amend or revoke the trust. Here, the settlor expressly explained she was removing her son's interest from the trust—clear and convincing evidence of her intent.

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The Subsidiary Law of Wills

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The *majority* of courts apply the rules of construction and revocation that they apply to a will to a revocable trust, mainly because of the revocable trust's will-like character. —Reason: We want the same policy decisions surrounding wills to be applicable to revocable trusts. We don't want these policy goals to go by the wayside simply because the testamentary instrument has changed.

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State Street Bank & Trust Co. v. Reiser

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*Facts:* Settlor created for himself an inter vivos trust, which allowed him to take whatever funds he needed for himself without violating the contingent beneficiaries' interests while he was alive. His will directed his residuary estate into this trust at his death. After he took out an unsecured loan from the bank, he died. The bank sued to collect but couldn't get anything because the residuary estate had already gone into the trust. *Issue:* Was the bank allowed to take assets from the trust to pay off the debt? *Held:* Yes, the bank was allowed to reach the trust to pay off the debt. *Discussion:* It would violate public policy to allow a settlor to create a trust that he could use to live off of but would be out-of-reach to his creditors. Thus, when a settlor creates a trust and retains the right to amend, revoke, or direct the disposition of principal/income, his creditors can reach whatever res the settlor had control of and was able to use for his own benefit. If the settlor's estate can pay off the debt, though, the creditors have no reason to reach the trust. *The main takeaway is that the courts will treat will substitutes (here, a RIVT) like a will by allowing the creditors to reach the res.*

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Creditors and Revocable Trusts

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The *majority* of jurisdictions, the UTC,and the Rest.3d of Trusts regard the *settlor's power to revoke the trust* and take back the res as equivalent to ownership; thus, the res is subject to the settlor's creditors during life and at death. —i.e., ANY REVOCABLE TRUST IS SUBJECT TO THE SETTLOR'S CREDITORS The *minority* view is that creditors can't reach the res of a trust

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Creditors and Other Nonprobate Transfers

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Not all nonprobate assets are reachable like RIVTs —creditors of a joint tenant *cannot* reach the property held in joint tenancy after the debtor-tenant's death —life insurance proceeds are usually exempt from the insured's creditors if payable to a spouse or child. —retirement benefits are usually exempt. —U.S. savings bonds with a POD beneficiary are exempt, as well

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UPC § 6-102

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Allows a decedent's creditors to reach nonprobate transfers (except joint tenancies in real estate), such as RIVTs and joint bank accounts if the probate estate is insufficient to pay the debts

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Spousal Rights and Revocable Trusts

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Spouses are not entitled to the res of a RIVT; thus, they *CANNOT* take their forced shares. In re Estate of Prestie, (holding amendments to inter vivos trusts cannot serve to rebut the presumption that a will is revoked as to an unintentionally omitted spouse).

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Clymer v. Mayo

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*Facts:* Settlor created a revocable trust, which was to receive the pour-over of her will, and named her husband as the beneficiary of both. Otherwise, the trust was unfunded. They divorced. Not too long afterward, the settlor died without changing the trust's beneficiary designation. *Issue:* Was the husband still entitled to the res as a beneficiary? *Held: No, he was not. *Discussion:* As a will-substitute, revocable trusts aim to fill the same functions as wills. Thus, the subsidiary law of wills applies to will-substitutes in the same way. In this case, because the trust was so coordinated with the will and, "for all practical purposes, spoke only at the settlor's death" like a will, divorce nullified the husband's right to the revocable trust's res and to inherit under the will. *Policy:* Basically, it would be incongruous to allow revocation-on-divorce for wills because the because the testator is presumed to revoke provisions favoring the divorced spouse, and to ignore it in regards to revocable inter vivos trusts the function as wills. The trust did nto need to have been funded before the pour-over because the trust had been established by a writing —so ORAL trusts need to be funded right away, but TESTAMENTARY trusts don't need to be funded at the outset The important thing is to focus on whether the RIVT functions as a will. If it functions as a will, the revocation-on-divorce statutes should take effect

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Revocation-on-Divorce and Revocable Trusts

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UPC § 2-804 applies to both wills and will substitutes. It revokes a disposition in favor of a former spouse in a "governing instrument," which is defined to mean a deed, will, trust, insurance or annuity policy, POD or transfer on death, pension plan, or other nonprobate transfer. Two difficulties persist with revocation-on-divorce statutes: (1) It is not entirely settled whether the Constitution permits such a statute to be applied to a beneficiary designation made before the effective date of the statute. Most courts *DO* allow the statute to act retroactively, but a *minority* of states have not (2) Federal law preempts the application of state revocation-on-divorce statutes to most pension accounts and life insurance obtained as a benefit of employment

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Ademption and Abatement

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Courts have applied most of the rules of construction that typically apply to wills to revocable trusts, such as abatement and ademption

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The Antilapse Controversy

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A *minority* of states and the UPC § 2-707 apply antilapse statutes to lapsed bequests under revocable trusts. —many states have chosen not to adopt this provision because it forces the application of UPC § 2-603(b)(3), which precludes words of survivorship from overriding antilapse statutes

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Capacity and Limitation Periods for Revocable Trusts

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The *majority* of states require a higher level of capacity for lifetime transfers than for testamentary transfers —Policy: Living donors need more protection from poverty than dead ones. The emerging *minority* view, adopted by the UTC, is that the "capacity required to create, amend, revoke, or add property to a revocable trust, or to direct the actions of the trustee of a revocable trust, is the same as that required to make a will." —Both the UPC and the UTC limit contests on the testator/settlor's capacity to three years after his death The UTC limits the contest period for revocable trusts to 120 days if the trustee sends any prospective contesters "a copy of the trust instrument and a notice informing the person of the trust's existence, of the trustee's name and address, and of the time allowed for commencing a proceeding." —serves revocable trusts' purpose of expediting property administration

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The Pour-Over Will

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Two theories are useful for validating a pour over of probate property from a will into a decedent's revocable trust: *(1) Incorporation by reference*—a will can incorporate by reference a document in existence at the time the will is executed. —wills *CANNOT* incorporate amendments to the document made AFTER the will's execution, though *(2) Acts of Independent Significance*—a will may dispose of property by referring to some act or event that has significance apart from disposing of probate assets (here, it would refer to the trust that refers to property transferred to the trust during life). —trust doesn't have to exist at execution, but must have some property in it prior to the testator/settlor's death *Keep in mind that these theories do not allow the transfer of property over into an unfunded revocable trust drafted or amended AFTER the execution of the will*

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Statutory Validation for Pour-Over Wills and Unfunded Revocable Trusts

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The UPC and the Uniform Testamentary Additions to Trusts Act (UTATA) permit trust instruments to be executed or amended after the will's execution —functionally, substitutes a writing for all the other will formalities Basically, the UPC and UTATA take precedence over the unwieldy "acts of independent significance" and the "incorporation by reference" justifications If the trust does not yet exist, the will must address the fact that the trust has not yet been created (i.e., "will go to the trust that I WILL execute")

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Trusts and Incapacity

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Funded RIVTs can be used to plan for incapacity —Allows successor-trustees to take over at incapacity right away, ensuring *continuity in property management*

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Trusts and Marriage

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Trusts are good for *keeping title clear*, such as when a newly married person wants to avoid commingling separate property with property acquired during marriage. —spouses who move from a community property state to a separate property state sometimes create a RIVT for their community property to preserve a stepped-up income tax basis on the property when one spouse dies

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Trusts and Privacy

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While a will is a public document, RIVTs are private unless a dispute arises. So trusts are better for privacy. —RIVTs can still be contested for lack of capacity and undue influence It's more difficult to get a trust set aside for incapacity than a will, though, because: (1) heirs who are not beneficiaries of the trust are not entitled to see the instrument; and (2) if a trust continues as an ongoing operation for years before the settlor dies, generating monthly or yearly statement and involving various property transfers by a third-party trustee, a court is likely to be reluctant to set the trust aside

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Trusts and Personal Property

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If a RIVT only contains personal property, and not real property, the settlor might be able to choose the state law that will govern the trust. —in contrast, the law of the testator's domicile will apply to a testamentary trust May be able to use an out-of-state revocable trust to deny a forced share to a surviving spouse

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RIVTs and Nonclaim statutes

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In probate, a nonclaim statute may bar creditors from a will —however, most RIVTs don't have an equivalent nonclaim statute to protect them from creditors —so for professionals subject to malpractice suits, a will with probate might be better (because it will likely run the statute of limitations)

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Life Insurance

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A large group of people buy into an insurance pool in case they die early. A common mistake is not insuring against the death of a partner who is not the wage earner but instead works from home

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Types of Life Insurance

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*Term life insurance* is a contract that obligates the insurance company to pay the named beneficiary if the insured dies within the policy's term—commonly 1, 5, 10, 20, or even 30 years —less expensive than permanent insurance because there is no saving feature or cash surrender value *Whole life insurance* (ordinary or straight life insurance) combines life insurance with a savings plan. —you can eventually pay off the policy, meaning no more payments are owed —most expensive because it is permanent —less expensive variations, such as universal or variable life, exist *Life insurance contracts are valid to transfer property on death without Wills Act formalities*

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Cook v. Equitable Life Assurance Society

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*Facts:* Man bought a whole life insurance policy in favor of his then-wife. They divorced, but he did not formally remove her as a beneficiary according to the strict rules of the policy. After he married again, he executed a holographic will that gave his new wife the life insurance policy. His new wife filed a claim for the proceeds after he died. *Issue:* The husband didn't follow the contract's express rules for changing the beneficiary of the insurance policy. Should the new wife get the proceeds anyway? *Held:* No, she should not. *Discussion:* This jurisdiction followed a *strict compliance* rule: an attempt to change the beneficiary of a life insurance contract by will, in disregard of the methods prescribed under the contract, will be unsuccessful. The public policy behind this rule is to allow for the expeditious transfer of policy benefits without subjecting the insurance companies to claims by people who they didn't even know had a right to the money. *So it protects the insurance companies*. Similarly, this quick process benefits the beneficiaries and the court systems by avoiding a lengthy probate process and wasting judicial resources. Secondly, the court does not want to help the widow because the insured had 14 years to change his policy. "Equity aids the vigilant, not those who slumber on their rights."

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Life Insurance and Revocation-on-Divorce

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In many states, the statute that revokes a will provision for an ex-spouse does not apply to life insurance contracts The UPC, however, applies revocation-on-divorce statutes to life insurance —keep in mind, however, only FEDERAL law applies when the policy is obtained through employment . . . so a revocation-on-divorce statutes don't always matter

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A Super-Will?

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A *superwill statute* allows the will's designations to trump all nonprobate transfers. It resolves the problem of updating beneficiary designations across a testator's many and sometimes forgotten nonprobate instruments —the Rest.3d endorses the concept of a superwill, but protects the financial intermediary paying out the benefits if it makes a transfer without knowing of the will. The intermediary has no liability to the will's beneficiaries —if the intermediary knows of the will, it should follow the will; if it is uncertain of the will's validity, it should interplead the court

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Advantages of tax-qualified pension plans

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(1) Contributions are tax-deferred—as in, they are saved in their full, free-from-tax form until withdrawal (2) earning on qualified plan investments accrue and compound on a tax-deferred basis —income tax only paid upon distributions (3) Lower taxable income at the time of distribution —because they've retired, they are usually in the lowest tax bracket, so the income tax doesn't have quite as much bite

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Tax Savings May Continue Beyond Death

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Because many wealthy people use retirement accounts to save, federal law requires minimum annual withdrawals after the account holder reaches the age of 70.5 —at the account holder's death, further distributions can be delayed to extend the tax-deferred compounding of the funds by naming a much younger death-beneficiary

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Types of Pension and Retirement Plans

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*(1) Defined Benefit Plan*—typically, a retired employee receives a regular pension check for life (life annuity) or the joint and several lives of the employee and his spouse (joint and survivor annuity). —benefit size depends on years of participation in the plan —nothing left to pass on to others at the retiree's death with an annuitized pension —these are pretty rare today *(2) Defined Contribution Plan*—The employee, employer, or both make payments to a specific account for the employee —employee makes the investment decisions. Target-date funds reallocate the investments to become more conservative as retirement nears —After retirement, the retiree controls the size and timing of the distributions, subject to the same annual mandatory withdrawals —after death, it *passes outside of probate* according to the plan *(3) Individual Retirement Account* (IRA)—much like a defined contribution plan, but governed by a contract between the account holder and the custodial institution —employees often transfer funds from a defined contribution plan to an IRA (known as a *roll over*) after retiring, which is a tax-free process —the IRA owner controls the timing and amounts of withdrawals, but subject to the same annual mandatory withdrawals —after death, it passes *outside of probate* according to either the beneficiary or according to the account agreement's default distribution rules

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Nunnenman v. Estate of Grubbs

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*Facts:* Account holder created an IRA and designated a beneficiary. He wrote a will that left his entire estate to his mother, but did not mention the IRA at all. A note was found that indicated his mother should have the proceeds of the IRA. The mother sued to collect the IRA funds. *Issue:* Was the mother entitled to the IRA funds? *Held:* No, she was not. *Discussion:* The court analogizes IRAs to insurance policies. The majority of states hold that, where the IRA or insurance policy designates the method for changing the beneficiary, any other method is INVALID. This state did not follow the majority, but instead allowed a change by will if the will's language was sufficient to identify the insurance policy involved and the intent to change the beneficiary. Here, the actual will did not mention the IRA or change the IRA's beneficiary. Thus, the only way to have made the mother the beneficiary was through the holographic codicil (the note). This codicil, however, was expressly revoked by the will, which was made at the testator's deathbed ("all other Wills and Codicils are revoked").

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Changing a Beneficiary Designation

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Courts are split as to whether there should be strict compliance or substantial compliance with an IRA contract's procedures for changing a beneficiary designation.

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Egelhoff v. Egelhoff

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*Facts:* The insured had a life insurance policy and pension plan with his employer, both of which designated his wife as beneficiary. After they divorced, he died before changing the beneficiary designation. His children from a previous marriage sued for the funds. *Issue:* The state of Washington has a revocation-on-divorce statute applying to nonprobate assets; thus, under that law, the ex-wife could not have been the legitimate beneficiary of the funds. The policy and pension plan, however, were held under the insured's employer; thus, they were governed under FEDERAL, and not state, law. Did the federal Employment Retirement Income Security Act of 1974 (ERISA) preempt the statute? *Held:* Yes, the federal ERISA preempts the state's statute regarding the policy and pension plan. *Discussion:* Rather than employers deal with the problems of familiarizing themselves with state laws, federal law preempts. In essence, the court wanted to prevent employers from having a heavy administrative burden. Thus, when a life insurance policy or pension plan is from an employer, it must be formally changed according to the rules of the contract.

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Federal Common Law

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In the wake of Egelhoff, some courts have continued to apply various constructional rules from the law of wills under the guise of "federal common law." —Metro Life Ins. Co. v. Johnson, (holding federal common law recognized substantial compliance when an account holder accidentally checked the wrong box on his form to change his beneficiary status). —Ahmed v. Ahmed, (holding federal common law, while overriding the state's slayer statute, also prevent a slayer-beneficiary from receiving the benefits of the policy).

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Pay-on-Death and Transfer-on-Death Contracts

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Although POD accounts are clearly testamentary, the law does not require them to conform with Wills Act formalities The UPC and the *majority* of states have authorized POD designations in ALL contracts

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Transfer-on-Death (TOD) Security Accounts

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The Uniform Transfer on Death Security Registration Act permits securities to be registered in transfer-on-death forms. The UPC and majority of states allow transfer-on-death registrations for securities

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Totten Trust

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Totten trusts are savings accounts that are held as trusts. Thus, the account holder can still withdraw money, but the account still goes to the beneficiary at death. The UPC replaces Totten trusts with POD accounts

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Varela v. Bernachea

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*Facts:* Depositor made a joint account with his mistress. She took money from him and put it into a personal account. He got the money back and then sued to settle the ownership of the account. *Issue:* Did the mistress have the right to withdraw from the account? *Held:* Yes, she did. *Discussion:* When a joint bank account is established with the funds of only one account holder, a gift of the funds is presumed. This presumption may only be rebutted by *clear and convincing* evidence. Thus, the depositor bears the burden to prove he did not intended a gift. The decision here was meant to give banks the freedom to allow either joint holder to withdraw funds without liability or being forced to make ownership inquiries.

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POD and Convenience Accounts

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If a depositor intends a convenience or POD account, the other tenant is not entitled to treat the funds as her own while the depositor is alive. —the problem is getting enough clear and convincing evidence to prove the depositor did not intend a joint survivor account if the depositor signed a joint a survivor form Many courts presume a gift was intended by a joint account unless *clear and convincing* evidence is offered to rebut this presumption In a *minority* of states, the presumption of a gift is conclusive and evidence to the contrary is not admissible. —Policy: Fits rationale of most people and facilitates judicial efficiency

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UPC and joint accounts

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Under the UPC, joint accounts belong to the named parties during their joint lifetimes "in proportion to the net contribution of each to the sums on deposit, unless there is *clear and convincing* evidence of a different intent." —Extrinsic evidence is admissible to show that a joint account was opened SOLELY for the convenience of the depositor.

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Antilapse Statutes and POD Accounts

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UPC imposes a requirement of survivorship on beneficiaries of POD bank accounts and TOD security accounts. —UPC also includes an antilapse provision for nonprobate transfers, which substitutes the surviving descendants of a predeceased named beneficiary

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Conservatorship

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The *majority* of states allow a court to APPOINT a conservator to manage the property of an incapacitated person. —the UPC allows a conservator to be appoint if: (1) clear and convincing evidence shows a person is "unable to manage property and business affairs because of an impairment in the ability to receive and evaluate information or make decisions"; and (2) a preponderance of the evidence shows the person "has property that will be wasted or dissipated unless management is provided or money is needed for support, care, education, health, and welfare of the person" Most states and the UPC give priority for conservatorships to someone chosen in advance by the incapacitated person, an agent under a durable power of attorney, or the person's spouse, adult child, or parent (in that order) A conservator has similar powers over property to a trustee —states that use the *guardian* system are more limited and judicial involvement is more substantial The process for being declared incompetent is cumbersome because it represents a deprivation of liberty through due process, even under the UPC —advance planning helps to waive this process and streamline it

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RIVTs and Incapacity

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RIVTs can be used as alternatives to conservatorships in planning for incapacity —in the event of a settlor's incapacity, a successor trustee or co-trustee can act to ensure uninterrupted fiduciary management of the trust property without judicial involvement —the trust itself should include a mechanism for determining whether the settlor has become incapacitated One big limitation: the trustee can act only with respect to property put in the trust by the settlor prior to incapacity —anything outside of it can only be controlled by a conservator or agent with durable power of attorney

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Durable Power of Attorney

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An ordinary power of attorney creates an agency relationship in which the agent, called an *attorney-in-fact*, is given written authorization to act on behalf of the principal. The written instrument solves the problem of satisfying third-parties that the agent has authority to act on behalf of the principal —a simple power of attorney is limited by the common law rule that an agent's authority terminates on the principal's incapacity In contrast, a *durable power of attorney* is effective even after incapacity and until the principal's death. —can be drafted to be effective immediately upon signing or only upon the principal's incapacity (a *springing* durable power of attorney) All states and the UPC authorize a durable power of attorney —the UPC presumes all powers of attorney are durable unless the instrument states otherwise —UPC also includes a statutory form power-of-attorney instrument, which must be accepted by a third-party The main advantage of a durable power of attorney is that the agent can be authorized to act with respect to ANY of the principal's property —the main DISADVANTAGE is that, as compared to a RIVT, the permissible scope of an agent's powers and the contours of his fiduciary duty might not be as clear

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In re Estate of Kurrelmeyer

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*Facts:* When he was competent, Kurrelmeyer invested in his wife and daughter durable powers-of-attorney. After her husband became incompetent, his wife settled a trust with his property in her own favor. This trust disposed of a certain property contrary to the man's will, granting the remainder of the property to his children. One of the man's children sued to have the trust set aside. *Issue:* Did the wife breach her fiduciary duty to the beneficiaries of the will/trust? *Held:* Remanded. *Discussion:* The trial court here adopted somewhere between a strict and loose construction approach to powers-of-attorney—they wouldn't give a power that wasn't expressly listed, but they looked at all the terms to come to the conclusion that the power to create trusts was among the attorney-in-fact powers. The court recognized that the express terms of the power of attorney granted the attorney-in-fact the authority to create a trust (the catchall provision). The fact that the trust disposes of property contrary to a will does not automatically invalidate it because, in giving the agent the express power to convey real estate from his estate, the principal must have anticipated the terms of the will might be altered. What's important to remember is that most courts will be STRICTER in construing the will. If it doesn't *unambiguously* grant the power to make a trust, most courts won't read provisions to grant it. A loose construction will grant the power more easily, while this medium construction looked to the express term as a whole to see whether the agent had the power. *Attorneys-in-fact can make trusts where the durable power of attorney document EXPRESSLY grants them the power* —whether the document does so is a matter of loose, medium, and strict constructions

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Estate Planning by a Surrogate

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The *majority* of courts hold that, although an agent acting under power of attorney cannot make, amend, or revoke a principal's will, the agent can create, modify, or revoke a trust if the power to do so is *expressly* granted in the power-of-attorney instrument —both the UTC and the UPC support this view Under the UPC and in a *minority* of states, a court-appointed guardian or conservator has the power to make, amend, or revoke the ward's will —under the *substituted judgment* standard, adopted by the UPC, the court will consider whether the ward probably would have undertaken the same action

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Gifts and Enhanced Formalities

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The *majority* of courts hold that an agent cannot make a gift without specific authorization. This authorization is often subject to strict formalities —under the UPC, the principal must separately initial the agent's power to make gifts on a separate statutory form

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Default Laws of Health Care

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Every person has the right to make their own medical decisions, including to refuse medical treatment, but it MUST BE IN WRITING.

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Advance Directives

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Three basic types: *(1) Instructional directives*—such as a living will, which specifies either generally or by way of hypothetical examples how one wants to be treated in the end-of-life situations or in the event of incompetence; *(2) Proxy directives*—such as a health care proxy or durable power of attorney for healthcare, which designate an agent to make health care decisions for the patient; and *(3) Hybrid or Combined directives*—incorporate both of the first two approaches, directing treatment preferences and designating an agent to make substituted decisions.

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Forced Shares

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The *majority* of separate property states allow a surviving spouse to take an *elective* or *forced* share, typically 1/3 of the decedent spouse's estate —community property states don't need a forced share because each spouse owns ALL earnings in equal, undivided shares Both separate AND community property states protect a *pretermitted* surviving spouse from accidental disinheritance by way of a premarital will that the decedent spouse neglected to update after the marriage In contrast to spouse, who may receive a forced share, children can be completely disinherited —Although, American law does protect children who are *accidentally* omitted froma will

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Community property states

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Only 9 states are community property states Community property states allow spouses to separately own all property owned BEFORE marriage, but everything acquired thereafter is jointly and equally owned

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Forced Shares in Separate Property states

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In separate property states (except Georgia), the surviving spouse gets an *elective share* (also called a *forced* or *statutory* share) —under the statute, a surviving spouse can ELECT to take under the decedent's will *or* to RENOUNCE the will and take a fractional share of the decedent's estate (typically, 1/3 of the estate) The right to a forced share can be waived by premarital or marital agreement

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Economic Partnership or Support Obligation

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Elective shares are justified under the theory that the surviving spouse contributed to the decedent's acquisition of wealth, reflecting the *partnership theory* of marriage —the older and narrower justification is that marriage entails a *support obligation* that continues after death These two theories oppose each other when it comes to designating the size of the share: —the partnership theory gives 1/2 of the property acquired during marriage, mirroring the outcome in a community property state —the support theory justifies smaller percentages, but applies it to ALL of the decedent's property, even property acquired before the marriage

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Size of the Forced Share

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It does not matter how long the couple has been married for: the 1/3 share in a separate property system is final The real test of whether an elective share system implements the partnership theory comes when the lower earner dies before the higher earner—all elective-share systems fail this time —when the lower wage earner dies before the higher wage earner, he cannot dispose of any of the marital partnership property titled in the higher-earner's name Community property states, on the other hand, allow the lower wage-earner to distribute their half of the TOTAL communal property, even property owned or earned by the other spouse

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the UPC and Forced Shares

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The UPC applies the elective share to an *augmented estate*, which includes both the probate estate and certain nonprobate transfers. The UPC takes a very broad view of the augmented estate by: (1) including in the augmented estate any transfer in which the decedent spouse retains a right to possession or income (2) Addressing lifetime transfers made to the surviving spouse and taking into account the surviving spouse's own wealth —meant to achieve a fairer allocation between spouses; and (3) Addresses the length of the marriage, increasing the size of the forced share the longer the marriage lasted

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1969 UPC and the Forced Share

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Under the 1969 UPC, the surviving spouse is entitled to an elective share of 1/3 of the augmented estate. Under UPC § 2-202 (1969), the augmented estate includes the probate estate plus the following nonprobate and inter vivos tranfsers made without consideration at any time DURING THE MARRIAGE: (1) a transfer in which the decedent retains the right to possession or income from the property; (2) a transfer that the decedent can revoke or invade or dispose of the principal for his own benefit (i.e., any RIVTs); (3) a transfer in joint tenancy with someone other than the spouse; (4) A transfer made within 2 years before death exceeding $3,000 per donee per year (at the time, $3,000 was the maximum amount exempt from the federal gift tax under the annual exclusion; now it's $14k); and (5) property given to the surviving spouse during life, including a life estate in a trust, and property received by the spouse at death derived from the decedent, such as life insurances and pensions —this provision was included to prevent a spouse who has been well-provided for by lifetime or nonprobate transfers from electing against the will and claiming more than a fair share Under UPC § 2-207 (1969), to the extent property in the augmented estate passes to the surviving spouse, that property is applied first in satisfaction of the elected share

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The 1990 UPC and Forced Share

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The 1990 UPC redesigned elective shares and the augmented estate so that it would achieve results closer to the community property system. —adds up all the property of both spouses and allocates it according to a percentage based on the length of the marriage —Adds transfers BEFORE marriage to the augmented estate —Also includes property or powers received from others The purpose of the augmented estate under the 1990 UPC is no longer, as under the 1969 UPC, to protect against "fraud on the widow's share," but rather to "bring elective-share law into line with the PARTNERSHIP theory of marriage," tempered by a minimum support obligation in the form of a $50,000 supplemental elective share amount. —*Policy:* Increases the entitlement of a surviving spouse in a long-term marriage where the assets were disproportionately titled in the decedent's name —Decreases or even eliminates the surviving spouse's entitlement in a long-term marriage where the assets were more or less equally titled or disproportionately titled in the surviving spouse's name. —Also decreases the entitlement in a short-term, later-in-life marriage in which neither spouse contributed much, if anything, to the acquisition of wealth

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UPC 2008 Amendments and the Forced Share

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—Provide for an equal split of marital property, but the proportion of each spouse's property that is deemed included in the augmented estate is based on the length of marriage —Also increases the supplemental elective share amount to $75,000 and subjects it to inflation UPC § 2-202 (2008) provides that the elective share of a surviving spouse of a domiciliary decedent is "50% of the value of the marital-property portion of the augmented estate." —The augmented estate includes: (1) the sum of the decedent's net probate estate; (2) the decedent's nonprobate transfers to others; (3) the decedent's nonprobate transfers to the surviving spouse; (4) the surviving spouse's property and nonprobate transfers to others The marital property portion of the augmented estate is computed by multiplying the augmented estate by a percentage that is determined by the length of the marriage —the forced share is HALF the resulting marital-property portion of the augmented estate

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Differences between the UPC and Community Property States on Forced Share

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the UPC includes all property of both spouses, and not only property acquired DURING the marriage —community property states include only earnings and acquisitions from DURING the marriage. —community property states also do not include property brought into the marriage or acquired by gift or inheritance About 12 states have adopted the 1990 UPC elective share provisions.

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Spouse Omitted from a Premarital Will

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The *majority* of states give a surviving spouse who does not inherit through a premarital will an intestate share, otherwise leaving the premarital will intact. —Evidence that the testator deliberately omitted the surviving spouse and did not just mistakenly fail to update the premarital will can defeat these statutes Only a *minority* of states follow the common law rule that marriage or the birth of issue revokes a premarital will

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UPC § 2-301 and Pretermitted Spouses

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If a decedent has not revoked a premarital will, the surviving spouse gets whatever share he or she would have received in intestacy —but this share cannot come from the share allotted by the will to a child born BEFORE the testator married the spouse *and* who is NOT the child of the pretermitted spouse, nor is devised to a descendant of such a child This section has no effect if: (1) it seems the testator made the will with knowledge that he did not include the spouse; (2) the will itself expresses the intention that it is to be effective in spite of subsequent marriages; or (3) the testator provided for the spouse by transfer outside the will and the intent that the transfer be in lieu of a testamentary provision is shown by the testator's statements or is reasonably inferred front he amount of the transfer

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Intentional Omission of a Child

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In all states but Louisiana, a child or other descendant has no statutory protection against INTENTIONAL disinheritance —it's risky to disinherit a child, though, because it leads to will contests —judges will often flexibly use testamentary capacity, undue influence, and fraud to rewrite the will in an attempt to do justice The Louisiana forced share for children is called "legitime." It protects children from disinheritance who are: (1) under the age of 23; (2) mentally infirm; or (3) disabled

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Pretermitted Heir Statutes

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Pretermitted heir statutes attempt to prevent the unintentional disinheritance of a child —many apply only to children born AFTER the will's execution

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UPC § 2-302, Pretermitted Heirs

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UPC § 2-302 requires: (1) after-born or after-adopted children receive a share equal to intestacy, unless the will gave the property to the child's other parent; (2) if the testator already had children who were alive, and they received an inheritance through the will, then an after-born or after-adopted child: —(a) gets a share only from the then-living children's shares; —(b) the child should only get a share the size he would have received had the will included all after-born children and given them equal shares; —(c) the child should only get the same interests as given to the then-living children under the will; —(d) the then-living children's shares abate ratably Neither of the two sections above apply if: (1) the omission appears to be intentional; or (2) the testator provided for the after-born or after-adopted child outside of the will, intentionally in lieu of a testamentary provisions as evidenced by the testator's statements, or reasonably inferred from the amount of the transfer or other evidence. If the testator failed to provide for the child because he thought the child was dead, the child is entitled to a share as though he were an after-born or after-adopted child

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Gray v. Gray

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*Facts:* Testator created a will that designated his wife as the sole inheritor, excluding his two children from a prior marriage. He and his wife then had a baby. At his divorce, he created a trust to provide for the baby and did not amend his will; thus, his wife was still the beneficiary of his will, which was revoked by the revocation-on-divorce statute. "Property prevented from passing to a former spouse because of revocation on divorce . . . passes as if the former spouse failed to survive the decedent." When the testator died, the Testator's brother inherited as the contingent beneficiary and refused to the the then-grown baby a share in the estate. *Issue:* Was the boy entitled to a share under the pretermitted heir statutes as an after-born child? *Held:* No, the child was not. *Discussion:* The pretermitted child statute provided that a child born subsequent to a will's execution is entitled to an intestate share if the will fails to provide for the child. However, the rule has exceptions: (1) if the testator had *more than one child* at the time and devised all his estate *to the parent of the omitted child*, the pretermitted child may not take. The other two exceptions to the statute prevented the pretermitted child from inheriting when: (2) the omission appeared *from the will* to be intentional; and (3) the testator provided for the child by transfer outside the will, and the intent to transfer be in lieu of a testamentary provision be reasonably proven. Here, all three exceptions to the statute's application were triggered. First, the testator had other children at the time and gave his entire estate to the omitted child's mother. The fact that these children were the result of a prior marriage did not matter for the statute. Second, the testator expressly recognized in the will that he was not providing for the omitted child. Third, the testator created a trust to provide for the omitted child before his death; the circumstances reasonably showed the trust was meant to be in lieu of the will. Remember, the two children from the previous marriage could not take pretermitted shares because they were ALIVE at the time testator wrote his will. Thus, there was the presumption that he intentionally omitted them.

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Pretermitted Heir Statute Types

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Pretermitted heir statutes can be classified as: *(1) Missouri-type*—benefit children "not named or provided for" in the will —no extrinsic evidence of intent is admissible *(2) Massachusetts-type*—allow the child to take "unless it appears that such omission was intentional and not occasioned by mistake." —extrinsic evidence IS admissible to show whether the testator *intended* to disinherit the child

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Pretermitted Children and Codicils

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Azcunce v. Estate of Azcunce, (holding pretermitted heir statute did not apply because, although the will was executed before the child's birth, the father executed a codicil afterwards that republished the will).

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Children or Descendants After or Already Born

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Many pretermitted heir statutes, like UPC § 2-302, only protect children born or adopted AFTER execution —In re Gilmore, (holding that a child born before the will's execution was not pretermitted even if the testator had no knowledge of the child's existence). Other operate favorably for such children who were born BEFORE the will's execution

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Pretermission and Nonprobate Transfers

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Most pretermitted heir statutes apply ONLY to wills and NOT to RIVTS or other nonprobate transfers

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Discretionary Trusts

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Reasons to make a discretionary trust: (1) preserves flexibility in distributions over time—trustees may be given discretion over when, to whom, and in what amount to make a distribution (2) asset protection—creditors of the beneficiary cannot get to the beneficiary's interest in a discretionary trust, and the beneficiary himself cannot alienate the interest Three kinds of discretionary trusts: (1) Pure discretionary trust—the trustee has absolute discretion over distributions to the beneficiary (2) Support trusts—trustee is *required* to make distributions as necessary for the beneficiary's NEEDS (3) Discretionary-Support trust—a hybrid trust combining the features of both discretionary and support trusts

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Pure Discretionary Trusts

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Creditors of a beneficiary to a pure discretionary trust have no recourse against the beneficiary's interests in the trust *Policy: Courts can't compel the trustee to pay the creditor because the beneficiary doesn't have a property interest that can be transferred or attached to Creditors, however, may be entitled to a court order prohibiting further distributions to a beneficiary until they have been paid: —UTC cofidifies this by allowing creditors to receive a court order allowing themselves to be paid before the beneficiary —thus, while they can't COMPEL a distribution, they CAN have their interests attached get paid first WHEN a distribution is made

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Support Trust

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Beneficiaries of a support trust cannot alienate their interests in it. Neither can creditors reach the beneficiaries' interests. —Young v. McCoy, (holding support trust's trustee could not be compelled to pay anyone at all when beneficiary was already cared for by state as prisoner). Children and spouses may still reach the property through claims of support or alimony —people who supply necessities, such as physicians and grocers, also have recourse against the trust property in a support trust

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Discretionary Support Trust

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Courts tend to treat them as pure discretionary trusts, foreclosing all claims by the beneficiary's creditors

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Collapsing Trust Categories

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The UTC and the Rest.3d of Trusts collapse the distinction between discretionary trusts and support trusts. —unifies the rules governing alienation and the rights of creditors for all trusts in which the trustee has any kind of discretion over distributions The Rest.3d, however, breaks with the UTC in treatment of creditors: —if the trust's terms give the trustee discretion over distributinos, a creditor may receive or attach to any of these distributions In contrast, the UTC still provides that creditors CANNOT compel distributions (although spouses and children can)

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Protective Trusts

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Protective trusts can offer a settlor the ability to give beneficiaries a mandatory right to regular distributions and the asset protection of a discretionary trust —if the beneficiary's creditors attach to his interest, the trust automatically becomes a discretionary trust.

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Spendthrift Trusts

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A beneficiary of a *spendthrift trust* cannot voluntarily alienate his interest in the trust. Nor can his creditors attach to his interest. —remains true even if the beneficiary is entitled to a mandatory distributions —unlike with discretionary trusts, the creditor of a spendthrift trust's beneficiary cannot get a court order preventing the trustee from making a distribution to or for the benefit of a beneficiary or attaching a future distribution Spendthrift trusts are created by imposing a disabling restraint on alienation of the beneficial interest —traditionally, a trust could not be spendthrift unless it included a spendthrift clause —many states, however, no longer require a spendthrift provision Spendthrift trusts support a settlor's freedom of disposition —thus, it doesn't take the beneficiary's interests into account at all

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UTC on Spendthrift Trusts

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Spendthrift provisions must disable both voluntary and involuntary alienation to be valid —Just declaring itself to be a spendthrift trust allows a trust to validly restrain alienation A beneficiary's child, spouse, or former spouse can reach the res if they have a court order —judgment creditors who have provided service for the protection of the beneficiary's interest in the trust are also excepted —the state and the US government can reach it

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Scheffel v. Kreuger

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*Facts:* A mother sued the man who sexually assaulted her child to reach the spendthrift trust of which he was the beneficiary. *Issue:* Could the mother reach the spendthrift trust's res? *Held:* No, she could not. *Discussion:* The Legislature had already set out specific exceptions to the rule that creditors cannot reach a spendthrift trust. The court was forced to strictly construe the statute and had to presume that no other exceptions—not even for the sake of public policy—were permitted. Thus, the mother and child could not reach the res.

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Tort Victims and Spendthrift Trusts

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Although tort victims are involuntary creditors, unlike regular creditors, the *majority* of states do not allow them to reach the res of spendthrift trusts —the UTC purposely does not recognize an exception for tort creditors —Rest.3d of Trusts is less clear—it contemplates that "evolving policy" might justify allowing tort creditors to reach the spendthrift trust when the beneficiary causes serious harm to others.

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Children and Spouses on Spendthrift Trusts

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A *majority* of states and the UTC allow judgments for child support and alimony to be enforced against spendthrift trusts —*Rationale*: Public policy constrains the settlor's freedom of disposition, which is not an absolute privilege

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Necessary Support and Other Exceptions

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A *majority* of states and the UTC allow a claimant who provided services necessary to protect a beneficiary's interest in a trust to recover against the beneficiary's interest in a spendthrift trust. —*Policy:* Ensures that a beneficiary can obtain services essential to the protection or enforcement of the beneficiary's rights under the trust, such as legal representation The Rest.3d allows claimants who provided the beneficiary with necessities, such as physicians and grocers, to reach the res of a spendthrift trust: —the UTC does not allow this exception

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Modification and Termination of Trusts

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To support freedom of disposition, the U.S. has only recognized TWO grounds for judicial modification or termination of a trust without the settlor's consent: (1) by consent of all the beneficiaries IF the modification or termination is NOT contrary to a material purpose of the settlor (Claflin doctrine); or (2) Changed circumstances not anticipated by the settlor would defeat or substantially impair the accomplishment of the trust's purpose without modification or termination (equitable deviation doctrine) Even spendthrift trusts are subject to the Claflin doctrine

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The Claflin Doctrine

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A trust cannot be terminated or modified on petition of all the beneficiaries if doing so would be contrary to the material purpose of the settlor —in general, a trust cannot be terminated if: (1) it is a spendthrift trust; (2) the beneficiary is not to receive the principal until attaining a specific age; (3) it is a discretionary trust; or (4) it is a support trust

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In re Estate of Brown

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*Facts: The settlor created a testamentary trust, which had two main purposes: (1) to pay for the college educations of his nephew's children; and (2) to support his nephew until death "in the manner to which he had become accustomed for and during the remainder of his natural life." After the children had attended college, the nephew petitioned the court to terminate the trust, arguing the first goal was complete and distribution was necessary to complete the second. The children filed their consents. *Issue:* Could the trust be terminated? *Held:* No, it could not. *Discussion:* First, the court decides the trust was neither a support nor a spendthrift trust. It could not be a support trust because the trustee was directed to pay the nephew ALL of the trust income. It could not be a spendthrift trust because no language implied a restraint on alienation. The court decides the second purpose had not yet been met, interpreting the words "for and during the remainder of his natural life" to mean that the trust was meant to assure a *lifelong* income. The trust would not accomplish one of its material purposes if it were terminated. Thus, the court refused to terminate the trust.

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The UTC, Rest.3d, and Modification of Trusts

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A *minority* of states and the UTC preserve the material purpose rule, but allow modification or termination by consent of only SOME of the beneficiaries —Rest.3d and another minority of states permit modification or termination if the beneficiaries can persuade the court that "the reasons for termination or modification outweigh the material purpose," thus undermining the material purpose rule

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UTC § 411

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Spendthrift provisions are not presumed to constitute a material purpose of the trust If not all beneficiaries agree to terminate or modify the trust, the court can do so anyway: (1) if all the parties had consented, it would have been allowed to have been terminated and (2) the interests of non-consenting beneficiaries will be adequately protected

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Claflin under the UTC and Rest.3d

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The UTC upholds the tradiational Claflin doctrine: a trust can't be terminated or modified if continuance is necessary to accomplish a material purpose In contrast, the Rest.3d allows modification if the reasons to do so outweigh the material purpose —spendthrift provisions are NOT a material purpose to prevent termination —the *majority* of states presume a spendthrift provision IS a material purpose. Thus, the Rest.3d is the MINORITYposition

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Deviation and Changed Circumstances

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Under the equitable deviation doctrine, a court will permit a trustee to deviate from the administrative terms of a trust if compliance would defeat or substantially impair the accomplishment of the trust's purposes in light of changed circumstances not anticipated by the settlor. —modification or termination is not allowed simply because to do so would be more advantageous to the beneficiaries—the settlor's PURPOSE is what matters for equitable deviation —courts have been much more liberal in allowing trustees to deviate from ADMINISTRATIVE terms owing to unanticipated changes of circumstances than they have been in permitting modifications of DISPOSITIVE provisions

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UTC § 412

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Allows equitable deviation from BOTH administrative and dispositive provisions —don't have to show substantial impairment anymore; just have to show deviation will further the trust's purposes —the Rest.3d provides the same thing, allowing deviation from both "administrative and distributive" provisions if it would "tend to advance the trust's purposes."

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In re Riddell

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*Facts:* Settlor created a testamentary trust that would terminate when his grandchildren turned 35, at which point the res would be distributed to them. The trustee, his son, petitioned to modify the trust into a special needs trust because his daughter was schizophrenic and permanently in a mental health facility. *Issue:* Could the trust be modified into a special needs trust? *Held:* Yes, it could. *Discussion:* The court had previously adopted the Rest.3d's stance on modifying a trust's dispositive terms. It decided to use a two-pronged approach: (1) circumstances have changed since the creation of the trust or the settlor was unaware of circumstances when the trust was established; and (2) a modification would advance the purposes of the trust. The policy is to "give effect to the settlor's intent had the circumstances in question been anticipated." The Omnibus Budget Reconciliation Act sets forth requirements for creating a special needs (or supplemental) trust. These trusts are established for a disabled person's benefit and are intended to supplement public benefits without increasing countable assets, thus preventing disqualification from those public benefits. They can be established by either a third-party or by the disabled person himself. The state is entitled to receive the remaining res upon termination for medical assistance paid on behalf of the disabled beneficiary. However, the state can't get reimbursement on termination of a special needs trust for medical assistance provided for the disabled beneficiary. Here, the granddaugher's mental illness was absolutely an unforeseen circumstance; the settlor had no idea. The trust itself was for her care. Thus, both prongs were met and the special needs trust could be established in place of the original trust.

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Duty to Seek Equitable Deviation

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Trustees who are aware of changed circumstances that the settlor was not might have a duty to seek an equitable deviation.

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