Intestate Succession Flashcards
(130 cards)
1
Q
What is probate property?
A
Property that is subject to the probate process and has not been disposed of through nonprobate transfers.
2
Q
What is nonprobate property?
A
Property that is disposed of through nonprobate transfer
3
Q
What is intestacy?
A
Intestacy or “intestate succession” are the default rules for who gets a person’s property after they die. If a person dies without an estate plan in place (e.g., no will or trust, etc.), their property – including determining how much each person receives – will go to the people designated in the Probate Code (and in some cases, the state).
4
Q
What is required to be an intestate taker in CA?
A
The taker must survive the decedent by 120 hours.
5
Q
What is required to be a testate taker in CA?
A
If the decedent dies with a written instrument, only clear and convincing evidence is required that the beneficiary survived by a millisecond or as otherwise provided in the instrument, in which case the instrument governs.
6
Q
What happens if JTs dies simultaneously (without clear and convincing evidence one survived the other)?
A
If decedents held property as JTs and they both simultaneously die with neither able to meet the “clear and convincing evidence” survival requirement, then by operation of law the property is severed and converted into a TiC, with proportional shares to the number of JTs.
7
Q
What is considered SP?
A
Property owned before marriage, acquired during marriage by gift, devise, or inheritance. Must be kept separate from Community Property to remain Separate Property.
8
Q
What is considered CP
A
Any property acquired by either spouse as a result of their labor during marriage during the marriage. CP is held 50/50 by the spouses while both are alive.
9
Q
what is QCP?
A
CP that is acquired in another state
10
Q
Who qualifies as a spouse in determining inheritance rights?
A
Married spouses or putative spouses
11
Q
What is a putative spouse?
A
A spouse that has a good faith belief they are married
12
Q
Who qualifies as a child for inheritance rights?
A
(1) children born out of wedlock whose (a) parentage is established by a court during the testator’s lifetime or (b) is proven after death by clear and convincing evidence
13
Q
When does adoption fail to sever the parent-child relationship?
A
When (a) a natural parent and adopted person lived together any time as parent and child, AND (b) the adoption was by the spouse of either of the natural parents or after the death of either of the natural parents.
14
Q
Does adoption sever the parent-child relationship?
A
Yes, unless the living together and adoption by spouse exception applies
15
Q
How much CP does a surviving spouse get?
A
1/2 of the CP and QCP
16
Q
How much SP does a surviving spouse get?
A
i. all SP if not issue, parent, siblings, or issue of siblings;
ii. 1/2 of SP where decedent left (a) one child or issue of deceased child; (b) no issue but parent(s) siblings or half-siblings
iii. 1/3 of SP where decedent left either (a) more than one child, (b) one child and issue of one or more deceased children (c) issue of two or more deceased children
17
Q
How are issue definged?
A
all of a person’s lineal descendants of all generations, with the relationship of parent and child at each generation being determined by the definitions of child and parent
18
Q
What are the three ways intestate shares are divided among issue?
A
- Per Cap With Rep (CA Default)
- Per Stirpes
- Per Cap at each generation
19
Q
How are intestate shares of issue divided under per cap with represention?
A
(1) division is made at first live taker, (2) 1 shares for each live taker and 1 share for each deceased taker with surviving issue; (3) drop shares divided by bloodline
20
Q
How are intestate shares distributed to issue by per stirpes?
A
(1) first division at first generation always (2) 1 share for each party alive; 1 share each party dead but survived by issue; (3) share dropped divided by bloodline.
21
Q
How are intestate shares to issue divided per cap each generation?
A
(1) division at 1st tier live taker, (2) 1 share each party alive, 1 share each party dead but survived by issue; (3) dropping shares divided by pooling.
22
Q
If no method is specified, how are intestate shares divided among issue?
A
Per cap with representation
23
Q
What is the only way an intestate share can adeem?
A
Ademption by Advancement
24
Q
How does ademption by advancement occur?
A
The decedent or recipient acknowledge in writing that their share has been advanced. If testator, the testator must make a contemporaneous statement of their intent.
25
If there is ademption by advancement, how are intestate shares calculated?
A hotchpot accounting occurs where the advancement is added to the estate before issuing shares and then the advancement is subtracted from the heir's share.
26
What do all wills require from a testator and how is it established?
Testamentary intent. It must appear from the document that the decedent intended to transfer specified property upon his/her death. If not clear, the court may look at surrounding circumstances.
27
Is extrinsic evidence admissible to determine the validity of a will?
Yes, extrinsic evidence is admissible to determine whether a document constitutes a will (attested or holographic), or to determine the meaning of a will or a portion of a will if the meaning is unclear.
28
What are the four requirements of an attested (formal) will?
1. Testamentary Intent
2. A writing
3. Signed
4. Witnessed
29
what is considered a writing?
anything legible on a tangible medium
30
What is considered a signature?
any mark(s) that reflect the testator's testamentary intent
31
How is the witness requirement satisfied?
there must be two witnesses that signed the will during the testator's lifetime that (1) were present at the time of signing, witnessed either the signing of the will or the testator acknowledged the signature or the will AND (2) understand that the instrument they sign is the testator's will.
32
Does an attested will fail when it fails to meet the witness requirement?
Not necessarily. The Limited Harmless Error Doctrine provides that a deficiency in the witness requirement will be overlooked if there is clear and convincing evidence that at the time of signing the instrument constitutes the testator's will.
33
What is an interested witness and what effect if any does it have on a will?
An interested witness is a witness that benefits from the will i.e. receives a gift. An interested witness does not cause a will to fail. However, it does raise the rebuttable presumption that the interested witness obtained the gift in the will by duress, menace, fraud, or undue influence unless there are two other uninterested witnesses. If the witness can rebut the presumption, they take the whole gift. If they cannot rebut the presumption, their gift is purged (reduced) to be no more than what their intestate share would be under the will.
34
What is a holographic will and what are its requirements?
A holographic will is a valid will that has (1) testamentary intent, (2) its material provisions in the testator's handwriting, and (3) is signed in the testator's handwriting. It does not have to be witnessed.
35
What happens if a holographic will acts as a codicil but is not dated?
If a holographic will acts as a codicil but does not contain a date and the lack of the date raises doubt over which instrument came first, the holographic codicil will be invalid insofar as it is inconsistent with the other instrument.
36
What is the effect of a testator of a holographic will being found to lack capacity?
If the testator of a holographic will is found to have lacked capacity during any time the holographic will may have been executed, it will be presumed invalid unless it is established that it was executed at a time when a testator had testamentary capacity (opposite of attested will).
37
How can testamentary intent be established in a holographic will on a form will?
It can be established either in the pre-printed portion or in the testator's handwriting.
38
What is a codicil?
A codicil is an amendment to a will. When a subsequent will only partially revokes a previous will, it is considered a codicil to the prior will. A valid holographic will can act as a codicil if there was a valid will that came before it. A codicil can also work in conjunction with an older will. An attested codicil requires the formalities of an attested will.
39
What effect does revoking a will have on a codicil?
Revoking a will revokes all subsequent codicils.
40
What effect does revoking a codicil have on a will?
None. Revocation of a codicil only revokes the codicil, not the underlying will.
41
What is an important part of the freedom of disposition?
The right to revoke a will is an important corollary to the principle of the freedom of disposition. A person remains free to rework their estate plan until death. Revocation of a will requires the same testamentary capacity as required to create a will.
42
What are the five ways a will can be revoked?
1. Expressly by writing where T writies a new will which expressly revoked the prior will.
2. Expressly by act where the testator destroys the will with intent to revoke
3. Impliedly by writing where a new will or codicil partially or completely revoke a prior will by inconsistency.
4. Impliedly by act where (1) the will was last in the possession of the testator (2) it nor a copy cannot be found after the testator's death, (3) the testator was sound of mind until death, the will is presumed to have been revoked.
5. By Operation of Law: where a will provides for a spouse and the testator divorces from the spouse but fails to update their will, the provisions providing for the spouse will be revoked.
43
What is revival of a will and how does it occur?
A will is said to be revived if a testator revokes a second will by physical act or a third will with the intent to revive the first will.
44
What kind of evidence is allowed for proving the intent to revive?
If Will 2 was revoked by act, the court will accept any evidence of the intent to revive. If Will 2 was revoked by Will 3, the court will only look at Will 3 to determine intent to revive. Case example, sneaky grandma goes to CA.
45
What is Dependent Relative Revocation?
Dependent Relative Revocation is an equitable doctrine that the court will use to ignore a valid revocation of a will if the revocation was based on the testator's mistake.
46
What are the two types of DRR?
(1) revocation by act; and
(2) revocation by writing
47
Under DRR, if the revocation was by act, what must be shown in order to ignore the revocation?
(1) there was was a valid revocation, (2) the revocation was based on a mistake, (3) there is a failed alternative plan of disposition, and (4) the Testator would not have revoked but for the mistake.
48
Under DRR, if the revocation was by writing, what must be shown to ignore the revocation?
(1) there was a valid revocation, (2) the revocation was based on a mistake, (3) the revoking instrument evidences the mistake, and (4) the Testator would not have revoked but for the mistake
49
Does DRR apply if it is shown the second will was invalid due to fraud, duress, menace, undue influence or ineffective execution?
No, the revocation of the first will was never valid so DRR is not applicable.
50
What is an act of independent significance?
A will may dispose of property by reference to acts and events that have significance apart from their effect upon the disposition made by the will (i.e. not just naming the beneficiary) whether the acts and events occur before or after the execution of the will or before or after the testator's death. The execution or revocation of a will of another person is such an event.
51
How do you approach analyzing a potential act of independent significance?
Step 1: identify the act or event referenced in the will that is to occur outside of the will;
Step 2: analyze whether the act or event has significance independent of its effect upon the testator's probate estate.
52
What issue is often crossed with acts of independent significance?
Incorporation by reference
53
What are the five types of gifts that can be given in a will?
1. Specific Gift
2. General Gift
3. Demonstrative Gift
4. Residuary Gift
5. Class Gift
54
How do you identify a specific gift in a will?
A specific gift is a particular thing, specified, and distinguished from all other items of the same kind. Language such as "my" or serial numbers connote a specific gift.
55
How do you identify a general gift in a will?
A general gift is a gift from the general estate that does not give specific property. In general, if it is not part of the testator's estate at death, the personal representative has a legal duty to purchase the gift and give it to the beneficiary.
56
What is a demonstrative gift?
A demonstrative gifts is a gift from the estate to be paid out from a particular source. Legally, a demonstrative gift is usually considered to be a subset of a general gift. It will be considered a specific gift if it is ONLY to be paid from the specifically referenced source. It will be considered a general gift if the intent was to be charged against general assets.
57
What is a residuary gift?
A residuary gift is a gift in a will that gives all that remains after all specific and general gifts are discharged.
58
What is a class gift?
A class gift is one that is given to an ascertainable group of people. A gift is determined to be a class gift considering (a) how takers were described by the instrument, (b) how the instrument described the gift, (c) whether the beneficiaries "are united or connected by some common tie", and (d) testator's overall testamentary scheme?
59
What happens if the beneficiary of a class gift predeceases the testator?
(1) If antilapse applies, their issue take the decedent's share.
(2) If antilapse does not apply, the share is redistributed equally among the surviving members. If it is not a class gift, then it goes to residuary clause. if also no residuary clause, then intestate successtion.
60
What is Ademption By Extinction and when does it apply?
Ademption by extinction occurs when a testator provides a specific gift in their will but the specific gift is not part of the estate when the testator dies. If this happens, the gift is said to adeem by extinction and thus fails.
61
What is an exception to ademption by extinction (change in form but not substance)?
If a specific gift changed in form but not in substance, the court will look at the testator's intent to determine whether the specific gift adeems. e.g. promissory note that is paid off but then reissued by testator.
62
What is ademption by satisfaction and how does it occur with general gifts?
A general gift is said to adeem by satisfaction when (1) testator's will provides for the deduction of the lifetime gift or (2) the testator declares in writing that the gift is satisfied, or (3) the beneficiary testator declares in writing the gift is satisfied.
63
How does a specific gift adeem by satisfaction?
If it is given to the beneficiary during the testator's lifetime.
64
How does a stock split of a specific gift of stock affect the gift?
If the gift of stock is a specific gift, and the testator owned the stock at the time of execution, and the change in form is initiated by the corporation, then the gift does not adeem and the beneficiary is entitled to the change in number and change in form of the stock, unless the testator intended otherwise.
65
What is the doctrine of exoneration?
The doctrine of exoneration holds that a gift in a will that is encumbered by debt is presumed to be given to the beneficiary along with the encumbrance unless otherwise provided in the will.
66
What is abatement?
Abatement occurs when an estate is smaller than the total gifts it gives. Unless provided for otherwise in the will, the following in the order provided will be sold off to make the rest of the gifts in the will:
1. Property not disposed of by the will;
2. Residuary Gifts
3. General Gifts to nonrelatives
4. General Gifts to relatives
5. Specific Gifts to nonrelatives
6. Specific gifts to relatives
If the court determines this order was not the testator's intent, it will not follow it.
67
What happens if a testamentary gift fails?
1. if the will provides alternative disposition then it will be followed;
2. if no alternative disposition but there is a residuary clause then it becomes a part of the residuary;
3. if no alternative disposition, and no residuary clause then it falls into intestacy;
4. But if the gift or future interest is transferred to two or more persons and the share of a transferee fails for any reason, and no alt. disposition, the share passes to the other transferee in proportion to their own interest
68
When does a gift lapse?
A gift is said to lapse (fail) if the beneficiary predeceases the testator.
69
What does antilapse do?
If a gift lapses, antilapse will save it from failing, unless contrary intention is or substitution disposition is in the will. Antilapse will apply if (1) the predeceased beneficiary was kindred of the testator or their spouse, and (2) they left issue. In that case, antilapse will distribute the gift to the beneficiary.
70
Does Antilapse apply to class gifts?
Yes, unless the beneficiary predeceased the execution of the will and the fact was known to the testator when the will was executed.
71
What shows contrary intention against antilapse application?
(1) an alternative plan of disposition, (2) a survival period, and (3) survival of the probate period.
72
What is a pretermitted spouse?
A pretermitted spouse is a spouse that survived the decedent and (1) married the decedent after execution of decedent's testamentary instruments, and (2) those documents failed to provide for the surviving spouse. The pretermitted spouse is entitled to 1/2 of the decedents CP and QCP, and an intestate share of the decedent's SP.
73
Is the pretermitted spouse subject to exceptions?
Yes, the pretermitted spouse rule provides a presumption that must be rebutted by the will proponents. There are three ways to rebut the presumption:
(1) the spouse was intentionally omitted as indicated on the face of the will; or
(2) the spouse was otherwise provide for outside the will with the intent to do so in lieu of the will; or
(3) the surviving spouse waived their right to a share with a valid agreement.
74
What is the pretermitted child doctrine?
A pretermitted child is a child that was born or adopted after the execution of the decedent's testamentary instruments. The pretermitted child is entitled to their intestate share of the estate.
75
Can the pretermitted child doctrine be challenged?
The pretermitted child doctrine provides a presumption that may be rebutted one of three ways:
(1) the child was intentionally omitted as indicated on the face of the will;
(2) the decedent devised substantially all of the estate to the parent of the omitted child;
(3) the decedent otherwise provided for the child outside the will with an intent to do so in lieu of the will.
76
What is an accidentally omitted child?
An accidentally omitted child is a child that was born or adopted before the execution of the decedent's testamentary instruments but was not provided for solely because the decedent either (1) mistakenly believed the child was dead, or (2) did not know of the child's birth. The presumption is irrebuttable and the child is entitled to their intestate share.
77
What are the three ways we learned a will or trust can be challenged?
1. Testamentary Capacity
2. Undue influence
3. Fraud
78
Who has testamentary capacity?
Anyone that is over 18 years of age and sound of mind. An individual is not mentally competent to make a will if at the time of making the will, he or she is unable to:
1. understand the nature of the testamentary act; OR
2. understand the nature and situation of her property; OR
3. Remember and understand her relations with family members that are affected by her will.
79
When is testamentary capacity analyzed?
At the time of execution. There is a presumption of competence. It is the burden of the contestant to overcome the presumption of competence and presumption the execution was during a lucid period.
80
What is undue influence ?
Undue influence occurs when a party unduly influences the testator to substitute the undue influencer's intent for the testator's intent.
81
When does the presumption of undue influence arise?
The presumption of undue influence arises when:
1. the undue influencer has a confidential relationship with the testator (isolates them);
2. the alleged undue influencer takes active steps to procure the will or its execution (drafts it etc);
3. the alleged undue influencer unduly benefits from the will
82
What are the two types of fraud we learned about?
(1) Fraud in the inducement and (2) fraud in the execution
83
When does fraud in the inducement occur?
Fraud in the inducement occurs when (1) the testamentary intent of the testator is substituted for the fraudster's (2) by fraudulent misrepresentations by the fraudster (3) meant to induce the testator to include a beneficiary or exclude a gift or reduce a gift. The testator knows what is in the will but it is because of fraudulent misrepresentations.
84
When does fraud in the execution occur?
When a testator is unaware she is signing a will or the will is forged by another resulting in the entire will being invalid.
85
What does undue influence go hand-in-hand with?
Fraud
86
What is a trust?
Trusts are bifurcated gifts where legal title and equitable interests are split. A trust is a fiduciary relationship that involves three roles: the settlor, the trustee(s), and beneficiary(ies).
87
What is a settlor?
The person that establishes the trust?
88
What is a trustee?
holds legal title of the property in trust for the benefit of the beneficiary as a fiduciary.
89
What is a beneficiary?
The recipient of the equitable interest of the trust property.
90
What is the principal?
the property AKA the corpus or res in a trusts
91
What is trust income?
income that is generated by the property or business held in trust
92
What are the elements of a valid trust?
1. Intent to establish a trust;
2. Funding of the trust;
3. An ascertainable beneficiary;
4. a valid purpose;
5. A writing
93
How is intent to create a trust shown and what is insufficient?
Intent to create a trust is shown through the use of language of establishing a trust i.e. for the benefit of someone. Precatory language such as "i hope/wish" is inadequate.
94
How does funding occur?
A trust is only created if there is trust property. When the trustee is a third party rather than the settlor, property must be transferred to the trustee to be considered trust property. Transfers are properly made depending on the nature of the property i.e. titled property requires transfer of title while tangible property a physical or symbolic delivery.
95
Can a trust be funded through a will?
Yes, titled property may be sufficiently transferred by meeting the statute of frauds through the will/trust document itself. When the trustor and trustee are the same person and property is not properly retitled in the trust, the property can be included through a Hegstadt petition.
96
What is required to be a trust beneficiary?
The beneficiary must be an ascertainable person, unless it is a charitable trust.
97
What is a valid purpose for a trust?
One that is not illegal or contrary to public policy.
98
Do trusts require a writing?
Yes.
(a) If a trust is inter vivos and the trust property includes real property, the SoF requires a writing;
(b) If the trust is a testamentary trust, the Will Act formalities require the will to be in writing.
99
Is capacity required for a trust to be formed?
yes, testamentary capacity required for a will generally applies to trust
100
How is a trust created?
a. Declaration by the owner of the property that the owner holds property as trustee i.e. for the beneficiary.
b. agreement or transfer: transfer of property by the owner during the owner's lifetime to another person as trustee
101
What is a pour-over will?
A will that simply directs the probate estate to be transfered to the trust.
102
What is a testamentary trust?
A will that creates the trust at testator's death when the will goes through probate. There is no separate pour-over will because the terms of the trust are in the will itself.
103
What is an inter vivos trust?
A trust that has property transferred to the trustee during the settlor's lifetime is legally owned by the trust, not the settlor. At testator's death, a "pour-over" will may add any property not already in the trust to trustee of the testator's trust.
104
What is a resulting trust?
A resulting trust is a judicial remedy. It arises by operation of law and transfers property back to a settlor or her estate if:
1. a trust fails.
2. the purpose of the trust is satisfied or ends
3. a charitable trust ends and the cy pres doctrine is inapplicable
4. there is a semi-secret trust
105
What is a constructive trust?
A constructive trust is a judicial remedy. It arises by operation of law and transfers property to the party with a stronger equitable claim in different situations, including:
1. when there is self-dealing, fraud, undue influence or
2. a secret trust is involved
106
What is a Secret trust?
A trust where the settlor leaves a gift to someone but based on the face of the will there is no clear intent to create a trust in the will. The settlor leaves the gift to the trustee in reliance on a promise that the person will hold the property in trust for a named beneficiary under a constructive trust (property goes to person with stronger equitable claim). Extrinsic evidence is permitted. Issue spot: a promise outside of the trust the the property will be used to benefit a third party.
107
What is a semi-secret trust?
1. A semi-secret trust is when the settlor leaves a gift in his will to a person in trust, but does not identify the beneficiary of the trust.
a. Majority Rule: the majority of jdxs declare semi-secret trusts as invalid and apply a resulting trust (property goes back to estate). Extrinsic evidence not permitted
b. Minority Rule (CA): a minority of jdxs allow extrinsic evidence to prove the trust.
108
What is a charitable trust?
a charitable trust is one that is for charitable purposes and benefits society (e.g. benefit a library or public park). A key quality is it is for a charitable purpose that benefits society. It does not have an ascertainable beneficiary because it is usually not an individually identifiable person.
109
What is the cy pres doctrine?
(as near as possible): when a charitable objective becomes impossible or impractical to fulfill, courts often apply the cy pres doctrine and substitute another similar charitable objective that is as near as possible to the settlor’s intent.
110
What happens to a charitable trust cannot be fixed by cy pres?
if the cy pres doctrine will not fullfill the settlor’s intent, the courts will apply a resulting trust (i.e. the property will go back to the settlor or estate).
111
What is UTUTA?
UTATA creates a “safe harbor” for pour-over clauses in wills. It allows a provision in a will to devise property in the estate of the testator to a trust that either existed prior to the devise or one that is initially funded within 60 days after the execution of the testators will. The devise is not invalid because the trust was amended after the execution of the will or after the death of the testator.
112
What happens to property devised to a pour over trust?
it becomes a part of the trust it is given to and shall be administered and disposed of in accordance with the provision of the instrument.
113
What happens if a pour over trust is revoked or terminated before the testator dies?
a revocation or termination of the trust before the death of the testator causes the devise to lapse.
114
How can a trust be revoked?
Majority rule: A settlor can modify or revoke the trust only if the power is expressly reserved in the trust.
Minority Rule (CA): The power to revoke a trust generally includes the power to modify it. Trusts are revocable unless stated otherwise. A trust that is revocable by the settlor or any other person may be revoked by one of the following methods:
115
How may a trust be revoked statutorily?
By a writing other than a will, signed by the settlor or any other person holding the power of revocation and delivered to the trustee during the lifetime of the settlor or the person holding the power of revocation. If the trust instrument makes the method of revocation in the trust instrument the exclusive method of revocation, the trust cannot be revoked this way.
116
Other than the statutory method, how else may a trust be revoked?
By compliance with any method of revocation provided in the trust instrument.
117
What is special about co-trustees?
a power vested in two or more trustees may only be exercised by their unanimous action, unless otherwise provided in the trust.
118
What powers do trustees hold?
The powers given to them in the trust and by law. By law, they have implied powers necessary an appropriate to carry out the terms of the trust, such as to sell or lease trust property, incur reasonable expenses, borrow money, or operate a business
119
How are trustees compensated?
If the trust does not specify, the trustee’s compensation, the trustee is entitled to reasonable compensation under the circumstances. Difficulty and amount of work needed to manage trust are considered.
120
What duties do trusties have?
A trustee's powers are limited by the fiduciary duties the trustee owes to the trust beneficiaries
121
What 2 duties does a trustee owed to the trustor?
1. During Settlor’s Lifetime: The duties of the trustee of a revocable living trust are owed to the person holding the power to revoke while the person holding the power to revoke is competent.
2. Once Settlor Dies: The trustee has a duty to administer the trust solely in the interest of the beneficiaries.
122
What 4 duties does a trustee owe a beneficiary?
1. Duty of Loyalty
2. Duty of Impartialiaty
3. Duty to Act Prudently
4. Ancillary Administrative Duties
123
What is the duty of loyalty of a trustee?
A duty of loyalty is owed and the trustee may not participate in
(1) self-dealing (personally transacts with the trust), (2)must avoid conflicts of interest, and
(3) must treat all beneficiaries impartially.
124
What is the duty of impartiality of a trustee?
1. If a trust has two or more beneficiaries, the trustee has a duty to deal impartially with them and shall act impartially in investing and managing the trust property, taking into account any differing interests of the beneficiaries.
a. Conflict with duty of impartiality: Present interests want more at the risk of reducing what the beneficiary receives.
b. A trust can authorize a trustee to make investments that ultimately benefit one beneficiary over the other. Hearst, where trust instrument gave trustee power to do what is best.
125
What is the duty to act prudently of a trustee?
A trustee has a duty to use due care and act as a reasonable prudent person, which includes his (1) duty to investigate any investment (consider objective information) and (2) a duty to diversify investments. See Estate of Collins (trustee still liable under prudent person rule, even though trust included certain discretionary provisions).
a. Prof Note: need to investigate or hire someone using trust property to help advise, and exercise due diligence to hire the advisor.
126
What is the uniform prudent investor act?
Uniform Prudent Investor Act provides that a prudent investor’s performance is measured in the context of the entire trust portfolio and as part of an overall investment strategy having risk and return objectives reasonably suited to the trust.
127
What ancillary and administrative duties does a trustee have?
1. A trustee has a duty to segregate and earmark trust funds and not commingle the trust funds with the trustee's own funds, such that all trust funds are clearly labeled as such.
2. A trustee has a duty to disclose terms of the trust to the beneficiaries once the trust becomes irrevocable.
a. Prof. Note: when settlor of a revocable trust dies, it becomes irrevocable.
3. A trustee has a duty to account to and inform the beneficiaries with a statement of income and expenses of the trust on a regular basis, at least annually, even if not requested.
128
When does a trust become irrevocable?
when the settlor dies
129
Can a trustee delegate their duties?
Delegation of Duties is allowed if the trustee exercises due care and skill when selecting agents.
130
What is incorporation by refereence?
A writing in existence when a will is executed may be incorporated
by reference if (1) the language of the will manifests this intent and (2) describes
the writing sufficiently to permit its identification
