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MEE_Wills & Trusts Flashcards

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1
Q

Trustee has ___ & ____ discretion

A

absolute & unreviewable discretion

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2
Q

Trustee’s fiduciary duties:

A

duty to preserve trust property & make it productive,
duty to make sure trust produces income,
duty of loyalty

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3
Q

How is a trust created?

A

1) settlor who
2) intent to create trust for valid purpose
3) delivers trust property to trustee
4) to hold for benefit of one or more beneficiaries

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4
Q

Presence of a spendthrift provision precludes termination of a trust because…

A

it shows settlor’s material purpose & manifests his lack of confidence in judgment & management ability of the beneficiary

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5
Q

When may a trust be terminated?

A

1) purposes are accomplished early or trust purposes become illegal or impossible to carry out
2) all beneficiaries consent & modification will not interfere w/ material purpose of trust

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6
Q

Settlor’s promise to create a trust in future is valid only if:

A

1) supported by consideration
OR
2) manifests anew an intention to create trust when assets come into existence

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7
Q

Under traditional view, to create a valid pour-over gift from a will to a revocable trust,

A

the trust may be established after the will is executed but before the testator’s death

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8
Q

Under the prevailing view, when may the trust may be established?

A

After the will is executed but before testator’s death

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9
Q

Pour over gifts are valid even if trust is:

A

1) unfunded OR

2) amended during testator’s lifetime

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10
Q

Under UTC, is an inter vivos trust revocable?

A

Yes, unless expressly made irrevocable

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11
Q

What is a discretionary trust?

A

trustee is given discretion whether to apply or withhold payments of income or principal to a eneficiary

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12
Q

What is a support trust?

A

trustee is required to pay or apply so much of the income or principal as is necessary for the beneficiary’s support

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13
Q

What happens when a portion of a trust fails for lack of a beneficiary?

A

A resulting trust in favor of the settlor or settlor’s successors in interest is presumed

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14
Q

May settlor give trustee discretion to select class members?

A

Yes, as long as the class is reasonably definite - if too broad, trust or portion of, will be invalid

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15
Q

Cy Pres Doctrine =

A

applies when a specific charitable purpose indicated by settlor is no longer possible or practical, and settlor manifested a general charitable intent

UTC - general charitable intent is presumed & application of cy pres is mandatory

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16
Q

Disclaimer of a beneficiary interest:

A

A beneficiary has right, w/in reasonable time after learning of trust, to disclaim beneficial interest, absent some act of expressed or implied acceptance

in most states, a disclaimer is not effective unless it is in writing & is filed w/in 9 months of decedent’s death

any interest that otherwise would pass to that person under trust passes as though disclaiming party predeceased

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17
Q

In a Support Trust, what is trustee’s required duty?

A

Trustee is required to apply so much of trust as is necessary for beneficiary’s support; trustee does not have discretion to refuse to pay those bills

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18
Q

In a Discretionary Trust, what is trustee’s duty?

A

Trustee is given discretion whether to apply or withhold payment of trust property to the beneficiary

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19
Q

When will a court interfere with a trustee?

A

when trustee has acted in bad faith or dishonestly

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20
Q

A power of appointment is an authority created in a donee enabling donee….

A

to designate, w/in limits prescribed by donor of power, the persons who shall take certain property and the manner in which they shall take it

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21
Q

A special power of appointment =

A

exercisable in favor of a specified class of persons that does NOT include donee, her estate, creditors or creditors of estate

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22
Q

A testamentary power is one that is exercisable only by _____ ____

A

Donee’s will

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23
Q

Under UPIA, how must a trustee invest and manage the trust?

A

As a Prudent Investor, taking into account purposes, terms, distribution requirements & other circumstances of the trust

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24
Q

To act prudently =

A

trustee must exercise reasonable care, skill & caution

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25
In evaluating prudence of trustee as to overall portfolio, trustee has a duty to:
diversity investments, unless special circumstances AND act impartially in managing trust assets, taking into account beneficiaries differing interests
26
What constitutes "abuse" by trustee?
Abuse depends on the extent of discretion conferred on trustee
27
May a trustee purchase property owned by the trust?
NO, even if pays full value = Breach of LOYALTY self dealing trustee's good faith or benefit to trust is irrelevant
28
If a prohibited transaction takes place, the beneficiaries may:
1) set aside the transaction 2) recover profit made by trustee OR 3) ratify the transaction
29
Common Law RAP =
Gift must vest or fail w/in 21 years after a life in being
30
What is the modified "wait and see" approach for gifts?
validity of events is judge by actual events as they happen
31
Rule of Convenience =
when a will makes a class gif but postpones the time for possession and enjoyment of the gift, the class closes at the time fixed for distribution
32
Trust modification = Claflin Doctrine =
all beneficiaries consent AND modification will not interfere w/ material purpose of trust = Claflin Doctrine
33
Common law - equitable deviation
At common law, a court in equity may authorize trustee to deviate from administrative terms of a trust if settlor did not know or anticipate new circumstances and compliance with trust terms would defeat or substantially impair accomplishment of trust purposes (ex - trust prohibits sale of home, purpose to take care of daughter, neighborhood went bad, reform trust terms to permit sale)
34
UTC - court sanctioned modification if:
Trust could have been modified if all beneficiaries had consented and interests of any nonconsenting beneficiaries will be adequately protected Changed circumstances - court may modify trust terms if circumstances unanticipated by settlor threaten purpose of trust
35
Invasion of principal:
Usually changed circumstances cannot be used to change the BENEFICIAL RIGHTS of the beneficiaries. However, many states permit change if support of life tenant (income beneficiary) was primary purpose. UTC - no restriction against changing beneficiary rights for unanticipated circumstances threaten purpose of trust - modification permitted
36
Cy Pres if:
Charitable purpose becomes impossible or impracticable and Settlor had general charitable intent then court will order trust property be applied to another charitable purpose as closes as possible to original rather than have trust fail
37
If court determines Testator had specific charitable intent to Charity:
gift fails and reverts to Testator's estate
38
Under UTC, Cy Pres:
Under UTC, general charitable intent is conclusively presumed. Cypress will be applied in every case of impossible or impracticable charitable trust interest, unless settlor specifically provides for substitute taker in event of this type of problem
39
Requirements for a valid well (attestated):
Signed by Testator & 2 witnesses, signed in presence of testator
40
Holographic will:
UPC & majority of states recognize - requires all or most of will be in testator's handwriting and signed by testator
41
Purpose of Codicil:
amends prior validly executed will & republishes it
42
Incorporation by Reference:
document not present when will executed may be incorporated by reference if: (1) document in existence at time will (codicil) executed (2) sufficiently describes writing, AND (3) Will manifests intent to incorporate
43
Slayer Statute
one who feloniously & intentionally causes decedent's death forfeits share property passes as though killer predeceased decedent
44
Ademption =
when specifically bequeath property not in estate at death, gift is adeemed (fails)
45
Stock Dividend, at common law, specific bequest of stock included:
Splits but not dividends
46
UPC, specific bequest of stock:
includes both stock splits and dividends
47
Under UPC, a specific devise of real property:
a specific devisee has the right to any real property owned by testator at death that was acquired as a replacement for the specifically devised property
48
Exception to Ademption:
if bequeathed property is sold by Conservator/guardian, then Beneficiary is entitled to Proceeds of Sale (ex. Ring sold by conservator, friend entitled to 50K proceeds from sale of ring)
49
Revocation by Operation of Law - Divorce
Divorce revokes all provisions in favor of former spouse - residue passes under law of intestacy UPC - revokes gifts to former spouse & former spouses relatives
50
Intestate Succession:
Under typical scheme, property passes: spouse decendants parents and/or siblings (and children of deceased siblings)
51
Per capita by representation:
used by most states, split at first level w/living takers
52
Per stirpes:
shares determined at first generation level (child level) even if no living takers
53
Is life insurance probate or nonprobate asset?
Life Insurance policy is nonprobate asset passing outside of estate - policies are contracts
54
Can a will change a beneficiary of a life insurance policy?
NO, unless insurance contract permits it
55
UPC & many states, Document incorporated by reference:
document need not be in existence when will executed for small amounts of personal property if signed by testator and items and devisees are described w/ reasonable certainty (ex. memo describing jewelry to specific person)
56
Order of Abatement (when reducing gifts):
Intestate property residuary estate general legacies specific devises and bequests
57
Undue Influence - contestant must prove:
1) Influence exerted 2) Overpowered mind & free will of testator, AND 3) Product was will that would not have been executed but for influence Burden shifts to proponent of will to prove it was not induced by her undue influence
58
Presumption arises when:
1) confidential relationship 2) beneficiary participated in procuring will, AND 3) provisions unnatural and favor alleged influencer
59
effect of undue influence on will:
will is void, if only part of will procured by undue influence, only that part void
60
Intestate succession:
statutory method of distributing assets that are not disposed of by will if no souse, to children & descendants of deceased children
61
Common law: no residue of residue =
If will partially invalid b/c testator's residuary estate is bequeathed to two or more beneficiaries & one beneficiaries' shares lapse, that share does not pass to remaining beneficiaries but instead "falls out of the will" and passes by intestacy
62
most states, Distribution if will partially invalid:
replaces CL rule by Statute, under which lapsed share passes to other residuary beneficiaries in proportion to their interests in the residue
63
Specific bequest =
gift of property that is particularly designated & is to be satisfied only by receipt of particular property described (ex. My 100 Shares)
64
Condo, Majority objective test:
gift of property not in estate at death fails (adeems)
65
Condo, Intent test:
beneficiary will take if can show testator intended him to take substitute property
66
Condo, UPC
specific devisee has right to real property acquired by T as a replacement for specifically devised property
67
What are the 3 different types of tests for gift of real property?
Majority objective test Intent test UPC
68
Disclaimed bequest passes to whom?
interest passes through as disclaimant predeceased decedent gift saved if anti-lapse statutes (most require predeceasing beneficiary to be related to testator) other states & UPC extend to testator's stepchild, grandparent very few states apply broader anti-lapse statute - any beneficiary (ex. 10K to friend - friend disclaims & has child - usually will lapse, and go to residuary estate)
69
Residuary Estate:
what is left over after payment of all bequests and expenses
70
Lack of Testamentary Intent:
for will to be valid, testator must intend for particular instrument to operate as will "This is my last will" raises presumption of testamentary intent, but rebuttable by extrinsic evidence (ex. writing on back of will)
71
Revocation by instrument must be:
Present intent to revoke, AND | Instrument executed w/ testamentary formalities (signed & attested)
72
Revocation by physical act:
Requires intent to revoke PLUS Burning, tearing, obliterating or canceling material portion of will Must have actual effect on will or its language - Common Law UPC - words of cancellation must be on will itself, but need not touch any words of will (note on back effective to revoke) MAJORITY STATES - writing "ignore this will" on back of will fails to revoke
73
Most states, Interested Witnesses:
will is valid, but gift to witness-beneficiary is void = (purging statute)
74
Common Law, Interested Witnesses:
will invalid if witness was also beneficiary, probate denied
75
3 reasons to Deny Probate:
Lack of Testamentary Intent Revocation Interested Witnesses
76
Theories other than fraud for claim - Contract to make gift (CL)
T & B have contract in which T promised to leave entire estate to B in return for taking care of him = Contracts law, not wills law controls
77
Theories other than fraud for claim - Contract to make gift (UPC)
UPC requires: Will provisions stating terms of K Express reference in will to K, OR Signed writing by decedent
78
Integration of will:
proponent must show: Pages present, AND Testator intended pages to be will
79
(Validity) Integration - Presumption of presence & intent if:
Pages physically connected, Internal Coherence (provisions run from one page to next), OR Pages constitute orderly dispositive plan (when read together) Burden shifts to will contestant to prove otherwise
80
(Distribution) - Crossing out a bequest:
Crossing out bequest would normally revoke
81
(Distribution) - DRR:
applies when revocation due to mistaken belief other bequest was valid (T believed increased bequest was valid when crossed out & ignoring revocation closer to T's intent)
82
In most states, Paternity can be established if father:
married mother after child's birth OR man was adjudicated to be father in a paternity suit OR after man's death, he is probed in probate proceedings to have been child' father (clear & convincing evidence)
83
Extrinsic evidence is not admissible in most courts to show that a provision contained in the will is not what testator intended absence:
evidence of fraud, duress or suspicious circumstances, it is presumed testator understood & approved terms of will when he signed it
84
No-contest clause:
in most states & UPC, a no-contest clause is enforceable, but beneficiary will not forfeit legacy if court find he challenged will in good faith & on basis of probable cause (question of fact) court will uphold forfeiture provision if beneficiary had no reasonable basis for contesting will
85
Fraud in the inducement:
will or gift is invalid if: 1) Willful misrepresentation of material fact 2) Purpose to mislead testator for purposes of influencing will, AND 3) Testator relies on misrepresentation

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