South Carolina - Wills and Trusts

Question 1

INTESTACY > Disclaimers

Requirements

Timing

Effect

Answer 1

REQUIREMENTS: Disclaimer must

1. be in writing
2. be signed
3. describe the property disclaimed
4. describe the extent disclaimed, and
5. be delivered to PR or court

TIMING: must be delivered w/in later of 9 months of ø’s death, date interest vested, or disclaimant’s 21st birthday

EFFECT: treats disclaimant as predeceasing decedent
*DOES NOT treat disclaimant as having predeceased the decedent for purposes of determining the generational level at which a distribution is made.

Question 2

WILLS > Requirements of a Will

Answer 2

1. Testator must be 18 years old, married, or emancipated
2. Will must be in writing
3. Will must be signed by T (or by another in T’s presence and at T’s direction) (can be signed anywhere on document); and
4. Two Witnesses must witness T signing will (or T’s acknowledgement of a prior signature or of the will itself)

Question 3

WILLS > What jurisdiction’s law must the will comply with in order to be admissible to probate in SC

Answer 3

1. SC
2. state where will was executed
3. T’s domicile at time of will’s execution
4. T’s domicile at death

Question 4

WILLS > Pretermitted Children

Answer 4

Entitled to Intestate share, unless
1. appears from will that omission is intentional

2. T left substantially all of the estate to the surviving spouse; or
3. T provided for child by transfer outside of the will w/ intent that it be in lieu of the testamentary devise

Question 5

WILLS > How to get a lost/destroyed will admitted to probate

Answer 5

First, must overcome rebuttable presumption that will was revoked by physical act

Second, it may be admitted to probate if the following can be proven:

1. valid execution;
2. the cause of the nonproduction; and
3. the contents of the will

Question 6

WILLS > Revival

Revival after Total Revocation

Revival after Partial Revocation

Will-2 Revoked by Written Instrument (not physical act)

Answer 6

REVIVAL AFTER TOTAL REVOCATION: If a subsequent will that WHOLLY revoked a previous will is itself revoked by a revocatory act, the prior/first will is revived if it appears by Clear and Convincing evidence that Testator intended to revive. (favors not reviving first will)

REVIVAL AFTER PARTIAL REVOCATION: If a subsequent will that partly revoked a previous will is revoked, the revoked part of the previous will is automatically revived, UNLESS there is clear and convincing evidence that Testator did not intend to revive the portion revoked (favors reviving first will)

WILL-2 REVIVED BY WRITTEN INSTRUMENT
If Will-2 revoked by written instrument (not physical act), intent to revive Will-1 must be in the terms of the revoking instrument

Question 7

WILLS > Dependent Relative Revocation

Answer 7

T’s revocation will fail and the prior disposition will remain in force, when

1. T revokes all/part of a will under mistaken belief that another disposition of his property would be effective, and
2. but for that mistaken belief, T would not have made the revocation
   * Only use DRR if result would come closer to what T tried to do [[I.e., if attempted gift was larger. Mention on exam if attempted gift is smaller. Do not mention if gift is totally gone]]

Question 8

WILLS >

When does SC Anti-Lapse Statute Apply

Answer 8

When there’s a lapse

Must be a gift to T’s grandparent or a lineal descendant of a grandparent who left issue that survives T.

*doesn’t apply to class gifts (i.e., only surviving class members take)

Question 9

INTESTACY > Paternity by Adjudication

Timing

Standard of Proof

Answer 9

Before ø’s death, or LATER of

6 months after appointment of PR, or

8 months after Decedent’s death

STANDARD OF PROOF
clear and convincing

Question 10

ELECTIVE SHARE >

Timing

Answer 10

Later of 6 months following probate of will, or 8 months after ø’s death

Question 11

ELECTIVE SHARE >

Waiver

Answer 11

1. in writing, and

2. any time after spouse receives a written disclosure of the T’s property and financial obligations

Question 12

WILL CONTEST >

Prerequisites to mounting a will contest

Answer 12

1. Grounds (defective execution; revocation; lack of testamentary capacity; lack of testamentary intent; undue influence; fraud; and mistake)
2. Standing: any person whose share of the estate would increase were teh will contest successful

Question 13

WILL CONTEST >

Lack of Testamentary Capacity

Effect of an adjudication of incompetency

Answer 13

T must be 18, married, or emancipated

1. Did T know the nature and character of his property;
2. did T know the natural objects of his bounty; and
3. did T understand the disposition he wished to make

EFFECT OF ADJUDICATION OF INCOMPETENCY
presumption of incapacity, but not conclusive

Question 14

WILL CONTEST >

Undue Influence

Presumption

Answer 14

Clear and Convincing evidence of

1. existence and exertion of the influence
2. effect of which was to overpower the mind and will of the testator; and
3. the result if a will (in whole/part) that would not have been executed but for the influence

PRESUMPTION:
Person with confidential or fiduciary relationship to testator draws or procures the execution of the will

Question 15

WILL CONTEST >

Fraud

Answer 15

Testator was WILLFULLY DECEIVED as to the

1. Character/content of the instrument,
2. extrinsic facts that would induce the will or a particular disposition, or
3. facts material to a disposition

Question 16

WILL CONTEST >

Mistake

Answer 16

MISTAKE IN EXECUTION: parol evidence admissible to show T didn’t know instrument was a will

MISTAKE IN INDUCEMENT: No relief, unless (1) mistake is on the face of the will, or (2) mistake involves omission of a child mistakenly believed to be dead.

Question 17

WILL CONTEST > Reformation available when

Answer 17

Clear and Convincing Evidence of BOTH: (1) ACCOMPLISHMENT of T’s intent was affected by mistake of law or fact; and (2) TERMS of the will were affected by a mistake of law or fact.

Question 18

TRUSTS > Elements

Answer 18

Creator … delivers … legal title of trust assets (res) … to trustee … for the benefit of the beneficiaries … with intent to create a trust … for a valid purpose

*does not apply to self declaration of trusts or testamentary trusts

Question 19

TRUSTS >

If the Statute of Frauds is violated (wrt a valid express trust), when may a constructive trust be imposed due to an issue with the trustee?

Answer 19

FRAUD IN INDUCEMENT: if trustee (at any time) orally promises to serve as trustee, and at that time, he has no intention to perform his promise.

CONFIDENTIAL RELATIONSHIP: Grantee/Trustee served in a confidential relationship to Grantor/Settlor

Question 20

TRUSTS > SECRET TRUSTS

What is a Secret Trust

Extrinsic Evidence permitted

Rule

Answer 20

Testamentary gift that is absolute on its face, but was in fact made in reliance on the devisee’s promise to hold the property in trust for another.

Extrinsic evidence is permitted

If intended trust beneficiary can present CLEAR AND CONVINCING evidence of the devisee’s promise (to hold property in trust), a CONSTRUCTIVE TRUST will be imposed

Question 21

TRUSTS > SECRET TRUSTS

What is a Semi-Secret Trust?

Rule

Answer 21

Testamentary gift that is made in trust (with a named trustee), but fails to name the beneficiaries.

Extrinsic evidence is NOT permitted

Named trustee holds the property on a resulting trust for the testator’s heirs

Question 22

TRUSTS > CHARITABLE TRUSTS

Special Rules for Charitable Trusts

Answer 22

1. Not subject to the Rule Against Perpetuities or the Rule Against Accumulations (can accumulate income perpetually)
2. Must be for a CHARITABLE PURPOSE
   -must have a mechanism to ensure it’s being used for a charitable purpose
   ((e.g., religion, medicine, science, governmental, research, education))
3. Must be in favor of a REASONABLY LARGE NUMBER of UNIDENTIFIABLE beneficiaries, and
4. Can be modified by EQUITABLE DEVIATION (also applies to private trusts)
   - used when specific charitable purpose becomes unlawful, impracticable, wasteful, or impossible

Question 23

TRUSTS > Creditors

Efficacy of Spendthrift Trusts against Creditors

Answer 23

THIRD PARTY BENEFICIARIES:

• Enforceable if it restricts the alienability AND assignments of a third-party beneficiary.
• Child Support

TRUSTS FOR BENEFIT OF SETTLOR:
-invalid to protect against creditors
-invalid to protect against child support
((-invalid against claims of government))

Question 24

TRUSTS > Creditors

Effect of Discretionary Trusts on Beneficiary’s Creditors

Answer 24

Creditors cannot compel payment from the trustee (even in absence of spendthrift clause)

If served with process, trustee must satisfy creditor’s claim before exercising power in favor of beneficiary

Court can also order trustee to satisfy SMS, spousal support, child support

Question 25

TRUSTS > Creditors Effect of revocability on creditor's claims

Answer 25

if trust is for benefit of S, and it's irrevocable, S's creditors CANNOT reach it (exception: if trust create with intent of defrauding known creditors)

Question 26

TRUSTS > TRUSTEE'S DUTIES Trustee's Duties

Answer 26

1. Duty of Loyalty (no self-dealing) 2. Duty to Invest Prudently - --- 3. Duty to preserve and protect trust property 4. Duty of Impartiality 5. Duty to Account and Inform

Question 27

TRUSTS > TRUSTEE'S DUTIES Duty of Loyalty

Answer 27

Duty against Self Dealing (BBBCS) 1. Trustee cannot BUY/SELL assets to itself 2. Trustee cannot BUY/SELL assets from one trust to another trust 3. Trustee cannot BORROW trust funds (no matter what) 4. CORPORATE trustee cannot purchase its own stock as a trust investment (can retain if in original res) 5. SELF-DEALING: Trustee cannot engage in any transaction in which she seeks to secure a PERSONAL GAIN.

Question 28

TRUSTS > TRUSTEE'S DUTIES Duty to Invest Prudently

Answer 28

*Trustee must manage property as a PRUDENT INVESTOR would. Must adhere to a standard of REASONABLE CARE, SKILL, and CAUTION in making investment decisions ("BC = Powdered Dope") 1. Duty to BALANCE return with potential risk 2. Duty not to COMMINGLE ("duty to earmark") * 3. Duty to DIVERSIFY Investments 4. Duty to keep trust PRODUCTIVE (Portfolio view: TOTAL return of investments must be reasonable)

Question 29

TRUSTS > TRUSTEE'S DUTIES What are the Beneficiary's remedies for trustee's breach of trust

Answer 29

1. RATIFY: Ratifies transactions and waives the breach 2. SURCHARGE: Sue for resulting loss (breach of fiduciary duty is automatic wrong: no justification/excuse available) 3. TRACE (self-dealing cases): can recover trust property for the trust

Question 30

TRUSTS > TRUSTEE'S DUTIES Trustee's duties in delegating responsibility to agent Notifying Beneficiaries of Delegation

Answer 30

Must use reasonable care, skills, and caution in (i) SELECTION of agent (ii) defining SCOPE and terms of the delegation, and (iii) periodically REVIEWING actions of agent Beneficiary's knowledge of delegation will not absolve trustee: they must affirmatively consent.

Question 31

TRUSTS > Trust Accounting

Answer 31

Trust divided into Income (for income beneficiaries) and trust corpus (for remaindermen at termination of trust) RECEIPTS: Income (ORDINARY RECEIPTS): interest, rents, cash dividends ((also, 10% of annuities or royalties received)) Corpus (EXTRAORDINARY RECEIPTS): proceeds from sale of trust assets, stock splits, and stock dividends EXPENDITURES: Income: ORDINARY EXPENSES incurred in production of income (and 1/2 trustee's fee) Corpus: EXTRAORDINARY EXPENSES (and 1/2 trustee's fee)

Question 32

TRUSTS > REVOCATION, TERMINATION, AND REFORMATION By the Settlor

Answer 32

Settlor can revoke, terminate, or reform trust if 1. trust instruments does not explicitly state it's IRREVOCABLE, and 2. Settlor COMPLIES with provisions in trust

Question 33

TRUSTS > TERMINATION AND REFORMATION REVOCATION by the Trustee

Answer 33

TERMINATION ONLY* 1. Notice to all qualified (i.e., living) beneficiaries, 2. Trustee determines value of trust is insufficient to justify its administration, and 2. Trust worth less than $100,000

Question 34

TRUSTS > TERMINATION AND REFORMATION TERMINATION/MODIFICATION by Beneficiaries

Answer 34

TERMINATION/MODIFICATION 1. Must be an IRREVOCABLE, NONCHARITABLE trust, 2. all beneficiaries CONSENT, and 3. Court concludes that continuance of trust (or adherence to its original terms) is NOT NECESSARY TO ACHIEVE ANY MATERIAL PURPOSE of the trust

Question 35

TRUSTS > REVOCATION, TERMINATION, AND REFORMATION Spendthrift Clause's Effect on Termination by Beneficiaries

Answer 35

Can't terminate if there's a spendthrift clause, unless 1. All beneficiaries consent, 2. Settlor consents, and 3. court approval

Question 36

TRUSTS > TERMINATION AND REFORMATION By the Court

Answer 36

1. value of trust is does not JUSTIFY its cost of administration. 2. UNANTICIPATED CIRCUMSTANCES, and modification/termination will FURTHER PURPOSE of the trust. 3. Continuation of trust on existing terms would be IMPRACTICABLE, WASTEFUL, or would IMPAIR trust's administration OR 4. MISTAKE of law or fact

Question 37

TRUSTS > TRUSTS BY OPERATION OF LAW Resulting Trust Defenses

Answer 37

1. FAILURE of express trust, OR 2. When express trust purposes ACCOMPLISHED -Semi-Secret Trust

Question 38

TRUSTS > TRUSTS BY OPERATION OF LAW Purchase Money Resulting Trust: Definition Defenses

Answer 38

DEFINITION: One the person who pays consideration is different than the person who takes title. Person who takes title keeps property in a purchase money resulting trust for the benefit of the payor. DEFENSES: Gift (presumed if family) Loan

Question 39

TRUSTS > TRUSTS BY OPERATION OF LAW Sale/Exchange by trustee of a resulting/constructive trust to a BFP for value

Answer 39

Cuts off right to beneficiary's right to transferred asset Beneficiary gets right to the proceeds If person is not BFP, Beneficiary can elect between proceeds or property

Question 40

POWERS OF APPOINTMENT What are Powers of Appointment

Answer 40

Authority granted by donor to a donee, enabling donee to designate (within terms prescribed by donor) the persons who shall take property and the manner in which they shall take

Question 41

POWERS OF APPOINTMENT Parties Involved Types of Powers of Appointment

Answer 41

PARTIES Donor Donee Takers in Default TYPES OF POWERS OF APPOINTMENT General: exercisable in favor of tghe donee himself, his creditors, or the creditors of his estate. Special ---- Presently Exercisable Power: can be exercised by donee during her lifetime Testamentary Power: can be exercised only by donee's will

Question 42

WILLS > Attorney Liability for Negligence

Answer 42

Attorney owes a duty to an intended beneficiary of an executed will, where Testator's intent has been DEFEATED OR DIMINISHED by the attorney's negligence *always bring up on exam

Question 43

WILLS > REVOCATION BY WRITTEN INSTRUMENT Effect of Second Will that revokes first will

Answer 43

2D WILL HAS NO RESIDUARY CLAUSE: presumptively a codicil--implied revocation to extent of inconsistency 2D WILL HAS A RESIDUARY CLAUSE: Revokes 1st will in its ENTIRETY by inconsistency

Question 44

WILLS > REVOCATION BY OPERATION OF LAW > Effect of Divorce On Will: If parties remarry: on revocable beneficiary designations

Answer 44

WILL: FINAL divorce revokes all provisions in favor of ex-spouse (treated as predeceased) REMARRY: comes back in under will REVOCABLE BENEFICIARY DESIGNATIONS: all such designations are revoked as to ex-spouse (revocable trust; life insurance policy; pension plan)

Question 45

WILLS > INCORPORATION BY REFERENCE Requirements Personal Property Exemption

Answer 45

1. Will must MANIFEST INTENT to incorporate by reference 2. Referenced document must be in EXISTENCE at time of the will's execution; and 3. Will must DESCRIBE WRITING SUFFICIENTLY to permit its identification *personal property exception: (not money/no stocks or bonds)

Question 46

WILLS > Ademption by Extinction What can a specific devisee get if his gift is ademed

Answer 46

TESTATOR NOT DECLARED INCOMPETENT Specific Devisee entitled to a GENERAL LEGACY equal to -any purchase price owing from purchase when K is still executory at T's death -any condemnation award still unpaid at T's death, and/or -any insurance proceeds unpaid at T's death TESTATOR DECLARED INCOMPETENT AFTER EXECUTION OF WILL Specific devisee entitled to THE REMAINING SPECIFICALLY DEVISED PROPERTY and a GENERAL LEGACY equal to -net sale price -condemnation award, and/or -insurance proceeds UNLESS: T's disability adjudicated to have ceased and T survives adjudication by 1 year

Question 47

WILLS > INTESTACY > Items NOT in the probate estate

Answer 47

Property passing by right of SURVIVORSHIP Property passing by CONTRACT ((life ins; employee plan death benefits)) Payable on Death (POD) Accounts Property held in TRUST (including revocable trust) Property over which decedent had a POWER OF APPOINTMENT

Question 48

WILLS > INTESTACY Step Parent Adoption (Mother remarries and step father adopts). What are intestacy rights?

Answer 48

Mother and stepfather can inherit from child Child can inherit from mother and stepfather. Child and biological father CANNOT inherit from each other

Question 49

WILLS > INTESTACY Intestacy Rights: Child born out of wedlock child vs. biological father

Answer 49

CAnnot inherit unless father OPENLY AND NOTORIOUSLY treated child as his own

Question 50

WILLS > INTESTACY > When is a gift an "advancement" or a "satisfaction Advancement Satisfaction

Answer 50

Only when 1. Decedent declares it as such in a CONTEMPORANEOUS WRITING, or 2. Heir acknowledges as such in a WRITING Additional circumstance for satisfaction 3. when will provides that gift was in satisfaction

Question 51

WILLS > ELECTIVE SHARE What assets are used in calculating the elective share

Answer 51

PROBATE ASSETS: probate assets, and ILLUSORY REVOCABLE TRUST: A revocable trust is illusory when 1. decedent is the sole trustee, or 2. decedent has veto power over trustee's decisions

Question 52

WILLS > ELECTIVE SHARE How much is the elective share What property is used to satisfy the elective share

Answer 52

HOW MUCH IS ELECTIVE SHARE: 1/3 of probate estate (including illusory revocable trust) PROPERTY USED TO SATISFY THE ELECTIVE SHARE (in order) 1st: property ALREADY PASSING to SS under the decedent's will or illusory revocable trust 2d: Use rules of abatement to satisfy remainder

Question 53

WILLS > SLAYER STATUTE Evidentiary standard Effect on - will/intestate share - nonprobate benefits - Jointly held property with right of survivorship

Answer 53

Must find killing UNLAWFUL or INTENTIONAL by a POTE. Final criminal judgment is conclusive proof. EFFECT ON: Will/Intestate Share: as though predeceased Non-Probate Benefits: Predeceased Right of Survivorship: does not get benefit of ROS, but does not forfeit his own share [[i.e., tenants in common]]

Question 54

DURABLE POWER OF ATTORNEY Requirements

Answer 54

REQUIREMENTS: 1. Will formalities 2. Capacity to make a contract 3. Language to act on behalf of principle 4. Survivorship Language TERMINATION 1. death or revocation of Principal