Trust and Estates Rule Paragraphs

Question 1

The issue is whether the testator’s intent will govern the construction of a will that is otherwise valid on its face

Answer 1

Under the New York EPTL, parole evidence is admissible to determine the intention of a testator who creates a will that is ambiguous on its face. Such evidence can be obtained from the drafting attorney or third parties with relevant knowledge.

Also, when a will is complete on its face, the court may interpret the will in order to arrive at the result most likely intended by the testator. To do this a construction trust will be created.

Question 2

If it appears that a residuary clause will normally fail because of the Will’s construction, the court will

Answer 2

attempt to fulfill the testator’s wishes by awarding the residuary to the named party. The testator’s intent needs to be made clear that the testator did not want the estate to pass through the intestacy laws.

Question 3

The issue is whether a broad residuary clause, containing “insurance benefits,” acts as a valid designation or change of beneficiaries under an existing policy.

Answer 3

An insurance policy is a contract between the insured and the insurer. The terms of the contract regarding designation of beneficiaries govern the extent to which an insured can change the beneficiaries pursuant to a will. Therefore, if the testator does not comply with the terms of the policy, and mention in the Will is invalid and does not modify the insurance contract, even if the Will states the policy amount, company and new beneficiary

Question 4

The issue is whether the attestation of an interested witness affects the witness’ grant under the will

Answer 4

Under the EPTL, a valid New York will must be in writing, signed and attested by two disinterested witnesses. if one of the two witnesses is a beneficiary to the will, that gift fails, but the will is otherwise valid.

If the interested beneficiary is also an intestate distributee, the beneficiary takes the lesser of the specific bequest or intestate stare.

However, if two separate witnesses attest to the will in addition to an interested witness, there is no effect on the Will. The interested witness is simply discarded and the will is probated with the two witnesses.

Question 5

What are the requirements of a validly executed Will in New York

Answer 5

A Will is validly executed if it mets the five requirements of due execution: 1) the will was signed by the testator, 2) the will was written, 3) the will was signed at the end of the document, 4) it was published to the witnesses that it was the testator’s Will, and 5) it was signed by two disinterested witnesses. Additionally, the testator was over 18 years old, and had the mental capacity to execute a will (meaning the testator understood the value of the bequests, her bounty, and intent to create the will). The testator must either sign the Will in the presence of both witnesses or acknowledge this signature before the witnesses. Both witnesses can sign together, or if separately, the witnesses must sign within 30 days of each other. The witnesses must sign in a witness capacity, and not as a notary. The witnesses can be under the 18, but must be deemed competent.

Question 6

In New York in distributing an estate, as a matter of policy, the court will attempt to accomplish?

Answer 6

In distributing an estate in New York, the courts have established, as a matter of policy, the goal of accomplishing the testator’s intent. In doing so, courts tend to enforce a Will if the enforcement represents the testator’s intentions, rather then have the estate pass through intestacy.

Question 7

Incorporation of a life insurance policy/contract in a will has what effect on the insurance policy

Answer 7

In general, New York does not allow a Will to incorporate another document, such as an insurance policy. However, the exception in New York to allow incorporation of another document, generally, has to be an attested document, such as a husband’s Will referencing his wife’s Will (if both were duly executed). Furthermore, the insurance policy is a private contract between the testator and insurance company.

Question 8

What is the effect of a interested-witness that signs and attests to the execution of a Will

Answer 8

Generally, if an interested witness, witnessed the will, further examination is required. Under the EPTL’s requirement of two disinterested witnesses sign the will, if three witnesses sign the Will, and one is interested, and the other two are disinterested, then the interested witness is superfluous, and discarded. Under the EPTL, if two witnesses sign, and one is an interested witness or will receive under the Will, the court will admit the Will to probate, but revoke the witnesses gift, and the witness will forfeit the gift. However, if the interested witness would also take under the laws of intestacy, then the interested witness will take the lesser of the gifts.

Always state whether or not all the elements are present and properly executed (input the facts to support the execution, such as what the testator did)

Question 9

The issue is whether attestation of a Will by an interested witness invalidates the Will

Answer 9

Under the EPTL, a bequest under a Will to one of the attesting witnesses, which is an interested-witness, will not invalidate the Will, but the gift to such a witness (interested witness) will fail, unless: 1) the other two disinterested witnesses attest the Will, and 2) if the interested witness is also an intestate distrubtee, then the interested witness would receive the lesser of his gift under the Will or his intestate share

Under the New York EPTL, the Will is not invalid because an interested party witnessed and signed as a witness to the Will. Generally, the interested witness will forfeit the gift.

Question 10

What effect does the “affidavit of proper execution” have on a Will

Answer 10

The affidavit asserting the elements of proper execution signed by the attested witnesses would satisfy the requirements for admission of the Will to probate without the testimony of such witnesses if there is no will contest.

Question 11

What is the general rule applied to witnesses, if there is a Will contest

Answer 11

if there is a Will contest, the witnesses must testify. However, if one witness is unavailable at least one of the witnesses must testify. If both witnesses are unavailable other evidence must be produced to admit the Will to probate. Evidence such as, proof of at least two signatures, which is that of the testator and at least one witness.

Question 12

The issue is whether the attorney-drafter and beneficiary under the Will, exercised undue influence on the testator in the execution of the Will.

Answer 12

Under the EPTL, and SCPA, the party challenging the Will based on undue influence must normally show that there was exercise of undue influence, and mere opportunity to exercise influence or mere susceptibility to it are insufficient. The court defines undue influence as overpowering the Will of the testator, the testator did not execute the Will under his/her own free will, and that the disposition in the Will would not have been made but for undue influence.

However, there is an inference of undue influence where a person in a confidential relationship with the testator, including an attorney who took an active part in drafting and executing the Will. In such cases, the court is required to engage in “Putnam Scrutiny” even sua sponte. However, the inference of undue influence is a rebuttal presumption, and can be negated by showing that there was an independent basis for the disposition to the person in the confidential relationship.

Question 13

The issue is whether a specific gift fails when the property given as a gift at the time of the Will is subsequently sold, and where the proceeds of the sale are received by the testator before the testator’s death

Answer 13

Under the EPTL, where a specific gift is made to a beneficiary under a Will and at the time death, the testator is not the owner of the property in question or the property is not found, the gift is said to have adeemed, or failed. The only exceptions to the rule of ademption is when the property is sold under contract and the proceed are paid after the death. In such case, the beneficiary of the specific gift is entitle to the proceeds.

The general rule is that a beneficiary is not entitled to the receipt of a specific bequest if it does not exist at the testator’s death. A specific bequest is one that is referred to specifically and not a sum amount which is a general bequest, but if the testator bequests a sum of money from a specific source, then that is a demonstrative bequest. Both general and demonstrative bequest are not subject to ademption.

However, if the proceeds of the sale of the specific bequest or proceeds from casualty insurance in connection with the specific bequest were received after the testator’s death, or if a conservator of the testator’s estate sold a specific bequest and such proceeds or sale or insurance (and in the case of sale by the conservator), the beneficiary may only recover to the extent of proceeds traceable by the beneficiary.

Question 14

The issue is, and to what extent, is an attorney permitted to receive both Executor commissions and legal fees from an estate of the decedent

Answer 14

Under New York statute, if an attorney who drafts the will is appointed the executor of the testator’s estate, the attorney is required to give the testator a written statement disclosing that anyone can be an executor, any one can be executor, even layman, not just attorneys. The statement to the testator must include that the attorney will be entitle to two fees, the Executor fees and legal fees from the estate. The acknowledgment must be signed by the testator (in a separate document from the Will), and witnessed by two witnesses (who are not employees of the lawyer).

If the attorney fails to comply, it results in the attorney receiving only half of the statutory commissions, but the attorney can still charge the normal legal fees

Question 15

What is the rule of “doctrine of incorporation by reference in NY, whereby a Will provision references or incorporates an extrinsic document

Answer 15

Generally, New York Wills are governed by the EPTL, unlike certain other states, the EPTL does not provide for the doctrine of incorporation by reference whereby a Will provisions may incorporate an extrinsic document and be considered valid. However, an exception to the EPTL’s rejection of a document of incorporation by reference is a so-called “pour-over” Will provision into a valid trust

Under New York law, incorporation by reference into the terms of the will is not allowed. All terms must be set forth in a will that is duly (properly) executed in writing, signed, witnessed by two witnesses who knew they were signing the testator’s will. However, there is an exception for “pour over” Wills. A pour over trust in a will exists when a testamentary gift is left in part or all of the testator’s estate to a trust.

The trust must have been properly executed, signed by the party creating the trust, witnessed by two witness, for a lawful purpose, res or corpus put in the trust, and (1) been in existence at the time time the will was executed or (2) executed contemporaneously (simultaneously).

Question 16

What is the requirement for a “pour-over” trust to be valid with regard to a Will’s reference to a inter vivos trust?

Answer 16

A pour-over Will provision occurs when a bequest in a will is made to lifetime (intervivos) trust instrument. Generally, such a provision is valid provided it expressly references the trust and the trust was created prior to or concurrently (simultaneously) with the Will itself.

Question 17

What rights does a creator / grantor have to amend a life time trust in New York

Answer 17

New York statutorily provides that, absent express reservation to amend a lifetime trust, creates an irrevocable and unamendable trust. A settlor may in fact reserve the right to revoke and/or amend provided such reservation is expressly included in the instrument.

It should be noted that, if grantor/settlor (beneficiary to lifetime income) was not entitled to amend or revoke the trust, such amendment can occur or be accomplished with the consent of all the beneficiaries. However, if any of the beneficiaries are a minor, the minor could not consent to such amendment or revocation (and nor could a guardian on the minor’s behalf).

Question 18

What action does the court take when a valid pour over trust (revocable or amendable) is amended after the execution of the Will?

Answer 18

The surrogate court will generally give effect to valid amendments to a lifetime trust even where such amendments occur after the valid execution of the will which incorporates them.

Question 19

When the fact pattern establishes a trust, under NY statute, trusts are spendthrift protected, make sure that you include a few sentences stating that

Answer 19

Under the EPTL, absent contrary agreement or provision, income trusts are spendthrift-protected. When an income beneficiary is the settlor/grantor, any subsequent income beneficiaries do not have any vested rights, and the next generation of income beneficiaries are not subject to the automatic spendthrift protection afforded by the NY statutes, therefore, the creator of the trust would need to include the spendthrift language in order to protect the future beneficiaries.

Question 20

What are the applicable laws in New York in regard to pretermitted children (after born children)

Answer 20

Generally, the law in New York under the EPTL, will provide a share of inheritance for a child of a testator who is: (1) born after the execution of the testator’s Will, (2) the after born child is not mentioned in the testator’s Will; and (3) the after born child is not provided for by other settlement.

The statute protecting pretermitted (after born) children does not extend so far as to ensure equal shares for all children, but rather assumes an oversight where no settlement or mention of the child was made in a prior will. In such circumstances, a court will allow a child to share equally in the gifts to the other children.

Where is no provision or limited provision, the pretermitted child would be allowed to take his or her intestate share in order to prevent disinheritance. However, were children that were alive prior to the execution, and the will does not provide or leave anything for the children, the pretermitted child would take nothing.

Question 21

What is the rule of law in New York related to surviving residuary beneficiaries

Answer 21

The surviving residuary beneficiaries rule states that where there are two or more residuary beneficiaries and one predeceases the testator, the surviving residuary beneficiaries take the share of the deceased residuary beneficiary, subject to the anit-lapse statutes in New York,

Question 22

The anti-lapse statutes in New York apply when

Answer 22

A beneficiary predeceases the testator, but subsequent to the Wills execution. The New York anti-lapse statutes under the EPTL saves a gift (to the extent that the gift would otherwise fail due to the beneficiary predeceasing the testator) if such gift was made to: (1) the issue or sibling of the testator; AND (2) the predeceasing person left behind surviving issue.

Question 23

The issue is whether a former spouse is entitled to take under a Totten Trust or whether a divorce revokes the Totten Trust distribution

Answer 23

In New York, a Totten trust is created when a bank account holder designates another person as the beneficiary upon the account holder’s death. A Totten trust is unlike a traditional trust in that the name beneficiary simply takes the “trust” assets upon the account holder’s death. In NY, a Totten trust is considered a testamentary substitute and are included in the calculation of a surviving spouse’s elective share. Upon divorce, provisions to the former spouse in a Will, Insurance Policy, or Trust, are automatically revoked by operation of law. As a testamentary substitute, Totten trusts are also subject to this rule.

New York law provides that a valid divorce automatically revokes all testamentary dispositions in favor of a former spouse. This includes Totten trusts in favor of a former spouse. Thus, upon divorce a former spouse is automatically revoked as the beneficiary of the trust as a matter of law, and not entitled to inherit.

Question 24

The issue is whether a bequest in a will may be partially revoked by physical act by testator crossing out the provision and initialing the Will

Answer 24

In New York, under the EPTL, a Will is can only be revoked by a physical act, such as burning, tearing, shredding or obliteration by the testator, or by a third party at the testator’s request. If the a third, while acting at the testator’s direction, destroys the Will, the destruction must be witnessed by two disinterested witnesses. A Will may not be partially not be partially revoked by physical act (note: there is a practical exception to this rule when the marked out provision is wholly incapable of being deciphered, and there is no other way to determine the bequest).

Rather, a provision may only be amended by codicil or republication or the Will, with the provision removed, complying with the requisite formalities in making a Will. Formalities address the problems of unreliability and fraud.

Question 25

The issue is whether a specific devisee of a china set is entitled to a replacement of silver, when the china set was sold to obtain the silver

Answer 25

In New York, under the EPTL, gifts in a Will are one of three types: (1) specific; (2) demonstrative; or (3) general. Specific gifts refer to certain property. Specific gifts not in the testator's estate at the time of death of the testator are considered "adeemed." When a specific gift adeems, the devisee is not entitled to have his or her gift replaced. It is simply gone. However, in New York there is an exception to the general rule; where there is a specific devise of real estate and contract for sale executed before the testator's death; the devisee may be entitled to the proceeds from the sale if the real property was not tendered for payment before the testator's death. Under the EPTL, a specific bequest not in the testator's estate at death adeems--fails, and the beneficiary does not receive any compensation for the adeemed gift. There is no tracing of principal, the gift is either in the estate or it is not. There are a few exceptions but none are applicable in this situation.

Question 26

What are the three types of gifts in a Will

Answer 26

1- Specific; Demonstrative; and General. A specific gifts names a particular item in the testator's estate. A demonstrative gift is a monetary gift order to be paid from certain property, whoever, if the property is not in the testator's estate, the demonstrative gift is still paid from the estate. General gifts are monetary gifts with no instructions on where the monetary gift comes from, but the general estate. Both demonstrative and general gifts do not adeem.

Question 27

The issue is whether an adopted out child can inherit from his natural (biological) mother's estate, when both his biological parents consented to the adoption.

Answer 27

In New York, under the EPTL, an adoption servers all inheritance rights from the child's natural parents unless: (1) the child was adopted by a person to whom a natural parent became married (i.e., step-parent adoption); or (2) the child was adopted by a close family member (e.g., when the child's natural parent was presently unable to care for the child, but intended to stay in the child's life, such as a grandmother adopting her granddaughter). Under New York law, an "adopted in" child is treated for all purposes the same as a biological child of the adoptive parents. Likewise, the EPTL provides that an adopted child is entitled to inherit from the adoptive parents. The EPTL further provides, however, that termination of the biological parent's parental rights results in the adopted child having no rights of inheritance from the biological parents.

Question 28

The issue is whether a will is properly executed when it is signed by the testator's attorney, at the direction of the testator.

Answer 28

Under the Estate, Powers and Trust Law (EPTL), the requirements to execute a valid Will: (1) the testator must be 18 or older, (2) the testator signs, (3) at the end of the document thereof, (4) in front of two attesting witnesses, (5) the testator publishes (stating to the witnesses that it is the testator's last will and testament), (6) two or more attesting witnesses sign after the testator signs; (7) in the presence of the testator, (8) a completed ceremony within thirty days, meaning that attesting witnesses sign within thirty days of each other. A testator need not sign himself, if he is unable to. In New York, there is an exception, when the ceremony of execution for a will occurs and the testator cannot sign his own name then the testator can request that another person sign the testator’s name. New York requires that when another person signs the testator’s name, the following must also occur in addition to the requirements above for the proper execution; (1) the party must sign the testator’s name at the direction of the testator; (2) in the presence of the testator; (3) witnessed by at least two disinterested witness; (4) the person who signed the testator’s name, must sign their own name, (5) and the party that signs the testator's signature does not sign as a witness.

Question 29

The issue is whether an in terrorem clause/contest clause will prohibit a beneficiary from inheriting, when the beneficiary contested the wills validity on the grounds of either forgery or revocation by a later instrument

Answer 29

Under the EPTl, a no-contest or in terrorem clause is valid and given full effect during probate. An in terrorem clause is a clause in a will preventing any beneficiary from contesting the will's validity. When the clause is written into a will, the beneficiary forfeits his inheritance under the will if he contests the validity of the will and the challenge fails. Moreover, under New York law, the beneficiary cannot usually claim in his defense that he had probable cause to contest the will; he forfeits his interest just the same. There is an exception, however, when the beneficiary contests the will on grounds of "forgery" or "revocation" by a later instrument. In either case, if the beneficiary demonstrates probable cause for his challenge, he will not forfeit his inheritance This rule exists to allow testators to guard against in-fighting and prolonged waits before distribution of their estate. However, when a beneficiary challenges on the basis of a good faith claim of forgery, contestation clauses will not apply because the challenge is essentially considered a preliminary challenge to the will as a document, not to the Will's provisions.

Question 30

The issue is whether an interested witness can inherit under a will, when he is one of three attesting witnesses to the will.

Answer 30

Under the EPTl, an interested witness is one who serves as an attesting witness to the will, and who is also a beneficiary under that will. An interested witness does not prevent a will from being duly executed, or submitted to probate. However, under the EPTL's Interested Witness Statute, an interested witness who would have been an intestate distributee of the testator, but even then, the interested witness would have been an intestate distributee of the testator, but even then, the interested witness can take only the lesser of his intestate share or his bequest under the will (the "whichever is least" rule). Importantly, the interested witness statute does not apply when there are more than two attesting witnesses to a will. This is sometimes known as the supernumerary (superfluous) rule. Thus, an interested witness may take his specific bequest under a will, if there are at least two additional, disinterested witnesses.

Question 31

The issue is whether an attorney acts properly by assisting with the preparation of a will that provides a bequest for that attorney.

Answer 31

Under the NY Rules of Professional Conduct (RPC), an attorney must avoid conflicts of interest. Thus, an attorney may not undertake representation whenever it will create a substantial risk that the attorney's professional judgment will be adversely affected by his personal interests. As a specific variation of the RPC's general rule against conflict, an attorney may not assist a client in preparing a gift from the client to the attorney. An exception is made only when the attorney and client are close relatives. In addition, under the EPTL, a bequest in a will to the drafting attorney is presumptively suspect. As a general rule, a will may not be probated if its creation was the product of undue influence. Undue influence occurs when an external influence operates to overpower the mind of the testator, resulting in a bequest or entire will that would not have been made absent the external influence. An inference of undue influence arises whenever a person who assisted the testator in preparing the will also inherits under the will. Moreover, under the Putnam doctrine, the Surrogates Court must automatically inquire into undue influence when the drafting attorney inherits under the will. Under the New York Rules of Professional Conduct (RPC), an attorney may not draft a will that contains a bequest to himself, unless the testator is a relative of the attorney. The rational of the rule is to avoid an attorney exerting undue influence on a testator, and to avoid fraud. If an attorney violates this rule, he is subject to discipline from the New York bar and the court will generally strike the bequest from the will.