Trusts (Creation, Types, RAP, Modification and Termination, Trustees)

Question 1

Which of the following people may NOT be the beneficiary of a trust?

A. “My oldest living relative”
B. “My neighbor at 123 Main Street”
C. “All persons of my trustee’s choosing”
D. “All persons who visited me on my 50th birthday”
E. None of the above

Answer 1

C. “All persons of my trustee’s choosing.”

Remember that the beneficiaries of a trust must be ascertainable.

A beneficiary is ascertainable when specifically named or able to be objectively determined.

Here, answers A, B, and D are objectively determined beneficiaries. However, “all persons of my trustee’s choosing” requires the trustee to subjectively determine the beneficiary. Thus, answer C is correct.

Question 2

Under the merger doctrine, a trustee may not also be a beneficiary of the same trust.

T/F

Answer 2

False

Remember that the merger doctrine prevents a sole trustee from also being the sole beneficiary of the same trust.

Under the merger doctrine, a trustee may also be a beneficiary of the same trust, as long as there is either another trustee or another beneficiary.

Question 3

Jack and Jill are considering a divorce after several years of turbulent marriage. Jasper, Jill’s father, disapproves of the impending divorce and creates a trust. Jasper instructs Thomas, the trustee, to distribute $100,000 to Jill for each year that she remains married to Jack.

Has Jasper created a valid trust?

A. Yes
B. No, because it is unlawful
C. No, because it is against public policy
D. No, because it is impossible to achieve
E. None of the above

Answer 3

C. No, because it is against public policy

Remember that a trust is invalid when it is unlawful, against public policy, or impossible to achieve.

A trust is against public policy when, for instance, it interferes with the freedom to marry or divorce.

Here, Jasper has created a trust to encourage Jill to remain married to Jack, interfering with her freedom to divorce. Jasper’s trust is invalid because it is against public policy. Thus, answer C is correct.

Question 4

Jack and Jill are considering a divorce after several years of turbulent marriage. Jasper, Jill’s father, disapproves of the impending divorce and creates a trust. Jasper instructs Thomas, the trustee, to distribute $100,000 to Jill for each year that she remains married to Jack.

Assuming that Jasper’s trust is valid, which of the following aspects regarding the creation of his trust would render it invalid?

A. Jasper was senile
B. Jack threatened to harm Jill if Jasper did not create the trust
C. Jill lied about the divorce so that Jasper would create the trust
D. B and C
E. All of the above

Answer 4

E. All of the above.

Remember that a settlor must have capacity in order to create a valid trust.

Furthermore, a trust is void if its creation was induced by fraud, duress, or undue influence.

Here, the trust is invalid if Jasper lacked capacity due to his senility, answer A.

The trust is also invalid if Jasper was induced by Jack’s duress to create the trust, answer B.

Finally, the trust is invalid if Jasper was induced by Jill’s fraud to create the trust, answer C.

Thus, answer E, all of the above, is the correct answer.

Question 5

Saturn decides to create a trust for his daughter, Neptune. He transfers $1 million to a separate account in the name of Venus, his wife, as well as Neptune, his daughter. He also records himself saying, “I, Saturn, intend to create a trust. I have transferred $1 million to my wife Venus and my daughter Neptune. I prefer that they use the money to pay for Neptune’s living expenses, such as rent and utility bills.”

Has Saturn created a valid trust?

A. Yes, because an oral trust is valid
B. No, because an oral trust is invalid
C. No, because his trustees have no duties
D. No, because Neptune may not be a trustee
E. None of the above

Answer 5

C. No, because his trustees have no duties

Remember that a settlor may create a valid oral trust if there is clear and convincing evidence of the creation and terms of the trust.

Under the merger doctrine, a beneficiary may also serve as a trustee, as long as there is another trustee as well. See id. § 402(a)(5). However, the settlor must give the trustees actual duties to use the trust property in a certain way, rather than merely expressing his hope or preference that the trust property be used in a certain way.

Here, Saturn may create a valid oral trust by recording his creation of the trust, as well as his statement of the terms. Neptune, the beneficiary, may also serve as a trustee, because there is another trustee, Venus. However, Saturn has not given the trustees any actual duties and has merely expressed his preference that they use the trust property in a certain way. Thus, the trust is invalid, and answer C is correct.

Question 6

A spendthrift provision is unenforceable against:

A. Child support claims
B. Spousal alimony claims
C. Government claims
D. A and B
E. All of the above

Answer 6

E. All of the above.

Remember that a spendthrift provision is unenforceable against child support claims, spousal alimony claims, and government claims.

Thus, answer E, all of the above, is the correct answer.

Question 7

Which of the following is NOT a valid purpose for a charitable trust?

A. Relieving poverty
B. Advancing Christianity
C. Renovating public libraries
D. Constructing homeless shelters
E. Donating to iPhone app developers

Answer 7

E. Donating to iPhone app developers

Remember that valid purposes for a charitable trust include relief of poverty, answer A; advancement of religion, answer B; and benefitting the community, answers C and D.

The promotion of iPhone app developers, answer E, is not a valid purpose for a charitable trust. Thus, answer E is correct.

Question 8

Earl creates a $1 million trust to pay for his ailing brother Duke’s medical care, with the intent of saving his brother’s life. Patricia, the trustee, is instructed to pay any medical bills that are forwarded to her by Duke.

If $700,000 remains in the trust when Duke dies, how should Patricia proceed?

A. Return $700,000 to Earl
B. Keep $700,000 for herself
C. Give $700,000 to Duke’s family
D. Ask a court to create a resulting trust to return $700,000 to Earl
E. None of the above

Answer 8

A. Return $700k to Earl

Remember that a resulting trust arises by operation of law when an express trust fails or otherwise does not completely dispose of the trust property. See Cornell University Law School, Legal Information Institute, Resulting Trust, http://www.law.cornell.edu/wex/resulting_trust.

The undisposed property in the resulting trust is returned to the settlor.

Here, Earl’s express trust has failed and created a resulting trust. Without having to ask for a court order, Patricia may return the remaining $700,000 to Earl due to the resulting trust. Thus, answer A is correct.

Question 9

Cruella creates a trust for Lady and Tramp, her pet dogs, as well as any puppies born to Lady. Roger, the trustee, is instructed to use the trust property to pay for the dogs’ food, shelter, toys, and other necessities after Cruella dies.

What happens if Lady gives birth to Scamp after Cruella dies?

A. The trust terminates when Cruella dies.
B. The trust terminates when Lady, Tramp, and Scamp die.
C. The trust may not distribute property to Scamp.
D. The trust is invalid because it lacks a human beneficiary.
E. C and D

Answer 9

C. The trust may not distribute property to Scamp.

Remember that a pet trust, or a trust for the care of an animal, is valid for any animals alive during the settlor’s lifetime.

The lack of a human beneficiary does not render a pet trust invalid.

However, the trust terminates upon the death of the last animal that may benefit from the trust.

Here, Cruella has created a pet trust, which is valid despite the lack of a human beneficiary. However, the pet trust is only valid for Lady and Tramp, who were alive during Cruella’s lifetime, and terminates when Lady and Tramp die. The pet trust may not distribute property to Scamp, who was not alive during Cruella’s lifetime. Thus, answer C is correct.

Question 10

Cruella creates a trust for Lady and Tramp, her pet dogs, as well as any puppies born to Lady. Roger, the trustee, is instructed to use the trust property to pay for the dogs’ food, shelter, toys, and other necessities after Cruella dies.

Cruella also creates a $1 million trust to fund a local nonprofit rehabilitation center for injured bears. In the terms of the trust, Cruella specifies that Roger, the trustee, should send an annual check for $50,000 to the San Francisco Bear Shelter. However, several years later, the city government makes it illegal to keep bears outside of the San Francisco Zoo and shuts down the San Francisco Bear Shelter. With permission from a court, Roger should:

A. Return the remaining trust property to Cruella
B. Send an annual check to the Boston Bear Shelter
C. Send an annual check to the San Francisco Zoo
D. Send an annual check to the San Francisco Wildcat Shelter
E. None of the above

Answer 10

C. Send an annual check to the San Francisco Zoo

Remember that a charitable trust is a trust with a charitable purpose that benefits the community.

Under the cy près doctrine, a charitable trust does not fail when the charitable purpose becomes unlawful or impossible to achieve.

Rather, the court may modify the terms of the trust to distribute the trust property in a manner consistent with the settlor’s charitable intent.

Here, Cruella has created a charitable trust that benefits the community by supporting the local rehabilitation of injured bears. Even though the charitable purpose has become unlawful, the charitable trust does not fail. Rather, Roger may ask a court to modify the trust to benefit a different but similar beneficiary in a manner consistent with Cruella’s charitable intent. Answer B benefits bears, while answer D benefits a local animal shelter. However, answer C is the only answer that benefits local bears, which are now kept in the San Francisco Zoo. Thus, answer C is correct.

Question 11

The Rule Against Perpetuities applies to:

A. Express trusts
B. Honorary trusts
C. Charitable trusts
D. A and B
E. All of the above

Answer 11

D. A and B

Remember that the Rule Against Perpetuities applies to all trusts, including express trusts and honorary noncharitable trusts, with the exception of charitable trusts, which are allowed to continue indefinitely. Seeeee Cornell University Law School, Legal Information Institute, Charitable Trust, http://www.law.cornell.edu/wex/charitable_trust. Thus, answer D is correct.

Question 12

Under the statutory Rule Against Perpetuities, the court waits and sees whether a nonvested property interest actually vests or terminates within 21 years after its creation.

T/F

Answer 12

False

Remember that the statutory Rule Against Perpetuities requires the court to wait and see whether a nonvested property interest actually vests or terminates within 90 years, not 21 years, after its creation. The above statement is, therefore, false.

Question 13

Clark creates a trust that contains the following provision: “$100,000 to my friend Lewis each year until his death, and then the remainder to my first child who reaches the age of 30.”

Does the provision violate the common law Rule Against Perpetuities?

A. No
B. Yes, always
C. Yes, if Lewis dies before Clark
D. Yes, if Lewis dies more than 21 years after the trust was created
E. Yes, if Lewis dies more than 90 years after the trust was created

Answer 13

B/ Yes, always

Remember that the common law Rule Against Perpetuities provides that a nonvested property interest is invalid unless, at the time of its creation, it is certain to vest or terminate no later than 21 years after the death of a measuring life, or an individual then alive.

Here, Clark is the measuring life. It is possible that Lewis may not have a child whose interests vests (i.e., who reaches the age of 30) within 21 years after Clark’s death. The provision always violates the common law Rule Against Perpetuities. Thus, answer B is correct.

Question 14

Clark creates a trust that contains the following provision: “$100,000 to my friend Lewis each year until his death, and then the remainder to my first child who reaches the age of 30.”

Does the provision violate the statutory Rule Against Perpetuities?

A. No
B. Yes, always
C. Yes, but only if Clark’s oldest child is younger than 30 when Lewis dies
D. Maybe, but a court may reform the trust to avoid any violation
E. None of the above

Answer 14

D. Maybe, but a court may reform the trust to avoid any violation

Remember that the statutory Rule Against Perpetuities takes a “wait and see” approach based on whether the interest actually vests or terminates within 90 years after its creation.

Under the statutory rule, a court may reform the trust to avoid violating the Rule Against Perpetuities if the nonvested property interest will not vest or terminate otherwise.

Here, Clark’s oldest child must reach the age of 30 within 90 years of the trust’s creation, regardless of when Lewis dies. However, a court will wait to see what actually happens and may even reform the trust to avoid violating the Rule Against Perpetuities. Thus, answer D is correct.

Question 15

Evan creates a trust that contains the following provision: “$10,000 to my daughter Emily on Christmas until the end of her life, then the remainder to Emily’s first child to graduate from law school.” Emily currently has three children: Frannie, age 15; Grant, age 21; and Hannah, age 24. Frannie and Grant are planning to attend law school, while Hannah is currently in her second year of law school.

Does Evan’s trust violate the Rule Against Perpetuities?

A. Yes, always
B. No, because Hannah is in law school
C. No, because all of Emily’s children are planning to graduate from law school
D. It depends on whether Hannah graduates from law school within 90 years
E. None of the above

Answer 15

A. Yes, always

Remember that there are two approaches to the Rule Against Perpetuities. The common law rule provides that a nonvested property interest is invalid unless, at the time of its creation, it is certain to vest or terminate no later than 21 years after the death of a measuring life, or an individual alive at the time of creation.

The statutory rule provides that a nonvested property interest must actually vest or terminate within 90 years after its creation.

Here, Evan’s trust violates the common law Rule Against Perpetuities. Hannah may drop out of law school or otherwise fail to graduate, and Frannie and Grant may never attend law school. Even if Emily has more children, they are not certain to graduate from law school within 21 years after the death of Emily, the measuring life. Thus, answer A is correct.

Question 16

A court may terminate a trust when:

A. Continuation is impracticable
B. Unanticipated circumstances arise
C. Terms were affected by the settlor’s mistake
D. A and B
E. All of the above

Answer 16

B. Unanticipated circumstances arise.

Remember that a court may only modify a trust when continuation is impracticable or when the terms were affected by the settlor’s mistake.

However, a court may modify as well as terminate a trust when unanticipated circumstances arise. Thus, answer B is correct.

Question 17

Under the Claflin doctrine, a court may modify an irrevocable trust with only the beneficiaries’ consent if the modification is not inconsistent with the material purpose of the trust.

T/F

Answer 17

True

Remember that the Claflin doctrine allows a court to modify an irrevocable trust with only the beneficiaries’ consent, as long as the modification is not inconsistent with the material purpose of the trust.

Question 18

Victor creates a $200,000 trust for his daughter, Vivian, with the sole purpose of paying off her student loans. The terms specify that the trust becomes effective when Vivian graduates from law school in 2010 and terminates after ten years.

Assuming that all of the following events occur, when does the trust terminate?

A. 2020, when the terms specify that the trust expires
B. 2015, when her student loans are completely paid off that year
C. 2011, when Vivian drops out of law school that year
D. Immediately, as the trust is unlawful
E. None of the above

Answer 18

B. 2015, when her student loans are completely paid off that year

Remember that a trust terminates on its own when it expires under its terms or loses its purpose.

Here, Vivian’s trust is set to terminate in 2020, ten years after its creation. Even if Vivian drops out of law school in 2011, she may still have student loans to repay. However, if her student loans are completely paid off in 2015, then the trust has lost its purpose and terminates on its own. Thus, answer B is correct.

Question 19

Sydney creates a trust to distribute allowance to her children. The terms of the trust include the following provision: “The trustees may not make any investments using trust property. These terms may only be modified or terminated by the settlor. The settlor may use a notarized writing that is sent to all trustees and beneficiaries.”

How may Sydney modify the terms of her trust?

A. Create a notarized writing and send it as instructed
B. Create a new statement of the terms of the trust
C. Record a meeting with the trustees and beneficiaries
D. Fill out a standard amendment form provided by her attorney
E. All of the above

Answer 19

E. All of the above.

Remember that a settlor may modify the terms of her trust unless it is expressly irrevocable. The settlor may use a method provided in the terms. If the provided method is not required, then the settlor may also use any method clearly indicating her intent to modify the terms. See id. at (c)(2)(B).

Here, Sydney may modify the terms of her trust using the provided method, answer A. However, the method is not required, so she may also uses any method clearly indicating her intent to modify the terms, answers B , C, and D. Thus, answer E, all of the above, is the correct answer.

Question 20

Sydney creates a trust to distribute allowance to her children. The terms of the trust include the following provision: “The trustees may not make any investments using trust property. These terms may only be modified or terminated by the settlor. The settlor may use a notarized writing that is sent to all trustees and beneficiaries.”

When Sydney dies, her children propose to modify the terms of the trust to allow for the investment of trust property. In court, they argue that the trust income generated by the investments will help further the material purpose of the trust. May the court modify the terms of the trust?

A. Yes, but only if their argument is accurate
B. Yes, even if their argument is inaccurate, as long as the trustee consents
C. No, because only the settlor may modify the terms of the trust
D. No, because the trust became irrevocable upon the settlor’s death
E. None of the above

Answer 20

B. Yes, even if their argument is inaccurate, as long as the trustee consents

Remember that an irrevocable trust, or a trust whose terms prevent it from being modified, may nonetheless be modified in several situations.

If the trustee and all beneficiaries consent, then the court may approve the modification.

If all beneficiaries consent, then under the Claflin doctrine, the court may approve the modification if it is not inconsistent with the material purpose of the trust.

Here, Sydney’s trust is irrevocable because the terms provide that only the settlor, who is dead, may modify the trust. Regardless, all of the beneficiaries have consented to a modification of the terms to allow investment. Under the Claflin doctrine, the court may approve the modification if their argument is accurate. However, the court may also approve the modification, even if their argument is inaccurate, as long as the trustee consents. Answer A is not correct, as it mistakenly states that the court may only modify the terms of the trust if the beneficiaries’ argument is accurate. Thus, answer B is correct.

Question 21

Which of the following is NOT a trustee’s duty?

A. Duty to remain loyal
B. Duty to enforce claims
C. Duty to inform beneficiaries
D. Duty to hold an annual meeting
E. Duty to submit an annual report

Answer 21

D. Duty to hold an annual meeting.

Remember that a trustee has the duties to remain loyal to beneficiaries, to enforce claims by the trust, to inform beneficiaries of material facts, and to submit an annual report.

However, the trustee does not have the duty to hold an annual meeting. See id. §§ 801-13. Thus, answer D is correct.

Question 22

What are the duties of the trustee?

Answer 22

A trustee has the following duties:
• duty to remain loyal to beneficiaries,
• duty to enforce claims by the trust,
• duty to inform beneficiaries of material facts, and
• duty to submit an annual report.

However, the trustee does not have the duty to hold an annual meeting. Thus, answer D is correct.

Question 23

A trustee is not liable to the beneficiaries for the actions of an agent who has been delegated the trustee’s duties and powers.

T/F

(not cal?)

Answer 23

NOT CAL?

True

Remember that a trustee may delegate duties and powers to an agent.

If so, the trustee is not liable to the beneficiaries or the trust for the actions of the agent.

The above statement is, therefore, true.

Question 24

Jane is named the trustee of Tarzan’s trust and is given the discretion to distribute the trust property to support Tarzan’s family in Africa, the beneficiaries. She uses $20,000 from the trust to fund her father’s expedition to Africa, which plans to bring food and gifts to Tarzan’s family as well as to sell merchandise to local residents.

Has Jane committed a breach of trust?

A. Yes, always
B. No, always
C. No, if Tarzan consented to her use of the $20,000
D. No, if Tarzan’s family consented to her use of the $20,000
E. None of the above

Answer 24

D. No, if Tarzan’s family consented to her use of the $20,000.

Remember that a trustee may not commit a breach of trust such as self-dealing. Self-dealing occurs when the trustee uses trust property in a conflict of interest, such as providing funding for a relative. However, if the beneficiaries consent to the self-dealing, then the trustee has not committed a breach of trust.

Here, Jane may have committed a breach of trust by self-dealing to her father’s expedition in a conflict of interest. However, if the beneficiaries, Tarzan’s family, have consented to the self-dealing, then Jane has not committed a breach of trust. Thus, answer D is correct.

Question 25

Jane is named the trustee of Tarzan’s trust and is given the discretion to distribute the trust property to support Tarzan’s family in Africa, the beneficiaries. She uses $20,000 from the trust to fund her father’s expedition to Africa, which plans to bring food and gifts to Tarzan’s family as well as to sell merchandise to local residents.

Assuming that Jane is liable for a breach of trust and that her father made a profit of $25,000 on his expedition to Africa, how much should Jane return to the trust?

A. $5,000
B. $20,000
C. $25,000
D. $45,000
E. Nothing

Answer 25

C. $25,000

Remember that a trustee who is liable for a breach of trust should return the property taken from the trust or the profit made as a result of the breach, whichever is greater.

Here, Jane should return the profit made as a result of the breach of trust, $25,000, as that amount is greater than the property taken from the trust ($20,000). Thus, answer C is correct.

Question 26

Joker creates a trust for his daughters, Heart and Clover, and names King, Queen, and Jack as cotrustees, with the instructions to distribute a total of $30,000 per year to both of his daughters to support their education. King, an accountant who despises lawyers, decides to give this year’s entire $30,000 to Heart, a business student whose tuition is $20,000 per year, rather than Clover, a law student whose tuition is $60,000 per year. Queen and Jack reasonably attempt to prevent and redress King’s disposition but ultimately fail. Queen refuses to participate in the disposition, while Jack participates but notifies the other trustees of his dissent.

If Queen adequately notifies Clover of King’s disposition and the relevant statute of limitations, which of the following is a true statement?

A. King has not committed a breach of trust.
B. Only King is liable for a breach of trust.
C. Only King and Jack are liable for a breach of trust.
D. Clover has 5 years to bring an action against King for the disposition.
E. None of the above

Answer 26

B. Only King is liable for a breach of trust.

Remember that a trustee has a duty of impartiality and may not favor one beneficiary over another by failing to give due regard to each beneficiary’s respective interest.

Furthermore, each cotrustees is liable for a breach of trust, unless he or she did not participate in the breach or participated but notified the other trustees of his or her dissent.

Finally, the statute of limitations when the beneficiary receives adequate disclosure of the breach of trust and the time to bring an action for the breach is 1 year. See id. § 1005(a).

Here, King has violated the duty of impartiality by favoring Heart over Clover, despite the fact that Heart’s tuition is significantly less than Clover’s tuition. King has breached the trust. Because Queen disclosed the breach to Clover, the statute of limitations for Clover to bring an action against King for the disposition is 1 year. However, only King is liable for the breach of trust, as Queen refused to participate in the disposition and Jack notified the other cotrustees of his dissent. Thus, answer B is correct.

Question 27

A testamentary trust does not become effective until the settlor’s death.

T/F

Answer 27

True

Remember that a testamentary trust is a trust created by the settlor in his or her will.

Thus, a testamentary trust does not become effective until the will becomes effective at the time of the settlor’s death. The above statement is, therefore, true.

Question 28

When may a trustee self-deal without committing a breach of trust?

A. When approved by a court
B. When authorized by the terms
C. When the beneficiary consents
D. All of the above
E. None of the above; a trustee may never self-deal

Answer 28

D. All of the above

Remember that a trustee’s self-dealing constitutes a breach of trust unless it has been approved by a court, authorized by the terms of the trust, or consented to by the beneficiary. Thus, answer D, all of the above, is the correct answer.

Question 29

A settlor and trustee may terminate an irrevocable trust without the beneficiaries’ consent, as long as the court approves the termination.

T/F

Answer 29

False

Remember that the beneficiaries must always consent to a modification or termination of an irrevocable trust. The settlor and beneficiaries may consent, the trustee and beneficiaries may consent, or the beneficiaries may consent. A settlor and trustee may not terminate an irrevocable trust without the beneficiaries’ consent, even with court approval of the termination. The above statement is, therefore, false.

Question 30

A noncharitable trust that lacks a beneficiary is not enforceable.

T/F

Answer 30

False.

Remember that a noncharitable trust that lacks a beneficiary, or an honorary trust, may be enforceable for up to 21 years. The above statement is, therefore, false.

Question 31

A trustee is not liable for a contract entered into in his or her fiduciary capacity while administering the trust.

T/F

Answer 31

True

Remember that a trustee is liable for breaches of trust, but not contracts entered into in his or her fiduciary capacity while administering the trust.

Question 32

Maria creates a trust to provide funding for local nunneries and names George as the trustee. However, she fails to name the beneficiaries who may receive funding.

Which of the following is an accurate statement?

A. Maria must select a beneficiary.
B. The trust fails for lack of a valid purpose.
C. The trust fails for lack of an ascertainable beneficiary.
D. The court may select an appropriate beneficiary.
E. The court may modify the terms of the trust.

Answer 32

D. The court may select an approp beneficiary

Remember that a charitable trust has a valid charitable purpose when it advances religion. Ascertainable beneficiaries are not required, and the court may select an appropriate beneficiary if one has not been indicated by the settlor.

Here, Maria has created a charitable trust but has not indicated a beneficiary. However, Maria does not have to select a beneficiary; the court may select an appropriate beneficiary by naming a specific nunnery that is to receive funding. Thus, answer D is correct.

Question 33

Maria creates a trust to provide funding for local nunneries and names George as the trustee. However, she fails to name the beneficiaries who may receive funding.

George accidentally runs over a nun while driving to a local nunnery on trust business, committing the tort of negligence. If the nun successfully sues George for $100,000 in damages, may George use the trust property to pay the nun?

A. Yes, because he is the trustee
B. Yes, because he was on trust business
C. No, because he was personally liable
D. No, because it is a charitable trust
E. A and B

Answer 33

C. No, because he was personally liable.

Remember that a trustee is personally liable for a tort committed in the course of trust administration if he was at fault.

Here, George was at fault and is personally liable. Thus, he may not use trust property to pay the nun, and answer C is correct.

Question 34

Michael hacks into Jonathan’s bank account and steals $5 million, using all of the money to buy 5,000 shares of stock in various companies. Jonathan sues Michael, seeking a remedial trust for the return of his property.

If Jonathan wins, the court is likely to find that Michael has held a:

A. Resulting trust containing $5 million
B. Resulting trust containing 5,000 shares of stock
C. Constructive trust containing $5 million
D. Constructive trust containing 5,000 shares of stock
E. None of the above; Jonathan cannot win

Answer 34

D.) Constructive trust containing 5,000 shares of stock

Remember that a court may impose a constructive trust to prevent unjust enrichment. If so, the court finds that the unjustly enriched party has held the money and any purchased property in a constructive trust for the injured party.

Here, if Jonathan wins, the court is likely to find that Michael has held a constructive trust containing the 5,000 shares of stock purchased using the $5 million. Thus, answer D is correct.

Question 35

Charlotte includes the following provision in her will: “I leave $1 million to be transferred into a trust account in Fern’s name. I hope that Fern uses the money to provide for the care of Wilbur, my pet pig.”

Has Charlotte created a valid trust?

A. Yes
B. No, she has only created a will
C. No, she has not given Fern any duties
D. No, she lacks an ascertainable beneficiary
E. None of the above

Answer 35

C. No, she had not given Fern any duties.

NO PASSIVE TRUSTS

Remember that a trust may be created by a transfer of property to a trustee in the settlor’s will. A pet trust is a valid honorary trust and does not require an ascertainable beneficiary. However, the settlor must give the trustee actual duties to perform, rather than expressing a mere hope that the trust property be used in a certain way.

Here, Charlotte as intended to create a valid pet trust in her will. The lack of an ascertainable beneficiary is irrelevant. However, she has failed to give the trustee, Fern, any actual duties to perform. Thus, she has not created a valid trust, and answer C is correct.

Question 36

Charlotte includes the following provision in her will: “I leave $1 million to be transferred into a trust account in Fern’s name. I hope that Fern uses the money to provide for the care of Wilbur, my pet pig.”

Assuming that Charlotte’s trust is valid, how long does it remain enforceable?

A. Until Wilbur dies
B. Until 21 years have passed after Charlotte’s death
C. Until 90 years have passed after Charlotte’s death
D. The earliest of A and B
E. The earliest of A and C

Answer 36

D. The earliest of A and B

Remember that a pet trust terminates upon the death of the last animal. However, a noncharitable honorary trust such as a pet trust is only enforceable for up to 21 years after its creation.

Here, Charlotte’s trust is created when her will becomes effective upon her death. The trust remains enforceable until Wilbur dies or until 21 years have passed after Charlotte’s death, whichever is earlier. Thus, answer D is correct.

Question 37

inda, a law student, is named as the trustee of her younger sister’s trust. However, Linda does not have time to serve as the trustee while in law school and decides to delegate her duties to her older sister, Melissa.

Which of the following is NOT an accurate statement?

(NOT CAL?)

A. Linda is liable for Melissa’s actions as trustee.
B. Linda must periodically review Melissa’s actions as trustee.
C. Linda must set the terms of the delegation to be consistent with the trust.
D. Melissa must reasonably comply with the terms of the delegation.
E. None of the above

Answer 37

(NOT CAL?)

A. Linda is liable for Melissa’s actions as trustee.

Remember that a trustee may delegate her duties to an agent if she establishes the terms of the delegation to be consistent with the terms of the trust and also periodically reviews the agent’s actions to monitor performance and compliance. The agent must reasonably comply with the terms of the delegation. However, the trustee is not liable for the agent’s actions.

Here, Linda, the trustee, has delegated her duties as trustee to an agent, Melissa. Answers B, C, and D are all accurate statements, as Linda must periodically review Melissa’s actions and set the terms of the delegation to be consistent with the trust. Furthermore, Melissa must reasonably comply with the terms of the delegation. However, Linda is not liable for Melissa’s actions as trustee. Thus, answer A is correct, as it is not an accurate statement.

Question 38

Gray creates a trust and names Amber and Lavender as the trustees. The terms of the trust indicate that the trust property should be used to fund Hazel’s marijuana dispensary, which is not yet legal.

Has Gray created a valid trust?

A. Yes
B. No, because there is no beneficiary
C. No, because the trust’s purpose is invalid
D. No, because of the Rule Against Perpetuities
E. None of the above

Answer 38

C. No, b/c the trust’s purpose is invalid

valid purpose
≠ unlawful
≠ against public policy

Remember that an honorary trust may be valid, even without a beneficiary.
• An honorary trust does not violate the Rule Against Perpetuities under the Uniform Trust Code.
• However, any trust must have a valid purpose that is not unlawful or against public policy.

Here, Gray has created an honorary trust that lacks a beneficiary. However, the trust’s purpose is to fund Hazel’s illegal marijuana dispensary, so it is invalid. Gray has not created a valid trust. Thus, answer C is correct.

Question 39

Gray creates a trust and names Amber and Lavender as the trustees. The terms of the trust indicate that the trust property should be used to fund Hazel’s marijuana dispensary, which is not yet legal.

As co-trustees, Amber and Lavender must exercise reasonable care to:

A. Prevent each other from seriously breaching the trust
B. Compel each other to redress a serious breach of trust
C. Periodically review each other’s actions to identify a breach of trust
D. A and B
E. All of the above

Answer 39

D. A and B

Remember that co-trustees must exercise reasonable care to prevent each other from seriously breaching the trust, answer A, and to compel each other to redress a serious breach of trust, answer B.

However, co-trustees do not have to periodically review each other’s actions to identify a breach of trust, answer C, as a delegating trustee must do for an agent.

Here, Amber and Lavender are co-trustees, so only answers A and B are accurate. Thus, answer D is correct.

Question 40

Tina, a trustee, must distribute trust property to Benny and Bobby, the beneficiaries, for as long as they work as lawyers. On January 1, 2000, Tina violated her duty of loyalty to Benny but did not disclose the breach of trust. On April 1, 2001, Tina resigned as trustee. On July 1, 2002, Benny quit working as a lawyer to become a chef instead. On October 1, 2003, Benny learned about Tina’s breach of trust. Finally, the trust terminated on January 1, 2004.

Benny was able to commence a proceeding against Tina for her breach until:

A. January 1, 2005
B. April 1, 2006
C. July 1, 2007
D. October 1, 2008
E. January 1, 2009

Answer 40

B. April 1, 2006

Recall the statute of limitations for commencing a proceeding against a trustee for a breach of trust when there has been no disclosure of the breach.

The statute of limitations is 5 years after the earliest of the trustee’s removal, resignation, or death; the termination of the beneficiary’s interest; or the termination of the trust.

Here, the earliest of any of these was April 1, 2001, when Tina resigned as the trustee. Benny was able to commence a proceeding against Tina for her breach until the statute of limitations ran out 5 years later, on April 1, 2006. Thus, answer B is correct.

Question 41

Mr. Tall creates a testamentary trust with several categories of beneficiaries: (1) “Mr. Big, my brother”; (2) “any relatives who visit me in my nursing home”; (3) “one person of Mr. Big’s choosing”; and (4) “any siblings who attend my funeral.”

Which of Mr. Tall’s beneficiaries are NOT valid?

A. (3) only
B. (2) and (4)
C. (2), (3), and (4)
D. (1), (2), (3), and (4)
E. None of the above

Answer 41

A. (3) only

Remember that a valid beneficiary must be ascertainable, i.e., named or otherwise able to be objectively determined.

Here, Mr. Tall has a number of ascertainable beneficiaries: Mr. Big, the relatives who visit the nursing home, and the siblings who attend his funeral. “One person of Mr. Big’s choosing,” however, is a subjective rather than objective determination. Thus, beneficiary (3) is not valid, and answer A is correct.

Question 42

Mr. Tall creates a testamentary trust with several categories of beneficiaries: (1) “Mr. Big, my brother”; (2) “any relatives who visit me in my nursing home”; (3) “one person of Mr. Big’s choosing”; and (4) “any siblings who attend my funeral.”

Mrs. Tall is named the trustee due to her experience as an investment banker. She is instructed to use her discretion to distribute a total of $100,000 per year to each category of beneficiaries, prioritizing those who “need it the most.” She is also instructed to invest a portion of the trust property to generate trust income. However, Mrs. Tall only makes an unprofitable investment in her friend’s company. She also dislikes Mr. Big and ignores his communications regarding the trust. For everyone else, she approves their requests for money on a first-come, first-served basis, without bothering to consider who may “need it the most.” The beneficiaries bring action against Mrs. Tall, arguing that she has violated the following duties as trustee: (1) duty of loyalty, (2) duty of impartiality, (3) duty to act prudently, (4) duty to use special skills or expertise, and (5) duty to inform and report. Based on the above information, the beneficiaries are likely to succeed for which of the argued violations?

A. (4) and (5)
B. (2), (3), and (4)
C. (1), (2), and (3)
D. (1), (2), (3), and (4)
E. None of the above

Answer 42

D. (1), (2), (3), and (4)

Remember that a trustee has the duty of loyalty, of impartiality, to act prudently, to use special skills or expertise, and to inform and report.

The duty of loyalty requires the trustee to act solely in the beneficiaries’ interests, while the duty of impartiality requires the trustee to give due regard to the beneficiaries’ respective interests.

Meanwhile, the duty to use special skills or expertise requires the trustee to use those skills or expertise when named trustee in reliance on those skills or expertise.

Finally, the duty to inform and report requires the trustee to keep the beneficiaries reasonably informed regarding trust information and other relevant facts.

Here, Mrs. Tall has not acted in the beneficiaries’ interests by failing to consider who may need the money the most. She has also failed to remain impartial by ignoring Mr. Big’s communications. Furthermore, she has not used her special skills and expertise as an investment banker to make profitable investments. Finally, she has not acted prudently by failing to adhere to the terms of the trust. Mrs. Tall has violated duties (1) through (4). However, based on the above information, Mrs. Tall has not violated her duty to inform and report, duty (5). Thus, answer D is correct.

Question 43

Chelsea creates an irrevocable trust as a favor to her friend Daniel, the dean of Western Law School, to help him keep his job. The terms specify that $20,000 should be donated to Western Law School each year, as long as Daniel remains the dean of Western Law School. Unfortunately, Western Law School burns down several years later, and Daniel dies in the fire. The trustee of Chelsea’s trust commences a proceeding to modify the terms to give the money to Eastern Law School, another law school in the same city.

Should the court approve or disapprove the modification?

A. Approve, because the fire was unanticipated
B. Approve, because Chelsea’s purpose has become impossible to achieve
C. Disapprove, because the trust is irrevocable
D. Disapprove, because the trust has terminated
E. None of the above

Answer 43

D. Disapprove, b/c the trust has terminated

Recall two of the circumstances under which an irrevocable trust may nonetheless be modified by a court.

(1) First, the court may modify the terms to further the purpose of any trust when unanticipated circumstances arise.
(2) Second, under the cy près doctrine, the court may modify a charitable trust consistent with the settlor’s charitable intent when the trust’s purpose has become impossible to achieve.

When a trust has lost its purpose, however, it terminates on its own.

Here, Chelsea has created an irrevocable trust for the noncharitable purpose of helping Daniel keep his job as the dean at Western Law School. Though the fire was an unanticipated circumstance, Chelsea’s purpose has become impossible to achieve with Daniel’s death and the destruction of Western Law School. The cy près doctrine does not apply, as the trust is not charitable. Because Chelsea’s trust has lost its purpose, it terminates on its own. Thus, answer D is correct.

Question 44

Calvin’s will has created a $50 million testamentary trust leaving “$10,000 to my son Hobbes, each year until his death, and then $10,000 to each of his children until their deaths.”

Does Calvin’s will violate the Rule Against Perpetuities?

A. No
B. Yes, the statutory Rule Against Perpetuities
C. Yes, the common law Rule Against Perpetuities
D. Maybe, depending on what happens in the next 90 years
E. B and C

Answer 44

D. Maybe, depending on what happens in the next 90 years

Remember that the common law Rule Against Perpetuities provides that a nonvested property interest is invalid unless, at the time of its creation, it is certain to vest or terminate no later than 21 years after the death of a measuring life, or an individual then alive.

On the other hand, the statutory Rule Against Perpetuities requires a nonvested property interest to actually vest or terminate within 90 years after the interest’s creation.

Here, Calvin’s will has created a testamentary trust. Under the common law Rule Against Perpetuities, Hobbes is the measuring life, and his children’s nonvested property interests are going to vest immediately (within 21 years) after his death. The testamentary trust does not violate the common law rule. However, the testamentary trust may violate the statutory Rule Against Perpetuities, depending on what happens in the next 90 years. For example, if Hobbes does not die until 95 years later, then his children’s nonvested property interests are going to vest more than 90 years after the creation of their interests. Thus, answer D is correct.

Question 45

Timothy creates a trust to distribute an annual allowance to Barney and Brandon, the beneficiaries. The trust contains the following provision: “Trust property may be given only to the beneficiaries and to no others, whether by assignment or otherwise.” Brandon is sued by Christine for false imprisonment. When he loses, Brandon hires Atticus, an attorney, to argue that any damages cannot come out of the trust property. Atticus is now seeking attorney’s fees to be paid by the trust.

Other than the beneficiaries, who may receive property from Timothy’s trust?

A. Atticus
B. Christine
C. Atticus and Christine
D. Anyone
E. None of the above

Answer 45

A. Atticus

Remember that a spendthrift provision to prevent voluntary and involuntary transfer of the beneficiary’s interest in a trust is valid.

However, a spendthrift provision is unenforceable against a claim of child support or spousal alimony, a claim by someone who provided services essential to protecting the beneficiary’s interest in the trust, and a government claim.

Here, Timothy’s trust is valid and enforceable. Christine is seeking damages for false imprisonment, which does not fall under one of the exceptions, so the spendthrift provision is enforceable against her claim. However, Atticus provided legal services essential to protecting Brandon’s interest in the trust, so the spendthrift provision is not enforceable against his claim. Only Atticus may receive property from Timothy’s trust. Thus, answer A is correct.

Question 46

Rebecca, as the trustee of a $1 million trust, must invest and distribute the trust property in the best interest of Rodney, the beneficiary. When Rodney is sued for negligent driving, Rebecca use trust property to hire her husband’s law firm to defend Rodney in court. However, Rodney loses and subsequently brings action against Rebecca for breaching the trust. In response, Rebecca argues that the incident occurred two years ago and that the statute of limitations has passed.

Based on the above information, whose argument is more likely to win in court?

A. Rodney, because the statute of limitations has not passed
B. Rebecca, because there was no breach of trust
C. Rebecca, because the statute of limitations has passed
D. Rebecca, because she was protecting Rodney’s interest
E. None of the above

Answer 46

A. Rodney, because the statute of limitations has not passed

Remember that a trustee may not breach a trust by committing self-dealing.

A trustee self-deals when she uses trust property in a conflict of interest, such as hiring her spouse’s law firm.

Remember also that the statute of limitations for a breach of trust is 1 year after adequate disclosure by the trustee or 5 years after termination of the trustee, the beneficiary’s interest, or the trust.

Here, Rebecca has used trust property in a conflict of interest by hiring her husband’s law firm to defend Rodney. Rebecca breached the trust. However, she has not made an adequate disclosure and is still the trustee, and Rodney’s interest and the trust have not been terminated. The statute of limitations on her breach has not started to run. Because Rebecca committed a breach of trust and the statute of limitations has not passed, Rodney’s argument is more likely to win in court. Thus, answer A is correct.

Question 47

Which of the following is NOT a class gift?

A. “My estate to my children”
B. “My money to my grandchildren”
C. “My real property to my cousins”
D. “My personal property to my father”
E. “My shares of stock to my employees”

Answer 47

D. “My personal property to my father”

Remember that a class gift is made to a group of persons with common characteristics.

Here, answers A, B, C, and E are class gifts made to groups with common characteristics. Thus, answer D, an individual gift to the testator’s father, is correct.

Question 48

Anti-lapse allows a beneficiary to collect money or replacement property from an estate when the beneficiary’s gift is no longer owned by the testator.

T/F

Answer 48

False

Remember that a beneficiary may collect money or replacement property from an estate when the beneficiary’s gift is no longer owned by the testator.

However, this rule is an exception to ademption by extinction, rather than anti-lapse.

Question 49

Which of the following is included in a testator’s augmented estate?

A. Net probate estate
B. Spouse’s property
C. Non-probate transfers
D. A and B
E. All of the above

Answer 49

E. All of the above

Remember that an augmented estate includes the value of the property in the testator’s net probate estate, the value of the spouse’s property, and the value of non-probate transfers. Thus, answer E, all of the above, is the correct answer.

Question 50

A will provision that penalizes a person for contesting the will is:

A. Always enforceable
B. Always unenforceable
C. Unenforceable if probable cause exists for contestation
D. Unenforceable if the testator intended to penalize contestants
E. Either enforceable or unenforceable, depending on the probate court

Answer 50

D. Unenforceable if the testator intended to penalize contestants

Remember that a no contest clause is a will provision that penalizes a person for contesting the will.

A no contest clause is unenforceable, however, if probable cause exists for contestation.

Question 51

What fact or facts must be proven, and by what standard of proof, in order to admit extrinsic evidence to correct a scrivener’s error?

A. It must be proven, by clear and convincing evidence, only that the scrivener’s error exists.
B. It must be proven, by a preponderance of the evidence, only that the scrivener’s error exists.
C. It must be proven, by clear and convincing evidence, that the scrivener’s error exists, and that the error materially affects the testator’s will.
D. It must be proven, by a preponderance of the evidence, that the scrivener’s error exists, and that the error materially affects the testator’s will.
E. It must be proven, beyond a reasonable doubt, that the scrivener’s error exists, and that the error materially affects the testator’s will.

Answer 51

C. It must be proven, by clear and convincing evidence, that the scrivener’s error exists, and that the error materially affects the testator’s will.

Remember that extrinsic evidence is admissible to correct a scrivener’s error if there is clear and convincing evidence both that the error exists, and that it materially affects the testator’s will. Thus, choice C is the correct answer, because it lists both essential facts that must be proven, and it sets forth the correct standard of proof.

Choice A is wrong, because it indicates that only the existence of the error must be shown–when, in truth, it must also be shown that the error materially affected the testator’s will.

Choice B is wrong, not only because it indicates that merely the existence of the error need be shown, like choice A, but also because it cites preponderance of the evidence as the standard of proof, which is incorrect.

Choice D is wrong, because while it correctly mentions both the existence and effect of the scrivener’s error as essential facts, it incorrectly cites preponderance of the evidence as the standard of proof.

Choice E is also incorrect, because, while it, too, mentions both essential facts, it cites beyond a reasonable doubt as the standard of proof, which is wrong.

Question 52

Sarah executes a will, leaving her entire estate to Sebastian, her husband. Several years later, Sarah and Sebastian adopt Tommy, their first child.

Is Tommy entitled to a share of Sarah’s estate?

A. Yes, an intestate share
B. No, because Tommy is adopted
C. No, because Sebastian receives the estate
D. B and C
E. None of the above

Answer 52

C. No, because Sebastian receives the estate

Remember that a child born after execution of a will may be entitled to a share of the testator’s estate under the omitted child doctrine.

If the testator had no children at the time of execution, then the child may receive an intestate share.

However, if the surviving spouse and parent of the child is already receiving the entire estate, then the child receives nothing.

Here, Sarah had no children at the time of execution. However, Sebastian is already receiving the entire estate, so Tommy is not entitled to a portion of the estate. Thus, answer C is correct.

Question 53

Sarah executes a will, leaving her entire estate to Sebastian, her husband. Several years later, Sarah and Sebastian adopt Tommy, their first child.

Assuming that Tommy is entitled to a share of the estate but has already received a substantial transfer of property from Sarah, which of the following would prevent Tommy from receiving his share?

A. Sarah expressly stated that the transfer was in lieu of the will
B. Sarah made the transfer when Tommy asked to be added to the will
C. Sarah told Tommy that he was already provided for after her death
D. A and B
E. All of the above

Answer 53

E. All of the above

Remember that an exception to the omitted child doctrine applies when the testator already provided for the child with a transfer of property in lieu of the will, based on the testator’s statements or other reasonable evidence.

Here, Sarah already made a substantial transfer of property to Tommy. Answers A, B, and C consist of statements or other reasonable evidence indicating that the transfer was in lieu of the will. Thus, answer E, all of the above, is correct.

Question 54

Finn executes a will, which is witnessed by his brothers, to leave his estate to his daughter. However, Finn confesses to his brothers that he is only pretending to execute the will in order to convince his ex-girlfriend to stop suing him for child support.

May Finn’s brothers testify to his confession in probate court?

A. Yes
B. No, because Finn executed the will
C. No, because the will is not ambiguous
D. No, because the will does not contain an error
E. None of the above

Answer 54

A. Yes

Remember that extrinsic evidence is admissible to prove that a will is invalid by, for instance, establishing the testator’s lack of intent to execute a valid will.

Here, Finn’s brothers may testify that Finn never intended to execute a valid will. Thus, answer A is correct.

Question 55

Maria gifts $20 million to her husband, Manuel, and 50 acres of land to her son, Nick. Later, she declares in a writing that the gifts were a partial satisfaction of her will, which bequeaths $100 million to Manuel and 100 acres of land to Nick. Manuel agrees in a writing that his gift was a satisfaction.

How should Maria’s estate be distributed to Manuel and Nick?

A. $80 million to Manuel; 50 acres of land to Nick
B. $80 million to Manuel; 100 acres of land to Nick
C. $100 million to Manuel; 50 acres of land to Nick
D. $100 million to Manuel; 100 acres of land to Nick
E. None of the above

Answer 55

B. $80 million to Manuel; 100 acres of land to Nick

Remember that ademption by satisfaction applies when the testator made a gift to a beneficiary during her lifetime.

The inter vivos gift is treated as a partial satisfaction of the testamentary gift, if the testator declared the satisfaction in a writing contemporaneous to the gift or if the beneficiary acknowledged the satisfaction in any writing.

Here, Maria made inter vivos gifts Manuel and Nick. Maria’s declaration of the partial satisfaction was not contemporaneous with her gifts, so Nick may receive 100 acres of land. However, Manuel’s declaration of his $20 million as a partial satisfaction was in writing, so his testamentary gift of $100 million is partially satisfied and deducted to $80 million. Thus, answer B is correct.

Question 56

Maria gifts $20 million to her husband, Manuel, and 50 acres of land to her son, Nick. Later, she declares in a writing that the gifts were a partial satisfaction of her will, which bequeaths $100 million to Manuel and 100 acres of land to Nick. Manuel agrees in a writing that his gift was a satisfaction.

Charlotte, a daughter adopted by Maria and Mark after the execution of Maria’s will, argues that she should receive a portion of Maria’s estate. There is no evidence that Maria intended to omit Charlotte from her will. Is Charlotte’s argument likely to succeed, and if so, what portion of Maria’s estate may she receive?

A. No
B. Yes, an intestate share
C. Yes, 100 acres of land taken from the estate
D. Yes, 50 acres of land taken from the estate
E. Yes, 50 acres of land taken from Nick’s portion

Answer 56

E. Yes, 50 acres of land taken from Nick’s portion

Under the omitted child doctrine, a child adopted after execution of the testator’s will is entitled to a portion of the estate, as long as there is not any evidence that the testator intended to omit the child.

The child may receive an equal share of the combined devises made to any non-omitted children.

Here, Charlotte was adopted after Maria executed her will. As an omitted child, she is entitled to an equal share of the devise made to Nick, the non-omitted child. She may receive half of Nick’s 100 acres of land (50 acres). Thus, answer E is correct.

Question 57

Emily’s will contains the following provision: “I bequeath my grand piano to my neighbor, Flora, and anything that remains in my estate to my daughter, Ellen.” At the time of Emily’s death, Flora is already deceased and is survived by her son, Fred.

Who should receive the grand piano from Emily’s estate?

A. Ellen
B. Flora
C. Fred
D. Emily’s intestate heirs
E. None of the above

Answer 57

A. Ellen

Remember that the anti-lapse doctrine does not apply when the deceased beneficiary is not related to the testator.

Here, Flora is not related to Emily, so her lapsed gift of the grand piano does not pass to her surviving descendant. Instead, the grand piano passes to Ellen, who is receiving the residuary of the estate. Thus, answer A is correct.

Question 58

Carl is married to Christy, with whom he has one daughter, Diana. He also has a son, Eddie, with his first ex-wife, as well as another son, Frank, with his second ex-wife. His will, executed before his current marriage, provides only that “my estate of $30 million is devised to my children in equal portions.”

What portion of Carl’s estate may Christy receive?

A. $10 million
B. $20 million
C. $30 million
D. Intestate portion of $10 million
E. Intestate portion of $30 million

Answer 58

D. Intestate portion of $10 million

Remember that the omitted spouse doctrine allows a surviving spouse to claim an intestate share of a portion of the testator’s estate.

The portion of the estate does not include property devised to the testator’s children from before his marriage to the surviving spouse.

Here, Christy is an omitted spouse. She may claim an intestate share of the $10 million of Carl’s estate that is not devised his two sons from before their marriage. Thus, answer D is correct.

Question 59

Carl is married to Christy, with whom he has one daughter, Diana. He also has a son, Eddie, with his first ex-wife, as well as another son, Frank, with his second ex-wife. His will, executed before his current marriage, provides only that “my estate of $30 million is devised to my children in equal portions.”

Christy declines to take a share of Carl’s estate. At the time of Carl’s death, Diana is deceased with four children, Eddie is deceased with three children, and Frank is deceased with three children. What may Carl’s ten grandchildren claim from his estate?

A. $3 million each
B. $10 million each to Diana’s children, Eddie’s children, and Frank’s children
C. $30 million to Diana’s children
D. Carl’s grandchildren may not claim anything
E. None of the above

Answer 59

B. $10 million each to Diana’s children, Eddie’s children, and Frank’s children

Remember that a share of a class gift passes to a predeceased member’s surviving descendants under anti-lapse.

Here, Diana’s, Eddie’s, and Frank’s shares of $10 million pass to their surviving descendants. Thus, answer B is correct.

Question 60

Tom executes a will, leaving his house at 1 Firecracker Lane to his brother Jerry. However, when Tom dies, the house has been destroyed in a fire and is no longer in his estate. At the time of his death, Tom is still owed $10,000 in home insurance payments from the fire and has a new house at 2 Mousetrap Road.

What property may Jerry claim from Tom’s estate?

A. Jerry may not claim any property
B. Jerry may claim the house at 2 Mousetrap Road
C. Jerry may claim the $10,000 in home insurance payments
D. B and C
E. None of the above

Answer 60

D. B and C

Remember that ademption by extinction may apply when the testator makes a gift that is no longer in his estate at the time of his death.

However, an exception applies if the testator did not intend for the gift to be adeemed.

The beneficiary may claim any outstanding balance from the loss or sale of the property, such as unpaid insurance proceeds, as well as any replacement property owned by the testator at the time of his death.

Here, Tom lost his house in a fire and did not intend for the gift to be adeemed. Jerry may claim the unpaid insurance proceeds of $10,000, as well as the house at 2 Mousetrap Road. Thus, answer D is correct.

Question 61

Scarlett’s will contains the following provision: “I leave 3/4 of my estate to my beloved friend Rhett, but if Rhett is deceased, then to my sister-in-law Melanie.” When Scarlett dies, Rhett is deceased with one surviving descendant, Polly.

Who should receive 3/4 of Scarlett’s estate?

A. Rhett
B. Polly
C. Melanie
D. Both Melanie and Polly
E. Scarlett’s intestate heirs

Answer 61

C. Melanie

Remember that anti-lapse may apply when the beneficiary of an individual gift fails to survive the testator.

If the deceased beneficiary is related to the testator, then the beneficiary’s surviving descendants may take the gift.

However, an alternative beneficiary supersedes any surviving descendants.

Here, Rhett has failed to survive Scarlett and has one surviving descendant. However, Rhett is not related to Scarlett. Furthermore, Scarlett has named Melanie as the alternative beneficiary. Thus, Melanie should receive Scarlett’s money, and answer C is correct.

Question 62

Scarlett’s will contains the following provision: “I leave 3/4 of my estate to my beloved friend Rhett, but if Rhett is deceased, then to my sister-in-law Melanie.” When Scarlett dies, Rhett is deceased with one surviving descendant, Polly.

Scarlett’s husband, Charles, may inherit the remaining 1/4 of the estate through intestacy. Before taking any property, Charles contests the will in court, arguing that he should receive the entire estate through intestacy because Scarlett executed the will before they were married. However, Scarlett’s will also contains the following provisions: “The terms of my will are to remain effective and unchanged regardless of my future marriage to Charles. Any person who contests my will in court is barred from taking any portion of my estate.” May Charles receive a portion of Scarlett’s estate?

A. Yes, because of the law of intestacy
B. Yes, because of the omitted spouse doctrine
C. No, because of the no contest clause
D. No, because of an exception to the omitted spouse doctrine
E. None of the above

Answer 62

C. No, b/c of the no contest clause

Remember that the omitted spouse doctrine may apply when the testator marries a spouse after executing her will.

However, an exception to the doctrine applies when the will already contemplated marriage to the omitted spouse.

Furthermore, a no contest clause is enforceable if the contestant lacks probable cause to contest the will.

Here, an exception to the omitted spouse doctrine applies. Scarlett married Charles after executing her will. However, her will already contemplated marriage to Charles and specified that the terms should remain effective and unchanged regardless of their marriage. Even without the will, Charles may inherit a portion of Scarlett’s estate through the law of intestacy. However, the no contest clause is enforceable, because Charles had no probable cause for contesting Scarlett’s will. Thus, answer C is correct.

Question 63

Michael’s will bequeaths $10 million to his wife, his paper company to his son, and the residuary of his estate to his daughter. At the time of his death, Michael’s estate consists of $20 million. Michael had sold his paper company for $15 million and had not intended for any of his testamentary gifts to be adeemed.

How should Michael’s estate be distributed to his beneficiaries?

A. $20 million to his daughter
B. $10 million each to his wife and son
C. $10 million each to his wife and daughter
D. $5 million to his wife and $15 million to his son
E. $5 million to his daughter and $15 million to his son

Answer 63

D. $5 million to his wife and $15 million to his son

Remember that an exception to ademption by extinction may apply when the testator makes a specific gift that is no longer in his estate at the time of his death.

If there is no outstanding balance or replacement property, then the beneficiary may receive the value of the gift unless the testator intended for ademption.

Remember also that abatement applies when the testator gives away more property than he has in his estate.

The gifts should be reduced in the following order: the residuary of the estate, general devises such as money, and specific devises.

Here, Michael has attempted to give away more property than he has in his estate. Furthermore, the paper company is no longer in his estate. Michael’s son may receive the value of the paper company, or $15 million, as his specific gift is not adeemed by extinction and is also abated third and last. Michael’s wife’s gift of $10 million is abated second, so she receives as much of it as possible, or $5 million. Michael’s daughter’s gift of the residuary is abated first, so she receives nothing. Thus, answer D is correct.

Question 64

Bartleby’s will contains the following provision: “My estate to my son Bobby if he survives me, but if not, then to his daughter and my granddaughter Becky.” In a tragic boating accident, Bartleby, Bobby, and Becky die on the same day. Bobby and Becky are each survived by several children.

Who should receive Bartleby’s estate?

A. Becky’s surviving children
B. Bobby’s surviving children
C. Bartleby’s intestate heirs
D. A and B
E. None of the above

Answer 64

A. Becky’s surviving children

Remember that the anti-lapse doctrine allows a predeceased beneficiary’s surviving descendants to take an individual gift that would otherwise lapse.

If the testator has named an alternative beneficiary who is also predeceased, the primary beneficiary’s surviving descendants typically take the gift.

However, the alternative beneficiary’s surviving descendants take the gift if the alternative beneficiary is a descendant of the primary beneficiary.

Here, Bobby and Becky have both predeceased Bartleby. However, Bartleby has named Becky as the alternative beneficiary. Because Becky is Bobby’s descendant, her surviving children supersede Bobby’s surviving children to receive Bartleby’s estate. Thus, answer A is correct.

Question 65

Bartleby’s will contains the following provision: “My estate to my son Bobby if he survives me, but if not, then to his daughter and my granddaughter Becky.” In a tragic boating accident, Bartleby, Bobby, and Becky die on the same day. Bobby and Becky are each survived by several children.

The final draft of Bartleby’s will contains a general provision stating that his debts are to be paid by the estate. Before executing his will, Bartleby consults his attorney, Annabel, regarding whether the general provision covers the mortgage on his house. Based on Annabel’s assurance that it does, Bartleby executes his will without adding a more specific provision. Does the house transfer subject to the mortgage if there is clear and convincing evidence of the above information?

A. Yes, because of a scrivener’s error
B. Yes, because of the general provision
C. No, because there is no right to exoneration
D. No, because the general provision is insufficient
E. None of the above

Answer 65

A. Yes, because of a scrivener’s error

Remember that there is no right to the exoneration of liens, such as a mortgage on a house.

The house passes subject to the mortgage unless otherwise specified by the testator, even if a general provision in the will states that debts are to be paid by the estate.

However, a will may be corrected when there is clear and convincing evidence of a scrivener’s error and its effect on the testator’s will.

Here, Bartleby did not include a specific provision for the mortgage on his house to be paid by his estate. However, he intended for the mortgage to be paid and only executed the will without the specific provision because of Annabel’s scrivener’s error. With clear and convincing evidence, the probate court may correct the will to transfer the house without the mortgage. Thus, answer A is correct.

Question 66

Wally’s will bequeaths his entire estate of $1 million to his brother Billy, rather than his wife Eve. The marital property in his augmented estate consists of $100,000, and Eve requires the reasonable amount of $50,000 per year to support herself and their children. Eve is interested in finding a way to keep as much Wally’s money and their marital property as possible, as well as keeping several of his items that she and their children have been using: a self-driving car (worth $100,000), a stainless steel refrigerator (worth $5,000), and a high-definition television (worth $10,000).

What may Eve claim from Wally’s estate?

A. Nothing
B. $22,500, the car, the refrigerator, and the television
C. $72,500, the refrigerator, and the television
D. $100,000, the refrigerator, and the television
E. $122,500, the refrigerator, and the television

NOT CAL?

Answer 66

E. $122,500, the refrigerator, and the television

Remember that a surviving spouse has the right to support from the testator’s estate, regardless of the terms of the testator’s will.

The right to support includes a homestead exemption of up to $22,500, an exemption for personal property such as household appliances and cars worth up to $15,000, and a family allowance of a reasonable amount for support for up to 1 year.

The surviving spouse may also take an elective share of half of the marital property in the augmented estate.

Here, Eve may take a portion of Wally’s estate, even though his will leaves his entire estate to his brother. She may claim a homestead exemption of $22,500, a personal property exemption of the refrigerator and the television but not the car (worth $15,000), a family allowance for 1 year of $50,000, and half of the marital property ($50,000). Thus, answer E is correct.