Trusts & Estates Flashcards
(321 cards)
1
Q
Magoun v. Illinois Trust & Savings Bank
A
Supreme Court case that holds:
- an estate tax is not a tax on property, it is a tax on succession
- the right to take property as a successor is created by law (not a natural right), and the state can condition a right it creates
- Minor illogical consequences and unfairness do not violate the Equal Protection clause of the 14th amendment
2
Q
Knowlton v. Moore
A
- a federal estate tax is constitutional
- estate and legacy taxes are not taxes on property but taxes on succession
- differences in tax across persons (such as progressive taxes) do not violate the constitutional requirement that taxes be uniform
3
Q
Hodel v. Irving
A
- Congress divided land among Oglala Sioux individuals, which became splintered. In 1983, Congress decided to collect and consolidate those splinters.
- Supreme Court found this problematic because is abrogated the right to pass property by descent or devise (amounts to a taking)
4
Q
Babbitt v. Youpee (extends Hodel)
A
-it is a taking if the government takes the right to give to descendants
5
Q
Priority of claims to assets after a person dies
A
- Property rights of concurrent owners (usually do not terminate)
- Government allocation to secured creditors, to the extent of their security
- Government allocation to private parties (families)
- Unsecured creditors to pay D’s debts
- Government via taxes
- Surviving spouses
- Allocations by decedents
- Allocation by default rules
6
Q
Homestead allowance
A
Rights of surviving spouse (no minor or dependent children) in decedent’s probate estate ahead of creditors:
- UPC 22-402: $22,500
- other states: less or substantially more
7
Q
Family allowance
A
Rights of surviving spouse (and minor children the decedent was supporting/was obligated to support) in decedent’s probate estate ahead of creditors:
-UPC 2-404: Up to $27,000
8
Q
Exempt property
A
Rights of surviving spouse (if no spouse, children) in decedent’s probate estate beyond control of decedent and ahead of creditors:
-UPC 2-403: Household furniture, automobiles, furnishings, appliances, and personal effects up to a value of $15,000, or other assets after that
9
Q
Do former spouses qualify for homestead allowance, family allowance, exempt property?
A
NO
10
Q
Can rights to homestead allowance, family allowance, exempt property, be waived?
A
UPC 2-213: YES
11
Q
What is the federal unified estate and gift tax exemption in 2021?
A
$11,700,000 plus $15,000 per person per year
12
Q
How can surviving spouses effectively double the decedent’s exclusion?
A
Filing a return at decedent’s death to make the exclusion “portable”
13
Q
Estate tax
A
The government’s portion depends on the net value of the decedent’s gifts before death and assets remaining at death (at varying marginal rates)
14
Q
Inheritance tax
A
The government’s portion depends on the amount of each recipient’s gifts and inheritances (at varying marginal rates)
15
Q
How much wealth in the United States is held by the top 20%?
A
About 83%
-The estimated is 58%, the ideal is 32%
16
Q
What are public goods?
A
Non-rivalrous and non-excludable. Because of free riders, they are not efficiently provided by free markets and must be provided by the government
17
Q
Arguments for government controlling assets over an exemption of $1-5 million
A
- Reduce unjust enrichment
- Advances meritocracy, making race more fair and perhaps improving opportunities for poor kids
- Move distribution of wealth toward an average ideal
- Reward public capital fairly
18
Q
Arguments against government controlling assets over an exemption
A
- Foster families
- Optimize incentives (increasing incentives for productivity, reducing incentives to waste assets)
- Reduces decedent choice
- Improve democracy by reducing aristocratic control
- allow decedents to be happier before death
19
Q
What duty does a lawyer owe to the intended beneficiaries of a will?
A
- Common law rule: The intended beneficiary has no privity and therefore the lawyer does not owe a duty to that person
- Modern rule: Yes, there is a duty unless one of three exceptions applies:
1. The will was never executed
2. The suit is for failure to get the client to execute the will
3. It is inappropriate according to a six-factor balancing test
20
Q
Parks v. Fink
A
Applies modern rule, where lawyer owes a duty to the intended beneficiary in some kinds of cases, but not if an exception applies.
21
Q
Parks v. Fink Balancing Factors
A
To determine if lawyer owes intended beneficiary a duty:
- The extent to which the transaction was intended to benefit the nonclient plaintiff
- The foreseeability of harm to the plaintiff
- The degree of certainty that the plaintiff suffered injury
- The closeness of the connection between the defendant’s conduct and the injury
- Preventing future harm
- Extent to which the profession would be unduly burdened by a finding of liability
22
Q
What is Stake’s proposed variation to the duty owed to beneficiary rule?
A
Lawyer is liable to a beneficiary only if the lawyer would have been liable to the client.
23
Q
Policy of modern duty rules
A
- Generate more litigation than common law rule
- Increase lawyer liability (and as a result, cost of lawyer services)
- Lawyers might simplify law to reduce liability
- If lawyers increase care, their reputation may increase
24
Q
Reciprocal will
A
The first spouse to die gives the residue of the estate to the surviving spouse; the survivor gives the residuary estate to the survivor’s issue
25
Problems with reciprocal wills
- survivor changes their will
- survivor remarries
- spouses have conflicting interests
26
Potential bars to succession (none of which are actually bars in the US today)
- enslaved persons (no longer a bar)
- being an alien (not a bar in the US)
- Minor (not a bar, just might lack legal control over assets)
27
Guardianship of property
In feudal times, a guardian took possession of the ward's lands. This relationship is still subject to extensive judicial supervision
28
Conservatorship
A conservator of property has investment powers similar to those of trustees. More flexible than guardianship.
29
Custodianship
A custodian is given property to hold for the benefit of a minor under uniform acts (often used for modest gifts)
30
Trust
Holds property for the benefit of the beneficiaries
31
Transfer of an expectancy
- Common law: Expectancy is not property, so purported transfer has no effect
- Many states will enforce in equity a purported transfer, if fair consideration was given
32
Renunciation vs. Disclaimer
Renunciation is by heirs and disclaimer is by devisees, although they are used interchangeably now. They may do this to an interest after the death of the decedent.
33
UPC disclaimer
The disclaimed interest passes as if X had died just before the time of distribution of that interest
34
Why might a recipient dislciam/renounce?
- To reduce taxes
| - To avoid claims of the disclaimant's creditors
35
Professional Responsibility relating to reciprocal wills
- Duty to inform client of information needed to make informed decisions relating to representation
- Duty to not reveal information relating to representation (exceptions: preventing substantial injury from fraud or to rectify fraud)
36
Engagement letter
Can waive conflicts and confidentiality, giving lawyers a way out when the conflict arises
37
Drye v. United States
- Facts: Drye owed unpaid taxes when his mother died intestate. He disclaimed.
- Issue: Was the disclaimed inheritance property under the federal law allowing attachment?
- Holding: YES, even though state law says the money was not his. In the end, disclaimer gave him some control over where the property goes.
38
Actions that are bars to succession
- transfer of expectancy
- disclaimer
- refusing to support minor decedent (cannot inherit from child)
- killing the decedent
39
Constructive trust in Mahoney
Slayer took inheritance in law but it was held in trust for those who would take if the slayer was barred. Slayer had a duty to turn assets over to the constructive beneficiary.
40
Slayer rule in UPC
UPC 2-803
- intestate estate passes as if slayer disclaimed
- revoke dispositions under governing instruments (wills and trusts)
- sever interests with rights of survivorship, making a tenancy in common
41
Does the law recognize rights to control images of dead persons (postmortem publicity rights)?
- Common law: NO
- Many states: unclear
- IN, CA, and 20 other states: YES, recognize postmortem publicity rights
42
Shaw Family Archives v. CMG Worldwide
- Question: Are rights acquired after death controlled by decedent's will?
- Facts: Shaw took photographs of Marilyn Monroe and held those copyrights. CMG argues that Shaw's licensing a photo of MM for a shirt was a violation of MM's rights of publicity
- Holding: NO, the will did not pass rights created by a statute after MM's death.
43
Are rights acquired after death of decedent devisable?
UPC 2-602: YES
| Shaw Family Archives v. CMG: NO, will does not pass rights
44
What can be property subject to succession?
- enslaved people
- minors (NO)
- unexecuted DNA instructions
45
Hecht v. Superior Court
Kane saved vials of sperm in a bank and devised them to Deborah Hecht. His adult children contested the devise, but Hecht won
46
How many Americans die without a will?
Approximately one half
47
What are the possibilities for what happens to property not devised?
- Assets enter commons
- Escheat to the state
- List of recipients specified by statute
- Hearings to determine intent of decedent
48
Why pass rights to family members first?
-The decedent would likely want relatives to succeed, as they are the natural objects of decedent's bounty
49
Intestate succession
who succeeds to the estate remaining after taxes, creditors, allowances, and assets devised by will
50
Community property (intestacy)
- Includes earnings from labor during the marriage and earnings from community property
- Surviving spouse's half of the community property and the surviving spouse's separate property is kept by the surviving spouse
- The decedent's half of the community property and the decedent's separate property passes under the will. If it is not devised by the will, it may pass to the surviving spouse or in a way similar to non community property states
51
Non-community property (intestacy)
- If decedent is intestate, the surviving spouse takes a share of the decedent's estate
- Common law: dower (life estate in 1/3 of lands of which decedent was seized during marriage of an inheritable estate)
- Traditional statutory rule: 1/3 or 1/2 of probate estate
52
UPC rules for intestacy in non-community property states
- If D leaves issue and if D and S have all the same issue, S gets all
- If D leaves no issue and no surviving parent, S gets all
- If D leaves no issue and there is a parent, S gets $300K plus 3/4 balance
- If D has a stepkid and S does not, S gets $225K + 1/2 balance
- If S has a stepkid, S gets $150K + 1/2
53
What stereotype does the UPC endorse with intestate succession in non-community property states?
Cinderella
| -If one of D's kids is not S's, it makes sense to say that D wanted all kids to be treated equally
54
Classic (strict) per stirpes
Starting with the decedent's children, divide by the stocks (counting living and dead with living descendants); do the same at each generation
55
Modern (modified) per stirpes
Starting at the oldest generation in which a descendant of the decedent is alive, distribute per stirpes
56
1969 UPC (per capita with per capita representation)
Skip any generation without living descendants, then distribute to living roots and from any deceased roots by representation as if each root were a decedent
57
1990 UPC (per capita at each generation)
Skip any generation without living descendants. Distribute to living roots. At every generation, collect the shares of deceased roots and drop the bundle to all of their issue.
58
How does intestate succession work if no descendants and no parents survive the decedents?
- UPC: Spouse takes it all
| - Other states: siblings of decedent share with spouse
59
What do parents take under UPC 2-103 if no issue survives the decedent?
Portion that does not go to the spouse goes to the parents (unless they are barred from taking for being a bad parent).
- The parents' portion is divided into shares equal to the number of surviving parents and deceased parents with surviving issue
- If two or more deceased parents have exactly the same surviving descendants, they are deemed to be one deceased parent
- A deceased parent does not get a share if all of that deceased parent's surviving descendants are also descendants of one or more surviving parents and none of those surviving parents has any other surviving descendant.
60
Under UPC 2-114, what qualifies a parent as a bad parent?
- Parental rights were terminated and not reestablished
- Child died before 18 and parental rights could have been terminated for non-support, abuse, neglect, or other actions or inactions
61
How does intestate succession work under the UPC if no spouse, parents, or descendants of parents survive the decedent?
The estate passes to the grandparents and issue of grandparents.
62
Parentelic distribution
Form of distribution to ancestors and collaterals. The UPC is this, stopping with grandparents and their issue.
63
Degree of relationship distribution
"Nearest kindred" distribution to ancestors and collaterals. Count the degrees of relationship; count the parent-child steps from one person to another. Break ties in favor of claimant in closer line (parentela). This system favors the closest genetic relative.
64
What happens when laughing heirs can take?
Lots of claims to the estate. This is costly for the estate and can delay distribution to heirs.
65
How is disclaimer treated under the UPC?
To avoid manipulation, take the disclaimed interest and treat it as though it was the disclaimant's and the disclaimant died intestate.
66
Do stepchildren take in intestate succession?
1990 UPC: NO
| 2008 UPC: YES, after collaterals
67
Hall v. Vallandingham
- Facts: After their father died, children are adopted by their mother's new husband.
- Issue: Can the children inherit from their deceased father's brother?
- Holding: No, adoption means they are no longer considered children of their deceased father so they cannot inherit from his brother
68
UPC on Adoption
Adoption terminates parent-child relationship unless the adoption...
- was by the spouse of a parent before the adoption
- was by a relative or the spouse or surviving spouse of a relative of a parent before the adoption
- occurred after the death of a parent before the adoption
69
If the UPC governed Hall v. Vallandingham, could the deceased father's relatives inherit from and through the children?
2008 UPC: NO, no upward inheritance (but does allow downward inheritance)
2019 UPC: YES, the parent-child relationship continues to exist.
70
Equitable/Virtual Adoption
- Also called estoppel; recognized in a majority of states
- Allows court to find an adoption where the formalities were not completed
- Allows unadopted child to be an heir of the parent who failed to complete the adoption.
- In certain states, may allow the unadopted child to be the devisee of parent who failed to complete adoption or heir of family of that parent.
- Does not allow the person who failed to complete the adoption to inherit from the unadopted child.
71
Did virtual adoption work in O'Neal v. Wilkes?
No, there was no legal contract because the parties had no legal authority to execute Hattie's adoption
72
What is the effect of the UPC's fresh start in adoption?
- A child cannot inherit from or through their genetic mother/father
- A child can inherit from or through their adopted mother/father
73
Can a person be adopted after reaching the age of majority?
Yes
74
What was the common law rule regarding children born out of wedlock?
Filius nullius - child of nobody
75
How did statutes change the common law regarding children born out of wedlock?
- Mother is mother
| - Father may be father (may be required to acknowledge child, marry mother, child proves paternity)
76
How does the UPC treat children born out of wedlock?
UPC 2-117: A parent-child relationship extends equally to every child and parent, regardless of the marital status of the parent
77
In Astrue v. Capato, could posthumously conceived children take from their deceased parent?
- In this case under FL law: NO
- 2008 UPC: YES
- 2019 UPC: Depends, not clear based on these facts
78
UPC limitations on posthumously conceived children
Requires child to be in utero within 36 months or born within 45 months of decedent's death
79
How did the common law treat nearly simultaneous deaths?
Depended on the time of deaths, which created costs in trying to determine who died first
80
Advancement
A gift by the decedent during life that reduces the heir's share at death
81
Who can be charged with an advancement?
UPC: Heirs (any of those who take by intestate succession)
| Many states: narrower definition
82
Old Uniform Simultaneous Death Act
If there is "no sufficient evidence" of who died first, then half of joint property goes to each decedent and pretend the other died first for each decedent's life insurance and other assets.
83
How does the UPC treat simultaneous deaths?
Taker must survive decedent by 120 hours (5 days)
84
Are negative wills effective?
Common law: NO
| UPC: YES
85
Under the UPC, do advancements apply to partial intestacy?
YES
86
What are the presumptions regarding advancements?
English statute: Inter vivos gift was advancement
Most states: Inter vivos gift was NOT an advancement
UPC: Inter vivos gift was NOT an advancement, and only a writing can overcome the presumption
87
Hotchpot
Add advancements to the probate estate to get the hotchpot estate and divide among all takers. Leave out advancements to advancees who would get less under hotchpot than by their advancements.
88
What are some biases that might impact a parent's giving?
- Deviation by birth order
| - Deviation by sex
89
What happens if there is more than one will?
-A more recent will amends or revokes an earlier will, either expressly or impliedly
90
Codicil
If a newer will revokes an older will only in part. This is read together with the old will
91
Animus testandi
Subjective intent of testator that T intended to make a gift with the will and intended it to be effective at death
92
What are the requirements for a valid will?
- Intent
- Capacity
- Wills Formalities
93
Mistake in the execution
If the decedent did not think the instrument (or part of it) was her will, then she did not intend for the instrument to be her will and it will be denied probate
94
Can extra provisions be added to a will if the decedent mistakenly thought there were additional provisions in it?
No, because they were not executed properly
95
Is a coerced document admitted to probate?
No, because the intent for the contents to be effective in making a gift at death is absent
96
What is undue influence?
It overcomes the testator's free agency/free will and has the same effect as coercion--denial of probate to all or part of will
97
Loss of free agency test
Identifies undue influence:
1. Did influencer have opportunity?
2. Did the influencer have a disposition or motive?
3. To what degree are the results unnatural?
4. To what degree was the decedent susceptible to psychological domination?
98
Unethical/Improper conduct approach
Same as loss of free agency test for undue influence, but adds a fifth factor: unethical conduct
99
Fraud in the execution
- That led to execution of document lacking animus testandi: deny probate
- That led to failure to execute will: impose constructive trust on takers
100
Fraud in the inducement
- One approach: animus testandi was conditional on truth of something told to decedent, so part or all of will is denied probate
- Another approach: reversed by court of equity via constructive trust
101
What are the presumptions if a lawyer or scrivener writes himself into the will as a devisee?
- Traditional will: No presumption
- Modern rule: presumption of undue influence. Can be rebutted with independent legal advice or clear & convincing evidence of no undue influence
102
Elements of fraud
- Misrepresentation
- Made with intent to deceive and purpose to influence
- Causing or inducing
- A change of behavior
103
Intentional interference with an expectancy of inheritance
Elements:
- Plaintiff has an expectancy (from a previous will, trust, or intestacy)
- Tortious conduct against decedent (fraud, coercion, duress, etc.)
- Causation
- Damages, loss of value to beneficiary
Defenses:
- D did not owe a duty to P
- P did not exhaust probate remedies
104
Are no-contest (in terrorem) clauses honored?
UPC & majority of states: YES, unless there is probable cause for the contest
Minority: Yes, with exceptions for certain challenges which are allowed
Florida: No
105
Doctrine of Republication by Codicil
In some states, allows a court to transfer the intent or capacity from a subsequent codicil to an earlier will if that earlier will was executed in compliance with statutory formalities
106
What is the legal age for testamentary capacity?
18
107
What are the mental requirements for testamentary capacity?
Sound mind with burden of proof on contestant to show lack of capacity. Burden is not on proponent to show capacity
108
Propounder
Proponent
109
Caveator
Contestant
110
General Capacity
Testator must be capable of knowing and understanding:
- the nature & extent of her property
- the natural objects of her bounty
- the connections the will is making and not making between the items of property and those persons
111
Might a ward have a capacity to execute a will?
YES, if:
- the standard is lower for capacity to write a will than for capacity to avoid being a ward
- a person that lacks capacity often enough to become a ward might have a "lucid interval" where they have capacity to write a will
112
Disciplinary Board v. Kuhn
Lawyer helped client/ward execute will, and court said that ward had no capacity. Lawyer faced discipline & suspension
113
Specific incapacity (monomania)
- Was there an insane delusion?
| - Did it affect a provision of the will?
114
What is an insane delusion?
A belief that is false and persistent (cannot be dislodged by evidence and reason to the contrary)
115
Determining whether an insane delusion materially affected a dispositive provision of the will
Majority: "but for/must have been test": the dispositive provision of the will would not have been made but for the insane delusion
Minority: "might have been test": the dispositive provision might have been the product of the insane delusion
116
What is the policy behind enforcing a no-contest clause?
- Saves costs of disputes
- Reduces false negatives (denial of intended will)
- Increases false positives (admitting unintended wills)
117
What happened in Townshend v. Townshend?
Testator claimed to have spoken face to face with God, who directed him to free his slaves. The testator's intent was not honored
118
Why require a sound mind?
- Devil speaks through insane people
- Protect decedent's family
- Provide care and support for the aged
- Protect people of unsound mind from exploitation
- Enhance legitimacy of law
- Cost-benefit balancing (more efficient allocations with sound mind)
- People of sound mind want the sound mind: protect me from my later self
119
False Positive
Unintended will is admitted to probate (type I error)
120
False Negative
An instrument intended to be a will is denied admission to probate (Type II error)
121
Functions of Formalities
- Evidentiary (reduce false positives)
- Protective (reduce predatory behaviors)
- Cautionary or Ritual
- Channeling (send people to lawyers)
- Reduce administrative costs of probate (reducing contested cases)
122
Formalities for wills
- A writing
- Signed by testator
- Attested by witnesses
123
What must the writing contain?
- Traditional rule: the writing must itself express the animus testandi (objective requirement)
- UPC: Expression in the will is not required. Extrinsic evidence may establish that a document is a will
124
Subscription
Signing at the bottom of the will
125
Are electronic signatures allowed?
Yes, in Taylor v. Holt the court admitted a will that was signed electronically
126
What are the additional formalities for attested wills?
- Statute of Frauds required writing to be attested and subscribed by three witnesses
- UPC: Must be signed by two individuals who signed within a reasonable time after witnessing the signing of the will OR the testator's acknowledgement of the signature/will
127
Why was the will not admitted to probate in Stevens v. Casdorph?
The will had not been signed in the presence of two witnesses, the witnesses did not sign in the presence of the testator, and the witnesses did not sign in each other's presences. The court required strict compliance with the statutory requirements
128
What does the 2008 UPC say about notarized wills?
One notary is as good as two witnesses
129
When do attesting witnesses need to be competent?
- At time testator signs or acknowledges will/signature
| - At time witness signs
130
When does a witness in probate litigation need to be competent?
- At time testator signs or acknowledges will/signature
- At time witness signs (if they are also attesting witness)
- At time of probate
131
What makes a person incompetent to be a witness to a will?
- Mental incompetence
| - Financial interest of a necessary witness
132
What happens when a necessary witness has a financial interest in the will?
- Statute of Frauds: strike the witness and deny probate
- Some purging statutes: probate will but strike gift
- Some purging statutes: probate will but strike gain from gift
- UPC: probate will, strike nothing
133
Living probate/ante-mortem proceeding
Offered in some states. A person can prove a will's validity while they are still alive.
134
Holographic Wills
Informal wills; do not need to comply with witness requirements
135
What are the requirements for an informal will?
- Signature (sometimes subscription)
- Dated (maybe)
- Written in hand of testator
136
Need the expression of the intent that this document be the testator's will be in the hand of the decedent?
- Traditional rule: YES
| - UPC: NO, other portions or extrinsic evidence can establish intent
137
In jurisdictions allowing holographic wills, what do courts do when part of an informal document is not in the hand of the decedent?
- Oldest approach: deny probate if any part is not in T's hand
- UPC: signature and material portions must be in T's hand
138
Nuncupative Wills
Oral wills, allowed in some states under limited circumstances
139
What happened in Matter of Snide?
Spouses signed the wrong wills, court carved narrow exception to admit the signed will even though it was not in strict compliance with formalities.
140
What is UPC 2-503 harmless error?
- Clear and convincing evidence that an instrument was intended to be a will is enough for probate
- Intended to reduce false negatives
141
In re Estate of Horton
- Decedent committed suicide after writing a note on his phone
- Trial court found clear and convincing evidence that he intended to leave a farewell note on his phone as his will. A handwritten note described how to reach the file
142
What are the costs of UPC 2-503 harmless error?
- May increase false positives
- May increase attempts to defraud and influence
- Reduces certainty that planning will not be undone
- Reduces incentives to create good evidence of intent when it is cheap to do so
- Reduces channeling to lawyers, who can improve planning for death
- Increases administrative costs
143
Integration of Wills Doctrine
The will is all of the papers present at the time and place of execution and intended to be part of the will
144
Incorporation by reference doctrine
A writing that is not part of a will might be given testatmentary effect if it is incorporated by reference into a valid will. This type of document is not part of the formal will, but it is part of the probate file
145
Requirements of incorporation by reference
- Language in the will manifests an intent to incorporate another writing (required by UPC and all jurisdictions)
- will must identify the writing (some variation required by UPC and all states)
- the writing must exist at the time the will is executed
- existence of document at death (not a UPC requirement)
- will refers to the document as being in existence at the time of the execution (not a UPC requirement)
146
What effect does a codicil have on the date of a will?
Updates the will as of the later date of the codicil
147
UPC 2-513: Subsequent statement or list having testamentary effect
- will must refer to writing
- only for tangible personalty not specifically devised by will (not money)
- writing describes items and persons with reasonable certainty
- signature
148
act of independent significant doctrine (UPC 2-512)
- creates an exception to the formalities in cases where there is no testamentary intent
- if contingency affecting disposition might be determined by factors other than testator's purpose to make a devise or bequest (like having an additional child)
149
what are the three approaches to dealing with mistakes in wills?
- strict compliance
- courts carve narrow exceptions
- UPC 2-503 dispense with formalities
150
what is private ordering?
Requiring an individual testator to opt in or opt out of certain UPC provisions (such as 2-503)
151
Why require writings to have existed at the time the will was executed?
D could opt out of formalities in the future, imposing costs on others, externalities, and spillovers
152
Methods of revocation by law
Divorce, marriage
153
What impact does divorce have on a will?
Common law: Divorce works a total revocation of wills existing at divorce
UPC 2-804: Divorce works a partial revocation of gifts in wills and other instruments to the former spouse and their kin, who are treated as having disclaimed
154
What impact does marriage have on a will?
Some states: Marriage totally revokes wills that did not provide for marriage
UPC 2-804(f): Marriage does nto revoke wills.
155
What is required for volitional revocation of a will?
- Intent to revoke will (animo revocandi)
| - Capacity, as for a will
156
What are the two methods of volitional revocation?
- By instrument
| - By revocatory (physical) act
157
Was the will revoked in Milbourne v. Milbourne?
No, because the later will was executed under undue influence. Additionally, statement of intent to caretaker does not count as a revocation
158
Was there a volitional revocation in Thompson v. Royall?
- Judge wrote "this will is null and void" on the back of the will and the testator signed.
- Not a revocation by instrument because there were not attesting witnesses and not a holograph.
- Not a revocation by physical act because the will was not defaced
159
Examples of revocation by physical act
Obliteration, cancellation, destruction
160
Must revocation by physical act actually touch the words of the will?
- Some courts: YES
| - UPC 2-507: No
161
Can a physical revocatory act be done on a copy of a will?
No, it must be the original
162
Is partial revocation by physical act allowed?
- Allowed or allowed with limits by some states
- Not allowed by some states including Indiana
- Allowed by the UPC
163
Non-revocation (ineffective revocation)
When a volitional revocation is ignored even though the revocation seems to meet all requirements for a valid revocation
164
Dependent Relative Revocation
The revocation of a will was dependent or conditional on a related will (or part of the same will) being admitted to probate. Since the related will or part is not being admitted, the condition is not met and the will or part is not revoked.
165
Can the presumption of DRR be overcome?
Yes, if recognizing the revocation gets closer to the decedent's intent
166
What are the requirements of a revocatory act?
-Performed by D or D's agent at D's direction in D's conscious presence
-Physical act must be performed, not just ordered or intended
-To the will, not a copy
-Traditionally, the physical act must touch the words of the will
-Presumption of revocatory act with intent to revoke if will last in D’s possession
and cannot be found or is defaced
167
Can a revoked will be brought back to life?
Yes, under a process called revival
168
If Will 1 is partially revoked by Will 2, and then Will 2 is revoked by revocatory act, what is the effect on Will 1?
It is rebuttably presumed alive
169
How do some states approach revival?
- Some states do not have revival
| - In other states, Will 2 supersedes Will 1. Revoking Will 2 uncovers Will 1.
170
Plain Meaning Rule (traditional rule)
If language accurately describes property or a likely beneficiary of the testator, the court will not admit extrinsic evidence that something else or someone else was actually intended by testator. (might be meaning that is plain to estates lawyer)
171
No reformation rule (traditional rule)
The subjective intent of the decedent will not be a basis for reforming the instrument.
172
If Will 1 is revoked by revocatory act, can it be revived under the UPC?
No, it is fully dead
173
What are the traditional rules regarding mistake in the execution?
-if words were mistakenly included, we can exclude them because they lacked
intent.
-If intended provisions are omitted, admit the will anyway, but no reformation is allowed, no words can be added. We cannot include in the will words that
were not executed in compliance with the Wills Act formalities (unless they
are incorporated by reference).
174
What are the traditional rules regarding mistake in the inducement?
If words were executed in compliance with the Wills Act and were intended to be a will, admit them to probate despite mistakes in the inducement
175
UPC 2-805 Reformation Rules
– Reform instrument to follow clear and convincing evidence of testator’s intent.
– Applies in cases of mistake in the inducement or execution. Allows evidence of intent in more cases.
– Many jurisdictions have not adopted it.
176
According to Knupp, can extrinsic evidence be used to fill in the gaps for a patent ambiguity?
No, only for a latent ambiguity
177
According to Breckner v. Prestwood, what evidence can be heard to clear up a patent ambiguity?
Circumstances of D's life, friendships, etc.
178
According to Breckner v. Prestwood, what evidence can be heard to clear up a latent ambiguity?
What D intended AND circumstances of D's life, friendships, etc.
179
What ambiguity was present in Breckner v. Prestwood?
Patent (two distinct provisions giving personal property to a named beneficiary and a charity)
180
What is the modern trend with patent and latent ambiguities?
Reject the distinction and allow extrinsic evidence to clear up any ambiguity.
181
Does the UPC allow extrinsic evidence for issues of construction?
YES, for any issue of construction.
182
What is the effect of allowing extrinsic evidence in all cases?
Rejects the plain meaning rule
183
Specific devise example
I give to X my ring (reference to specific asset)
184
General devise example
I give to X $100
185
Demonstrative devise example
I give to X $100 from the sale of my stock (this is specific to the extent of stock proceeds, general to the extent other sources are used to make up the rest of the gift).
186
Residuary devise example
I give to X the residue of my estate
187
Class gift example
"I give the residue to my children," NOT "I give the residue to Laura, Alison, and Christopher."
188
What gifts are void?
Gifts to...
- an animal
- God
- A devisee who was dead at the time the will is executed
189
What is lapse?
A gift to...
- Common law: Devisee alive at execution of will but dead before the testator
- UPC: Devisee alive at execution of will but dead before 120 hours after death of testator
190
What do antilapse statutes do?
Provide substitute takers in some situations (but not all situations)
191
Is there antilapse under the common law?
NO! Antilapse rules are statutory
192
What did court apply in Breckner v. Prestwood to resolve the patent ambiguity?
Ejustem generis, which limited the scope of personal property
193
Does a gift lapse if an alternative taker is specified for that particular gift?
NO
194
What happens to a specific or general devise if the devisee cannot take?
Goes to residuary devisees
195
What happens to a residuary devise if the devisee cannot take?
- Common law: Intestate successor (no residue of residue)
| - UPC: Other residuary devisees
196
What are the requirements of most lapse statutes (including UPC 2-603)?
- A substitute taker (descendant surviving at the time of D's death)
- Relationship between testator and devisee (under the UPC, a grandparent or descendant of grandparent of D. In some states, descendant of D).
197
Do lapse statutes create default or limiting rules?
Default
198
Do words of survivorship suffice for a will to opt out of the lapse statute?
- Majority of states: YES
| - UPC: NO
199
Do lapse statutes apply to some class gifts?
Yes, in most states and under the UPC, if one member of the class dies, the gift can go to a substitute taker
200
Ademption by extinction
- Common law: If property is gone, gift is adeemed by extinction
- UPC 2-606: Devisee gets gifts still in the estate plus (1) unpaid purchase price, (2) unpaid condemnation award, (3) unpaid insurance, (4) property obtained from foreclosure on unpaid obligation, (5) tangible replacement property, (6) pecuniary devise equal to the value of the specific devise to the extent the testator did not intend to adeem
201
Devise of stock that increases after will execution
-Traditional rule:
Specific devise - devise increases, number of shares grows
General devise - devise and number of shares stays the same
-UPC 2-605: If testator had enough shares both at time of will execution and at death, number of shares grows
202
Does the devise grow if the increase in shares was before the will was executed?
- Strunk: Yes
| - UPC: No
203
Can a gift to spouse B satisfy the devise to A?
A change in the 1990 UPC implies that a gift to B can adeem by satisfaction the devise to A
204
What is the priority when some distribution must be reduced?
Abatement order:
1. Property not disposed of by the will
2. Residuary devises
3. General devises
4. Specific devises
205
What is ademption by satisfaction?
Gift to devisee during life of testator with intent to adeem gift to devisee
206
Who pays the debt on pledged property in a specific devise?
- Common law: Presume debt paid out of residue
| - UPC: Presume specific devisee pays debt
207
What is pretermission?
Omission of heirs from will executed before the person was an heir apparent
208
What are the default rules for pretermission of spouse?
UPC 2-301: Might provide a share of the estate to the pretermitted spouse
- Exceptions: not intestate share if it looks like D did not intend S to take
- Intestate share of estaet minus gifts to some children
209
What is the default rule for pretermission of child of D not in D's will?
- After-born and after-adopted children are protected someitmes.
- After-known children are not protected
- UPC 2-302 adds protection for children D failed to provide for only because D thought they were dead
210
Should you have a contract relating to a will?
No, they are generally a bad idea and have limited enforcement
211
Inter vivos gifts
Gratuitous transfers that take effect during life.
Requirements: intent, delivery, acceptance
Cannot be revoked
212
Gifts causa mortis
Extra requirement: anticipated death from some peril
- Revocable automatically if you survive peril
- Volitionally revocable if there is intentional revocation
213
Tenancy by the entirety
- Unities: marriage, time, title, interest, possession
| - Cannot be unilaterally severed other than by divorce
214
Joint tenancy
- Unities: time, title, interest, possession
| - One joint tenant can unilaterally sever her portion into a Tenancy in Common, revoking right of survivorship
215
Tenancy in Common
Unity: possession
216
Right of survivorship in TxE and JT
When one party dies, that party's interest vanishes. The interest of the remaining party swells
217
Partition by Sale
Any tenant in common or joint tenant has the power to sell an interest to a person outside the family. That person can ask for a partition by sale. If the court grants the sale, the entire property can e purchased by the highest bidder, a person outside the family, which displaces the heirs outside the family
218
Payment on death contracts
"When I die, pay X."
- If they work, the title changes at death. They are revocable and amendable.
- Under common law, these were viewed as testamentary and not valid unless executed in compliance with the wills act formalities
- UPC 6-101: Statutes in almost all states allow them to be enforced even though they act like a will
219
What was the first exception to the Wills Act?
Life insurance
220
Can life insurance beneficiary designations be changed by divorce?
Yes
- UPC: YES, automatic revocation
- Hillman v. Maretta: For federal employee life insurance, NO
221
Can life insurance beneficiary designations be changed by a will?
- Yes, in some states
| - Cook case: NO
222
What are pay on death accounts?
- Mutual funds
- POD brokerage account
- Banks and brokerages (like mulitparty bank accounts)
- Medical Savings Accounts
- IRAs
223
Does divorce revoke a POD designation in a pension covered by ERISA (Egelhoff case)?
ERISA displaces the state law, so the pension POD designation controls. In Egelhoff, D's former wife won
224
what type of trust is involuntary?
Constructive trust imposed for fairness
225
What does it take to create a trust?
Capacity, intent, manifestation of intent, res, beneficiary, trustee, active duty for trustee
226
What capacity is required for trusts?
- Testamentary: Capacity to execute a will
| - Inter vivos: Capacity to execute a deed or make a gift
227
Are specific "magic words" required to demonstrate intent to create a trust?
No, and the settlor does not need to know what a trust is. There simply must be an objective manifestation of intent to give one party legal title for the benefit of another.
228
What is the res?
Property in the trust, which must be identified with reasonable certainty
229
Are pets definite beneficiaries in trust?
- Common law: Honorary trusts are allowed for pets, but they are not real trusts
- UTC 408/UPC 2-907: A trust may be created for animals alive during the life of the settlor. Any extra money goes to settlor or settlor's successors
230
What are the requirements of trust beneficiaries?
- Some person capable of holding title
- Someone different from the trustee
- Someone other than grantor, unless intent is to set up a grantor trust
231
Will a trust fail for want of a trustee?
No, the court can appoint a trustee
232
Will a trust fail for want of an active duty for a trustee to perform?
Yes. If the trustee has no active duty to perform, it is a passive trust.
233
Revocable trusts
- Testamentary in nature
- Do not comply with Wills Acts
- Void under old common law, but are now valid even without Wills Act compliance
- Traditional rule: Right to revoke or amend had to be retained in the trust instrument and settlor had to follow method specified
- UTC: Default is that a trust is revocable and amendable, and settlor can amend by following terms of trust or some other method manifesting clear and convincing evidence of settlor's intent
234
Pourover Will
When a will devises assets to a trust
235
Can a will fund an inter vivos trust that has no res before the death of the testator?
- Old common law: No
| - UTATA, UPC: Yes, providing the res that brings an inter vivos trust to life.
236
Who is the trustee's duty to when the trust is revocable?
The settlor
237
Rights in the res for revocable trust
- Settlor holds rights
- Trustee's duties are to settlor
- Settlor's creditors can compel distribution of property before death, and often after death
- Beneficiary has no legally enforceable interest and their creditors cannot compel a distribution
238
Rights of creditors to reach assets in an irrevocable trust
- Settlor has no rights unless they are also a beneficiary, so creditors cannot reach trust property
- Trustees have no beneficial rights unless they are also a beneficiary, so their creditors cannot reach the trust property
239
Hamilton Order
Order secured by creditor that trustee must pay the creditor before paying the beneficiary. Creditor cannot compel payments by trustee, but can attach payments the trustee decides to make.
*prohibited by statute in some states
240
Rights in the res of a mandatory (irrevocable) trust
- Beneficiary can compel a distribution as specified in the trust instrument
- Creditor can compel same distribution
241
Rights in the res of a discretionary trust subject to an ascertainable standard
- If no creditor will intercept distribution, beneficiary can compel distribution as per standard
- If creditor will intercept distribution and standard is one that depends on debtor actually receiving the distribution (such as support or comfort), creditor cannot compel a distribution because it would not serve specified purpose
242
Rights in res of discretionary trust not subject to a standard
- Beneficiary cannot compel distribution unless court finds abuse of discretion
- creditor cannot compel distribution, unless court finds abuse of discretion and only to that extent
- creditor can get a Hamilton order
243
Protective trust
shifts from subject to a standard to completely discretionary when creditor tries to attach, so creditor gets nothing
244
Exception creditors w/ discretionary trust
- May include spouse, former spouse, child with support order
- Common law: no different from other creditors
- UTC 504: These creditors can compel a distribution if the trustee has abused discretion
245
Spendthrift trusts
Stops some creditors of beneficiaries from reaching trust assets
-Exception creditors can reach despite spendthrift clause
246
Scheffel v. Krueger
Victim of child abuse cannot recover from perpetrator's spendthrift trust
247
Exception creditors under the UPC
- spouse, former spouse, or child with support order
- IRS claims for federal taxes
- Lawyer claims for providing services for the protection of a beneficiary's interest in the trust
248
Asset Protection Trust (self-settled trust)
S creates a trust for S's own benefit that is unreachable by S's creditors
- Not allowed under common law
- Minority of states allow it now
249
Duties of trustees
- prudence
- loyalty
- care
- act impartially
- other subsidiary duties (collect and conserve property, not to comingle, keep & render accounts, inform, not to delegate, inquire)
250
When can a trust be terminated?
- Trust terms say so
- Trust reached its maximum age under statutes limiting duration
- illegal
- impossible
- uneconomic (UTC 414)
- settlor and all beneficiaries agree
251
Can a trust be terminated if the settlor and some beneficiaries agree?
- Traditional rule: NO
| - UTC 411: YES, if other beneficiaries will be protected
252
Can a trust be terminated if the settlor is dead and all beneficiaries agree?
- England: YES
| - USA: Claflin rule
253
Claflin Rule
As long as the trust might serve a material purpose, do not terminate it. The court protects the settlor's intent
*Protection limited to period of RAP
254
Reforming a trust
A Court may reform a trust to correct mistakes in accordance with settlor's intention
255
UTC requirements for reforming trust
Clear and convincing evidence that both the settlor's intent and the terms of the trust were affected by a mistake
256
Administrative deviation
change in the management of the property
257
Distributive deviation
change in the distributions from the trust, who takes, or what or when it is taken
258
When can a court grant an administrative deviation?
Traditional (equitable deviation doctrine):
-compliance with the terms would substantially impair the accomplishment of a material purpose of the settlor AND
-circumstances have changed in ways that the settlor did not anticipate
UTC 412: Continuation of trust on its existing terms "would be impracticable or wasteful or impair the trust's administration"
259
What does Stake think of APT?
Race to the bottom
260
When can a court grant a distributive deviation?
- Traditional rule: court did not allow change in share of one beneficiary who would then qualify ofr public assistance
- UTC 412/modern trend: A court may modify or terminate the trust if there are circumstances not anticipated by the settlor and modification or termination would further the purposes of the trust
261
Supplemental Needs Trust
Can provide only the benefits the state will not provide, maximizing support from the state.
*Terms provide that trustee shall not make distribution that would disqualify beneficiary from state support
262
Decanting a Trust
Pouring first trust's assets into a second trust. Does not require judicial approval.
263
What is the problem if it is hard for beneficiaries to remove the trustee?
Trustee with discretion might deviate from the intent of the settlor, devoting too little attention to the needs of the beneficiaries
264
What is the problem if it is easy for beneficiaries to remove the trustee?
Beneficiaries might press trustee to deviate from the intent of the settlor by threatening to remove trustee
265
Can the beneficiaries demand a change in the trustee?
- Common law: Unless the trust instrument allowed this, only for cause
- UTC: If co-trustees are no cooperating or if there is a substantial change in circumstances/all qualified beneficiaries request
266
What might trust protectors be empowered to do?
-approve equitable deviations
-terminate trust
-remove trustee
(Approve changes that a court might not allow)
267
Advantages of trusts over wills
- jurisdiction choice
- standards for incompetence of a person can be established and applied without litigation
- Not automatically on record
268
Advantages of wills over trusts
- non claim statutes bar creditors of estates
| - formalities reduce opportunities for overreaching and malefaction
269
What is a charitable purpose?
UTC 405: Relief of poverty, advancement of education or religion, promotion of health/governmental/municipal purposes, other purposes that benefit community
270
Charitable Trust characteristics
- Need not have a definite beneficiary
- Must have a charitable purpose (not merely benevolent)
- Court may cy pres a charitable trust if impracticable
271
Cy pres
Reforming a trust instead of terminating it to operate as nearly as possible to what the settlor intended.
272
Is specific charitable intent enough for reforming a trust?
No, the settlor must have general charitable intent
273
Does "children" include adoptees?
- In most jurisdictions, adopted minor child is presumed to be included in a class gift made by an adoptive parent's ancestor
- UPC: default rules that turn in part on whether adopting parent performed functions of a parent
274
Powers of Appointment
Donee of a power can transfer appointive property to objects (or permissible appointees) of the power. Transfer occurs when donee exercises power.
275
Inter vivos power of appointment
Created by "Donee may appoint by deed"
276
Testamentary power of appointment
Created by "Donee may appoint by will"
277
Exclusive power of appointment
allows donee to appoint to some objects (permissible appointees) and exclude others
278
Nonexclusive power of appointment
Requires donee to appoint to all permissible appointees
279
General power of appointment
- Objects include at least one of donee, donee's estate, creditors of either
- income to property is taxable to donee
- appointments are treated as gifts from the donee to the objects
- creditors of donee might be able to reach property
280
When can creditors of a donee reach the appointive property if the donee has a general power?
- Common law: If he never exercised it, it was not his. Creditors cannot reach
- UTC: Creditors can reach whether or not person has exercised power.
281
What happens if takers in default of appointment are named?
Named takers in default take because they have a vested interest subject to divestment by appointment
282
What happens if there are no takers in default of appointment named?
- Nongeneral: Permissible appointees take unless they are too numerous
- General: Donor takes (or donor's estate if donor is dead)
283
What happens if there is fraud on a special power?
Object gets nothing
284
Freehold estates (seisin if legal interest in land)
- Fee simple: Can last forever
- Fee tail: Lasts as long as it can be passed down to issue
- Life estate: Can last for the lifetime of a human or set of humans
285
Nonfreehold estates (no seisin)
- Term of years: until a fixed ending time
- Periodic tenancy: repeating period until terminated by either at the end of a period
- Tenancy at will: until either party lacks the will to continue
- Tenancy at sufferance: until the landlord chooses
286
Defeasible
An interest that may terminate before reaching its maximum duration
287
Two ways to make an interest defeasible
- Special limitation: temporal language such as during, while, as long as, for so long as, until
- Condition subsequent: conditional language such as if, but if, provided, on the condition that
288
Present interest
interest that is possessory now, vested in possession and interest
289
future interest
will become possessory, if at all, in the future. A set of rights that exist today, but not yet vested in possession
290
Future Interests Retained by Transferor
- Reversion: if O did not transfer a vested estate of the same quantum as she had (in O or O's heirs)
- Possibility of reverter: O transfers a vested estate of same quantum while attaching to that estate a special limitation operating in O's favor.
- Right of Entry: O transfers an estate but attaches a condition subsequent that operates in her own favor (not automatic, must be exercised)
291
Requirements for Remainders
Cannot be a remainder if it...
- could cause seisin to spring from O in the future
- could cut short a previous transferee's vested estate by a condition
- follows a vested interest
292
Vested Remainder
Has an ascertainable taker AND there is no unsatisfied condition precedent
293
Contingent Remainder
Has no ascertainable taker OR there is an unsatisfied condition precedent
294
Can someone be an heir of the living?
NO
295
What is a condition precedent?
The words of the condition precede the taker or are wrapped up in the description of the taker
296
Is release possible for a power of appointment?
YES
297
How were contingent remainders destructible under the common law?
- Merger
| - If it failed to vest in interest in time to vest in possession
298
Springing executory interest
Takes from the grantor or grantor's heir
299
Shifting executory interest
Takes by cutting off a vested grantee
300
When is an executory interest vested in interest?
When it vests in possession
301
Determinable interest
an interest that might end early by a special limitation and the limitation operates in favor of the transferor or a remainderperson
302
Special fertility rules when identifying future interests
- a person can conceive children until death
| - a person cannot conceive children after death
303
Merger Doctrine
If one person holds two vested legal estates in land, a vested LE followed by a vested remainder or a reversion in FS, the former merges into the latter
304
Does the common law require survival to the time of possession?
NO
305
Surplusage
Conditional language that restates a condition or limitation already expressed. Those words are ignored
306
Does the UPC require survival to the time of possession?
YES, there is a survival requirement
- A future interest in trust is contingent on survival until date of distribution
- If holder does not survive but leaves issue, make a substitute gift to the issue of the holder of the future interest
307
Heirs
Those who would take by intestacy. They must survive A, at the least
- Traditional rule: only need to survive to A's death
- UPC: Must survive until time of distribution
308
Rule in Shelley's Case
Applies when one instrument creates a life estate in A and a remainder in A's heirs. A will have fee simple.
309
Doctrine of Worthier Title
If O gives a life estate to A, then remainder to O's heirs, the DoWT creates a reversion in fee simple for O.
310
Rule of Convenience
The class closes when any member of the class is entitled to possession and enjoyment of a share. At that point, no more people can enter the class.
311
Rule Against Perpetuities
An interest is void if it might vest too late. If it is valid, you can find a validating life.
312
Void under RAP
The offending interest is struck from the instrument, but the entire instrument is not void
313
Class Gift Rule
```
Bad as to one, bad as to all.
If an interest might vest in any member of the class too late, the class gift is void for all members of the class
```
314
Time period for RAP
More than 21 years plus periods of actual gestation after the deaths of all persons alive when the perpetuities period starts to run
- Wills: death of testator
- Ordinary gifts: at delivery
- Inter vivos transfers in revocable trust: when irrevocable
315
What is the effect of statutes that made CRM indestructible?
Made some CRMs void under the RAP
316
How does RAP apply to general powers of appointment?
Power is void if it might become exercisable too late. Interest created by exercise of power is void if it might vest too late, starting at exercise
317
How does RAP apply to other powers of appointment (not general)
An interest created by the power is void if it might vest too late--measured from time power was created
318
RAP Reforms
- Carve exceptions for cases with bad results (statutes or common law)
- Cy pres for all instruments or trusts
- wait and see for common law period (until measuring lives end, plus 21 years + 10 months)
- wait and see for a fixed period
- abolition of RAP
319
When is an interest good under USRAP?
- it vests or terminates within 90 years OR
| - it is good under common law
320
Benefits of RAP
- Facilitates efficient transfer of resources
- Reduces dead hand control of the behavior of the living
- Reduces uncertainty from contingent changes in ownership
- Adds enjoyment from ownership of future interests
- Avoids problem of first-generation monopoly
- Reduces problem of accumulations
- Reduces problem of multiplication of beneficiaries
321
Costs of RAP
- Injustice when transferor's intent is ignored because of bad drafting
- Some desired transfers are impossible, so testators feel constrained
- Upsets grantees when RAP invalidates their gifts
- Testators are disappointed when results do not conform to expectations
