Trusts/Estates

Question 1

Intestate succession occurs when

Answer 1

1. Decedent dies without will
2. Decedent’s will does not dispose of all of their property
3. Decedent’s will is denied probate

Question 2

Intestate where survived by spouse and descendants

Answer 2

Surviving spouse inherits one-half or one-third of decedent’s estate with remainder to surviving descendants

UPC: if decendent’s descendants are also surviving spouse’s descendants, entire estate goes to surviving spouse

Question 3

Not survived by spouse or descendants

Answer 3

Decedent’s surviving parents inherit entire estate and if no parents, descendants of decedent’s parents inherit

Question 4

Intestate distributions

Answer 4

When decedent’s estate does not pass to surviving spouse, but instead to descendants then statutes control how distributions are made

Either (1) per capita with representation—modern per stirpes, or (2) per capita at each generation

Question 5

Per capita with representation (modern per stirpes)

Answer 5

Estate divided into equal shares at first generation at which there are living takers; each living person takes share and each share of deceased person at that level passes to descendants

Question 6

Per capita at each generation

Answer 6

UPC and growing number of states: divided at first generation with living takers, but shares of deceased are combined and divided equally among takers at next level

Avoids situations where takers are penalized for having bigger family

Question 7

Adopted children’s inheritance rights

Answer 7

Treated the same as natural child for purposes of intestate succession but cuts off rights from adoptee’s inheritance rights from natural parents unless adoption by spouse of natural parent

Question 8

Stepchildren and foster children inheritance rights

Answer 8

Generally have no inheritance rights unless adoption by estoppel or equitable adoption

Question 9

Non-marital children

Answer 9

All states permit inheritance from mother and from father is allowed if paternity established

Question 10

Posthumous children inheritance rights

Answer 10

Child in gestation at time of decedent’s death inherits as if born during lifetime

Question 11

Simultaneous death

Answer 11

One cannot take as an heir or beneficiary unless she survives decedent

Two approaches (1) Uniform Simultaneous Death Act, (2) 120-hour rule

Question 12

Uniform simultaneous death act

Answer 12

Property passes as though beneficiary or heir died before decedent unless sufficient evidence decedent died first

Question 13

120-hour rule

Answer 13

Beneficiary/heir is only treated as having survived decedent if clear evidence that she survived by 120 hours or more

Question 14

Slayer Rule

Answer 14

Decedent death’s caused by beneficiary; they then forfeit interest in decedent’s estate

Question 15

Disclaimers

Answer 15

One may disclaim interest that otherwise would pass to them from decedent or decedent’s estate which has effect of interest passing as if disclaiming party predeceased decedent

Question 16

Disclaimer requirements

Answer 16

For federal tax purposes, disclaimer must be in writing, irrevocable, and filed within 9 months of decedent’s death

Question 17

Advancement

Answer 17

Gifts made during testator or decedent’s life with intent that gift be applied against any share the heir or beneficiary inherits from decedent/testator’s estate

Common law: gifts automatically deducted from interest

Question 18

Modern requirement of advancements

Answer 18

Recognized as advancement only if
(1) decedent declared intent to make gift an advancement in contemporaneous writing, or
(2) beneficiary/heir acknowledged gift to be advancement in writing

Question 19

Testamentary capacity and intent

Answer 19

For valid will, testator must have capacity and requisite intent

Question 20

Testamentary capacity

Answer 20

For valid will, person executing must be 18 or older and have mental capacity which means they understand act, extent or property, people who are natural objects of bounty, and nature of disposition

Rebuttable presumption

Question 21

Testamentary intent

Answer 21

Must intended that instrument operates as will and this must be present intent

Extrinsic evidence allowed to prove requisite intent or lack thereof

Question 22

Wills

Answer 22

Instrument directing disposition of person’s property when they die

Has no legal effect before death and may be revoked or amended until death

Question 23

Reqs of a will

Answer 23

1. In writing
2. Signed by testator, any mark intended is sufficient
3. Signed by at least two witnesses

Question 24

Attestation clause

Answer 24

Included immediately between testator and witness signatures setting forth above required elements and that they were met

Question 25

Witness reqs

Answer 25

Must be competent (sufficient maturity and mental capacity to understand and appreciate nature of what they witnessed)

Question 26

Interested witnesses common law

Answer 26

Entire will could not be probated, abolished in every state

Question 27

Interested witnesses majority rule

Answer 27

Will is valid but gift to witness beneficiary is void unless (1) two other disinterested witnesses, or (2) interested witness would take if no will

Question 28

Interested witness UPC

Answer 28

Presence does not invalidate anything

Question 29

Codicil

Answer 29

Amendment, modification, or alteration to previously executed will Same formalities are required and, when met, original is republished and executed on date of codicil

Question 30

Holographic will

Answer 30

Handwritten, unwitnessed will Not recognized everywhere

Question 31

Holographic will reqs

Answer 31

1. Testator’s writing, at least material portions 2. Signature 3. Reflect intent to make will Revokes any prior valid will

Question 32

Separation of will documents (integration)

Answer 32

Issue can arise where part of will becomes separated Test: integrated into will if (1) document was physically present at time of execution, and (2) testator intended to include Reqs presumed if physical connection of pages

Question 33

Acts of independent significance

Answer 33

Will can dispose of property by reference to acts or events occurring after testator executes will IF act or event has some independent significance during testator’s lifetime other than providing gift in will

Question 34

Identifying beneficiaries and property

Answer 34

Future act or event can involve identifying beneficiaries like each person employed as gardener or all cars

Question 35

Incorporation by reference

Answer 35

Docs intrinsic to will may be incorporated by reference into will

Question 36

Incorporation by reference reqs

Answer 36

1. Intent to incorporate 2. Authenticated document: sufficiently described to be authenticated 3. In existence upon will execution unless it relates to tangible property if signed and items described to whom they are devised with reasonable certainty

Question 37

Revocation by testator

Answer 37

If testamentary capacity to make valid will then can revoke at any time before their death

Question 38

Revocation by written instrument

Answer 38

Will or any part of it can be revoked or changed if intent to revoke and formalities

Question 39

Revocation by physical act

Answer 39

Will may be revoked in most states by burning, tearing, or otherwise destroying the will 1. Present intent required 2. Act by another (revocation by proxy) is fine if done at testator’s direction and in their presence

Question 40

Partial revocation

Answer 40

May be accomplished by making marks of cancellation on will in most states

Question 41

Revocation by operation of law

Answer 41

Upon happening of certain events, usually involving marital status or children

Question 42

Marriage following execution of will

Answer 42

No effect on existing will in most states UPC: omitted spouse takes share of decedent’s estate equivalent to what their intestate share would be unless it was clear intent to omit

Question 43

Divorce following execution of will

Answer 43

Revokes all bequests made in favor of former spouse, unless will expressly provides otherwise and treats former spouse as predeceased

Question 44

Pretermitted children

Answer 44

Will does not provide for children born or adopted after will Most states give equal to what they would have received through intestate succession

Question 45

Revival of will

Answer 45

Where will revoked, and revoking instrument is revoked then original presumptively valid unless clear intent not to do so

Question 46

Dependent relative doctrine

Answer 46

Court disregards revocation done to create alternative disposition but based on mistake of fact or law if (a) premised on some mistake of fact or law, (b) revocation would not have happened absent this mistake, and (c) originally revoked is closer to what testator wanted

Question 47

Lapsed

Answer 47

Gift provided in will lapses where beneficiary predeceases testator and, absent anti-lapse, gift goes back into estate

Question 48

Anti-lapse statutes

Answer 48

Gift that would otherwise lapse vests in predeceased beneficiary’s descendants who become substitutes if predeceased was relative of testator and had descendants

Question 49

When anti-lapse elements not fulfilled

Answer 49

Common law: lapsed gift passes to testator’s heirs Modern: residuary beneficiaries who survive testator and deceased beneficiary take

Question 50

Class gifts where there is predecease

Answer 50

If will makes gift to class and class member predeceases, surviving class members take absent an alternative provision in will unless anti-lapse applies

Question 51

Ademption

Answer 51

Gift fails if no longer in estate at time of death, applying to specific devises only

Question 52

Intent theory states exception to ademption

Answer 52

Adeemed bequest saved if evidence suggests ademption would be inconsistent with intent

Question 53

Abatement

Answer 53

Where estate’s value is insufficient to pay its obligations and provide for disposition of property, it must reduce gifts to pay obligations and satisfy

Question 54

Order of abatement

Answer 54

Property not disposed of by will Residuary estate General devises Specific devises

Question 55

K involving will

Answer 55

Valid Ks to make, not make, or revoke wills generally enforceable, governed by K law so K requirements must be satisfied and generally needs to be in writing

Question 56

Common grounds for contesting will

Answer 56

Lack of capacity or testamentary intent, defective execution, undue influence, fraud, mistake, or revocation

Question 57

Standing to contest will

Answer 57

Only those who have pecuniary interest have standing

Question 58

No-contest clauses

Answer 58

Clause providing that beneficiary loses interest under will if they contest it but does not apply to suits challenging executor appointment, jurisdiction, or asking court to interpret Majority: no forfeiture of interest if good faith and probable cause Minority: given full effect

Question 59

Undue influence

Answer 59

Invalid if executed while testator subject to undue influence effectively overriding testator’s free will Requirements: (a) influence exerted, (b) mind and free will overpowered, and (c) will would not have been executed absent influence Presumed if special relationship like attorney-client, or significant participation in execution

Question 60

Mistake

Answer 60

Nature of instrument: what it is person is signing, extrinsic evidence allowed In inducement: relates to reason made will or gift, no relief Omission: no relief or extrinsic

Question 61

Reformation for Mistake

Answer 61

UPC allows court to reform terms of will to conform to testator’s intent Must show by clear and convincing evidence that mistake of law/fact affected will and testator’s intent

Question 62

Inter vivos gift

Answer 62

Non-probate; gift given by living person to another living person Requirements include intent, delivery, and acceptance

Question 63

Totten trust or POD account

Answer 63

Deposit in one’s own bank account held in trust for another, creates valid revocable trust either by withdrawing all funds of revoking trust by will

Question 64

Life insurance

Answer 64

K between insurance and policyholder Unless K provides otherwise, policyholder cannot change beneficiary through will provision

Question 65

Power of appointment

Answer 65

Authority granted to person enabling them to designate new owner of property and how they take General: donee can exercise in favor of anyone Special: power exercisable in favor of limited class of appointees

Question 66

Executor

Answer 66

Named in will as personal representative to carry out administration of decedent’s estate and, if no one, court appoints

Question 67

Living will

Answer 67

Specifies life-sustaining and pain-alleviating measures Created, generally, in writing, signed by testator, and witnessed by two adults Revocable

Question 68

Durable healthcare power of attorney

Answer 68

Document that appoints individual as an agent to make decisions on behalf of principal if become incapacitated

Question 69

Trust

Answer 69

Fiduciary relationship where trustee holds legal title to property for benefit of designated beneficiaries Created by settlor; generally, revocable

Question 70

Express trust

Answer 70

Created with express intent either private, for benefit of certain defined or ascertain able persons, or charity, for benefit of indefinite class or public generally

Question 71

Resulting trust

Answer 71

Implied or imposed by law when express trust fails for some reason; settlor becomes beneficiary and if dead, then to settlor’s estate

Question 72

Constructive trust

Answer 72

Not trust; equitable remedy used in cases to rectify unjust enrichment or wrongful conduct

Question 73

Valid express trust requires

Answer 73

1. Settlor has capacity to convey 2. Settlor has clear present intent to create trust 3. Competent trustee with duties 4. Definite beneficiary (specifically identify, or how beneficiaries will be ascertained) 5. Present and clear disposition of settlor’s specific property in trust 6. Valid trust purpose

Question 74

Inter vivos trust

Answer 74

Creation requires transfer of property or declaration of trust and then property must be delivered If land is property, then must be in writing for SoF

Question 75

Testamentary trusts reqs

Answer 75

Created by will and must include intent, essential terms, and identification of beneficiaries by either 1. Terms of will itself 2. Incorporation by reference 3. Power of appointment

Question 76

Pour-over provisions

Answer 76

Provision that devises property to previously existing trust

Question 77

Powers of trustee

Answer 77

Exercise powers expressly or impliedly conferred; has powers necessary and appropriate to properly invest, manage, and distribute trust property

Question 78

Duties of trustee

Answer 78

1. Duty to administer trust in good faith and prudent manner 2. Duty of loyalty, no self-dealing 3. Duty to report to beneficiaries 4. Duty to separate trust property and keep records 5. Duty to enforce claims and defend trust 6. Duty to preserve property and make it productive

Question 79

Discretionary trust

Answer 79

Trustee has absolute power and discretion to make decisions regarding distribution Beneficiaries have no right to income until trustee exercises discretion to distribute; creditors of beneficiary cannot reach unless served with process

Question 80

Support trust

Answer 80

Directs trustee to pay beneficiaries from trust as much as is necessary for beneficiary’s support Creditors of beneficiary cannot touch

Question 81

Spendthrift trust

Answer 81

Prohibits beneficiaries from transferring their interests in the trust Beneficiary’s creditors cannot reach but once distributed, they can

Question 82

Charitable trust

Answer 82

1. Indefinite beneficiaries required: reasonably large class, unnamed and changing over time 2. Charitable purpose: benefit public, effect of gift not motive controls 3. Can be perpetual: RAP does not apply Modification: trust property can be applied to different charitable purposes

Question 83

Termination of trusts (automatic)

Answer 83

At expiration of specified term, or when purposes have become accomplished, unlawful, impossible, or contrary to public policy

Question 84

Revocation and/or modification of private trusts

Answer 84

By settlor: modify or revoke unless terms expressly prohibit By beneficiaries: modify or revoke upon consent of settlor and all beneficiaries, or without settlor consent if would not frustrate material purpose of trust Remember, all beneficiaries include unascertainable ones

Question 85

Cy Pres

Answer 85

For charitable trusts, allows court to modify terms to as near as possible as settlor’s original intent