Wills - Herrera

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Wills & Trusts Final OutlineWILLS

I. Limits on Property Distribution

a. The Dead Hand Control Problemi. The controlling consideration in determining the meaning of a donative

document is the donors intention. The donors intention is given effect tothe maximum extent allowed by law.

b. Shapira v. Union National Banki. Father David made provisions in his will that if his 2 sons dont marry

Jewish women within 7 years they lose their part of their estate.ii. Furthermore, the daughter did not have to take part in this b/c Jewish

traditions are passed down from the woman and she was therefore safe.iii. Son challenges this provision under Equal protection clause because of the

right to marry whoever you want and its against public policy to have thestate enforce a racial provision.

iv. Court found it wasnt a state action even if the state enforces it.

II. Probate Processa. Definition

i. property that passes under the decedents will or by intestacyii. Probate provides formal settlement of ownership and clear title

b. Non Probate Property (not supervised by a judge in the probate court)i. Property passing under an instrument other than a will. Reasons for non

probate transfer: speed, expense, convenience and privacyii. Examples:

1. Joint tenancy (real and personal)a. Two people both own the entire estate. When one dies, the

other still owns the entire part

b. Tenancy in Common each person owns 50% of theproperty and can pass their 50% on to whom ever theywish.

2. Life insurance3. Contracts with payable on death (POD) provision

a. Pensionsb. 401(k)c. Bank accounts

4. Inter vivos trustsc. Estate planning Language

i. Probate court : the judicial procedure that administers the probate estate

ii. Personal Representative: someone who oversees the winding up of adecedents affairs

iii. Administrator: a person appointed by the court to manage the assets andliabilities of an intestate decedent.

iv. Beneficiary : person designated by the will to receive the giftsv. Executor : a person named by a testator to carry out the provisions in the

testators will

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vi. Bond : a type of surety bond required of a trustee, administrator, orexecutor to ensure the proper performance of duties

vii. Codicil : a supplement or amendment to a willviii. Heir : person designated by statute as being the next in line to inherit (next

of kin)

ix. Descendant : one who follows in lineage (child, grandchild)x. Intestate : to die without a valid disposition of propertyxi. Intestate succession : process of becoming beneficially entitled to the

property of decedent.xii. Trust: the beneficial enjoyment of property to which another person holds

legal titlexiii. Settler: one who sets up a trustxiv. Trustee: one who, having legal title to property, holds it in trust for the

benefit of another.d. Opening of the probate Process

i. Couple of places to open probate

1. State of Domicile (primary)2. Location of the property (ancillary)ii. Letters (testamentary v. administration)

e. Formal v. Informal Probatei. Formal

1. The court supervises the actions of the personal representative inadministering the estate through a potentially costly and timeconsuming process

ii. Informal1. The personal representative may administer the estate without

court supervision unless an interested party asks for court review.(DE 305, DE-310 examples of forms to probate small estateswithout full court intervention)

f. Administering and closing probatei. Notice (DE -121)

ii. Creditors (DE 172)iii. Clear titleiv. Pay taxesv. Sell property

vi. Distribute assetsvii. Court discharge

III. Intestacy

a. Generallyi. If someone dies without a will or trust, they die intestate or if the will is

invalidii. Default rules

1. No will or not trust: probate code sets out how it will be handlediii. Causes of intestacy

1. Some people dont want to deal with their own mortality2. Cost

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b. Intestate Successioni. The laws of intestate succession are used to determine who will inherit the

estate. In CA, the first question that begins the analysis of who gets thedecedents property depends on whether the decedent was marred or in adomestic partnership

IV. Intestate Succession (depends on what kind of property it is)a. Separate propertyi. Spouse gets nothing unless 6401 applies

b. Community property PC 100i. Upon the death of a married person, 1/2 of the CP goes to the surviving

spouse and the other half belongs to the decedent.c. Quasi community property PC 101

i. Upon the death of married person domiciled in CA, 1/2 of the decedentsquasi-community property belongs to the surviving spouse and the otherhalf belongs to the decedent

d. Transfer of quasi Community property PC 102

i. The decedents surviving spouse may require the transferee of property inwhich the surviving spouse had an expectancy under 101 at the time ofthe transfer to restore the decedents estate 1/2 of the property if thetransferee retains the property or, if not, 1/2 of its proceeds.

e. Surviving Spouse 6401i. (a) and (b) Community and Quasi community property

1. Living spouse gets deceased spouses 1/2 of CPii. (c) Separate Property

1. Spouse gets entire estate if no other issue, parent, sibling or issueof siblings.

2. 1/2 the estate if only one child or if parent(s)3. 1/3 of the estate if more than one child or issue.

f. Intestate Succession If no Spouse or DP 6402i. The portion of the estate which does not go to the spouse (Separate

property) goes to ( in order)1. children2. parents3. siblings and their issue4. grandparents and their issue5. former step children and issue6. next of kin7. former in laws and their issue

g. Failure to Survive 120 hours after decedent 6403i. Person who fails to survive the decedent by 120 hours (clear and

convincing standard) is deemed to have predeceased the decedent for thepurposes of intestate success.

ii. Provision only applies when the people die intestate. NOT applicable topeople who die with wills written. You can still write in a provision in thewill that makes the have to survive you for 120 hours if you want.

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h. Escheat provisions 6404i. If there are no takers of the intestate estate, it will escheat to the state.

i. EXAMPLE:i. CP Transfers

1. H & W are married and hold a $1000 checking account as

community property H dies intestate. What happens?2. Apply 100 (a) one half of the property goes to W. The other halfgoes to Hs estate

3. Then apply 6401: Ws intestate share of Hs cp is the 1/2 of thecommunity property that belongs to H. W gets all $1,000.

j. Division in Equal Shares 240 - in reference to 6402i. The property shall be divided into as many equal shares as there are living

members of the nearest generation of issue then living and deceasedmembers of that generation who leave issue then living, each livingmember of the nearest generation of issue then living receiving one shareand the share of each deceased member of that generation who leaves

issue then living being divided in the same manner among his or her thenliving issue. (Modern Per Stirpes)k. Half bloods 6406

i. Half blood relatives generally inherit the same share they would inherit ifthey were the whole blood (except in some cases involving severing of aparent/child relationship due to adoption)

V. Simultaneous Deatha. Janus v Tarasewics

i. H & W were at Hs brothers house for a memorial service (he died fromtainted Tylenol pills) the H & W took the same Tylenol pills and bothdied.

ii. Issue: who died first?iii. Trial court says H died first and therefore W inherits, but shes dead so

Ws father inherits.iv. Ct. Appeals affirms.

b. Simultaneous Death 103i. If it cannot be established by clear and convincing evidence that one

spouse survived the other:1. Half distributed as if one spouse survived2. Other have distributed as if other spouse survived.

ii. 220. Insufficient Evidence of survivorship1. If title to property or devolution of property depends upon priority

of death and it cannot be established by clear and convincingevidence, property of each person shall be administered as if thatperson had survived the other.

c. Half bloods 6406i. Half blood relatives generally inherit the same share they would inherit if

they were the whole blood (except in some cases involving severing of aparent/child relationship due to adoption CPC

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d. Adoptees, Bastards, stepchildren and foster children 21115i. Generally, half bloods, adopted persons, persons born out of wedlock, step

children, foster children and their issue are included when determining aclass gift for purposes of inheritance rights under intestate succession.

VI. Transfers to Children

a. Establishing Parent/Child Relationshipi. Relationship Existence 64501. With natural parent regardless of marital status

ii. Establishing paternity: FC 7610, 7611, 76301. Child born during marriage or within 300 days of termination of

the marriage2. M and F attempt to marry lawfully before the birth or 300 days

after3. Attempt of M and F to marry after the childs birth and the father is

named on the birth certificate OR paying child support4. Father holding out child as his own or judgment

5. Paternity test6. Sign declaration of paternity in court7. Fathers: inheritance of Non-marital children

a. 14th Amendment prohibits statutes allowing children toinherit from Mothers but not from fathers because it favorsfathers martial children

b. However a state can enact a statute limiting the non maritalchilds ability to establish paternity and the right to inherit.The statute must be substantially related to states interestfor disposition of property at death.

iii. Step children & Foster Children 64541. Relationship began during persons minority and continued

through he joint lifetimes of the persons and2. Established by Clear and Convincing evidence that the foster

parent or stepparent would have adopted the person but for a legalbarrier.

iv. Children born out of wedlock 64521. a natural parent or relatives of a natural parent can only inherit

from a child born out of wedlock ifa. the parent or a relative of the parent acknowledged the

childb. the parent or relative of the parent contributed to the

support of the care of the childv. Domestic Partnerships

1. Same elements as above must be established.2. Relationship established with non birthing DP by

a. Entering into DP within 300 days of childs birthb. Attempting to enter into DP before or within 300 days of

childs birth

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c. Attempting to enter into DP after birth AND named onbirth certificate OR pay support

b. Adoption/Equitable adoption 6451i. Adopted children can inherit from adoptive parents as a natural child

would. No difference.

ii. Adoption severs the relationship with the natural parent and will notinherit from the natural parent UNLESS1. They lived together or living natural parent lived with deceased

natural parent at time of childs conception AND the new spouseadopts after death of natural parent

iii. Minary v. Citizens Fidelty Bank1. Amelia leaves a trust for her 3 kids for their life and then to their

kids. If no kids then it goes to the Church.2. One of the kids adopts his wife so she can collect the money as an

heir.3. Ct. finds that adult adoption is legal. However the court found that

the adoption of Myra was not okay b/c it thwarted the intent of thegrantor of the trust.4. If grantor of trust wanted to provide for spouses of her kids, she

could have and she did not.c. Posthumous Heirs

i. Definition1. Child born after the parent dies.

ii. Reproductive Technology1. Creates more problems, b/c of frozen eggs and sperm.

iii. Woodward v. Commission of SS1. Husband and Wife found out H has cancer and so preserved his

sperm.2. He died. Two years later she got pregnant with his sperm and had

twins.3. She filed for SS benefits. She was denied. She appealed4. SS could not determine if the twins were children of Warren

within the meaning of the Act.5. Balancing test

a. Best interest of the children all the childrenb. Administrative efficiency when are we done

administeringc. Reproductive rights and consent

iv. Unborn Relatives of Decedent 64071. Relatives of the decedent conceived before the decedents death

but born thereafter inherit as if they had been born in the lifetimeof the decedent

v. Posthumous Conception 249.51. Child or his/her representative must prove by C and C evidence

that the decedenta. Left a signed and dated revocable writing

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b. Within 4 months of death served the writing on the persondesignated to control the genetic material

c. The child must have been in utero 2 years after death andnot a clone of decedent.

d. Guardianship of Minors

i. Guardianship1. Of Property or of Person appointed by the probate court. Oneperson can do both through. Parents dont have to be dead, justabsent in some way.

2. Controlled by the court step by step.3. Generally ends at age 18

ii. Conservatorship1. A guardian of property with investment powers similar to those of

trustees, more flexible than guardianship.2. Not controlled by the court on a step by step basis3. Can go up to age 21

iii. Custodianship1. A person who is given property to hold for the benefit of a minorunder the UTMA or UGMA. Facility of payment clause

2. Creates a 3rd person fiduciary duty to help manage the assets ofthe minor child.

iv. Trusts1. Can postpone childs control of property.2. The parent will determine the age of the child to end the trust and

distribute the funds.e. Atty Fiduciary Duties

i. Simpson v. Calivas1. Robert Jr. is suing Atty Chris Calivas for preparing a will. The will

gave a life estate to Rob Sr.s 2nd wife in the homestead. Thatword was ambiguous and was interpreted to mean the house andover 100 acres with it. Rob Jr. bought her out for 400,000 and thenhe sued the atty for breach of fiduciary duty, 3rd party beneficiarytheory and a negligence count.

2. Atty does owe a duty of care to beneficiaries b/c it was aforeseeable result even though there was no privity of K betweenbeneficiary and atty.

ii. A v. B1. Law firm (Hill Wallack) was reping a man and his wife to create a

will for the two of them. If one died it gave the property of each tothe other.

2. Law firm had a clerical error and took on another client which wasa COI. The woman was suing the husband in a paternity suit.Husband was aware of the double rep and didnt tell the firm untilthe firm asked for discovery and the mans new atty told them theyalready had that information.

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3. The woman suing ended up proving the kid was the husbands. Hedidnt want to pay for child support and so she sued for support.

4. Firm wants to notify the wife of the extra-marital child because itcould affect her will (the extramarital kid could inherit her assets ifshe died before the husband and then husband died later assets

would go to kid)5. While the RPC doesnt make it mandatory to disclose the existenceof the kid, it is permitted because the husband and wife signedwaivers of confidentiality and the hidden kid constituted fraud onthe wife.

f. Waivers 140-147i. Spouse can waive rights to property, family allowance, widows election,

or interest in property.ii. Must be in writing and signed

iii. Must have fair and reasonable disclosure of property or financialobligations

iv. Must have legal counsel at the time of signing the waiverVII. Other theories affecting intestate successiona. Advancements

a. Common lawi. A lifetime gift by the decent to a child was presumed to be a

prepayment of the childs intestate share. Child has the burden ofproving it was an outright gift

b. Advancements against Shares 6409i. Only considered and advancement IF:

1. decedent declares in a contemporaneous writing that the gift isan advancement

2. the heir acknowledges in writing that the gift is to be sodeducted

ii. Valuation1. gift valued at the time of possession or death of decedent,

which ever occurs first2. if value is expressed in contemporaneous writing the valuation

is conclusive.iii. Deceased recipient

1. if beneficiary predeceases recipient, advancement will not becounted against beneficiaries issue unless provided forotherwise in writing.

c. Advancements Examplesi. M has 3 kids: A, B, and C.

ii. M gave A 10,000 before death. His estate has 50,000 left.iii. Take 50,000 + advancement of 10,000 = 60,000iv. Take 60,000 /3 = 20,000 for B and Cv. 20,000 10,000 in advancement = 10,000 to A.

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b. Bars to successiona. Homicide

i. In Re Estate of Mahoney (Vermont 66)1. Howard was killed by wife. She got 10-15 years for

manslaughter.

2. He was survived by wife and his parents.3. Court initially gave estate to parents. In direct contradiction tothe statutes of Vermont that says it goes to spouse.

4. She appealed and argued that she should inherit b/cRestatement of Restitution only approves the application of theconstructive trust doctrine where a devisee or legatee murdersthe testator, not when convicted of manslaughter.

5. Ct. Rules that the Chancery Ct. not the probate court has thejurisdiction to create a constructive trust. Therefore, wifeinherits unless administrator of the estate of Howard petitionsthe Court of Chancery to create a constructive trust: where has

to be held in trust for heirs and not for the benefit of theconvicted person.ii. CPC 250 Slayer not Entitled

1. A person who intentionally and feloniously kills decedent isnot entitled to

a. any property, interest or benefit under a will or trustb. any property of the decedent by intestate succession

2. The property, appointment or benefit passes as if killers hadpredeceased decedent.

iii. CPC 251 2541. Same is true for killing by joint tenant, both personal and real

property. Decedents share doesnt go to killer2. Life insurance beneficiary doesnt get share3. CPC 254 a final judgment of conviction of felonious and

intentional killing is conclusive, if no final judgment, the partywho wants to prove felony must prove by preponderance of theevidence that killing was felonious and intentional.

b. Disclaimersi. Sometimes an heir or a devisee will decline to take the property, a

refusal that is called a disclaimer.ii. Disclaimed interest passes as if declaimer predeceased decedent

iii. Procedure to disclaim1. Must be in writing, signed by disclaimant, identify the

decedent and describe the interest being disclaimed2. State that there is a disclaimer and the extent of it3. Filed with the fiduciary with a reasonable time after learning of

the interest4. Cannot disclaim after the benefit was accepted 285

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5. Timinga. 279

i. Says reasonable time but interpreted as 9 monthsafter death

ii. Effect of Disclaimer

1. Disclaimed interest passes as if disclaimant predeceased decedent.Relates back to the date of decedents deathiii. Disclaimer on behalf of infants or incompetent individuals

1. They can disclaim on behalf of the child as a guardian mightlose benefits from another source if they get the inheritance.

iv. Creditors1. Drye v. US

a. Son inherits from mom. He disclaims b/c he owes money tothe IRS. The inheritance would flow to his daughter andshe sets up a trust to care for her and her parents. Creditorscannot get their hands on the trust.

b. Ct. disallows b/c he was exercising dominion over theproperty.c. The power to channel the estates assets warrants the

conclusion that Drye held property subject to the Govtsliens.

2. When there is a disclaimer, think about the creditors waiting on theinheritance.

b. Elder Abuse 259i. Abuser deemed to predeceased if

1. It is proven by C& C evidences that the person is liable forphysical abuse, neglect, fiduciary abuse of elder or dependantabuse

2. The person acted in bad faith3. The person found to be reckless, oppressive, fraudulent or

malicious in committing these acts AND4. Decedent, from the time of the acts until the time of death was

substantially unable to manage his or her financial resources orresist fraud or undue influence.

VIII. Capacity and Influence

a. Fraud, duress, tortious interference 6104i. The execution or revocation of a will or a part of a will is ineffective to the

extent the execution or revocation was procured by duress, menace, fraudor undue influence.

b. Mental Capacity 6100.5i. Age 18 and

ii. Of sound mind1. Competent and doesnt suffer from mental disorder that include

symptoms such as delusions or hallucinations

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iii. Standard of Competence 6100.51. an individual is not mentally competent to make a will if at the

time of making the willa. the individual does not understand the nature of the

testamentary act:

b. the individual does not understand and recollect the natureand situation of the individuals property orc. the individual cannot remember and understand the

individuals relations to individuals whos interests areaffected by the will

c. Burden of Proving Capacityi. In Re Estate of Washburn

1. Katherine made 3 wills. She willed it to her sister first, who died.Then to her niece, Catherine. Then she changed her will to benefitBarbara, her caretaker during her final years.

2. Catherine was protesting the last will and trying to say Katherine

was incompetent.3. Minority View: Proponent of the will (person that wants to upholdthe will) has to prove capacity

ii. Proving Lack of Capacity in CA 8121. California follows the majority rule contestant has the burden to

prove incapacity2. A mental or physical disorder does not prove incapacity to convey.

An adjudication of incompetent not enough.3. Does the behavior significantly impair the persons ability to

understand and appreciate the consequences of his actions?iii. Factors to Consider

1. Alertness & attention2. Processing Information3. Thought Process4. Ability to control mood

d. Capacity - CPC 811i. (a) requires 2 things:

1. Evidence of deficit in at least one mental function; AND2. Evidence of a correlation between the deficit or deficits and the

decision or acts in questionii. (b) deficit or combination of deficits must significantly impair the

person's ability to understand and appreciate the consequences of his orher actions with regard to the type of act or decision in question.

iii. (c) court may consider the frequency, duration, and severity of periodsor impairment

iv. (d) diagnosis of disorder by itself is not dispositive.e. Insane Delusion

i. Generally1. Capacity exists but suffering from a concept of reality that has no

foundation in truth and not supported by evidence of any kind.

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2. Testator adheres to belief to the contrary of reason and againstevidence. Rational Person Test.

3. Unusual Religious Beliefs are usually not insane delusions.ii. Proving insane Delusions

1. Majority Rule

a. Is the delusion insane?i. A delusion is insane even if there is some factualbasis for it if a rational person could not have drawnthe same conclusion

b. Did delusion cause bequesti. Insane delusion materially affected or influenced

the will.2. Minority Rule

a. Is the delusion insane?i. If there is any factual basis for the delusion, it is not

insane.

b. Did delusion cause bequest?i. Insane delusion might have caused or affected thewill (i.e., presume causation if there is an insanedelusion + an unnatural disposition)

iii. Insane Delusion Burden of Proof in CA1. Presumption is that Testator is sane.2. Contestant must introduce sufficient evidence to overcome the

presumption and must show that the I.D. caused the disposition3. If sufficient evidence is introduced then the proponent must

introduce evidence of capacity.f. Undue Influence

i. Elements to Establish U. I.1. T susceptible to UI or domination by another;2. Accused had opportunity to exercise UI;3. Accused has disposition to influence for personal benefit; AND4. Result isnt a natural disposition of Ts prop.

ii. Presumptions & Burden Shifting1. Confidential relationship + suspicious circumstances =

presumption of undue influence (burden shifting)iii. Types of Confidential Relationships:

1. Fiduciary2. Reliant3. Dominant-subservient

iv. Examples of Suspicious Circumstances:1. Secrecy or haste2. Reasonable person would regard it as unnatural, unjust or unfair3. Donors attitude toward others changed by reason of his

relationship with the alleged wrongdoerv. Bequests to Attys

1. Undue Influence

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a. Many courts hold that a presumption of undue influencearises when an attorney-drafter receives a legacy, exceptwhen related to the testator.

2. Unethical Conducta. Model Rule of Professional Conduct 1.8(c) reads:A lawyer

shall not solicit any substantial gift from a client, includinga testamentary gift, or prepare on behalf of a client aninstrument giving the lawyer or a person related to thelawyer any substantial gift unless the lawyer or otherrecipient is related to the client.

3. Fiduciary Appointments4. The comment to Rule 1.8 advises:

a. In obtaining the clients informed consent to the conflict,the lawyer should advise the client concerning the natureand extent of the lawyers financial interest in theappointment, as well as the availability of alternative

candidates for the position.g. Disqualified Transferees 21350i. Instrument Drafter

ii. Relative, DP or EE of instrument drafteriii. Partner/SH/EE of in partnership or corporation in which drafter has an

interestiv. Any one with a fiduciary relationship with transferor (except trustee or

conservator) or a EE, DP or relative of the fiduciaryv. Care custodian (or his/her EE, DP or relative) of transferor (dependent

adult)h. Disqualified Transferees 21351

i. Spouses, DPs, cohabitants & relatives of T, (Nonprofit organizations,some trusts or public entities)

ii. Will is reviewed by independent lawyer & lawyer must execute acertificate stating that no fraud, menace, duress or U.I existed.

iii. Rebuttable Presumption: Clear & Convincing Evidence must beestablished by transferee. If found invalid, will treat as if disqualifiedperson predeceased the testator

IX. Intent

a. Must have testamentary intentX. Formalities

a. Attested Wills Requirementsi. Must be in writing

1. any type of writing. Doesnt have to be on paper per say, but mustbe written down.

ii. Signed by the testator1. X is sufficient, initial, just about any kind of mark if made by the

deceased

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iii. Witnessed /Attested1. Attestation Clause: The foregoing instrument consisting of 3 pages

was signed and declared by Joe Smith to be his last will. We now,at his request, and in his presence, subscribe our names aswitnesses on this 3rd day of February, 2009. Our signatures below

confirm our participation as witnesses.2. Not required in CA but helpful for presumption that the will wasproperly executed.

3. Difference between subscription and this: at the end of the willputting your signature above refers to witnesses.

iv. CA Formalities 61101. A will must be in writing and be signed by the testator or in the

testators name by another in the presence of and by the directionof T or by conservator pursuant to court order

2. The will must be witnessed by at least 2 persons who have to bepresent at the same time when T signs or acknowledgment of T of

signature and will AND must understand that it is a will.3. Witnesses must sign during the Ts lifetime. (this is a newrequirement)

v. In Re Groffman1. Widow is challenging will b/c she cant believe that her husband

would make her share the estate with her daughter and hisdaughter.

2. Issue : whether Groffman and both witnesses have to be presenttogether to acknowledge Mr. Groffmans signature.

3. Ct. refused to admit will b/c the provision were not complied with.4. RULE: Testator is permitted either to acknowledge his prior

signature to both witnesses at the same time or to sign the willbefore both witness at the same time.

vi. Presence1. Line of sight test

a. Testator does not actually have to see the witnesses sign butmust be able to see them were the testator to look.

2. Conscious presence testa. The testator, through sight, hearing or general

consciousness of events, comprehends that the witness issigning.

vii. Signature1. Full name, mark, cross, abbreviation, electronically printed, mark

by someone else at deceased direction or nickname can besufficient.

2. Location:a. Must be at the end of the document generally.b. Subscription at the foot or end thereof,

3. Order of Signinga. Additions to will made after signing may be invalid

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b. Witnesses:i. At the time of Ts signing or acknowledgment as

part of one continuous transactionii. Sign within a reasonable time after execution during

testators life time.

viii. Purging Statute1. Estate of Moreaa. 2 out of 3 witnesses have to be independent. If 2 of 3 are

benefiting they cant be considered witnesses. Here 1 wasbenefiting, but the second was receiving a bequest, but itwas less than he would have received under the laws ofintestacy. Therefore the 2nd guy wasnt considered to bebenefiting from the will and therefore it is valid.

2. CA purging Statute 6112a. Must be competentb. Interested witness doesnt invalidate the will

c. When interested witness should have two other subscribingwitnesses otherwise there is presumption of duress,menace, fraud or influence

d. If presumption is not rebutted, interested party takes byintestate succession.

ix. Disqualified Transferees CPC 21350 invalidates Gift1. Instrument drafter2. Relative, DP or EE of instrument drafter3. Partner/ SHE/EE of in pship or cor. In which drafter has an

interest4. Any one with a fiduciary relationship with transferor (except

trustee or conservator) or Ee, DP or relative of the fiduciary5. Care custodian (or his/her EE, DP or relative) of transferor

(dependent adult)x. Exceptions to Disqualified Transferees 21351

1. Spouses, DPs, cohabitants & relatives of T, (Nonprofitorganizations, some trusts or public entities)

2. Certificate of Independent Review: Will is reviewed byindependent lawyer & lawyer must execute a certificate stating thatno fraud, menace, duress or U.I existed.

3. Rebuttable Presumption: Clear & Convincing Evidence must beestablished by transferee. If found invalid, will treat as ifdisqualified person predeceased the testator

xi. Will Contest Planning1. Contest Grounds & No Contests Clauses

a. most common grounds for will contest are lack of capacityand undue influence

b. often alleged together; testators mental status overlapswith the susceptibility element of undue influence

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2. Warning Signsa. new testamentary scheme makes a radical departure.b. multiple or blended families.c. imposes conditions that are likely to anger the beneficiary.d. makes a disposition to a person unpopular with the

testators family.3. Record Building4. Maintain Secrecy5. Sooth Feelings

xii. Forms of Fraud1. Fraud

a. testator is deceived by a deliberate misrepresentation and asa result does that which he would not have done

b. willfully deceived as to character or content of instrument2. Fraud in the inducement

a. a misrepresentation causes the testator to execute or revoke

a will, to refrain from executing or revoking a will, or toinclude particular provisions in the wrongdoers favor3. Fraud in the execution

a. a person intentionally misrepresents the character orcontents of the instrument signed by the testator, whichdoes not in fact carry out the testators intent.

xiii. If you have debt1. You can write it into the will to be paid off or you can just leave it

out there and have it dealt with in probate.2. Taxes and debts are paid above everything else.3. If the beneficiary is a spouse on life insurance, you dont have to

name it in the will, just make sure the life insurance beneficiary isaccurate.

b. Formalities for Holographic Willi. Valid if it has Ts signature & the material provisions in Ts handwriting.

ii. Date not required but inconsistent secondary instrument may deem theundated holographic will invalid. CPC 6111

XI. Validity

a. Testamentary Intentb. Capacity

i. 18+ Years Oldii. Must understand & know the nature and extent of property and its

disposition (no insane delusions) like who its going to affect.iii. Must clear any will contests

1. Undue Influence2. Gifts to Drafters3. Fraud (involves deception by perpetrator & reliance by T)4. Mistakes & Ambiguities

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i. Partial v. Total Revocationi. What if the will & the codicil are on the same piece of paper?

ii. Partial and total revocation permitted but extrinsic evidence must be usedto show that intent was to revoke only part and not the whole.

j. Harrison v. Bird

i. There is a presumption that the will is destroyed if it is not found upondeath.ii. Furthermore, if she destroys the copy of the will in her possession, a

presumption arises that she has revoked her will and all duplicates, eventhough a duplicate exits that is not in her possession.

iii. The presumption of revocation is rebuttable and the burden of rebuttingthe presumption is on the proponent of the will.

iv. Judgment affirmed against Katherine as she did not rebut the presumptionthat Daisy destroyed her will with the intent to revoke it.

k. Duplicates 6121i. Revocation of a duplicate will revokes the will.

ii. Avoid executing duplicate original wills and label copies.iii. Again, INTENT is the principal factor. The intent must be concurrent.Changing your mind after revoking a will requires you draft a new will.

l. Lost Wills 6124i. Will not found at death is presumed revoked.

ii. If will is destroyed without the consent/intent of T or is lost, a copy can beused to prove the contents of the original.

iii. September 11, 2001 destruction of wills is an examplem. Thompson v. Royall

i. Mrs. Kroll made a will and then decided to revoke it. She decided to keepthe will as a memorandum for future reference based on advice from afuture judge. The judge wrote on the back of the will saying that they werenull and void and she signed it.

ii. RULE : if the writing intended to be the act of canceling does not mutilate,or erase, or deface, or otherwise physically com in contact with any part ofthe written words of the will, it cannot be given any greater weight than asimilar writing on a separate sheet of paper, which identifies the willreferred to, just as definitely as doe the writing on the back.

n. Revival of Revoked Willsi. 6123(a)

1. If 2003 Will is revoked by physical act, 1995 will is not revivedunless:

a. evidence from circumstances of revocation that such wasTs intent; or

b. Ts contemporaneous or subsequent declarations indicatesuch intent. Extrinsic evidence can prove Ts intent.Reinstating a will that T has been revoked by physical act.

ii. Example1. 1995 Will created.2. 2003 Will created that revokes all of parts of 1995 Will.

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3. Yesterday, 2003 is revoked.4. Is the 1995 Will now admissible? Is it revived?

a. With no other facts, not admissible.iii. At common law prior will automatically revived

o. Subsequent Instruments 6123(b)

i. 1995 Will Createdii. 2003 Will Created, Revokes 1995iii. 2007 Will Created, Revokes 2003iv. 1995 Will is not revived & extrinsic evidence cannot be used to revive it.v. EXAMPLE

1. Delia revoked W2 by tearing it up at her attorneys office. She toldher attorney that she wanted W1 to be effective because she hadmade up with her boyfriend.

2. Delias statements to her attorney could be used to prove her intentto revive W1. However, if she revoked W2 by executing a new W3that revoked W2, Delias statements could not be used to prove her

intent to revive W1p. Revival by Re-execution or Republicationi. Can execute revoked will by having it attested (witnesses & reaffirming

signature)ii. Republication by a codicil except where:

1. will revoked by physical destruction; or2. the original will was never valid.

q. Dependent Relative Revocation (DRR)i. Generally

1. The DRR doctrine applies when a T revokes her will because shemistakenly believes that an alternate distribution of the property iseffective.

2. If but for this mistaken belief, T would not have revoked, then therevoked will remains in effect.

ii. Elements of DRR

1. Requires that there be an alternative disposition that wasineffective.

2. Can be used only to further Ts intent.3. Must revoke & make a new will simultaneously.4. Extrinsic evidence is permitted when the will was revoked by

physical act. If not revoked by physical act, mistake must be on theface of the will.

iii. Example of DRR:

1. T has a valid will that leaves everything to X.2. A year later he writes a second will leaving $25,000 to Y and the

rest to X.3. T tears up the first will because he believes the second one is valid.4. At Ts death, the court determines that Ts 2nd will is not valid.

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5. The original will is republished or re-executed as of the date of thecodicil. Look to the date of the last codicil for clarification onconflicting provisions.

6. Ts intent is key. If Child #3 was born and T thereafter executed acodicil then it was Ts intention to exclude Child #3.

XIII. Compositiona. Integrationi. The issues arise when the will is on more than one piece of paper (or other

material)ii. All papers (or other materials) must exist at the time of the execution of

the will that T intended1. Intent shown by physical or logical connection: stapled, stated in

will, in a binderiii. Incorporation by Reference

1. CPC 6130 Refers to an external document/instrument that is notpart of the will but must:

a. exist at the time the Will is executed (not in the future)b. show intent to incorporate that instrumentc. sufficiently describe the instrument.d. *Holographic wills can incorporate non-handwritten

instruments by reference2. Clark v. Greenhalge

a. Helen Nesmith wrote a will giving property to her cousinGreenhalge. She also kept a notebook where she kept atally of what she wanted to go to who. The will referenceda memorandum that she kept a tally of items in.

b. The nurses testified that the notebook existed at the timethe will was written.

c. In the notebook she gave the farm picture to her BFVirginia Clark.

d. Cousin Greenhalge wanted the will from 77 to be probatedb/c the notebook didnt exist then and wouldnt beadmitted.

e. However, the 80 codicil republished the 77 will andincluded the notebook distributions.

iv. Acts of Independent Significance 61311. A will may dispose of property by reference to acts and events that

have significance apart from their effect upon the dispositionsmade by the will, whether they occur before or after the executionof the will or before or after the testators death.

2. This doctrine allows a court to fill in the blanks of Ts will byreferring to acts, events or documents that have significanceseparate and apart from the will (non-testamentary motives).

3. Can be used to identify a beneficiary, a gift but it must havesignificance separate from its impact on the will.

4. Examples: (determines when you can bring in extrinsic evidence)

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a. the contents of my safety deposit boxb. my interest in the membership agreementc. my softball teamd. versuse. all my household furniture and personal property to those

individuals listed on a piece of paper that is going to befound with my will when I die. (or in accessible desk)f. (e.) wouldnt work b/c it doesnt exist independently from

the will.5. Pour Over

a. T drafts will that says, All of my assets shall be distributedat my death as stated in the terms of my trust, as amended.

b. However, trust amendments added after the will is executedcannot be incorporated by reference. This is a matter oftiming.

6. Testamentary Addition to Trust 6300

a. If the trust isi. identified in Ts will andii. its terms are set forth in a written instrument

iii. executed before or concurrently with the executionof Ts will,

iv. then an amended trust can be incorporated byreference.

7. Extrinsic Evidence 6111.5a. Extrinsic evidence is admissible to determine whether a

document constitutes a will pursuant to Section 6110 or6111, or to determine the meaning of a will or a portion ofa will if the meaning is unclear.

XIV. Contracts Relating to Wills

a. Contracts to Make or Not make a Will, Generallyi. When an individual enters a contract to make a will or not to revoke a will,

contract law applies.ii. A will is probated if it exists but the contract beneficiary can seek a

remedy for the breach. Joint and reciprocal wills are not presumed to becontractual.

iii. Constructive trusts or damages as remedies.iv. Statue of Frauds Must be in writing.

b. Contract to make Will can be established 21700i. Provisions of a will or other instrument stating the material provisions of

the contract.ii. An expressed reference in a will or other instrument to a contract and

extrinsic evidence proving the terms of the contract.iii. A writing signed by the decedent evidencing the contract.iv. Clear and convincing evidence of an agreement between the decedent and

the claimant or a promise by the decedent to the claimant that isenforceable in equity.

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v. Clear and convincing evidence of an agreement between the decedent andanother person for the benefit of the claimant or a promise by the decedentto another person for the benefit of the claimant that is enforceable inequity.

c. Extrinsic Evidence CPC 6111.5

i. Extrinsic evidence is admissible to determine whether a documentconstitutes a will pursuant to 6110 (attested will) or 6111 (holographicwill), or to determine the meaning of a will or a portion of a will if themeaning is unclear.

d. Substantial Compliance and Harmless Errori. Substantial Compliance

1. The court may deem a defectively executed will as being in accordwith statutory formalities if there is clear and convincing evidencethat the purposes of those formalities were served.

ii. Harmless Error Rule UPC 2-5031. The court may excuse noncompliance if there is clear and

convincing evidence that the decedent intended the document to behis will.iii. Mistaken or Ambiguous Language in Wills

1. Reformationa. Arises when there was improper drafting (ambiguity,

mistake inherit in the instrument)i. Allows the court to Re-write the will after T dies

ii. Applies where there is a mistake or ambiguityiii. Compare with undue influence, lack of capacity,

insane delusionb. Honoring the Ts intent is the underlying driver

2. Traditional Approacha. No Extrinsic Evidence, no Reformationb. Ambiguities

i. Patent1. Appears on the face of the will2. The disposable part of my estate.

ii. Latent1. exists when the words are applied to the

reality of the facts. Either nothing fits thedescription of the gift or too many eligiblepeople/things fit the description the gift.

iii. CA does not differentiate between types ofambiguities.

c. Causes and Effects of Will Defectsi. Cause

1. (cause) Intentional Wrongdoing W/ (effect)Lack of Volition

a. Undue influence, Duress: reliefgranted

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2. (cause) Innocent Acts w/ (effect) lack ofvolition

a. Lack of Capacity, Insane Delusion:Relief Granted

3. (cause)Intentional Wrongdoing w/(effect)

Mistaken Termsa. Fraud: relief granted4. (Cause) Innocent acts w/ (effect) mistaken

termsa. Mistake: No relief

d. Erickson v. Ericksoni. Man writes a will 2 days before the marriage.

Theres no provision in the will for the marriage.Daughters of man contest the will b/c they inheriteverything instead of their step mother if there is nowill.

ii. RULE : if the scriveners error and its effect on thetestators intent, are established by clear andconvincing evidence, they will be sufficient toestablish that provision has been made in such willfor such contingency.

iii. The ct. compared it to fraud and therefore extrinsicevidence would have been admitted.

e. Ambiguities in CA 21121i. All parts of an instrument are to be construed in

relation to each other and so as, if possible, to forma consistent whole. If the meaning of any part of aninstrument is ambiguous or doubtful, it may beexplained by any reference to or recital of that partin another part of the instrument.

ii. Generally: Extrinsic Evidence can be used toexplain any ambiguity that helps us understand Tsintent

1. Most relevant evidence is first admitted2. Oral declarations at time or around time of

execution to show state of mind3. Falso Demonstration Non Nocet a false

description doesnt make the instrumentinoperative.

f. Mistakes Overviewi. Mistakes in describing property or persons are

covered by rules governing ambiguities.ii. Generally, mistakes about the legal implication of

an instrument cannot be fixed by a court, even if itis caused by a lawyers mistake. Still, courts canliberally interpret an ambiguity.

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iii. A mistake of law can be cured by DRR (appliesonly T revokes based on mistake that anotherdisposition is valid).

XV. Distribution

a. Gift Classification 32

i. In California Gift or Devise or Bequest refers to any distribution ofpersonal or real property.ii. Traditionally:

1. Devise gift of land or an interest in land2. Bequest gift of personal property3. Legacy gift of sum of money

iii. At-death transfers are classified as follows:1. A specific gift

a. a particular itemb. I bequest my 2004 Honda Accord to Jim.c. I give Tiffany my pearl earrings.

d. A person receiving a specific devise is entitled to:i. -the giftii. -the purchase price & any security interest that is

owed to the T if there is a sale of the specific giftiii. -the entirety of an eminent domain award

2. A general gifta. General Gift a gift of economic benefit from the general

assets of the transferor.i. $50,000 to Jill

ii. $1 Million to Zoe3. A demonstrative gift

a. A general gift that specifies the fund or property fromwhich the transfer is primarily to be made.

i. I give $500 to Fran and any of my jewelry can besold to pay this gift

4. A general pecuniarya. Pecuniary Gift a gift made within an instrument that is

either stated as a fixed sum or can be determined by theprovisions of the instrument.

i. Examples: life Insurance policy, shares of stockii. "I give to Carl the maximum amount that can pass

free of tax at my death as described in my Trust."iii. Annuity a general pecuniary gift that is payable

periodically.5. A residuary gift

a. Whatever is left in an estate after debts, expenses, and taxesare paid, AND

b. all specific, general and demonstrative gifts are satisfied, isthe residuary.

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i. The remaining assets of my estate to Karla &Rafael.

ii. all my estateb. Lapse & Anti-Lapse

i. When a beneficiary dies before T (or before T indicated), the gift to the

beneficiary fails.ii. CPC 211091. If specific, general, demonstrative & pecuniary gifts lapses, those

gifts fall into the residuary.2. If the residuary lapses, the property is passed through intestate

succession statutes.iii. Distributing Lapsed Gifts

1. General Rule : The devisee must survive T to take under thetestators will. When the devisee does not survive T, the gift is saidto lapse.

2. When the devisee is already dead at the time the will is executed,

the gift is void.3. What happens to a lapsed gift depends on the type of gift, whetheran anti-lapse statute applies; and whether the no-residue-of-the-residue rule is still in effect.

4. Lapse Death of B before Ta. If a beneficiary does not survive the T, the gift lapses (fails)

at Ts death.b. In the context of simultaneous death, if C&C evidence

cannot establish that the B survived, then the B is not goingto be deemed to survive the T.

c. B does not have a property interest until T dies.i. B only has a mere expectancy

iv. Anti Lapse1. Decedents of pre-deceased B inherit if:

a. (1) B is a blood relative of T or relative of Ts current orformer spouse; AND (2) B leaves issue.

2. These statutes do notpreventlapse but redirecta lapsed gift to thedescendants of the B.

3. Anti-lapse statutes are premised on a theory ofpresumed intent.4. Anti Lapse Statutes CPC 21110

a. Substitutes a new B for the predeceased B pursuant to CPC 240

b. California has a statute that requires T and deceased B havea close relationship

c. CA is one such statute - Kindred (blood relative of T or Tsspouse).

d. Also applies to class gifts.

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5. Disposition of Failed Transfer CPC 21111a. Look at terms of the will, if not fail transfer provision, it

becomes part of the residue and follow terms of will forresidue transfer.

b. If nothing in (a) works, then part of the estate and it will be

distribution by intestate succession6. No residue of the residue rulea. We dont want a residue therefore if someone passes, the

other beneficiary gets the deceased persons portion as wellas the portion they were entitled to under the provisions ofthe will. NOT followed in CA. We have a lapse statute.

7. Distributing Lapsed Giftsa. General Rule: The devisee must survive T to take under the

testators will. When the devisee does not survive T, thegift is said to lapse.

b. When the devisee is already dead at the time the will is

executed, the gift is void.c. What happens to a lapsed gift depends on the type of gift,whether an anti-lapse statute applies; and whether the no-residue-of-the-residue rule is still in effect.

8. Express Languagea. T can provide for the predeceasing of a beneficiary with an

express intent that the gift to the predeceased person go toanother person EXPRESSLY.

b. RULE : anti lapse statute will yield to express language.9. Do the words if he survives me evidence an intention that

Sidneys descendants should not be substituted for Sidney?a. CA/Majority Rule: An express requirement of

survivorship, such as if he survives me, evidences anintention that Sidneys descendants should not besubstituted for Sidney. Wilma takes Blackacre.

b. UPC 2-603(b)(3): The term if he survives me is not asufficient expression of contrary intent. Antilapse statuteapplies. Debby takes Blackacre

v. Class Gifts1. Generally

a. Used to avoid lapses.b. The members of the class who survive T divide gift.

Differentiate between children v. To Monica, Anthony& Mark.

c. Class members must share a characteristic but the numbersmay fluctuate.

d. Can be used for charitable gifts that promote CD.2. Dawson v. Yucus

a. Nellie Stewart died, she had a 1/5 interest in a farm fromher deceased husband. She wanted it to go back to his side

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of the family upon her death. She wrote a will giving herinterest to her nephews on that side of the family. One ofthe nephews died before her

b. RULE : a gift of an aggregate sum to a body of personsuncertain in number at the time of the gift, to be ascertained

at a future time, and who are all to take in equal or in someother definite proportions, the share of each beingdependent for its amount upon the ultimate number ofpersons.

vi. Ademption by Extinction1. Applies only to specific gifts that do not exist. It constitutes a

revocation.2. Identify Theory extinguishes the gift.3. Intent Theory Ts intent may be able to save the replacement of

the gift.4. In re Estate of Anton

a. Woman marries husband. Husbands daughter fromprevious marriage deeds them property to build on.b. Woman writes will and gives stepdaughter 1/2 interest in

the duplex after husband dies.c. Womans natural daughter Nancy has to sell the house to

care for woman during her elder years.d. Ct. finds that stepdaughter is entitled to 1/2 of what is left

in the will.vii. Ademption 21133 & 21134

1. Ademption depends on Ts intent to adeem at the time he/she getsrid of the property.

2. Therefore, if agent or conservator is acting on behalf of T, the Btakes the net sales price of the gift since T didnt intend to sell theitem.

viii. Ademption: stock Splits1. When a companys stock splits, or the company merges, or spins

off a subsidiary, a devise of the companys shares should includeany shares generated by such split, merger, or spin-offtracing theeconomic equivalent of the devise. These are changes in form, notsubstance.

ix. Ademption: Stocks 211321. T executes a will that transfers stock upon death AND he owns the

stock at execution of will, the B will receive any additional stockthat T owns at death so long as the stock was acquired after thewill was executed & additional stock is

2. from same comp. (not purchase options);a. another comp. acquired by merger, reorganization.b. of same organization acquired as reinvestment plan

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x. Satisfaction

1. A specific, general or demonstrative gift may be satisfied in part orcompletely by Ts transfer of the gift to B after executing the will,if T intends for the transfer to take effect.

2. T bequeaths $10K to A in 2001

3. In 2002, T transfers $10K to A. Does this satisfy the provision inthe will?xi. Satisfaction in CA 21135

1. Ts intent must be in a contemporaneous writing stating that thegift is counted against or deducted from the testamentary gift.

2. B acknowledges in writing satisfaction of the gift; OR3. The will provides for deduction of lifetime gift4. Cf. Advancement (Intestate Succession)

xii. Exoneration1. My farm house to Y, the residuary to my three children.2. Under common law, Y gets home free & clear of any mortgage or

other indebtedness and the three children are responsible to pay offthat mortgage or indebted from the estates other funds.xiii. CA law does not exonerate 21131

1. The debt attached to any gift of property passes to the beneficiaryalong with the debt even if the will has a general provision thatsays all taxes are to be paid.

xiv. Abatement1. If an estate has insufficient assets to pay debts, the bequests must

be reduced to yield some $.2. Ts intent followed if stated order of abatement.3. If no intent stated: 21402 the order the gifts we will liquidate to

pay off debts is:a. - Intestate Property not included in willb. - Residuary Giftsc. - General Gifts (1st to non-relatives, then relatives)d. - Specific gifts (1st to non-relatives, then relatives)

xv. Letters Testamentary1. document that gives me the authority so that I may investigate the

financial accounts held by the deceased.XVI. Planning for Incapacity

a. Durable power of atty can authorize agent to do whatever you list for howeverlong necessary (as long as incapacitated)

b. Limited power of atty might give you the power to do just a certain thing. Couldbe limited by time frame or by activity.

XVII. Family Protection

a. Protection of Spouse & Childreni. What do we do with income, earnings and assets acquired during

marriage? How do we dispose of these assets at death?

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b. Marital Property Systemsi. Community Property

1. All property acquired during the marriage is community property,unless both spouses agree to separate ownership.

2. Sharing of acquisitions as equals in marital economic partnership.

ii. Separate Property1. No automatic sharing of earnings; whatever individual earns is hisor hers.

2. Protection against disinheritance provided through elective share.3. Individual autonomy over acquisitions.

c. Rights of Surviving Spouse to Supporti. Social Security

1. Surviving spouse receives worker's monthly benefits.ii. Eee pension plans

1. ERISA gives spouse of employee survivorship rights to pensionplan.

iii. Homestead1. Right to occupy family home for lifetime (CA=6520-6528)iv. Personal property set aside

1. Right to tangible personal property up to a certain value(UPC=$15,000)

v. Family allowance1. For support of surviving spouse during probate (CA = reasonable

allowance) (CPC 6540-6544)2. usually 1 year in length.

vi. Dower and curtesy1. Dower

a. Life estate in one-third of husbands property for the wife.2. Curtesy

a. If there are children, the husband receives a life estate inthe whole parcel.

d. California 704.710i. Homestead Exemption

1. Protects the equity that may exist in your house but doesnt protectthe house itself.

2. amt. depends on whether over age 62, married or single and youhave to live in the house.

3. 75 k for under 62 and single.ii. Declared Homestead

1. A recorded document that must contain a statement that thedeclared homestead is the principal dwelling of the declaredhomestead owner.

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a. Once Spouse/DP takes the election, he/she must renounceall other benefits under the will.

b. Spouse/DPs interest will be abated (1st from residuary,then from general gifts, etc.)

i. However, spouse can retain interest of CP

ii. Quasi CP is not settled re: abatement in election5. Surviving Spouse/DPs Optionsa. Take Under the Will orb. Choose the Election orc. Waiver (pre & post-marital agreements)

i. CPC 140-147ii. Independent Counsel

6. Other Considerations:a. QTIP Trust (Qualified Terminable Interest Property)

i. Sally transfer the house to Harryii. Sally creates a trust that gives Harry income for life

and the power to appoint the trust principal towhoever he wants at his death.iii. Sally creates a trust giving Harry income for life

b. Migrating Couples: Quasi-CP Scenarioi. Harry & Sally married and live in a SP state for 30

years. When Sally retired the couple moved to CA.Sally dies 5 years after moving to CA and leaves allof her property to the United Way. Harry is notprotected under CP laws because all of Sallysproperty was acquired in SP state.

ii. Under 101 Quasi-CPis all personal property andall CA real property acquired by a decedent whiledomiciled elsewhere that would have been CP hadthey resided in CA.

1. Harry gets a forced share.7. Intervivos Transfers 102

a. Allows the DP or spouse to set aside lifetime transfers ofup to of the proceeds, of title or of the value of time ofTs death if: (1) T died domiciled in CA; (2) no writtenconsent and no consideration received; and (3) it wasincome property, property held with another with a right ofsurvivorship, or property where decedent retained in anrevocable trust (or similar instrument that allowed T tocontrol transfer).

b. Applicable only to transfers made when the T was living inCA

c. The property is restored to Ts estate & not given directlyto SS/DP (creditors are key)

d. Life or accident insurance, annuity or pension will be paidto SS/DP

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e. Applies regardless of Will or Ts intent or fraud.8. In re Estate of Prestie

a. Man and wife divorced, they remarried and she took care ofhim through old age and blindness. He left all of his estateto his son through a will and intervivos trust.

b. Son argues that wife cannot set aside the will even thoughshe married H after he made the will b/c she got a lifeestate in the condo through the intervivos trust.

c. RULE : the only evidence admissible to rebut thepresumption of revocation of a will for an omitted spouse isa marriage K, provision providing of the spouse in the will,or a provision in the will expressing an intent to not providefor the spouse. TRUSTS will not be looked at in probatecourt (point is to not have trusts in probate court)

iv. Incompetent Surviving Spouse1. In re Estate of Cross

a. Husband died. Left entire estate to son. Wife wasincompetent and couldnt make the decision to elect or not.b. Nursing home was paid for by Medicaid and would have

been discontinued if she had NOT taken the election underthe Medicaid statutes.

c. RULE: Probate Ct. must ascertain what the survivingspouse would have done for her financial benefit had shebeen competent to make the decision herself.

XVIII.Rights of Children Omitted from the Will

a. Pretermitted Heirsi. CPC 21620

1. the omitted child shall receive a share of the decedents estateequal in value to that which the child would have received if thedecedent had died without having executed any testamentaryinstrument.

ii. CPC 216211. unless the omission was intentional

TRUSTS

XIX. Trusts

a. Generallyi. Definition

1. a fiduciary relationship where a trustee holds legal title to propertyunder a fiduciary duty to manage, invest and administer the trustassets and income for the designated beneficiaries who haveequitable title.

ii. Parties1. Settlor

a. The persons whose assets we are distributing2. Trustee

a. The managerial intermediary

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3. Beneficiarya. The person who is benefiting from the trust

iii. Property in Trust1. res2. or corpus

b. Creationi. Intent1. During lifetime or at death2. Express

a. Expressed intention of the property owner to create a trustrelationship with the property

3. Resultinga. Created from the presumed intention of the property owner

i. Lux v. Lux1. Philomena died testate. She wrote a will

she used phrases like shall be maintained

shall not be sold.2. Ct. construed this to mean she wanted a trustfor her grandchildren.

3. Therefore the will created a trust for thegrandchildren.

b. Resulting Trustsi. if there are no beneficiaries the trust fails and

property reverts to the settlerii. if settler is dead, then property goes to his or her

estateiii. unless the settler received considerationiv. Clark v. Campbell

1. He created a trust where trustees weresupposed to distribute his things to hisfriends

2. This is too indefinite and could mean manythings it fails for lack of certainty.

ii. Purpose1. Claflin and Material Purpose

a. Traditional Claflin Doctrine:i. If continuance of the trust without modification or

termination is necessary to carry out a materialpurpose of the settlor, the beneficiaries cannotcompel modification or termination.

b. Examples of Material Purpose (traditional law):i. Spendthrift trust

ii. Discretionary trustiii. Support trust

2. Postponed enjoyment: reach a certain age

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iii. Res (property, corpus)1. Property must be certain and delivered if 3rd party involved.

a. Brainard v. Commissioneri. Mr. Brainard orally declared trust of expected

profits from stock trading in 28 for benefit of wife,

mother and minor children.ii. Did trust arise in 27 with Brainards oraldeclaration, prior to making the profits.

iii. HOLDING : future profits are not res No trustcreated until 28 when the profit was realized.

iv. Trustee1. Trust will not fail for want of a trustee (ct. will appoint one)

v. Ascertainable Beneficiary 15205 (at least 1)1. Generally

a. A trust needs someone to enforce it.b. Beneficiaries must be ascertainable at the time interest

maturesc. Private trust enforced by beneficiariesd. Class must be sufficiently definede. Exceptions: Charitable & Honorary Trustsf. Charitable trusts enforced by Atty. General.

2. Beneficiaries Capacitya. Anyone who is capable of holding title to property can be a

beneficiaryb. An unincorporated association cannot take title but a

corporation may take title.c. A child or incompetent beneficiary must have property

administered3. No incidental/Indirect Beneficiaries

a. Individuals who derive benefit incidentally or indirectly arenot beneficiaries

b. Where trust will pay off creditors of X, X is thebeneficiary, not the creditors.

c. The creditors are indirect/incidental beneficiaryd. Just b/c someone is named in the trust doesnt mean that

they are a beneficiary trustee professional duties4. Notice and Acceptance

a. Notice B do not need to receive noticeb. However, not giving notice does not help when trying to

establish present intention.c. Acceptance B must accept. A trust cannot be forced upon

a B w/o acceptanced. B may renounce or disclaim

5. Class Giftsa. B must be reasonably definiteb. Trustee may have discretion in selecting class members

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c. If too large a class, may be held unenforceable, if so , thenT has a gift or power of appointment.

6. Resulting Trusta. If there are no beneficiaries (not sufficiently described or

died,) the trust fails and property reverts to the settlor

b. If settlor is dead, then the property goes to his/her estatec. Probate process unless Settlor recd consideration and a Kunderlies the transaction.

7. Unascertained Beneficiariesa. Must be able to identify Bs by the time their interests

come into enjoinmentb. Unborn kids is okay to Xs grandchildrenc. Description must satisfy Statue of Wills or statute of Frauds

& may be incorporated by reference or by acts ofindependent significance.

d. Like reference to my sisters my soft ball team changes

with time, but still a definite class of people that can beeasily ascertained.8. Delivery of Gifts v. Trust

a. Constructive Deliveryi. Giving someone a way to access the res (the

property)ii. Jewelry in a locked box, no good with out a key

b. Symbolic Deliveryi. Transfer a deed to a house

c. The Hebrew University Cases pg 563i. Mrs. owns her husbands library of Hebrew text

after he dies. She goes to Israel to create a libraryin their memory, and she announces her gift of thelibrary to the school and signs a press release to thateffect

ii. She dies before any of the library has been actuallydelivered.

iii. There was a list of the library assets that she signedand forwarded to the school

iv. Ct. holds that this informal list is an intervivos gift,NOT a trust.

c. Types of Trustsi. Testamentary

1. delivery takes place at death2. Oral Trusts

a. In re Estate of Fournieri. Man left oral trust for less well off sister by leaving

400K with a couple he was friends with telling themto give it to the poor sister when he died. He toldthem that several times.

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ii. Intervivos1. Transfer of property during lifetime

a. present intentb. if settler is trustee, no delivery requiredc. statute of fraud applies if real property

iii. Private trusts1. established for the purpose of providing for a specific set ofindividuals.

iv. Charitable trusts1. Trust that operates to advance a charitable purposes that favors

large group of unspecified beneficiaries2. Charitable trusts must advance a purpose that benefits the public.3. Chartable trusts v. Private Trusts

a. Private trustsi. purpose

1. for the benefit of an ascertainable

beneficiaryii. Modification1. Claflin doctrine2. Deviation

iii. Enforcement1. Beneficiaries

iv. Other b. Charitable trust

i. Purpose1. For the benefit of a charitable purpose

ii. Modification1. Cy pres doctrine2. deviation

iii. Enforcement1. State atty. general

iv. Other 1. Exempt from Rule Against Perpetuities and

certain taxes.4. Charitable Purposes

a. Restatement (3rd) of Trustsi. the relief of poverty;

ii. the advancement of knowledge or education;iii. the advancement of religion;iv. advancement of health;v. governmental or municipal purposes; and

vi. other purposes that are beneficial to the community.

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5. Modification of Charitable Trusts: Cy Presa. In re Neher pg 761

i. Woman leaves home to village of Red Hook to beused as a hospital in memoriam of her Husbandwho was also deceased. Village couldnt build it.

ii. HOLDING : ct. said she had a general charitableintent b/c she didnt specify anything about thehospital, like what kind of hospital.

b. Expansion of Cy Presi. Wasteful as basis for cy pres:

1. Cy pres allowed if stated charitable purposebecomes unlawful, impracticable,impossible to achieve, orwasteful.

ii. Presumption of general charitable intent:1. Party opposing cy pres must show donor

lacked general charitable intent to defeat the

cy pres doctrine.iii. Elements1. Impractical, impossible, illegal or wasteful

to carry out the charitable intent of thetestator, can then be modified to be directedto benefit a charity that is most close to thetestators intent.

v. Corp. trusts (not so much in this class)vi. Pour-over

1. Pour Over vs. Testamentary Trustsa. Testamentary

i. The trust is created by a will that has the materialprovisions of the trust within the will.

b. Pour-overi. The trust is identified in the will. The terms of the

trusts exists separately from the will. The trustalready exists.

vii. Secret/Semi-Secret1. Semisecret

a. gift to person to hold in trust but fails to name beneficiaryb. desire to create trust appears on the face of the willc. terms are undisclosedd. extrinsic evidence not needed to prevent unjust enrichmente. Devise is unenforceable.f. Olliffe v. Wells

i. Gift to reverend in will to distribute as he was toldto distribute it.

ii. The intent is for the reverend to distribute it as thedeceased told him to, not to keep it on the face ofthe will.

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f. way around the creditors is to pay it directly to theinstitutions that are providing services to the beneficiary.

g. Deceased parent and child, where trust is to provide forchilds support any recourse against trust for childscreditors?

2. Supporta. Trustee is required to pay or apply as much of the incomeor principal that is necessary for the support of theBeneficiary.

b. pay all the income to A for her support is NOTnecessarily a support trust.

c. Not assignable to creditors or otherwise.d. Settlors intention determines how we consider other assets

that are used for Beneficiarys support.3. Discretionary Trusts

a. Trustee has discretion to apply & distribute payments to

beneficiary. Beneficiary cant compel distribution.b. Interest cannot be reached before the Trustee exercisesdiscretion.

c. If the Trustee has notice of an assignment or attachment,the trustee must make those payments to thecreditor/assignee unless there is a spendthrift restriction.

x. Operation of Law1. Resulting

a. No express trust or lacks trust elements. Law operates tofurther purpose of trust and prevent fraud.

2. Constructivea. Court imposed to prevent unjust enrichment. It is an

equitable remedy that doesnt apply if there is a Bona FidePurchaser.

d. Supervisioni. Role of the trustee

1. Trustees Authoritya. Express stated in the trust document, by court order or

statuteb. Implied powers necessary to effectuate trust purpose

i. Where there are no express terms setting forth theTrustees powers, the implied powers are:

1. To Sell (unless trust terms indicateotherwise)

2. To Incur Necessary Expenses3. To Lease

ii. Fiduciary duties1. Fiduciary Obligations

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a. Duty of Loyaltyi. No self-dealing (includes relatives, business

associates)ii. No buying or selling trust assets to benefit self

iii. No borrowing trust funds or making loans

iv. No selling from one trust to anotherv. No buying own corporate stockvi. No personal gain through Trustee position

b. No Further Inquiry Rulei. Applies when there is self-dealing by a trustee.

ii. It makes all self-dealing transactions entered into bythe trustee voidable by thebeneficiaries, requiringno proof that such transactions were unreasonableor harmful. The trustee must act for the sole benefitof the beneficiaries.

2. Remedy for Breach of FD claim against Trustee

a. Trust pursuit rule: when trustee wrongfully conveysproperty, beneficiaries can pursue those specific assets totheir current holders

b. Doesnt apply to a BFPc. Can impose trust on substituted assets

3. Co-Trusteesa. Unless otherwise stated, decision-making must be

unanimousb. Co-Trustees liable for each others acts. To not be liable a

co-trustee must show that he/she/it failed to prevent theaction, did not participate in the breach or acted to remedythe breach when he/she/it found out about it.

4. Duty of Prudencea. Duty of Care Prudent Investor

i. Same as care for other fiduciaries (corporations,spouses) reasonably prudent investor

ii. Preserve & maintain trust assets- no speculationiii. To keep trust productive (diversify)iv. Invest timelyv. Keep marketable

5. Duty of Preserve Trust & Make it productivea. Collect all claims due to the trustb. Lease land and manage it.c. Record documents that need to be recordedd. Secure insurance on trust propertiese. Safeguard securities, funds and documentsf. Invest trust funds.**

6. Other Obligationsa. No commingling or earmarking funds.b. Account to beneficiaries and be fair to all of them

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c. Defend the trust from attack.d. Good Faith is irrelevante. No Self Dealingf. Enforce any claims that are outstanding

7. Investments Generally

a. Uniform Prudent Investor Act applies unless otherwiseexpressly stated in the trust.i. Reasonable care, skill & caution

ii. Higher skill means higher standard8. Loyalty & impartiality

a. Look at entire portfolio & overall strategyb. Any kind of property or any type of investment ok

9. Factors to Consider when investinga. General economic conditions (inflation/deflation)b. Expected tax consequencesc. Appreciation of capital

d. Liquidity neede. Total return of overall investmentf. Interests of beneficiaries v. remaindermeng. Duty to Investigate!!!

10. Duty to Perform Personallya. Cannot delegate trustee duties but can hire professionals to

advice & help. If hiring others, establish scope & terms ofrelationship, including review of agents actions.

11. Trustee is liable if:a. He/she does not use reasonable care in making decisions (ie

appointing agents)b. He/she fails to fix improper acts

12. UPIA Delegationa. (a) A trustee may delegate investment and management

functions.The trustee shall exercise reasonable care,skill, and caution in:

i. (1) selecting an agent;ii. (2) establishing the scope and terms of the

delegation; andiii. (3) periodically reviewing the agents actions.

b. (b) In performing a delegated function, an agent owes aduty to the trust to exercise reasonable care to comply withthe terms of the delegation.

c. (c) A trustee who complies with the requirements ofsubsection (a) is not liable to the beneficiaries or to the trustfor the decisions or actions of the agent .

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13. Delegation of Trustee Responsibilitiesa. Delegated Trust

i. Where a trustee doesnt have the expertise, a trusteedelegates responsibilities to professionals with moreexpertise.

b. Directed Trusti. The trust instrument directs that the trustee mustfollow the direction of a 3rd party.

14. Othera. Successor Trustee can maintain same actions to protect

Trust as original Trusteeb. Exculpatory Clauses construed narrowly. Will not

exclude bad faith, intentional breach or recklessness.c. Liability to Third Parties Tort & Contract

15. Impartiality and the Principle and Income problema. Conflict of interest between beneficiary for life and

remainderman that gets the trust after the beneficiary forlife dies. The Trustee has to maintain the trust so as to beimpartial to the both of them.

16. Duty to Collect and Protect Trust Propertya. Trustee must collect and protect property without

unnecessary delay (i.e., as promptly as circumstancespermit).

17. Duty to Earmark Trust Propertya. Trustee must designate property as trust property rather

than the trustees own.18. Duty Not to Mingle Trust Funds

a. Trustee must not commingle trust funds with his own, evenif trustee does not use the trust funds for his own purposes.

19. National Academy of Science v. Cambridge Trusta. RULE : entries in the accounts honestly made after

reasonable efforts to determine the truth or falsity of therepresentations therein have failed through no fault of thetrustee, will not be deemed fraudulent or provide groundsfor reopening otherwise properly allowed accounts. DUTYTO INVESTIGATE.

20. Duty to inform and Report 16060a. Trustee has a duty to keep the beneficiaries of the trust

reasonably informed of the trust and its administration.21. Irrevocable Trusts 16061.5

a. A duty to provide beneficiaries and heirs with a copy of thetrust when the trust becomes irrevocable

22. Duty to account in CA 16062a. Trustee shall account at least annually, at the termination of

the trust and upon change of trustee to each beneficiary.

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23. Trustee & Distributiona. Must be fair to all beneficiaries (impartiality)

i. Beneficiaries are entitled to incomeii. The remainder men get the principal

24. Breach of Trust: Remedies

a. Remove the Trusteeb. Set Aside the transaction, problem if theres a BFPVc. Beneficiaries or court may ratify the transaction & waive

the breach (if it turned out good for beneficiary)d. Sue for resulting losse. Trace the money and recover the property (often through a

constructive trust)f. If Trustee, commingles assets, the presumption is that lost,

destroyed or devalued property is the Trustees so theremaining property is the Trusts property.

g. If Trustee takes the advice of a professional and does not

use independent judgment, she may be held liable forimproperly delegating duties.25. Co-Trustees

a. Unless otherwise stated, decision-making must beunanimous

b. If only one acts, to be liable must prove the other failed toprevent the action, participated in the breach or found outabout the breach but did nothing.

26. Predecessor Trusteea. Not liable to Bs for breached of trust committed by

predecessor trustee unless hei. knew or should have known of breach and failed to

take proper steps to prevent further breach orredress damage or

ii. failed to obtain delivery of full trust property ofpredecessor.

27. Othera. Successor Trustee can maintain same actions to protect

Trust as original Trusteeb. Exculpatory Clauses construed narrowly. Will not

exclude bad faith, intentional breach or recklessness.c. Liability to Third Parties Tort & Contract

e. Constructioni. How are they created?

f. Modification/Termination of Private Trusti. Claflin Doctrine

1. A trust cannot be terminated or modified prior to the time fixed fortermination by petition by all the beneficiaries if termination ormodification is contrary to the settlors material purpose.

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ii. Equitable Deviation1. The court permits a trustee to deviate from the trust terms if there

are changed circumstances not anticipated by the settlor. Thedeviation must be necessary to accomplish the trust purpose(advantage to beneficiaries not sufficient).

iii. Generally 15400-154021. CA presumes the trust is revocable unless otherwise stated in thetrust

2. Beneficiaries of an irrevocable trust can compel modification ortermination if it is necessary to further the material purpose (CPC 15403) - Claflin.

3. Settlor can amend with all beneficiaries consent or with courtapproval. CPC 15404

4. Trustee does not have the power to amend or terminate unless it isso stated under the terms of the trust. But see CPC 15408 (canterminate if


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vi. Modification or Termination of Noncharitable Trust by Consent1. Restatement 65

a. Weakens material purposeb. Authorizes termination if reason outweighs material

purpose

c. Preserves requirement of beneficiaries unanimity.2. UTC 411a. Preserves material purposeb. Weakens requirement of beneficiaries unanimityc. Authorizes termination if interests of absent beneficiary

will be adequately protectedvii. Trustee Removal

1. Removal of Trustee UTC 706 & CPC 15640a. not enough to dislike the trustee.b. unless the trustee is doing something inappropriate, ct. will

not intervene.

g. Disposing of Property at Termination CPC 15410i. If revoked by Settlor, then Settlor determines.ii. If terminated by settlor and Bs, then based on agreement by parties.

iii. If none of above, then whatever is closest to the settlors intent.XV. Will Substitutes and the Wills Act

a. Pure Will Substitutesi. Life Insurance

ii. Pension Accountsiii. Joint Accountsiv. Revocable Trusts

1. no need to observe the formalities of the Will.2. Statutes authorize this bypass.

b. Impure Will Substitutesi. Joint Tenancies

c. Farkas v. Williams pg 398i. Farkas bought stock for former eee Williams and held it in trust until

Farkas death.ii. Issue: was this a valid inter vivos trust or was this a testamentary gift that

needed to conform to the Will Formalities?iii. Farkas as trustee had right to revoke, right to income, right to principle,

right to change beneficiary HOWEVER, he was liable to Williams as atrustee if he breached his fiduciary duties to Williams.

d. Linthicum v. Rudii. Ct. Held : interests as beneficiary are contingent upon death. No standing

to challenge a change in the inter-vivos revocable trust.ii. Have to petition to be a guardian and then have the right to amend the trust

through that position, not as mere beneficiaries.e. Payable on Death Contracts & Other non-probate Transfers

i. Contract that says this is the person who gets it.ii. In re Estate of Atkinson

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1. Walter made deposits and recorded them as P.O.D. withbeneficiaries.

2. He died. Wife now arguing that under Widows Forced Share, thePOD accounts should be included in the estate that she receives20% of under the Forced Share.

3. RULE : P.O.D. doesnt comply with formalities of a will andtherefore must be counted as part of the estate and Wife wins.XVI. Will Substitutes and the Subsidiary Law of Wills

a. Applicationi. Third Restatement

1. Although a will substitute need not be executed in compliance withthe statutory formalities required for a will, such an arrangement is,to the extent appropriate, subject to substantive restrictions ontestation and to rules of construction and other rules applicable totestamentary dispositions.

ii. In re Estate and Trust of Pilafas

1. RULE : the trust will be considered valid b/c there was a provisionin the will that said a writing had to be executed to revoke the trustand not just the disappearance of the trust.

2. REVOCATION : different between wills and trusts.a. Disappearance of original will = revokedb. Disappearance of original trust = not revoked unless

specified in the trust to make that assumption.iii. State Street Bank v. Reiser

1. Dunnebier created a trust and put all his property in the trust.2. he then applied for a loan and didnt tell the bank that his assets

were i

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