WILLS OUTLINE SUMMER 2007INTRODUCTION

Keep in mind:- can't screw your spouse in death

Body of Law in NY Governing Wills & Estates

Estates Powers & Trust Law (EPL) - *start all essays with this*

Surrogate’s Court Procedure Act (SCPA) - ignore

Definitions

Intestate = W/out a will1. Decedent = Dead person

Testate = W/ a will1. Testator = Dead person w/ a will

Administrative Proceeding = A proceeding to appoint a personal representative, also known in NY as an administrator, to administer the estate of a person who dies w/out a will.

Probate Proceeding = A proceeding to administer the property of a person who dies w/ a will

Probate Assets = Assets held in the decedent’s name alone that do not pass by operation of law and that which the Executor administers in accordance w/ the decedent’s will

Operation of Law = Property that passes automatically b/c of the way the property’s title is held (e.g. joint property) (not affected by the existence of a will or intestacy)

*Issue1. Definition – All persons who have descended from a common ancestor (more than just "children")2. Points

a. Includes those in a direct line (straight down the chain) of inheritance w/ the decedentb. Issue is synonymous w/ descendant

3. Examples – children, grandchildren, great-grandchildren

Distributees = Those individuals who inherit property under intestate succession.

Beneficiaries = Everybody who receives a bequest (legacy or devise) under a will

Residuary Estate = Balance of the Testator’s estate after all claims, taxes and “particular” bequests have been distributed (i.e., the “rest” of the estate).

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WILLS OUTLINE SUMMER 2007INTESTACY RULES

Introduction

When Do the Rules of Descent & Distribution (Intestacy Rules) Apply [Art. 4 - EPTL]?1. No Will – Decedent left no will or did not get around to signing it (or left a will that was not properly executed)2. Not a Complete Disposition – Will does not make a complete disposition of the estate (partial intestacy) typically due

to the fact that there was poor drafting by the attorney3. Successful Challenge – An intestate distribute successfully challenges the will, and the will is denied probate.

Appointment of Administrator1. Rule – If there is no will left by the decedent, an administration proceeding is started by an intestate distributee to be

appointed as administrator of the estate2. Order of Priority for Appointment

a. **Surviving spouseb. **Children c. Grandchildrend. Father or mothere. Brothers or sistersf. Any other distributees

Intestate Decedent Survived by Spouse & No Children

General Rule – If the intestate decedent is survived by her spouse but not by any children or issue of children, the surviving spouse takes the entire estate.

Example #1 – W died intestate, survived by her husband, H, her mother M, and her sister S. W never had any children. At her death, W owned property worth $300K. What distribution?

1. Husband H – $300K 2. Mother M - $03. Sister S - $0

Intestate Decedent Survived by Spouse & Children

General Rule – If the intestate decedent is survived by his spouse & one or more children or their issue, whether of the current marriage or an earlier marriage:

1. Surviving spouse : takes $50K + ½ of residuary (balance of estate)2. Issue : take the left over residuary

a. note: irrelevant what marriage kids come from, so long as they are dead person's kids

3. If estate < $50K , the surviving spouse takes everything, regardless of whether there are children or not

Example #2– Hal dies intestate survived by his wife Wilma and three children: Al, Bob (by an earlier marriage) and Carol (by his marriage to Wilma). Hal owned property worth $650K. What distribution?

1. Wilma - $350K [($650K - $50K) / 2] ; first $50K + 1/22. Al, Bob & Carol - $100K/each [($650K - $350K) / 3]

Intestate Decedent Survived by Children Only

General Rule – If intestate decedent is survived by children only (all children are alive), then the estate passes to the children in equal shares.

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Intestate Decedent Survived by Children & Issue of Predeceased Children

General Idea – Estate passes to the (i) “alive child” AND the (ii) issue of the “dead child” by representation (a.k.a. – per capita at each generation)

How to Distribute Per Capita at Each Generation [NY’s Statutory Distribution Method]1. Step 1 – Make the initial division of shares – one share for each line of issue – at the first generation level at which

there are survivors (usually the hypos are children of the deceased).2. Step 2 – All living persons at that first generational level take one share each3. Step 3 – The shares of the deceased persons at the first generational level are combined and then divided equally

among the takers at the next generational level in the same way.

Result – Under per capita at each generation, persons in the same generation are always going to have equal shares.

Example #3 – Winona, a widow, had three children, Art, Bill and Carol. As indicated by the family tree below, Winona was survived by all three children (and her daughter-in-law Betty). What distribution?

Art, Bill and Carol each take 1/3rd.

Winona

Art Bill Betty Carol

Example #4 – Winona, a widow, had three children but two of them (Art and Bill) predeceased her. Art had one child and Bill had two children. As indicated by the family tree below, Winona was survived by her daughter Carol, her daughter-in-law Betty, and four grandchildren as her nearest relatives. What distribution?

(i) Carol is alive, so that's where we make our first division. If each were alive, each would get 1/3. Carol is alive, so she gets 1/3. (ii) Shares of dead people are combined and then divided (1/3 + 1/3 = 2/3). Drop their share to their issue and divide equally. G1, G2, G3 divide up the 2/3 --> 2/9 each.(iii) In-laws are not intestate distributees (Betty gets nothing).

Winona

Art Bill Betty Carol

G-1 G2 G3 G-4

Distribution:Carol – 1/3rd

G-1, G-2, G-3 – 2/9th eachG-4 – nothingBetty – nothing b/c in-laws are not intestate distributees (Even if Bill left a will that left “all my property, including any interest I have in my mother’s estate, to my wife Betty” ; in-laws do not count - not Bill's to convey before W dies)

Note: In most states (and FORMERLY in NY (pre-1992)), the distribution is "per stirpes", under which the issue of a deceased child takes the share that her parent would have inherited if living.

In the example above, Carol would take 1/3. G-1 would take 1/3 in place of Art; G-2 and G-3 would take Bill's share of 1/6.

*** NY RULE: Per Capita at Each Generation - "by representation" is controlling.Exception: A will can override and change the default distribution to "per stirpes"

Distribution Per Stirpes1. Rule – The issue of a deceased child takes the share that her parent would have inherited if living.2. Points

a. While NY uses per capita at each generation, a NY resident’s will can override and change the default distribution to per stirpes.

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b. If only one person at the first generational level died and all have issue, distribution by representation or per stirpes would give you the same result.

3. Example – If example #4 was decided in a per stirpes jurisdiction, what would have been the distribution?a. G-1 – 1/3rd

b. G-2 & G-3 – 1/6th eachc. Carol – 1/3rd

Example #5 – Per Capita at Each Generation May Also Apply if Decedent Had a Will – In 1993, Tillie who is single, executed a will that bequeathed $360K “to the issue of my brother Bill,” and the residuary of her estate to her sister Sue. When the will was executed, Bill had three children, Alice, Carol & Donna. Alice died in 1996, leaving a child Andy. Carol died in 1999, leaving two children, Clyde and Claude. Tillie died in 2004, and her will was admitted to probate. Tillie was survived by her sister Sue; by her niece Donna, and by her three grand-nephews (Andy, Clyde and Claude). Who takes the $360K to “Bill’s issue”?

Remember:Step 1: Divide the property into as many shares as there are people at the first generational level where there are survivors

Step 2: All living persons at the first generational level take a share

Step 3: The shares of deceased persons are combined and then divided

(i) Bill's issue - Donna is alive, so that's where make first division. ($360K/3)(ii) All living at first level take a share. (iii) Shares of dead people are combined and then divided. ($120K + $120K = $240K ; $240K/3)

Tillie Bill Sue

Alice Carol Donna

Andy Clyde Claude

Distribution:Donna - $120KAndy, Clyde & Claude - $80K each

Variations:What if Alice was the only one dead? – Alice’s 1/3rd share drops straight down to AndyWhat if Carol was the only one dead? – Clyde and Claude each take 1/6th

What if Donna was the only one dead? – Alice and Carol take ½ eachWhat if Alice, Carol and Donna are all dead? – Andy, Clyde and Claude take 1/3rd each

Intestate Succession Not Survived by Spouse or Issue

Hierarchy 1. Bar Tested Situations

a. All to parents or surviving parentb. If not survived by parents: Issue of parents (brothers, sisters, issue of deceased brothers and sisters), who

take per capita at each generation2. Sadistic Situations (stuff not really tested)

a. If not survived by parents or issue of parents: ½ to maternal grandparents or surviving grandparent or (if neither is living) to their children and grandchildren, who take per capita at each generation. ½ to paternal grandparents or grandparent (or their children and grandchildren) in the same manner. If no maternal grandparents or their children or grandchildren, all to paternal grandparents or their issue (and vice versa).

b. If none of the above, great grandchildren or grandparents. If the decedent’s nearest kin are great grandchildren of grandparents (i.e., first cousins once removed), ½ in equal shares to great-grandchildren on

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maternal side, ½ to great-grandchildren on paternal side. If no great grandchildren on one side, all to great grandchildren on other side.

c. No inheritance beyond great-grandchildren of grandparents. If the nearest kin are great-great-grandchildren of grandparents, or issue of great-grandparents, the estate escheats to the state of NY.

Note – Decedent’s “relatives of the half-blood” are treated as if they were relatives of the whole blood.

When Spouse Disqualified From Taking Their Intestate Share

General Idea – Some circumstances disqualify a spouse from inheriting under intestacy (also, “exempt personal property set-aside” & under “elective share”).

“DISMAL”1. Divorce – Final decree of divorce of annulment valid under NY law2. Invalid Divorce – Surviving spouse procured, outside of NY, divorce or annulment not recognized as valid under NY

law. (This is a one-way street rule: Doesn’t bar surviving spouse if deceased spouse procedure invalid divorce or annulment. Surviving spouse did something bad.)

3. Separation Decree – Rendered against surviving spouse. (Doesn’t bar spouse if the final decree of separation was rendered against deceased spouse.) Only applies to separation decrees, not separation agreements unless there is specific language in the agreement waiving one’s rights under the EPTL.

4. Marriage Is Void – As incestuous or bigamous5. Abandonment or Lack of Support – Surviving spouse abandoned or refused to support deceased spouse

Slayer Statutes – Spouse can’t inherit from deceased spouse if they killed their spouse.

General Point – If one of the “DISMAL” conditions if met, treat the surviving spouse as having predeceased the dead spouse and drop their share down to their kids or whoever is next in line as distributee. (Note: the surviving spouse is "screwing" itself.)

Inheritance Rights of Adopted Children

Adopted Children & Their Issue – Receive full inheritance right from their adopting family (and vice versa if the adopted child dies first)

A Child Adopted by a New Family1. Rule – A child adopted by a new family has no inheritance rights from his or her natural parents or other members of

their natural family.2. Exception – If a child is adopted by the spouse of a natural parent (e.g., mom remarries a new husband who adopts

child), child and its issue can inherit from the adopting parent and both of his or her natural parents.a. Ex – Carol’s father dies; mother remarries, and second husband adopts Carol. Carol and her issue have

inheritance rights from her natural mother, her adoptive father, and the estate of her dead natural father.1. one-way street: if child dies first, father's estate has no rights

Special Rule When Children Are Adopted by Relatives (e.g., Aunt or Uncle)1. Rule – If the adopted child is related to the decedent by both a natural relationship and the adopted relationship, the

child inherits under the natural relationship only UNLESS the decedent was the adopting parent, then the child inherits under the adoptive relationship only.

2. Example sa. Example #6 – Maude (a widow) died in 1990, leaving a child Leah. In 1994, Maude’s sister Sarah who

already had 2 children, Sam and Susan, adopted Leah. Sarah died in 2001 and then Granny died intestate in 2004. Pete, who wants a ½ share, claims that Leah takes under the adoptive relationship only , meaning that there are only two lines of issue (Sarah’s line and Pete), and he inherits ½ of Granny’s estate. Is he right? – No. Pete doesn’t get a ½ share b/c Leah was adopted by a relative (Aunt Sarah) and thus takes under the natural relationship via Maude.

Granny

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Maude Sarah Pete

Leah Sam Susan

Distribution:Pete – 1/3rd

Leah, Sam & Susan – 2/9th each ("per capita at each generation")

b. Example #7 – Same facts, except Sarah (not Granny) died intestate. What distribution of Sarah’s estate? – Leah, Sam & Susan each take 1/3rd of Sarah’s estate b/c the adopted child (Leah) inherits under the adoptive relationship when the decedent was the adopting parent (Sarah).

Construction of Class Gifts – The “Adopted Out” Child

General Situation – Suppose a child is placed up for adoption and is adopted by a new family. Does the “adopted out” child take as the beneficiary of a “class gift” made in the will of a member of the child’s natural family?

General Rule – Once the child is adopted into a new family, he has NO inheritance rights from the natural family even if they do it as a class gift.

Example #8 – As a teenager, Tom’s daughter Dana had a child (Eddie) born out of wedlock in 1995; Eddie was placed up for adoption and was adopted by the Smiths. (B/c the adoption records are sealed, identity of the adoptive family is not known to Tom or Dana.) Thereafter, Dana married and had a child Steve. Tom died in 2005, leaving a will that established a trust: “income to Dana for life, and upon Dana’s death, remainder to her issue.” Dana has just died, the trustee learns of Dana’s teenage pregnancy and somehow learns the identity of Eddie.

1. Is Eddie (the “adopted out” child) entitled to a share of the gift of the trust remainder to Dana’s “issue” along w/ Dana’s son Steve?

a. No. Eddie is not entitled to a share of the class gift. B/c he was adopted into a new family, he has no inheritance rights from the natural family even if they do it as a class gift.

2. Would Eddie be entitled to a share if he had been adopted by another family member (e.g., Eddie’s parents died and he was adopted by an aunt)?

a. Yes. Eddie would inherit under the natural family as Dana’s son as we did in Example 6.

Inheritance Rights of Non-Marital Child

From Mother – A child born out of wedlock has full inheritance rights from their mother and the mother’s family.

From Father1. Rule – A child born out of wedlock inherits from the natural father only if paternity is established by one of the

following tests:a. ** Legitimated by marriage: Father marries mother after child’s birthb. Order of filiation in a paternity suit is entered during the father’s lifetime, adjudicating the man to be the

child’s fatherc. Father files a witnessed, acknowledged (before a notary public) affidavit of paternity w/ the Putative Father

Registeryd. ** After death, paternity is established in probate proceeding by:

i. Clear and convincing evidence (e.g., visitation, gifts, participation in school activities), AND1. note: support by itself is NOT enough

ii. Openly and notoriously acknowledging the child as his owne. ** DNA test plus clear and convincing evidence (but only if DNA is rebutted)

i. note: DNA test must be done before death2. Point – Child support by itself is not enough to establish paternity (not the same: child support vs. equitable paternity)

Lifetime Gifts to Intestate Distributee – Advancements (intestacy)

Common Law

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1. Rule – A lifetime gift to a child was presumptively an advancement (i.e., an advance payment) of his intestate share, to be taken into account when distributing the estate at death.

2. Justification – This was based on a presumption that a parent would always want to treat his or her children equally.

New York1. Rule – NY has rejected the “advancement” presumption by statute. In NY, there is no advancement unless proved by:

a. A contemporaneous writing made at the time of the gift, andb. It is signed by the donor or the donee

2. Example #9 – On Al’s 25th b-day his father (Fred) gave Al 100 acres of land, and told his other two boys (Ben and Carl), “you’ll receive similar gifts when you reach 25.” Two weeks later, Fred wrote Al a letter: “I want you to know that the land I gave you is to be considered an advance on your inheritance share of my estate. Signed, Fred.” Two years later, Fred died intestate (survived by Al, Ben and Carl), w/out having made gifts to Ben or Carl. The net value of Fred’s estate is $300K, and the land given to Al is worth $30K on Fred’s death.

a. Should Fred’s gift to Al be treated as an advancement?i. No b/c in NY you need a contemporaneous writing stating that the gift should be treated as an

advancement. Here, the writing was not sent until 2 weeks after the gift was made and 2 weeks is clearly not contemporaneous.

b. What distribution of Fred’s estate then?i. Fred’s $300K estate is divided into 3 equal shares and each boy takes $100K.

c. What would be the distribution if Fred’s writing to Al was contemporaneous to the gift?i. Ben and Carl would receive $110K each. Al would receive $80K. [Add the value of the $30K gift

back to Fred’s estate. Then divide the $330K by three, meaning that each child’s share is $110K, w/ Al treated as having already received $30K of his share.]

Disclaimer (a.k.a. – Renunciation) By Intestate Distributee or Beneficiary

General Idea – Nobody can be compelled to be a beneficiary under a will or to take property by operation of law.--> Don't have to take a gift if you don't want to.

General Rule – A beneficiary under a will or an intestate distributee can disclaim or renounce (in whole or in part) their interest in the decedent’s estate.

Effect of Disclaimer – The person who disclaims is treated as having predeceased the decedent/testator.

Requirements for a Valid Disclaimer1. Signed Writing – Must be writing, signed and acknowledged before a notary public2. Affidavit – Must be accompanied by a separate affidavit that states no consideration was received and that nobody

paid you to disclaim (unless court authorizes receipt of consideration for the disclaimer)3. Irrevocable – Must be irrevocable (after disclaimer is filed, you can’t change you mind)4. Filing – The disclaimer or renunciation must be filed w/ the Surrogate’s Court w/in 9 months after the date of death

General Point – Disclaimer can’t screw up someone else’s legitimate share [see Ex 11B(c)].

Reasons to Disclaim an Inheritance or Testamentary Gift1. Avoid taxes2. Avoid creditors

Disclaimer to Remain Eligible for Medicaid – Impermissible

Note (not tested) – These parties also can disclaim: beneficiaries of life insurance, employee benefit plans, trusts, other non-testamentary transfers; surviving joint tenant or tenant by entirety (to the extent decedent furnished consideration for tenancy’s acquisition.) With court approval, disclaimer can be made on a person’s behalf by a guardian or by a hold of a durable power of attorney or a decedent’s personal representative.

Example #11

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1. Example 11A – Igor died intestate, survived by his son Scott, his daughter Donna, and two grandchildren (Donna’s children) Dick and Jane. Igor’s estate is valued at $1.5M. Three months after her father’s death, Donna (a partner in a Manhattan law firm) filed w/ the Surrogate’s Court a document, signed and acknowledged before a notary public that stated, “I hereby irrevocably renounce and disclaim all of my right, title and interest in the estate of my late father.” In a separate sworn instrument, Donna stated: “I have received no consideration for making this disclaimer.”

a. Valid disclaimer? – Yes b/c it satisfies all 4 disclaimer requirements (signed writing, affidavit, irrevocable, and filing).

b. What distribution then? – Scott receives $750K. Then we act as though Donna predeceased Igor and we drop her share down to Dick and Jane equally. Thus, both Dick and Jane receive $375K.

2. Example 11B – Same facts, except now Scott predeceases Igor. Scott is survived by Scott Jr. What distribution then?a. If Donna did not disclaim, what would Scott Jr. receive? – ½ ($750K)b. What should theoretically happen in Donna disclaims? – We would have a per capita at each generation

distribution and Scott Jr., Dick and Jane would each receive 1/3rd ($500K each).c. ** What happens for real (by statute) to avoid an inequitable result? – We act as though Donna survived Igor

by one day. Then, Scott’s ½ drops to Scott Jr. Donna’s ½ would drop to Dick and Jane so each get ¼.

IgorScott Donna (disclaims)

Scott Jr. Dick Jane

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WILLS OUTLINE SUMMER 2007EXECUTION OF WILLS

Probate

General Idea – Probate refers to the Surrogate’s Court proceeding in which:1. It is judicially determined that the decedent died w/ a validly executed will and the intestate distributees are

determined (to put them on notice of the existence of a will), and2. A personal representative named in the will, also known as an executor, is appointed by the court to administer the

decedent’s estate.

Requirements for a Validly Executed Will (The 6 Point Test)

Seven Point Test1. Must be 18 years old +2. Testator’s Signature – Signed by the testator, or by someone at testator’s direction and in her presence

a. Pointsi. Testator can sign by using any mark intended to be their signature (e.g., “X”)

ii. Testator can have help signing the document if testator has disabilityb. Proxy Signatures – When T’s name is signed by another person (proxy signature), such person must also:

i. Sign their name;ii. Cannot be counted as one of the two needed attesting witnesses; and

iii. Shall affix her address (but failure to affix address does not invalidate the will)3. Signed at the End – Testator’s signature must be at “the end thereof”

a. Rule – If not signed at the end, the will still gets admitted to probate, but words following the signature are not given effect.

b. Exception – The entire will is invalid, including the portion after the signature, but only if the matter following the signature is so material that to give effect to that above the signature and not what is below the signature would defeat the testator’s intention.

4. Signed in Presence of Witnesses – Testator must sign the will or acknowledge his earlier signature in the presence of each witness

a. Testator can sign after witness as long as signature are contemporaneous (i.e., a few minutes, not a week)5. Publication – Testator must publish the will, meaning:

a. Testator must declare the document to be their "last will and testament"b. Testator must communicate to the witnesses that they are witnessing a will (not some other legal document)

6. Two Attesting Witnesses – There must be at least 2 attesting witnesses7. 30 Days – This execution ceremony must be completed w/in 30 days, w/ the clock starting when the first witness signs

the document

Codicil – A later amendment or supplement to a will which is executed w/ the same formalities

NY Distinctions1. NY does NOT require that:

a. Witnesses sign in each other’s presenceb. Witnesses sign in the testator’s presence

2. The key to the NY rule is that the testator must sign or acknowledge her signature in the presence of the witnesses

Burden of Proving Due Execution – The burden of proof (that the 7-point test is satisfied) is on the will proponent (the one offering the will for probate; usually the executor). If the will is not self-proved, both attesting witnesses must testify as to the facts necessary to show due execution. If one witness is dead, absent from state, incompetent or cannot w/ due diligence be found, testimony of one witness suffices. If none of the witnesses are able to testify, will proponents must prove 2 signatures – the signature of the testator and one witness.

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Attestation Clause1. Idea – An attestation clause appears below the testator’s signature line and above witnesses’ signature lines and recites

all the elements of due execution.2. Value of an Attestation Clause – It is prima facie evidence of the facts presented3. Situations Where Useful

a. Witness w/ bad memory – “Probate of a will does not turn on the memory of an attesting witness.”b. Hostile witnesses (recalls it was a power of attorney or some other document) – Attestation clause can be

used to rebut this witness.4. Point – An attestation clause is not legally required in any state5. Example of an Attestation Clause – “On the above date, testator declared to us that the foregoing instrument was her

will and she asked us to serve as witnesses thereto. She then signed the will in our presence, we being present at the same time. We then signed the will as attesting witnesses in testator’s presence and in the presence of each other.”

Self-Proving Affidavit1. Idea – A self-proving affidavit is where witnesses sign a sworn statement in the presence of an attorney that recites all

the statements that they would make if they were called to testify in court. It essentially states that all 7 points were satisfied.

2. Justification – It recognizes that most probates are harmonious and no one is going to contest the will’s validity.3. Timing – The affidavit, which can be signed at anytime after the will is executed, is usually signed at the same time as

the will.4. Substitute for Living Testimony – Unlike an attestation clause (which is merely corroborative of witnesses’ testimony)

where you still have to call the witnesses to testify or else prove their signatures; a self-proving affidavit is a *substitute for the live testimony of the witnesses*. The affidavit serves the same function as a deposition or an interrogatory (i.e., it is sworn testimony).

5. Point – The will is admissible to probate on the strength of the sworn recitals in the affidavit unless an interested party objects, in which case the formal rules of proof of due execution apply. You must then call the two attesting witnesses to testify. (Interested party is an intestate distributee who is adversely affected by the admission of the will to probate).

Examples1. Example #12 – Tammy signed her will in the middle of the page. Immediately following Tammy’s signature, the will

named Tammy’s friend Ed Smith as executor. Then the two witnesses’ signatures followed. Is the will admissible to probate, when it was not signed “at the end thereof”?

a. Yes, BUT the words following the signature are not given effect. Here, Ed would not be appointed executor since that direction follow Tammy’s signature.

2. Example #13 – On July 28, Tom took his typewritten will to his friend Wes and said, “This is my Will; please sign it.” Wes signed the will as a witness, and then Tom signed it. B/c Tom had Parkinson’s Disease, Wes held and guided Tom’s hand as Tom signed; his signature is almost illegible. On August 11 (two weeks later), Tom took the will to Wally and said, “This is my will w/ my signature; please sign it.” Tom proferred the will to Wally w/ his signature showing; Wally signed on the second witness line. Tom has died; Wes predeceased him.

a. Is the will admissible to probate? – Yesb. Wes signed before Tom signed the will; is that a problem? – No. The exact order of the signatures is not

critical as long as the ceremony is contemporaneous.c. Tom’s signature is barely legible; is that a problem? – No. Any mark intended as Tom’s signature is ok.d. Wes held and guided Tom’s hand when Tom signed; is that a problem? – No b/c it was Tom’s voluntary act.

He was not forced to sign the will.e. Wes and Wally did not sign in each other’s presence; is that a problem? – No. NY does not require that

witnesses sign in each other presence.f. Wally signed 14 days after Wes; is that a problem? – No as long as the entire ceremony occurs w/in the 30-

day window starting when the first witness signs.g. Tom didn’t sign the will in Wally’s presence; is that a problem? – No b/c Tom acknowledged his earlier

signature. The testator can take the will to the witness, point to the signature, and say, “that is my signature” and then have the witness sign.

3. Example #14 – How can we probate the will if Wes, an attesting witness predeceased Tom? – Just have to go through each element of the 7 Point Test.

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Interested Witness Statute

General Rule –The fact that a will beneficiary is an attesting witness never affects the validity of the will (key: will is still good). The only consequence is that the bequest to the interested witness is void, unless:

1. There were at least 3 signatures on the will and 2 were disinterested (“Supernumerary Rule”)2. ** Interested witness would be an intestate distributee if testator died w/out a will, in which case the “whichever is

least” rule applies.a. “Whichever is Least” Rule – The witness-beneficiary takes the lessor of:

i. The bequest under the will, orii. His intestate share

Purpose of Interested Witness Statute – To avoid fraud

Examples1. Example #15A – Terry’s will provided: “I give $50K to my brother Ross Smith, and my residuary estate to my sister

Jodi Brown.” The will, was signed by Terry and witnessed by Ross Smith and Jack Jones. Terry was survived by his brother Ross and his sister Jodi as the only living relations. Terry’s estate is valued at $200K. Is the bequest to brother Ross Smith of $50K void under the interested witness statute?

a. (i) would Ross, interested witness, still inherit if Terry died intestate - yes. (ii) If Terry died intestate, how much would Ross get? $100K. (iii) So, gets "whichever is least" --> $50K

b. No, the bequest of $50K under the will is not void. First, Ross, as Terry’s brother, would have inherited if Terri died intestate b/c Terry had no spouse, no issue, and no parents. Second, Ross’s intestate share would have been ½ of Terry’s estate which would have been $100K. Thus, we apply the “whichever is least” rule and the bequest of $50K is less than the intestate share of $100K so Ross is entitled to the $50K bequest.

2. Example #15B – What if instead, Terry’s will provided: “I give $150K to my brother Ross Smith, and my residuary estate to my sister Jodi Brown.” All other facts are the same. Is the bequest to brother Ross Smith of $150K void under the interested witness statute?

a. Yes, the $150K bequest is void. Applying the “whichever is least” rule, the $150K bequest is larger than Ross’s $100K intestate share, so Ross is limited to the $100K intestate share.

3. Example #16 – Terry’s will named Jack Jones (who was an attesting witness) as executor. Is Jack qualified to serve (and be compensated) as executor?

a. Yes b/c only gifts under the will trigger the interested witness statute. An executor earns their compensation so it is not considered a gift.

Foreign Wills Act

Rule – A will is admissible to probate in NY if it was validly executed under:1. E xecuted – Law of the state where it was executed, regardless of testator’s domicile at that time; or2. N Y Law – New York law; or3. D omiciled – Law of the state where testator was domiciled, either when the will was executed or at death.

Point – These rules apply only to the question of whether the will is admissible to probate in NY. Once the will is admitted to probate, NY law governs construction and application of its provisions.

Example #17 – Tess executed her will in Florida, but she did not “publish” the will. The witnesses thought they were witnessing a power of attorney, not a will. (The will would be valid in Florida; Florida does not have the “will publication” requirement.) Tess moved to NY and dies there five years later. Is the will admissible to probate in NY?

Yes - b/c it was validly executed in accordance w/ Florida law, the law of the state where it was executed.

Once admitted to probate --> NY rules govern the distribution

Holographic & Nuncupative Wills

General Definitions1. Holographic Will – It is a will that is entirely in testator’s handwriting that is signed but not witnessed2. Nuncupative Will – It is an oral will (e.g., video tape, DVD)

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General Rule – Both holographic wills and nuncupative wills are void in NY1. Exception – Holographic and nuncupative wills are valid for members of the armed forces during declared or

undeclared wars (expires one year after discharge) and mariners at sea (expires after 3 years)2. NY recognizes wills valid in another state - so, holographic wills are acceptable if validly executed in another state

(Foreign Wills Act)

Example #18 – Tanya wrote and signed a document in her own handwriting that reads: “This is my last will. I leave all my property to the American Red Cross.” The instrument is not witnessed.

1. Should it be admitted to probate?a. No b/c NY doesn’t recognize holographic wills

2. But what if the instrument was entirely in Tanya’s handwriting and was witnessed by two witnesses; would it be valid (assuming the 7 point test was satisfied)?

a. Now Tanya’s will is valid b/c there is no requirement in NY that a will be typewritten.

Lawyer Malpractice

Beneficiaries Lack Standing – B/c there is no privity of contract b/t the beneficiaries of a will and the drafting lawyer, they cannot sue for malpractice to recover the amount that they would have taken had the will been properly executed. However, they may sue the drafting attorney to recover the costs of drafting and executing the will.

Example #19 – Larry Lawyer prepared a will for Tina and supervised the will’s execution. Tina signed the will and had to rush back to work. Later that day, Larry had his law assistant and secretary sign as witnesses. On Tina’s death, the will is denied probate, and Tina’s estate passes by intestacy. Do the intended will beneficiaries have a cause of action against Larry Lawyer for negligence, the recovery being the amount they would have taken had the will been validly executed?

No. There is no privity of contract b/t the beneficiaries and the lawyer. The duty only runs to the client who contracted the lawyer’s services and now he is dead. At best, the estate can bring an action against the drafting attorney for the cost of executing the will.

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WILLS OUTLINE SUMMER 2007REVOCATION OF WILLS

What Constitutes a Valid Revocation?

Two Ways to Revoke a Will1. By subsequent testamentary instrument executed w/ appropriate formalities (7-point test) or2. By physical act w/ the intent to revoke (e.g., burning, tearing, cutting, canceling, obliteration, or other act of

mutilation) (need intent to revoke - ripping by accident does not count)a. Any physical act done to the signature shows an intent to revoke the entire will.

Example #20 1. Example 20A – John Smith’s 3 page will is found amongst his papers after his death. At the bottom of each page is

written, in John’s handwriting. “This will is void. John Smith.”a. Valid revocation by subsequent testamentary instrument? – No b/c it wasn’t witnessed by 2 attesting

witnesses.b. Valid revocation by physical act? – No b/c it wasn’t a physical act capable of revoking a will by statute. It is

not a cancellation b/c none of the words cross the actual words on the will. If Smith would have written “VOID” across the whole page, this would have been sufficient for a cancellation.

2. Example 20B – Suppose John had written, at the bottom of each page, “I cancel this will.” Valid revocation by cancellation? – No. You still need more of a physical act for a valid revocation.

3. Example 20C – Suppose John crossed out his signature w/ a big X. Valid revocation by physical act? – Yes. Anything done to the signature shows an intent to revoke the entire will. It is a decisive act of revocation.

Revocation by Implication

Typical Express Revocation Language – “I hereby revoke all wills heretofore made by me.”

Example #21 – In 2002, Tim executed “my last will.” In 2005, Tim executed “my last will.” The 2005 will does not contain language of revocation of the earlier will. What result?

To extent possible, you read the two instruments together. 2nd will treated as codicil (amendment) to the 1st will. 2nd only revokes 1st to extent there are inconsistent provisions. (see rules below)

If Second Will Contains No Express Revocation Language:1. If 2 nd will is not inconsistent w/ 1 st will – Read the two wills together and treat the 2nd will as an amendment to the first

will2. If 2 nd will is partially inconsistent w/ 1 st will – Read the two wills together and the 2nd will is treated as an amendment

to the 1st will and only revokes the 1st will to the extent that there are inconsistent provisions.3. If 2 nd will is wholly inconsistent w/ 1 st will – The 1st will is revoked by implication

Revocation by Physical Act by Another Person (Revocation by Proxy)

General Rule – To have a valid revocation by physical act by another person, there must be a physical act by another person:1. At the testator’s request2. In the testator’s presence3. Witnessed by at least 2 witnesses of the act

Need 4 People in the Room – Testator, person destroying the will, and 2 witnesses

Presumptions Regarding Revocation of Wills

Will Not Found After Death – Where a will that was last seen in T’s possession or control is not found after death, there is a presumption that T revoked the will by physical act.

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Will Found Mutilated After Death – Where a will that was last seen in T’s possession or control is found mutilated after T’s death (e.g., torn in two), there is a presumption that T was the one who revoked the will by physical act.

General Points1. Neither presumption arises if the will was last seen in the possession of someone adversely affected by its contents

(i.e., person in will #1, no longer in will #2, and will #2 was seen w/ that person)2. Evidence is admissible to rebut the presumptions (e.g., will left w/ attorney for safekeeping & attorney can’t find it; T

told witnesses that destruction of will was accidental)

Changes on Face of Will After It Has Been Executed

Two Ways for Testator to Make Changes in Will1. Write a new will which revokes the first will2. Make a codicil to the first will that only changes part of the will

Key Things Tested1. Words added to a will after it is signed and witnessed are disregarded2. Partial revocation by physical act is not recognized in NY

Examples1. Example #22 – Jackie’s duly executed will makes a number of general bequests, including:

Clause 10 – “I give the sum of $5K to my nephew Phil.”Clause 11 – “I give the sum of $2K to my niece Victoria.”Jackie decided to make some revisions in her will w/out the assistance of an attorney. Using a marking pencil, she deleted Clause 10 in its entirety and struck the “$2K” in Clause 11. Using a ballpoint pen, she wrote in “$5K” above the crossed-out $2K and initiated and dated in the margin. Jackie died three years later. What is the effect of the changes on the will?

a. Does Victoria take the $5K?i. No b/c the change was not properly witnessed and it therefore disregarded

b. Was the gift to Phil validly revoked?i. No b/c partial revocation by physical act is not recognized in NY

2. Example #23 – Suppose the interlineations and cross-outs in #22 were made by the testator (Jackie) immediately before she signed the will and the witnesses signed as attesting witnesses. Are the changes valid?

i. Yes b/c the changes are now part of the duly executed will

No Revival of Revoked Wills & Dependent Relative Revocation

No Revival of Revoked Wills1. Rule – A (earlier) will that has been revoked by a later will containing a revocation clause cannot be “revived” simply

by destroying the later will. It can only be revived in one of two ways:a. If it was re-executed – signed again by the testator & two witnesses, orb. The doctrine of “republication by codicil” applies (e.g., testator validly executes a codicil to the first will that

makes various changes)2. Example #24A – In 2001, Ted executed a will that devised his entire estate to his nephew Ned. In 2003, Ted executed

a new will that, after revoking he 2001 will, leaves his estate in trust: “Income to Ned for life, remainder to Ned’s children. (Ted doesn’t destroy the 2001). Later, Ted changed his mind again. He revokes the 2003 will by physical act, intending to revive the earlier will. On Ted’s death in 2004, the 2001 will and an unsigned photocopy of the 2003 will are found in Ted’s safe deposit box. Ted is survived by Ned, and by his daughter Delilah, whom he detested and intended to disinherit. Which will, if either, is entitled to probate?

a. Neither will was entitled to probate. Will #1 was revoked when will #2 (w/ its revocation clause) was executed. Will #2 was revoked by physical act. However, the destruction (revocation) of will #2 w/ the intent to revive will #1 is ineffective b/c there is no automatic revival of wills in NY.

Dependent Relative Revocation1. Idea – DRR permits a revocation to be disregarded when premised upon, conditioned upon, or dependent upon a

mistake of law as to the validity of another disposition.

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Both need to be properly executed under all the formalities (7 Point Test) under the law.

2. Effect – Disregard the revocation of will #2 (the one that was revoked based on the mistake of law) and permit its probate.

3. Doctrine of Second Best 4. Point – DRR should never be applied unless the disposition that results from disregarding the 2nd revocation comes

closer to doing what the testator tried – but failed – (reviving the 1st will).5. Bar Exam Tip – This doctrine has been applied by one Appellate Division case, but never by the Court of Appeals. If

you are given a DRR question on the bar exam, argue it both ways.6. Note - revoking codicil does not revoke entire will. Provisions of will not changed by codicil remain in effect 7. Examples

a. Example #24A – The NY courts might apply DRR in this case. Ted revoked will #2 under the mistaken belief that he was reviving will #1. If the court applies DRR, it will disregard the revocation of will #2 and permit its probate.

b. Example #24B i. What if the 2003 will said “all to my friend Sammy Smith” and the other facts were the same?

1. Definitely don’t apply DRR - b/c two totally different testamentary schemes. The doctrine shouldn’t be applied unless it helps get closer to the testator’s intent when he tried to revive the 1st will. Here, the testator was trying to revive a will that left everything to Ned. Probating will #2 that left everything to Sammy doesn’t not get closer to testator’s intent (i.e., 2 completely different testamentary schemes - didn't want Sammy to get anything). Therefore, conventional rules of revocation apply and testator in thrust into intestacy. In the end, the detested Delilah takes.

a. Ted’s revocation of the 2003 will (in effect, “I’ve changed my mind, and I do not want Sammy to take my estate”) would be independent of his intent to revive will #1 in favor of nephew Ned. To disregard the revocation of the 2003 will would accomplish nothing – Ted didn’t want Sam to get anything.

ii. Back to facts of #24A. If we disregard the revocation of the 2003 will b/c the court decides to apply DRR, how can we probate that will when Ted has destroyed it?

1. Proof of Lost Wills Statute

Proof of Lost Wills Statute (ripped up will by accident OR drr situation)1. General Rule – To prove a lost will and get it probated the following must occur:

a. Due Execution - Due execution (7-point test) must be proved as in any caseb. Not Revoked - it must be established that the will was not revoked. The lost will proponent must:

i. Overcome the presumption of revocation that arises from the will’s non-production; orii. Prove that the revocation should be disregarded b/c of DRR

c. All provisions of the will must be clearly and distinctly proved by each of at least two credible witnesses or by a copy or draft of the will proved to be true and complete.

2. Example #25 – In 2001, Sid executed a will that devised G/A to his sister Mary and the rest of his estate to his wife Sarah. In 2002, Sid executed a codicil to his will: “I revoke the gift of G/A to my sister Mary. Instead, I devise G/A to my niece Nell.” In 2003, Sid tore up the codicil intending to revoke it and to revive the gift of G/A to Mary under his will. Does Mary take G/A under the 2001 will?

a. No. The codicil revoked the gift to Mary of G/A. Tearing up the codicil doesn’t revive the gift. The only way to revive that gift is to re-execute the will or do a new codicil re-gifting to Mary. G/A will fall into the residuary.

i. Note - revoking codicil does not revoke entire will. Provisions of will not changed by codicil remain in effect

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WILLS OUTLINE SUMMER 2007DEATH OF BENEFICIARY DURING TESTATOR’S DEATH

New York Anti-Lapse Statute

Common Law Rule – If a will beneficiary dies during the testator’s lifetime, the gift fails or lapses since you can’t make a gift to a dead person, UNLESS the gift is saved by the state’s anti-lapse statute.

** NY Anti-Lapse Statute – The gift does not lapse (fail) but vests in the deceased beneficiary’s issue who survive the testator if two conditions are satisfied:

1. The predeceased beneficiary was T’s issue, brother or sister, AND2. The predeceased beneficiary leaves issue who survive the testator

General Point – The words “if he survives me” trumps the anti-lapse statute.

Examples1. Example #26 – T’s will bequeathed $75K to T’s sister Sue, who has one daughter, Debbie. Sue filed a proper

instrument of disclaimer (and a separate affidavit – no consideration received) w/in 9 months after T’s death. Due to the disclaimer, we read the will as though the disclaimant predeceased the decedent. Does the anti-lapse statute apply in this case?

a. Yes, it survives and saves the gift for Debbie. First, the predeceased beneficiary (Sue) was T’s sister. Second, the predeceased beneficiary left issue who survived the testator (Debbie).

2. Example #27 – Tim’s will devised B/A to his brother Bob and his residuary estate to his sister Sue. Bob died during Tim’s lifetime and was survived by his wife Betty and his son Junior. Bob left a will that devised “all of my property” to his wife Betty. Then Tim died survived by Betty, Bob Jr. and Sue. Who takes B/A?

a. Does the anti-lapse statute apply to the devise to Bob?i. Yes. First, the predeceased beneficiary (Bob) was T’s brother. Second, the predeceased beneficiary

(Bob) left issue who survive the testator (Bob Jr.). Therefore, the anti-lapse statute applies and Bob Jr. takes B/A.

b. But what about the fact that Bob left a will that devised “all my property” to his wife Betty? Doesn’t the anti-lapse statute save the gift for the deceased beneficiary’s estate?

i. No. The anti-lapse statute provides for a substitute taker. The gift does not pass to Bob’s estate. Bob’s will have no effect of the distribution of B/A.

3. Example #28 – Suppose, instead, that Tim’s will devised B/A “To my brother Bob if he survives me.” Again, Bob died during Tim’s lifetime, leaving a child (Junior) who survives Tim. Does Junior take B/A under the NY anti-lapse statute?

a. No b/c the gift fails according to its own terms. It is conditional on Bob surviving Tim. The words “if he survives me" trumps the anti-lapse statute.

Recent NY Court of Appeals Case – T’s son was adopted by a non-relative. T still named the son as a beneficiary in his will. The son, who had children who were alive, predeceased T. What did the court rule?

Even though the son was “adopted out” b/c T named the son specifically, the son’s issue would take under the anti-lapse statute.

Lapse in Residuary Gift – The “Surviving Residual Beneficiaries” Rule

General Rule – If testator’s residuary estate is: 1. Devised to two or more persons, and2. The gift to one of them fails or lapses for any reason, and3. The anti-lapse statute does not apply;

The other residuary beneficiaries take the entire residuary estate, in proportion to their interests in the residue, absent contrary provision in the will.

General Point – Anti-lapse statute trumps “surviving residuary beneficiaries” rule

Examples

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1. Example 29A – Ted’s will, after making various bequests, provided: “I devise all of the rest, residue and remainder of my estate in equal shares to my brother Al, my sister Betty, and my friend Carl.” Ted is survived by Al and Betty. Ted’s friend Carl predeceased him, leaving a son (Carl Jr.) who survived Ted. What distribution?

a. Does the anti-lapse statute apply to Carl’s 1/3rd share of the residuary estate?i. No. The predeceased beneficiary was not the testator’s issue, brother or sister. Instead, Carl was

Ted’s friend.b. What takes the residuary estate?

i. The remainder beneficiaries, Al and Betty, take the entire residuary estate.2. Example 29B – Same facts, except that it was Ted’s sister Betty who predeceased Ted, leaving a child (Ben) who

survived Ted. Al and Carl also survive Ted. Who takes Betty’s one-third share of the residuary estate?a. Ben takes Betty’s 1/3rd share b/c Betty was the sister of the testator and left issue (Ben) who survived the

testator.

Class Gifts

General Idea – If a will makes a gift to a group of persons generically described as a defined class (e.g., children, brothers, sisters) and some class members predecease the testator, the class members who survive the testator take (absent contrary provision of the gift.)

Rationale – Testator was group-minded in making the gift, and wanted this class of persons – and no one else – to share ownership of the property.

Result – You look at who is alive at the testator’s death to determine the takers of a class gift.

Rule When Beneficiaries Are Named Individually (Not Really a Class Gift) – Lapsed gifts falls into residuary, not to named individuals.

Note -- Anti-lapse statute trumps class gift rule.

Example #301. Example 30A – Tom’s will devises B/A “to the children of my brother Howard,” and his residuary estate to his wife

Wanda. At the time the will is executed in 1999, Howard has two children: Andy and Betty. After the will is executed but before Tom’s death, Howard has another child, Carl. Andy dies in 2002 survived by Andy Jr. Then, Tom dies in 2003 and two years later in 2005 Howard has another child, Donna. Who owns B/A?

Tom Wanda Howard

Andy Betty Carl Donna (after-born)

Andy Jr.

a. Does Andy Jr. take a share under the NY anti-lapse statute?i. No. Andy Jr. doesn’t take b/c Andy Sr. is not testator’s issue, brother or sister. Therefore, the anti-

lapse statute doesn’t apply.b. Who takes, then?

i. Just Betty and Carl (members of class who survive Tom).2. Example 30B – “I devise B/A to Andy, Betty and Carl, the children of my brother Howard, in equal shares.” [note:

naming individually - not as a class] (subject to: possible application of the anti-lapse statute)a. What happens if Andy predeceases Tom?

i. Andy’s 1/3rd share lapses b/c the anti-lapse statute does not apply (Andy Sr. is neither testator’s issue, brother or sister). However, Andy Sr.’s share will fall into the residuary. It doesn’t go to Betty and Carl b/c they are named individually in the will. Instead, Andy Sr.’s 1/3rd share will pass to Wanda via the residuary clause.

3. Example 30C - Same facts except gift is "to the children of my son Howard." a. What does Andy Jr. take?

i. Since the beneficiary, Andy, who predeceased the testator was within the degree of relationship (issue) covered by the anti-lapse statute, and left a child, Andy Jr., who survived the testaor: Andy

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Jr. now takes under anti-lapse. Andy is issue. Andy leaves issue surviving. (Anti-lapse statute trumps class gift rule).

Rule of Convenience1. Rule – The class if closed (and later-born class members are excluded) at the time a distribution to the class must be

made.2. Justification – We close the class in order to determine the minimum share of each class member so a distribution can

be made w/out the necessity of asking for a rebate or refund later on. 3. Outright Gift by Will

a. Rule – The class closes at testator’s deathi. Subject to the “gestation” principle (presumption – 280 days from conception to birth)

b. Example #31 – Back to facts of #30A. Devise of B/A “to the children of my brother Howard.” What about Donna (born to T’s brother Howard two years after T’s death)?

i. Donna takes nothing. The class closed at T’s death and Donna was born after T’s death. 4. Life Estates

a. Rule – If there is gift of a life estate or an income interest w/ a remainder to a “class” of beneficiaries, the class closes at the death of the life tenant or the income beneficiary.

b. Example #32 – Tim’s will bequeaths property in trust: “Income to my wife, Wilma for life, and on her death, principal to the children of my sister Sue.” At Tim’s death in 1999, Sue has two children: Bonnie and Connie. Then, in 2002, Sue has another child: Kara. Then, Wilma dies in 2003 and her life estate comes to an end. Two years later, in 2005, Sue has another child, Rush. Who is entitled to a share of the trust corpus on the wife’s death?Tim – Wilma (life estate) Sue

Bonnie Connie Kara Rush (after-born)

i. Under the “rule of convenience,” when does the class close?1. At the death of the life tenant, Wilma.

ii. Does Kara share in the gift?1. Yes b/c Kara was born before the life tenant (Wilma) died (before class closed).

iii. Does Rush share in the gift?1. No b/c he was born after the life tenant (Wilma) died and the class closed.

Simultaneous Deaths

Uniform Simultaneous Death Act (USDA) – If two persons die under the circumstances such that there is insufficient evidence that they have died otherwise than simultaneously, the property of each is distributed as though he or she survived.

General Idea – If two people die together and there is no proof of who died first, presume that each one outlived the other when figuring out how to distribute the property. (see examples)

Example #33 – Mary, a widow, is the insured under a $25K life insurance policy that names as beneficiary “my son Sam if he survives me; otherwise my daughter Donna.” Mary executes a will that leaves her residuary estate “one half to my son Sam and one half to my daughter Donna.” Mary and Sam are both killed together instantly in a plane crash. Mary is survived by Donna and a grandson, Sam Jr. Who takes the life insurance proceeds? Mary’s residuary estate?

Mary

Sam Donna

Sam Jr.

1. The $25K life insurance proceeds?a. B/c Mary and Sam died simultaneously there is rebuttable presumption that Sam predeceased Mary.

Therefore, the $25K in insurance proceeds go to Donna b/c the words “if he survives me” trump application of the anti-lapse statute.

2. Mary’s residuary estate?

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a. Donna takes her half and the other half goes to Sam Jr. b/c the anti-lapse statute applies.

USDA & Jointly Held Property1. Rule – Property passes as though each co-owner survived. The USDA prevents the operation of the right of

survivorship in cases of jointly held property.2. Idea – The property passes as though a tenancy in common was involved, not as a joint tenancy w/ a right of

survivorship.3. Note : Unexplained absence for 3 yrs. (with a dilignet search) --> presumption of death4. Point – Same rule applies for tenants by the entirety as well.5. Examples

a. Example #34 – H and W die simultaneously and are joint tenants w/ right of survivorship of a piece of real property. H has 2 children, Al and Bonnie from a prior marriage and a son, Carl, w/ W. W has no other children. What distribution?

i. H’s Estate – Act as though H survived W and his half of the real property will drop down to his children Al, Bonnie, and Carl.

ii. W’s Estate – Act as though W survived H and her half of the real property goes to her child, Carl.

Example #35 – Mother and daughter were both fatally injured in a car accident. The coroner’s autopsy shows that daughter survived mother by about 10 minutes. Mother has left no will. Does daughter take as mother’s intestate distributee?

Yes b/c we have proof that the daughter survived her mother. Therefore, the mother’s estate passed onto the daughter’s estate.

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WILLS OUTLINE SUMMER 2007CHANGES IN TESTATOR’S FAMILY AFTER WILL IS EXECUTED

Testator Marries After Will is Executed

General Rule – In NY, marriage following execution of the will has no effect on the validity of a will but it may effect the gifts and dispositions under the will.

Justification – NY law provides for a “right of election,” which provides that one cannot disinherit his spouse.

Testator is Divorced After Will is Executed

General Rule – If testator is divorced (not just in progress) or the marriage is annulled after the execution of the will, all gifts and fiduciary appointments in favor of the former spouse are revoked by operation of law (i.e., treat former spouse as though she predeceased testator).

1. Exceptions a. Appointment of a former spouse as guardian of the couple’s children is not affected.b. If couple reconciles and remarries, all provisions in favor of the former spouse are restored.

General Point – A bequest to a son or daughter of the former spouse is not revoked by the divorce.

Life Insurance Policies in Favor of Ex-Spouse – Ex-spouse still gets the proceeds if deceased spouse didn’t change beneficiary designation on policy.

Statute only applies to those assets passing via the will to the spouse (life insurance is a contract)

Example #36 – Hank’s will devises B/A to his wife Wilma. The will, which devises the rest of Hank’s estate to his brother, Sam, names Wilma as executor and as guardian of the couple’s child Sara “if she is able; otherwise my brother Sam is to serve as executor and guardian.” Two years later, Hank and Wilma divorce; then Hank dies w/out having changed his will.

Hank Wilma Sam

Sara

1. Who takes B/A under Hank’s will?a. Sam. The divorce revoked the gift to Wilma so it passes to the residuary estate as if Wilma predeceased

Hank.2. ** But if we read the will as though the former spouse predeceased the testator, doesn’t the anti-lapse statute apply in

favor of Wilma’s daughter Sara?a. No. The anti-lapse statute doesn’t save the gift for Sara b/c Wilma is neither the testator’s (Hank’s) issue,

brother or sister.3. Who serves as executor of Hank’s estate?

a. Sam b/c fiduciary appointments are revoked by a final divorce decree.4. Who serves as Sara’s guardian?

a. Wilma b/c appointment of a spouse as a guardian of a child is not revoked upon divorce.5. Does the statute apply if Wilma had applied for divorce but a final decree had not been entered at Hank’s death?

a. No. There must a final divorce decree of a decree of annulment for these rules to apply.6. Does the statute apply if a decree of separation was entered against Wilma before Hank’s death?

a. No. Only a final divorce decree or decree of separation makes the statute applicable.7. But didn’t we say earlier that a spouse is disqualified from being an intestate distributee or taking an elective share if

there is a final decree of separation rendered against the spouse?a. Yes, but there is a different rule for inheritance under a will.

8. Does the statute apply to a life insurance policy on Hank’s life that names “my wife Wilma” as primary beneficiary?a. No. Wilma still gets the proceeds of the life insurance policy. The statute only applies to those assets

passing via the will to the spouse.

Child Born or Adopted After Will is Executed

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General Idea – The EPTL gives no protection to children alive when the will was executed. The statute applies only to after-born and after-adopted children who are not provided for by any settlement and are neither provided for nor mentioned in the will.

Is the party "pretermitted" (within meaning of statute)?1. Is the child born or adopted after Will is executed, and2. Is the child "unprovided for by any settlement", and3. Is the child neither provided for nor mentioned in the Will?

Policy – To make sure that an after-born or after-adopted child inherits somewhat equally w/ its siblings just in case the parents forgot to change their wills.

First Section of Statute – If the testator had one or more children when the will was executed and:1. No provision is made for any children, an after-born child inherits nothing (put on equal footing w/ existing children)2. Will made gifts to the testator’s existing children, the after-born child shares in the amount to the other children as if a

class gift was made3. It appears that the intention of the testator was to make a limited provision only to the testator’s children living at the

time the will was executed, then the after-born child takes his intestate share

Second Section of Statute – If the testator had no children when the will was executed, then the after-born child takes his intestate share.

General Point – The child must be in gestation when testator dies in order to be pretermitted. (reason: frozen embrios)

Examples1. Example #37

a. Example #37A – In 2003, Ted executed a will that placed the residue of his estate in trust: “Income to my wife Wilma for life, and on her death remainder to my children, Anu and Jaime, in equal shares.” In 2005, Ted and Wilma adopted a child Carl. Ted dies, and his 2003 will is admitted to probate. Ted was survived by Wilma and the three children. What distribution?

i. What does Carl take? – Carl is an after-born child as intended by the statute. Carl then takes the same as his siblings as if a class gift has been made b/c he was not provided for by any settlement, he is not mentioned in the will and his siblings have been mentioned in the will.

ii. Where does Carl’s share come from? – His share comes out of the gifts to the other children the same way a class gift would.

b. Example #37B – What if children are given different amounts? (e.g., I give $100K to my daughter Anu and $50K to my daughter Jaime.”) Thereafter, Ted adopts Carl.

i. First, add the amounts gifted to the other children together and divide by the total number of children including the after-born child. Here, there is a total of $150K to Anu and Jaime. Divide $150K by the 3 children. This means that Carl gets $50K and his shares comes from the other children’s shares proportionately.

c. Example #37C – What if children are given nothing by Ted’s will?i. Carl gets nothing. He is put on equal footing w/ his siblings.

d. Example #37D – What if the will makes “limited provision” for testator’s existing children? (e.g., “I give $5 to my children, Anu and Jaime.”) Thereafter, Ted adopts Carl

i. Carl takes his intestate share. The after-born child (Carl) doesn’t lose out just b/c the testator hated his other kids. Carl’s intestate share comes from other beneficiaries under the will proportionately.

2. ** Example #38 – Same facts as #37A except that Ted had taken out a $25K life insurance policy naming Carl as primary beneficiary. Does Carl take a share as a pretermitted child?

a. No. One of the prerequisites for the application of the pretermitted child statute is that the child not be provided for by any other settlement. Here, the life insurance policy naming Carl as primary beneficiary is another settlement. Note that is doesn’t matter how much the policy is for. All that matters is that the parent was thinking about the kid.

3. Example #39 – Suppose that Ted had no children at the time the will was executed and then adopts Carl?a. The conditions to the statute’s operation are the same. However, the result is different. The after-born or

after-adopted child takes his intestate share. Other beneficiaries are going to get screwed b/c they will have to kick some of their money back to the after-born.

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WILLS OUTLINE SUMMER 2007REFERENCE TO FACTS AND EVENTS OUTSIDE OF THE WILL

Lifetime Gift by Testator to Beneficiary – “Satisfaction of Legacies” (wills exists)

Common Law – A lifetime gift to a beneficiary named in a donor’s will (executed before the gift was made) was presumptively in partial or total satisfaction of the legacy, to be applied against the amount to which the beneficiary was entitled under the will.

New York1. Rule – NY has rejected the “satisfaction of legacies” presumption by statute. In NY, such gift is not treated as a

“satisfaction of legacy” unless proved by:a. Contemporaneous writing made at the time of the gift, and b. It is signed by the donor or the donee

2. Example #39 – Tom wrote a will that made a $25K bequest to his niece Nell. Thereafter, Tom gave Nell $10K cash, telling her (in the presence of a priest, a bishop and a rabbi): “I want you to know that this is a down-payment on the legacy I have given you in my will.” Tom died two years later. Should the $10K gift be treated as a partial satisfaction of Nell’s legacy?

a. No. This is not a satisfaction of legacy b/c there is no signed, contemporaneous writing. Therefore, Nell takes the entire $25K bequest in Tom’s will.

Incorporation by Reference – Extrinsic Document

Common Law Rule – The terms of an extrinsic document, not present at the time the will is signed (and thus not part of the will itself) can be incorporated by reference if:

1. The document was in existence when the will was drafted,2. The will shows an intent to incorporate the document, and3. The extrinsic document is clearly identified by the language in the will.

New York Rule – NY does NOT recognize the doctrine of incorporation by reference. Everything that is going to make up the will must be formally executed in accordance w/ the 7 Point Test.

Example #40 – On May 1, 2004, T executed a will that provided: “I devise all of my jewelry to the persons named in a list dated March 5, 2004, which I have placed in my safe deposit box.” After T’s death, the list is found. It is in T’s handwriting and signed by T, but not witnessed. It names various pieces of jewelry and the beneficiaries thereof. Should the indicated dispositions be given effect?

No b/c incorporation by reference in not recognized in NY.

Acts of Independent Significance (“Non-Testamentary Acts”)

General Idea – Sometimes people do lifetime acts that have their own purpose or motive, independent of any testamentary purpose.

General Rule – These acts that occur after the will is executed should be given full effect when distributions are made.

Exception for Title Documents1. Rule – Title documents can only be transferred as mandated by law.2. Examples – deeds, stock certificates, bank passbooks

Example #41 – Tom executed a will that bequeathed “the automobile that I own at my death” to his nephew Rich, and “the furniture and furnishings in my living room” to his sister Sara. Thereafter, Tom trades his 1996 Taurus in for a brand new Mercedes. Shortly before his death, Tom removes a Picasso (worth $800K) form his den and mounts it on his living room wall. What is the effect of these acts on Tom’s will?

1. Does Rich take the Mercedes?a. Yes b/c Tom trading in the Taurus for the Mercedes was an act of independent significance.

2. Does Sara take the Picasso?

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a. Yes b/c Tom moving the painting from his den to living room was an act of independent significance.3. Would the result be the same for a gift of “the contents of my sea chest?”

a. Yes

Non-Probate Assets

[Probate Estate – Property that a decedent owned solely in his name at the time of the death is disposed of pursuant to the terms of the will and is referred to as the probate estate.]

General Idea – Non-probate assets are interests in property that are not subject to the disposition under the will and therefore are not part of the probate estate.

Major Types of Non-Probate Assets1. Property passing by right of survivorship (e.g., bank account, joint stock account, etc.)2. Property passing by contract (e.g., life insurance policy, employee benefits payable to a beneficiary other than the

decedent or decedent’s estate. If paid to the insured’s executor or insured’s estate, it becomes a “probate asset.”)3. Property held in trust (including revocable trusts)4. Property over which decedent held a power of appointment

Example #42 – T has a $50K Aetna life insurance policy that names Bill Bates as beneficiary. T dies leaving a will that provides: “I direct that the proceeds of my Aetna life insurance policy be paid to my sister Ann.” Who takes the $50K life insurance policy proceeds?

It passes to the designated beneficiary Bill Bates. The provision in the will instructing the executor to pay the proceeds to Ann is ineffective w/ respect to non-probate property.

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WILLS OUTLINE SUMMER 2007PROBLEMS ASSOCIATED WITH TESTAMENTARY GIFTS

Classification of Gifts That Can Be Made By a Will

Specific Gift (e.g., “I devise B/A (or my Dell computer) to my son John.”)

Demonstrative Legacy1. Idea – A general amount from a specific source (key: "from")2. Example – “I bequeath $5K to be paid from the proceeds of sale of IBM stock to Donna.”

General Legacy (e.g., “I give the sum of $5K to George.”) (general money bequest; shares of stock)

Residuary Disposition (e.g., “I give all the rest, residue and remainder of my estate to my brother Jim.”)

Intestate Property1. Idea – If partial intestacy results b/c the will was poorly drafted and the will has no residuary clause2. Example – “I give $50K to my friend, Frank.” Frank is dead. – This gift to Frank will fail b/c Frank is not your issue,

brother or sister so anti-lapse won’t save the gift. Moreover, there is no residuary clause in the will so the attempted gift to Frank becomes intestate property.

Abatement of Legacies to Satisfy Creditors’ Claims

General Idea – What happens when there are so many claims against the estate that there aren’t enough assets to cover all the gifts made by the will? The gifts under a will “abate” (i.e., they are not given effect so that the creditors’ claims can be paid).

Creditors claims get priority.

Order of Abatement (Debts and expenses first paid out of . . . )1. Intestate Property or Residuary dispositions2. General legacies (abate proportionately - pro rata)3. Demonstrative legacies (abate proportionately - pro rata)4. Specific gifts (abate proportionately)

Example #431. Example #43A – T’s estate is worth $200K at his death. But his debts total $100K. Provisions of T’s will: “I give

and devise G/A to A” (specific gift). “I give $50K from my account at XYZ Bank to B” (demonstrative legacy). “I give $50K to C” (general legacy). “My residuary estate goes to D” (residuary disposition). What distribution of T’s estate?

a. D’s residuary legacy is going to be the first to be abated so D gets nothing. Then, C’s general legacy is going to be abated and C gets nothing. B’s demonstrative legacy of $50K and A’s specific gift of G/A remain intact and they will receive them in full.

2. Example #43B – Same facts, but instead: “I give $50K to B” (general legacy). What distribution? – D still gets nothing. B and C’s general legacies will abate proportionately so each will be required to kick back $25K to creditors, but can also retain $25K each. A still receives his specific gift of G/A.

Specific Gift of Encumbered Property – No Exoneration of Liens

Common Law Rule – If testator made a specific bequest of property that was subject to a mortgage or other lien on which the testator was personally liable, then the beneficiary was entitled to have the lien “exonerated” (i.e., paid from the residuary estate).

NY Rule – Liens on specifically devised property are NOT exonerated unless the will directs exoneration on that piece of property specifically.

“Just Debts” Clauses – General provisions in the will for the payment of debts do not exonerate liens on specifically devises property. Must be specific.

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Example #44 – Tillie’s will includes the following clauses;Clause 1 – I direct that my executor pay all of my just debts out of my residuary estate as soon after my death as may be practicable.Clause 2 – I devise B/A, my farm in Mohawk County, to my sister Joan.Clause 3 – I devise my residuary estate to my sister Sue.

1. At Tillie’s death, B/A is subject to a mortgage lien securing a $12K note. Joan demands that Tillie’s executor pay off the loan so that B/A will pass to her free of the lien. Is Joan entitled to have the lien exonerated?

a. No, Joan is not entitled to exoneration of the lien on B/A b/c the will did not specifically direct the executor to exonerate the lien on B/A. Joan takes property subj. to note and takes exactly what Tillie owned.

2. But how about that clause 1 of the will (“just debts” clause) directing payment of “all of my just debts as soon after my death as may be practicable?”

a. Still no exoneration b/c general provisions in the will for the payment of debts do no exonerate liens on specifically devised property.

Ademption (Failure of Gifts)

General Idea – If the specific gift doesn’t exist at the time of the testator’s death, the person who was supposed to get that gift generally loses.

General Rule – If a will makes a gift of property and the property cannot be found or is not owned by the testator at her death, the gift fails under the doctrine of ademption, w/out regard to the testator’s probable intent.

Exceptions to Ademption1. Ademption does not apply to demonstrative or general legacies.

a. A demonstrative legacy (gift from a specific source) will turn into a general legacy if there is no cash available from the specific source designated. Assets will have to be sold to satisfy a demonstrative legacy if there is no cash in the estate or if the designated account is no longer in existence.

2. Casualty insurance proceeds for lost, damaged or destroyed property – The beneficiary takes the insurance proceeds, but only to the extent they are paid after death.

3. Executory contracts (contract which hasn't been performed yet) – Beneficiary gets the sale proceeds which are paid after death.

4. Sale by guardian or conservator of specifically bequeathed property – Beneficiary is entitled to receive the money or property into which the proceeds from the sale or transfer can be traced if they haven’t been spent. If the beneficiary cannot trace the proceeds, they adeem.

Examples1. Example #45 – Turner executed a will that provided: “I devise B/A to my son John (specific gift) and my residuary

estate to my daughter Ruth (residuary disposition)”. Two years later, Turner sells B/A for $10K cash and a $90K note that is secured by a mortgage on B/A. Turner dies 6 months later, survived by John and Ruth.

a. What does John take under Turner’s will?i. John takes nothing. The devise of B/A was a specific gift which the testator has sold. Thus, testator

has nothing to pass to John at testator’s death. b. Doesn’t John at least take the note and mortgage?

i. No - will said "B/A" and it's a specific gift. Following the sale, the note and mortgage fall into the residuary estate and Ruth takes them.

2. Example #46 – Tony executed a will that, among its provisions, bequeathed “my gold tie pin to Ben Brown.” Tony died two years later. The gold tie pin was stolen prior to Tony’s death, and $10K in insurance proceeds was paid, by reason of the theft, to Tony’s estate after his death.

a. Is Ben entitled to the casualty insurance proceeds?i. Yes b/c the casualty insurance proceeds were paid after testator’s death.

b. What if the insurance proceeds had been paid to T before T’s death?i. No. If the proceeds were paid before testator’s death, the proceeds adeem and Ben gets nothing.

3. Example #47A – Ted executed a will that provided: “I devise G/A to my friend Fred. I devise B/A to my brother Ben.” T enters into a contract for the sale of B/A to Price. The contract is still executory at Ted’s death. G/A is taken

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by eminent domain by the NY Thruway Authority. Ted deposits the $75K condemnation award in a bank account whose balance at Ted’s death (w/ interest) is $78K. What distribution?

a. B/A (executory contract for sale)i. If contract still executory at T’s death – Ben is going to take any contract proceeds paid after

testator’s death. ii. If contract was fully performed on April 1 and T died on April 4 – Ben takes nothing b/c the

executory contract rule only applies to proceeds paid after death.b. G/A (taken by eminent domain) – Ademption applies and Fred gets nothing. The reason the asset is not in

the estate is irrelevant (identity theory).4. Example #47B – Suppose, instead, that T became incapacitated, and T’s conservator sold G/A (devised to Fred) to

raise funds for T’s care. Is Fred entitled to the proceeds from the sale of G/A?a. Yes, but only to the extent that the proceeds can be traced and are not spent.

Bequests of Shares of Stock & Other Securities (special rules)

General Rules1. Gifts of shares of stock in publicly traded corporations (for ademption purposes) are treated as general legacies and do

not adeem unless T says, “I give my [X] stock” which evidences an intention to make a specific bequest.2. Gifts of shares of stock in a closely-held company are treated as specific legacies and adeem if they do not exist at the

time of the testator’s death.

Stock Splits – When the issue is a stock split, the bequest of stock is treated as a specific bequest whether a possession pronoun (“my”) was used, and whether publicly traded or closely-held stock is involved (i.e., always get the stock split).

Stock-for-Stock Mergers – If there is a stock-for-stock merger, the beneficiary of a specific gift of stock is entitled to the stock in the merged corporation b/c it is merely a change in form over substance (was not sold - just transferred form)

Examples1. Example #48A – Trevor executes a will that includes the following gifts:

Clause 4 – “I give $5K to be paid from the proceeds of sale of my Acme stock, to my friend Evan” (demonstrative legacy).Clause 5 – “I give my 100 shares of IBM common stock to my sister Lishanie” (specific legacy).Clause 6 – “I give 100 shares of Kodak common stock to my brother Carl” (general legacy)

At the time he wrote his will, Trevor owned 100 shares each of Acme, IBM and Kodak stock. Trevor later sold the Acme stock and used the sale proceeds to buy a Cadillac. Trevor sold the IBM stock and used the proceeds to buy AT&T stock. Trevor sold the Kodak stock and used the proceeds to buy Polaroid stock. Trevor dies w/out having changed his will. Who takes what?

a. Evan ($5K from Acme stock) – Evan received a demonstrative legacy so it does not adeem just b/c Trevor sold the Acme stock. Evan is entitled to $5K from the testator’s other assets.

b. Lishanie (my 100 shares of IBM) – Lishanie was given a specific gift which didn’t exist at the time of the testator’s death so it adeems and she gets nothing.

c. Carl (100 shares of Kodak) – Carl was given a general legacy so it does not adeem just b/c Trevor sold the Kodak stock. Carl is entitled to the value of the 100 shares of Kodak from the testator’s other assets.

2. Example #48B – Same facts, except the bequest in Clause 6 was “100 shares of FamilyCo stock to my brother Carl,” and FamilyCo is a closely held corporation. Trevor later sold all of his FamilyCo stock to his sister.

a. We treat it as a specific legacy and it adeems so Carl gets nothing.3. Example #48C – Suppose, in #48A, Trevor did not sell his Kodak stock (“I give 100 shares of Kodak stock to Carl.”)

Instead, Kodak splits 2-for-1.a. Carl will take all 200 shares.

4. Example #48D – Suppose, in #48B, Trevor did not sell his FamilyCo stock to his sister (“I give 100 shares of FamilyCo stock to Carl.”) Instead, FamilyCo splits 2-for-1. – Carl will take all 200 shares.

5. Example #49 – Tess made a will that bequeathed “my 1K shares of Tracor stock to my daughter Nora” (specific gift). In 2001, Tracor is acquired by IBM in a friendly takeover in which Tracor shareholders get one share of IBM stock for every two shares of Tracor. Tess died in 2005 owning 500 shares of IBM but no Tracor stock. Does ademption apply?

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a. Ademption does not apply. This is a change in form not substance. Even though this is a specific gift and specific gifts normally adeem, the IBM stock is directly traceable to the Tracor stock. Therefore, Nora would take the 500 shares of IBM stock.

Mistake & Ambiguity

Plain Meaning Rule1. Rule – The court will not allow the admission of extrinsic evidence to overturn otherwise clear language of the will.2. Justification – There is a presumption that the testator read the will and intended its consequences.3. Example #50 – Tom told his lawyer to draft his will and give his nephew Ed “300 shares of Exxon stock.” The

lawyer’s secretary made a mistake and typed the figure as “200 shares” which Tom did not notice when he signed the will. At Tom’s death, he owned 300 shares of Exxon stock. What does Ed get and why?

a. Ed only gets the 200 shares b/c the plain meaning of the will won’t be overturned by extrinsic evidence.

Latent Ambiguities1. Idea – A latent ambiguity (mis-description) is an error that is not evident merely by looking at the will2. Rule – The following forms of evidence are admissible to clear up latent ambiguities:

a. Extrinsic evidenceb. Facts and circumstances evidence (e.g., evidence about the testator, his family, the claimants under the will

and their relationships to the testator, testator’s habits and thoughts, etc.)c. Testator’s declaration of intent to 3rd parties (e.g., he told a friend he had bequeathed $10K to his nephew

James Peter Jones)d. Testator’s statements to the attorney who prepared the will

3. Point – If extrinsic evidence doesn’t cure the ambiguity, the gift fails b/c there is no ascertainable beneficiary.4. Example #51 – “I give $10K to my nephew, John Paul Jones.” Problem: T has a nephew James Peter Jones, and a

nephew named Harold Paul Jones, but no nephew named John Paul Jones. Who takes the $10K?a. Need to look to extrinsic evidence to determine who the testator was referring to.

Patent Ambiguities1. Idea – A patent ambiguity is a mistake that appears on the face of the will2. Rule – The following forms of evidence are admissible to clear up patent ambiguities:

a. Extrinsic evidenceb. Facts and circumstances evidencec. Testator’s statements to the attorney who prepared the will

d. NOT allowed - Testator’s declarations of intent to a 3rd person3. Example #52 – Tina’s will provided: “I give the sum of twenty-five dollars ($25K) to my brother Bill.”

a. Need to look to extrinsic evidence to determine how much the testator was trying to gift to Bill.

Precatory Language1. Idea – Precatory language is language of mere hope or desire (e.g., “I wish” or “I hope” or “I desire”)2. Rule – Testator must use definitive language to bequeath gifts.

a. Precatory language does not impose mandatory obligation.

Conditional Wills

Example #55 – Tom duly executed a will: “I am going on a mountain-climbing journey to the Himalayas. If anything happens to me on the trip, I leave all of my property to my good friends, Kara and Rush in equal shares.” Tom climbed Mt. Everest that summer, returned from the trip in July, and died three years later w/out having changed his will, which is found in his desk drawer. Do Kara and Rush take under the will?

1. Argument #1 – This is a conditional will, meaning that probate would be denied b/c the condition did not occur (i.e., nothing happened to Tom on his trip).

2. Argument #2 – Tom’s reference to the trip merely reflects the motive or inducement for making a will (i.e., the dangers he faced caused him to think of the possibility of death and the need for a will).

Bar Exam Tip – Argue conditional wills both ways

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Contracts Relating to Make a Will

Joint Will -- will of 2 people in 1 documentthe issue: was the will executed pursuant to a contract that the survivor would not revoke the Joint Will after the death of the other person?

General Rule – A contract to make a will or a contract not to revoke a will after the death of the other person can only be established by an EXPRESS STATEMENT that the will’s provisions are intended to be a contract b/t the parties.

Breach of Contract Not to Revoke – If a will is contractual and the survivor breaches the contract by writing a will w/ inconsistent provisions:

1. Step 1: Probate the new will even though will #1 was written as a contract, and2. Step 2: Impose a constructive trust in favor of the original intended beneficiaries

General Point – A contractual joint will can be revoked by agreement of the parties while they are both alive (i.e., the estate can’t revoke contractual will on behalf of decedent spouse).

Example #54 – H & W executed a joint will (w/ an express statement of intent). The will stated that all their assets are to go to whoever survives the other. Should either predecease the other the assets would be divided equally amongst their children, A, B & C. H predeceased W. W remarried, had more children and executed a new will changing the beneficiaries from her children w/ H to her children w/ H2 along w/ other assorted dispositions. What happens?

If a will is contractual and the survivor breaches the contract by writing a new will w/ inconsistent provisions:1. Step 1 – Probate W’s new will even though will #1 was written as a contract2. Step 2 – Impose a constructive trust in favor of A, B & C

New York’s “Negative Bequest” Rule

Common Law1. Rule – When a will does not make a complete distribution of the estate (resulting in partial intestacy), words of

disinheritance in the will are ineffective w/ respect to the property that passes via intestacy.2. Rationale – Property passing by intestacy is governed by the intestacy statutes, not by the decedent’s will

NY Rule – Words of disinheritance given FULL EFFECT even in partial intestacyNOTE: treat the disinherited party as if they pre-deceased

- therefore, anti-lapse may apply (b/c just because the person hated the one they disinherited, may not have hated their kids)

Example #55 – Tammy’s will devised B/A to her son Sam and her residuary estate to her husband Harold. The will provided: “I intentionally make no provision for my daughter Nancy, as she married out of the faith and has been a great disappointment to me.” Tammy divorced Harold in 2004 and died in 2005 w/out having changed her will. She is survived by Sam and Nancy as her nearest relatives. (Nancy had no children.) Who takes the residuary estate?

1. Common Law a. Harold – Takes nothing b/c he is an ex-spouse and the residuary falls into intestacy b/c anti-lapse doesn’t

applyb. Sam & Nancy – Split the residuary estate b/c Tammy’s words of disinheritance in regards to Nancy are

ineffective when she failed to make a complete disposition of her estate. 2. NY

a. Harold – Takes nothing b/c he is an ex-spouse and the residuary falls into intestacy b/c anti-lapse doesn’t apply

b. Sam – Takes the entire residuary estatec. Nancy – Takes nothing b/c Tammy’s words of disinheritance are given full effect even though she didn’t

make a complete disposition of her estate. i. ** Treat Nancy as if she pre-deceased ; But, if Nancy had children, they would take one half as

issue of Nancy via the anti-lapse statute since it was only Nancy that was disinherited.

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WILLS OUTLINE SUMMER 2007ELECTIVE SHARE STATUTE

Introduction

Elective Share (min. spouse must get whether there is will or not) = the greater of:

(i) $50K, or (ii) 1/3 of the net probate estate

Purpose of Elective Share Statute – To protect the surviving spouse against disinheritance by giving the spouse an entitlement to a minimum share of decedent’s estate. [You can't screw your spouse in death.]

Contrast: Surviving Spouse’s Intestate Share (spouse dies w/o will)1. Survived by spouse & issue - $50K plus ½ balance of estate2. Survived by spouse & no issue – entire estate3. Point – If the decedent died w/out a will, the surviving spouse’s intestate share is always going to be larger than his or

her elective share, unless “testamentary substitutes” are involved.

Testamentary Substitutes

General Idea – If the elective share applied only to the probate estate (i.e., property owned at death and passing by will or intestacy), a person intent on disinheriting his or her spouse could make non-probate transfers (revocable trusts, joint bank accounts, etc) in favor of others, and thereby defeat the policy and protection of the elective share statute.

General Rule -- To prevent this, the elective share applies to property owned at death and the following testamentary substitutes. B/c the probate estate is augmented by these testamentary substitutes, cases have referred to the amount subject to the elective share as the augmented estate or the elective share estate.

Testamentary Substitutes (To remember list of Testamentary Substitutes we need a LEG UP)Overall: Under current law, almost all nonprobate transfers (except: life insurance, irrevocable dispositions made before marriage, and irrevocable dispositions (gifts) made more than one year before death) are "testamentary substitutes".

If T has some interest in the property --> probably a "testamentary substitute"

1. T – Totten trusts (e.g., “To A, as trustee for B”, bank accounts) ("payable on death securities" are in here, too)2. S – Survivorship estates (created during marriage) – JT, T by E and joint & survivor bank accounts but only if created

on or after 9/1/66) (watch for: pre- and post- marriage scenarios)3. L – Lifetime transfers w/ strings attached – transfers w/ a retained power to revoke, invade, consume or dispose of

principal or name new beneficiaries and irrevocable transfer (made during the marriage) w/ retained life estate made on or after 9/1/92

4. E – Employee pension, profit-sharing, deferred compensation plan if employee designated the beneficiary on or after 9/1/92 and after the marriage. In any case, only one half of a qualified plan (qualified for favorable income tax treatment), is a testamentary substitute

5. G – Gifts in excess of $12K made w/in 1 year of death (Also gifts causa mortis – gifts made in fear of impending death – even w/in the $12K exclusion are testamentary substitutes. These gifts are automatically revoked if donor survives the expected peril.)

6. U – U.S. government bonds and other P.O.D. arrangements (“pay on death”)7. P – Powers of appointment – property over which decedent held a presently exercisable general power of appointment

(but not property over which he held a general testamentary power)

Non-Testamentary Substitutes (“LOGPIT”)1. ** L – Life insurance – whether payable to surviving spouse or 3rd party2. O – One-half of qualified pension and profit-sharing benefits (In any case, benefits in qualified pension plans are not

testamentary substitutes if the employee named a beneficiary before 9/1/92, and did not change the beneficiary designation thereafter.)

3. G – Gifts made w/in 1 year of death w/in the $12K annual exclusion4. P – Pre-marriage irrevocable transfers – a gift to a friend prior to the marriage

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5. I – Irrevocable transfers made more than 1 year before death – transfers in which grantor did not retain power to revoke, invade, consume or dispose of principal

6. T – Transfers (irrevocable) w/ retained life estate made during the marriage (and before 9/1/92)

If T does NOT have an interest --> NOT a T-Sub, UNLESS life insurance

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What Amount of Any Survivorship Estate is a Testamentary Substitute?

What amount of a Testamentary Substitute is included in calculating the "Elective Share Estate"?Full amount, EXCEPT . . .

Survivorship Estate Held by Deceased Spouse & 3rd Party (joint tenancies, joint and survivor bank accounts) – “Consideration Furnished” Test – The surviving spouse has the burden of proof as to the amount of decedent spouse’s contributions to the asset’s acquisition or the deposits in the joint account.

(Surviving spouse has to show how much was the dead spouse's - entitled to share of your spouse's part, not the 3rd party's)

Survivorship Estate Held by Deceased Spouse & Surviving Spouse (joint tenancies, tenancy by entirety, joint bank accounts) – ½ automatically is a testamentary substitute, regardless of which spouse furnished the consideration to acquire the property.

Example #571. Example #57A – Wanda married Harold in 1999. In 2002, Wanda and her sister Sue (3rd Party) acquired real estate,

taking title as joint tenants w/ right of survivorship. In 2003, Wanda and Harold opened a joint bank account under which the amount on deposit at the date of death of one joint tenant passes to the survivor. Wanda died in 2005, leaving a net probate estate of $300K. Wanda’s will devised B/A (worth $75K) to Harold, and her remaining estate ($225K) to Sue. Harold filed for an elective share.

a. The Wanda-Sue Joint Tenancy – (T-sub btwn. W (dead spouse) and 3rd Party) Harold has the burden of proof as to (consideration furnished) the amount of Wanda’s contributions to the joint tenancy’s acquisition.

b. The Wanda-Harold Joint Account – (deceased spouse & surviving spouse) ½ is automatically a testamentary substitute (regardless of which made the deposits)

Ex – Assume that there is $60K on deposit in the Wanda-Harold joint bank account and that the Wanda-Sue joint tenancy property is worth $150K at Wanda’s death. If Harold is able to prove that all of the funds used to buy the joint tenancy property was contributed by Wanda (and nothing was contributed by Wanda’s sister):

Elective Share Estate$300,000 Net probate estate ($75K + $225K) 30,000 W-H bank account – ½ is testamentary substitute 150,000 W-S joint tenancy – testamentary substitute$480,000 Elective share estate

$160,000 Elective share amount (1/3rd of elective share estate) --> H gets

How is this satisfied?(-$75,000) Amount passing to H under the will(-$30,000) Amount passing to H as testamentary substitute (1/2 joint bank account)

fiction: add ½ in, then take ½ out (later - here) $55,000 H will receive from other beneficiaries (“net elective share”)

Ex – If H cannot prove that any of the funds used to buy the joint tenancy property were contributed by W

Elective Share Estate$300,000 Net probate estate ($75K + $225K) 30,000 W-H bank account – ½ is testamentary substitute 0 W-S joint tenancy – testamentary substitute$330,000 Elective share estate

$110,000 Elective share amount (1/3rd of elective share estate)

How is this satisfied(-$75,000) Amount passing to H under the will(-$30,000) Amount passing to H as a testamentary substitute (1/2 joint bank account) $5,000 H will receive from other beneficiaries (“net elective share”)

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Note – If H is able to prove that W furnished one-third of the purchase price for the W-S joint tenancy, then one-third of its value ($50K) would be a testamentary substitute.

2. Added complication: Survivorship estates with deceased spouse and 3 rd party created before marriage :a. although the consideration furnished test applies to such estates, an added complication is raised by the rule

that irrevocable dispositions before marriage are not testamentary substitutes.i. pre-marriage joint property of: dead spouse w/ 3rd party --> only ½ is a t-sub

ii. note: this rule applies to joint bank accounts (to extent they were made before the marriage)iii. Example #57B – Same facts as above, except that the Wanda-Sue joint tenancy was created in 1998

(before Wanda’s marriage to Harold in 1999). Assume further that Harold can prove that Wanda furnished the entire consideration for the property’s acquisition. – See above.

1. Rationale – When Wanda acquired the property in 1998 and took title in this form, she made an irrevocable gift of a one-half interest to Sue. As this was an irrevocable disposition before marriage, this one-half is not a testamentary substitute.]

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** Testamentary Substitutes & Intestacy

Example #58A – Ted died survived by his wife Wilma. They had no children. Ted left $100K in a bank account in his name in trust for his cousin, Claude (Totten trust). He had no other assets solely to his name. Ted did, however, have a joint bank account w/ $140K w/ his “friend” Felicia which he created after his marriage to Wilma. Ted contributed all the money to this joint bank account. What is Wilma entitled to?

1. Under Intestacy – Wilma would get absolutely nothing. There are no probate assets in Ted’s estate.2. Via Elective Share

a. $0 (probate estate) + $100K (Totten trust) + $140K (joint account w/ 3rd party) = $240K / 3 = $80K

Example #58B – Same facts, except Ted left real property that he purchased and held w/ Wilma as tenants by the entirety worth $120K.

$100,000 (Totten trust account) 140,000 (joint account w/ 3rd party) 60,000 (1/2 value of property w/ W) -- "half in"$300,000 (elective share estate)

$100,000 elective share amount (1/3rd of elective share estate) (60,000) (1/2 value of property w/ W) -- "half out" $40,000 W will receive from others (net elective share)

Example #58C – Same facts except Ted left real property that he purchased and held with Wilma as tenants by the entirety worth $120K and intestate property solely in Ted’s name of $90K (spouse gets all b/c no kids).

$100,000 (Totten trust account) 140,000 (joint account w/ 3rd party) 60,000 (1/2 value of property w/ W) -- "half in" 90,000 (intestate property)$390,000 elective share estate

$130,000 elective share amount (1/3rd of elective share) (60,000) (1/2 value of property w/ W) -- "half out" (90,000) (intestate property)

_______________(-$20,000) W’s elective share is satisfied --> W should not exercise right of election b/c receiving more w/o it

Beneficiary Contributions to the Net Elective Share

General Rule – To satisfy the net elective share amount, all other beneficiaries contribute pro rata (proportionately)

Example #59 – W left a $300K probate estate after payment of debts and expenses. Her will bequeathed AT&T stock (worth $50K) to her husband H, $50K to her daughter D, $50K to her sister S, and her residuary estate ($150K) to her friend F. No testamentary substitutes are involved. H files for an elective share. The elective share amount is $100K (1/3 of $300K). H takes the AT&T stock, and the net elective share to which H is entitled is $50K. Where does the $50K come from?

The $50K we need to come with = 1/5 or 20% of assets we have left come back to HThe $250K in remaining assets

D – 20% of $50K = $10KS – 20% of $50K = $10KF – 20% of $150K = $30K

Elective Share Trusts No Longer Satisfy Surviving Spouse’s Right of Election

Estates of Decedents Dying Before 9/1/94 – For estates of decedents dying before 9/1/94, the right to an elective share could be wholly eliminated through the use of an elective share trust that gave the surviving spouse a life estate (an income interest for life) as long as at least $50K was given outright to the spouse. If the sum of (1) outright dispositions of at least $50K, plus

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(2) the principle of the trust equaled or exceeded the one-third elective share amount, then the surviving spouse had no right of election.

Today – Life estates no longer satisfy the elective share entitlement.

Bar Exam Tip – This rule applies to people dying on or after 9/1/94, not controlled by the date the will was executed (controlled by date of death).

It is still possible for this fact pattern to appear on the bar exam if you are given a will executed prior to 9/1/94 that contains an elective share trust w/ a testator dying on or after 9/1/94.

What if spouse given a trust, but files for an elective share?1. Kill the trust

a. read the trust as though the surviving spouse predeceased the testator (i.e., kill the trust - act as though there was no life estate in W)

2. Accelerate the remainder

What if spouse given 1/3 outright (so elective share satisfied) AND also given a trust?1. do NOT kill the trust

a. don't kill the trust (b/c elective share is satisfied ; only kill the trust if elective share is not satisfied)

Example #603. Example #60A – Herb dies, leaving a will that devises B/A (worth $50K) outright to his wife Wendy, and ½ the

balance of his estate in trust: “Income to Wendy for life, remainder to Herb’s son Steve if he survives Wendy, otherwise to Herb’s daughter Donna.” The will devises the remaining ½ of Herb’s estate to Donna. The net value of Herb’s estate (after debts and expenses) is $450K, which includes the value of B/A. Thus, the trust is funded w/ assets worth $200K. No testamentary substitutes are involved. Is Wendy entitled to file notice to take an elective share?

W --> B/A (50K) + 200K in trustD --> 200K (1/2 remainder of estate)S --> Remainder of trust after W's life estate (value: 200K)

a. If H died before 9/1/94 – Wendy would not have a right of election. Her net elective share would have been $150K, but she is already receiving $250K if you count the life estate in the $200K trust.

b. If H died on or after 9/1/94 – Wendy now has a right of election (b/c now needs to get 1/3 outright).$450,000 (net probate estate) 0 (testamentary substitutes$450,000 elective share estate (get 1/3 of this)

$150,000 elective share amount (1/3rd of elective share estate) (50,000) value of outright dispositions to spouse$100,000 W receives from other beneficiaries

4. Example #60B – What happens to Wendy’s trust income interest if she files for an elective share?a. ** You read the trust as though the surviving spouse predeceased the testator (i.e., kill the trust - act as

though there was no life estate in W). Then, you accelerate the remainder. Steve will get the remainder interest of $200K. Then, Steve and Donna will each have to kick $50K to satisfy W’s elective share.

b. If W is given 1/3 outright, and is also given a trust --> then don't kill the trust (b/c elective share is satisfied ; only kill the trust if elective share is not satisfied)

Procedural Rules Governing Election [Not important]

General Rules1. Must be filed w/in 6 months after Letters (Letters Testamentary or Letters of Administration) are issued by the

Surrogate Court at the start of probate proceedings. If there is no estate administration, no more than 2 years after decedent’s death.

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2. Right of election is personal to the surviving spouse. (Executor, administration of deceased spouse cannot elect.) This shows that the purpose of the elective share status is to protect the spouse, not her heirs. However, the guardian or committee of an incapacitated spouse may elect w/ court approval.

3. Can be waived w/ or w/out consideration; before or after marriage; as to a particular will or testamentary substitute; or as to all wills and testamentary substitutes generally. Waiver must be in writing, signed and acknowledged before a notary public.

** General Point – General waiver (for example in a premarital agreement) of all rights in spouse’s estate waives right to elective share or intestate share, but does not waive rights to specific gifts made by spouse’s will; there must be an explicit waiver of such bequests.

Separate gifts/bequests (through will) can be made when there are prenups, UNLESS there's a specific waiver.

Multijurisdictional Problems

Foreign Domiciliary Owns Real Property in NY1. Rule – Ancillary administration proceedings must be held in NY to clear title to the land.2. Example #61 – H (domiciled in FL) died, survived by his wife W and two children. H owned real property in NY.

(H’s will is probated and his entire estate is administered in FL. B/c of the “situs rule,” “ancillary administration” proceedings will be required in NY to clear title to the land here.)

Foreign Domiciliary Spouse’s Right to Elective Share1. Rule – Only the spouse of a decedent who was domiciled in NY at the time of his death has the right of election.

a. Exception – If H expressly states in his will that the disposition of his real property in NY is to be governed by NY law, then W may claim an elective share w/ respect to the NY real estate (i.e., Client retires to FL but still owns real property in NY and still has a NY attorney write his will.)

2. Example #62 – H, a domiciliary of NY, owned real property in Florida. He died, survived by his wife W and two children. W files notice of election to take an elective share of 1/3 of H’s net estate. Does H’s net estate, against which the NY elective share applies, include the value of the Florida real estate?

a. Yes. Even though the NY court can’t adjudicate ownership of the FL property, NY rules will govern the will.

Exempt Property

General Idea –These items “come off the top” (immediately distributed) – before look at property passing to the spouse by will, intestate share or elective share.

(In any question involving a surviving spouse you will strengthen your answer if you mention exempt personal property set-aside.)

Items of Exempt Property1. Car (up to $15K in value)2. Furniture, appliances, computers, etc (up to $10K in value)3. $15K cash allowance (cash allowance is not subject to creditor’s claims, except funeral expenses)4. Animals, farm machinery, tractor (up to $15K)5. Books, pictures, videotapes, software, etc. (up to $1K)

Statutory Cap – The total value of exempt personal property can be as high as $56K.

Bar Exam Tip – Unless the bar examiners specifically put an exempt property issue into play, do not mention it up front. First do the elective share calculation. Then mention any you want about exempt property. If you factor it in before doing the elective share calculation it will make the numbers to difficult to work with.

When Spouse Disqualified From Taking Elective Share (and Exempt Property)

General Rule – A spouse is disqualified from taking their elective share (and exempt property) in the following situations:1. D – Divorce – final decree of divorce or annulment under NY law2. I – Invalid divorce/annulment – procured by surviving spouse

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3. *S – Separation decree (not agreement) – rendered against surviving spouse4. M – Marriage – is void as incestuous or bigamous5. AL – Abandonment and lack of support

General Point – A decree of separation disqualifies the surviving spouse from filing for an elective share, but does not disqualify the spouse from taking under the decedent’s will (only 2 things knock spouse out of will: (i) final decree of divorce or (ii) annulment)

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WILLS OUTLINE SUMMER 2007WILL CONTESTS

Testamentary Capacity

Requirements – Testator must have sufficient capacity to: 1. Understand the nature of the act (i.e., did he know he was writing a will)2. Know the nature and approximate value of his property3. Know the "natural object of his bounty" (i.e., know your family members and loved ones)4. Understand the dispositions (gifts that he is making)

Extremely Low Threshold for Testamentary Capacity1. Rules

a. The capacity to make a will requires less capacity than is required for any other legal instrument.b. The surrogate court could find that the testator executed the will during a brief "lucid interval"

2. Example #63 – Six months before she wrote and signed her will, Emma was adjudicated incompetent and a guardian was appointed to manage her affairs. On that basis, the Surrogate Court entered a directed verdict that Emma lacked capacity to make a will. Proper?

a. Maybe - Capacity to make a will requires less capacity than required for any other legal instrument. You need to apply the above-mentioned rules. Maybe she has enough capacity or made she executed the will during a lucid interval.

Insane Delusions1. Idea – T is of sound mind on other subjects, but has a persistent belief in supposed facts which have no real existence

except in T’s perverted imagination. The facts are against all evidence, probability and control and produce the exercise of the testamentary act (a will).

2. Example – T, a 77 year old widow fighting cancer and taking morphine believes that there is a conspiracy against her by Bill Clinton and George Bush and leaves all her money to Ralph Nader.

Undue Influence1. Idea – Existence of testamentary capacity subjected to and controlled by a dominant influence of power.

a. burden: is on the one challenging the will. 2. Elements

a. Existence and exertion of an influence, andb. Effect of such influence was to overpower the mind and will of the testator, andc. The product is a will or a gift (in a will) which would not have happened, but-for the influence

i. Influence is not undue unless the free agency of the testator was destroyed such that the will produced is essentially a will, not of the testator, but of the one exerting the influence.

3. Situations That Alone Are Not Undue Influence a. Opportunity to exert influence

i. Ex – Fact that one child, who received major share of the estate, lived w/ mother, wrote checks for her, helped on income tax, held a power of attorney is not evidence that the opportunity was taken advantage of.

b. Susceptibility to influence b/c of agei. Ex – Fact that mother was very old, had broken her hip, had memory lapses, took Valium is not

evidence of undue influence.c. Unequal dispositions among children

i. Ex – That some children take less than others or are excluded entirely is not enough evidence of undue influence.

4. Wills Making Gifts to People Who Aid in Will Preparation a. Rules

i. If a will makes a gift to one in (i) a confidential relationship and (ii) that person was active in preparing the will, you then have:

1. an inference of undue influence which satisfied the will contestant’s burden of proof, if not rebutted.

ii. If a will makes a bequest to the drafting attorney, the Surrogate Court makes a "Putnam scrutiny":1. even if no objection is filed (i.e., automatic inquiry) to determine whether the gift was

voluntarily made.

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b. Example – Trudy’s will bequeathed $25K to Larry Lawyer (Trudy’s longtime attorney who prepared the will) and her residuary estate to her sister Sue. Sue files no objection to the bequest. Is Larry Lawyer home free? - No

5. Wills Naming Drafting Attorney as Executor a. Rule – If a will names the drafting attorney as executor, the attorney MUST given written disclosure to the

client that:i. Any person can be named an executor,

ii. That the executor receives a statutory commission, andiii. That the attorney handling the estate will also be entitled to legal fees for representing the estate

b. Client must sign the acknowledgment w/ 2 witnessesc. Effect of Attorney’s Failure to Comply – The attorney will receive only half of the statutory commissions.

No-Contest Clauses

General Idea – A no-contest clause is a clause in a will that says, “if anyone objects to my will, they will get nothing.”

Majority Rule – No-contest clauses are given full effect unless the court finds that the contest was brought in good faith and with probable cause (i.e., it wasn’t a frivolous suit designed to extract a settlement).

New York1. Rule – A no-contest clause is given FULL EFFECT even if there was probable cause to challenge the will2. Exceptions

a. Forgery or Revoked by later willi. Objector is arguing that the will is a forgery or that the will was revoked by a later will and the court

finds that there was probable cause for the contestb. Infant or Incompetent

i. Will contest is filed on behalf of an infant or incompetentc. Construction proceeding

i. Proceedings to construe the will’s term (i.e., “I’m not challenging the will; I just want to know what interests are created in it.”)

d. Objections to the jurisdiction of the courti. (e.g., That testator was domiciled in NJ, not NY. “I’m not challenging the will; I say it should be

probated in Trenton.”)3. Rationale – A testator should be permitted to protect his testamentary plan and his reputation against post-death

attack.

Example #65 1. Example #65A – T’s will bequeathed $25K to his son Sam and his residuary estate to his daughter Donna. The will

contained a no-contest clause: “If any beneficiary contests my will or any of its provisions, he shall forfeit his legacy.” Sam contests the will on grounds of undue influence and lack of testamentary capacity. Sam loses the contest, but there is evidence that he had probable cause for bringing the action. Does Sam forfeit the $25K bequest?

a. Majority – Sam does not forfeit the legacy b/c he had probable cause for brining the contest. b. NY – In NY, same does forfeit the legacy b/c we don’t care about probable cause and he can’t fit his

challenge into any of the four exceptions.2. Example #65B – Does this exception apply if Nephew contests will on ground that Uncle’s will was revoked by

physical act?a. No. In NY, Sam could challenge the will by arguing it was revoked by a later will but not by arguing that it

was revoked by a physical act.

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WILLS OUTLINE SUMMER 2007POWERS OF APPOINTMENT

Introduction

General Idea – A power of appointment is an authority created in or reserved by a person enabling that person to designate, w/in limits prescribed by the creator of the power, the persons who shall take the property and the manner in which they take it.

Purpose – A power of appointment allows one to look at facts in existence at a later date when distributing property. (e.g. did the grandkids grow up to be good or bad)

Definitions1. Donor – The creator of the power of appointment

a. When a person reserves a power in herself, she is both the donor and the donee of the power2. Donee – The person who is given the power of appointment to use3. Takers in Default – Person who take the property under this power if the donee fails to correctly exercise the power

Types of Powers of Appointment (key - identify & see if properly exercised)1. General Power of Appointment – The donee can appoint property to herself, to her creditors, or to her estate (i.e., it is

as if the donee owned the property herself).2. Special Power of Appointment (Limited Power of Appointment) – The donee cannot appoint the property to herself.

Moreover, there is usually a limited class to which the donee can appoint.3. Presently Exercisable Power of Appointment – Donee can exercise the power right now during her lifetime, usually

through a trust instrument.4. Testamentary Power of Appointment – Donee can only appoint the property by his will.

General Points1. A general will provision exercises all powers of appointment held by the donee testator, unless the instrument creating

the power of appointment called for its exercise by a specific reference in the donee’s will.

Examples1. Example #66A – Tom’s will creates a trust: “Income to my daughter Dana for life, and on Dana’s death the principal

shall be distributed to such persons, including Dana’s estate, as she appoints by will. If Dana does not exercise this power of appointment, the principal shall be distributed to Dana’s children.”

a. Tom – donor b. Dana – donee of a general testamentary power of appointmentc. Dana is not limited in the class of beneficiaries to whom she can appoint. Dana, by her will, can appoint the

trust property to herself, her estate, or her creditors. Dana’s children, who will take the trust property if Dana does not exercise the power of appointment, are takers in default of appointment.

2. Example #66B – Suppose instead that Tom’s will provided: “… and on Dana’s death, the trustee shall distribute the principal to such of Dana’s descendents as Dana appoints by her will…”

a. Dana – donee of a special testamentary power of appointmentb. Dana is limited in the class to whom she can appoint. She can only appoint by will among her descendants,

and cannot appoint herself, her creditors or her estate.3. Example #66C – Dana dies some years later, leaving a will that devised “all the rest, residue and remainder of my

estate to my son John.” Dana’s will made no reference to her testamentary power of appointment. Did Dana’s will exercise the testamentary power of appointment (whether a general or special testamentary power), even though the will makes no mention of the power of appointment?

a. Yes. In NY, a general will provision exercises all powers of appointment held by the donee testator, unless the instrument creating the power of appointment called for its exercise by a specific reference in the donee’s will.

4. Example #66D – Same facts except that Tom’s will gave the remainder “to such of her descendants as Dana appoints by a will that specifically refers to this power.” Dana’s will devised “all the rest and residue of my estate, including any property over which I have a power of appointment, to my son John.” Did Dana’s will exercise the power of appointment?

a. No. Under these facts, Dana’s will must specifically reference the exercise of the power of appointment.5. Example #66E

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a. Suppose instead that Tom’s will provides: “The trustee shall pay the income to my daughter Dana for life. However, during her lifetime Dana can appoint the trust property to anyone, including herself, by a written instrument delivered to the trustee.”

i. Dana is the donee of a presently exercisable general power of appointment. If Dana does exercise the power of appointment, on her death, the trustee will distribute the principal of the trust property over which she has this power of appointment to either the beneficiaries of the residuary estate if Dana has a will or via intestacy.

b. Dana dies some years later, leaving a will that devises “all the rest, residue and remainder of my estate, including any property over which I may have a power of appointment, to my son John.” Did Dana exercise this presently exercisable power of appointment by her will?

i. Yes, unless Tom’s will had expressly excluded exercising the power of appointment by will.

Powers of Appointment & Testamentary Substitutes

General Rule – Only a general presently exercisable power of appointment counts as a testamentary substitute. All other powers of appointment do not count.

Example #66F – Suppose, in any of the foregoing examples, Dana’s husband Horace files for an elective share to take one-third of Dana’s net estate. Which of the following, if held by Dana, would be a testamentary substitute for elective share purposes?

1. General presently exercisable power of appointment – Yes, this counts as a testamentary substitute b/c during D’s lifetime, D can appoint to herself, a 3rd party or her spouse.

2. General testamentary power of appointment – No, this doesn’t count as a testamentary substitute b/c D can’t get to trust principal during her lifetime.

3. Special power of appointment – No, this is not a testamentary substitute b/c D can’t get to trust principal at all.

Powers of Appointment & Creditors

General Rules1. The donee’s creditors may reach assets over which donee has a general presently exercisable power of appointment2. The donee’s creditors may not reach assets over which donee has a special power of appointment3. The donee’s creditor may not reach assets over which donee has a general testamentary power of appointment

a. Exception – Creditors may reach the assets if (1) donee was both the donee and the donor of the power or (2) donee exercised the power in favor of his estate (b/c creditors can get to your estate)

Example #671. Example #67A – Al has a general presently exercisable power of appointment. Can Al’s creditors reach the appointed

assets even if Al does not exercise the power?a. Yes. If Al can reach the assets as if he owned them himself, than so can his creditors.

2. Example #67B – Suppose instead that Al had a special presently exercisable power of appointment (“to such of Al’s descendents as he appoints”). Al died leaving a will that exercised the power. Can creditors of Al’s estate reach assets that are subject to the power of appointment?

a. No. If Al can’t get at the assets (i.e., can’t appoint them to himself), then his creditors cannot either.3. Example #67C – Suppose instead that Al had a general testamentary power of appointment. Al died leaving a will

that exercised the power. Can creditors of Al’s estate reach assets that are subject to the power of appointment?a. No, except if (1) Al was the donor and the donee of the power of appointment or (2) Al exercised the power

of appointment in favor of his estate.

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