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it is judicially determined that the decedent left a validly executed will (or that the
decedent died without a will and his intestate heirs are determined),
(ii)
take possession and control of the assets that comprise the estate,
(ii)
A person who executes a will is called the testator. Persons who take by intestate succession are
called heirs. Persons who take under a will are called beneficiaries (or devisees, or legatees). At
common law, one devised real property and bequeathed money or personal property. This
distinction is no longer made. A will can say I devise, I bequeath, I give, or I leaveall of
these terms mean the same thing, and can be employed to make testamentary gifts of both real
property and personal property.
Residuary estate is the estate of a testator that remains after all debts, taxes and administration
expenses have been paid, and after all specific gifts and cash legacies made by the will have been
satisfied. Under most wills, the residuary beneficiary is the testators preferred taker. (E.g., "I give
all of the rest, residue and remainder of my estate to my wife Wendy.")
B.
decedent left no will (or decedents will was not validly executed);
(ii)
the will does not make a complete disposition of the estate (resulting in a partial
intestacy), or
(iii) an heir successfully contests the will on the ground of lack of testamentary capacity or
undue influence, and the will is denied probate. In several states, the intestacy rules are
also involved in questions involving a pretermitted child (born or adopted after the will
was executed) or an omitted spouse (testator married after will was executed.)
C.
THE FIRST
Survived by descendants, some of whom are not descendants of surviving spousethe second
marriage situation: ONE-HALF.
Survived by spouse and no descendants but by one or both parents:
PLUS OF ANY BALANCE.
Revised Uniform Probate Code (1990 version) substantially increased the intestate share of a
surviving spouse, reflecting a policy that is more in line with the dispositions that most spouses
make if they write wills. The Revised UPC provisions also reflect that divided families are
encountered more frequently in our society.
Survived by spouse but not by descendants or parents: ALL.
Not survived by descendants, but survived by a parent: THE FIRST $200,000 PLUS OF
ANY BALANCE.
Survived by descendants, all of whom are descendants of surviving spouse, and surviving
spouse has no descendants from an earlier marriagethe one-marriage situation: ALL.
Survived by descendants, all of whom are descendants of surviving spouse, but surviving
spouse has one or more descendants who are not descendants of the decedent: THE FIRST
$150,000 PLUS OF ANY BALANCE.
Survived by descendants, some of whom are not descendants of surviving spouse: THE
FIRST $100,000 PLUS OF ANY BALANCE.
1. Herman and Winnie are married, and they have two children (Al and Betty). Winnie has a
child Carol) by her first marriage.
H-1
Winnie
Carol
Al
Herman
Betty
a. If Herman dies intestate survived by Winnie and the three children, what is Winnies
intestate share:
b. If Winnie dies intestate survived by Herman and the three children, what is Hermans
intestate share:
D.
INHERITANCE BY DESCENDANTS.
The Probate Codes of a few states use the term "issue" throughout. The terms issue and
descendants are synonymous, and include lineal descendants (children, grandchildren, etc.) by
blood or adoption. In making a distribution among descendants, the literal translation of per stirpes
is by the roots, and means one share for each line of descendants. The literal translation of per
capita is by the head, and means one share for each person.
2. Martha, a widow, dies intestate, survived by the family members listed below. What intestate
distribution?
Martha
Al
Ben
Carol
C-1
Donna
C-2
D-1
D-2
D-3
At common law, and in a small number of states today, the distribution rule is strict per
stirpes (also called classic per stirpes), under which the shares for each line of descendants
are always divided at the first generational level, regardless of whether there are any living
takers at that level, and then one share for each family line. Thus in the above family tree:
Al: ________
Ben: _______
The distribution rule under the original UPC and in most states is modern per stirpes,
usually described as per capita with representation ("per capita at the first level, then by
representation"). Under this distribution scheme, you cut the shares at the first generational
level at which there are living takers, and then one share for each family line.
Al: ________
Ben: _______
The distribution rule under the Revised UPC (also adopted in several non-UPC states) is per
capita at each generation. Under this rule, you make the initial division of shares (with one
share for each line of descendants) at the first generational level at which there are living
takers. Each living descendant in that nearest generation takes one share. Shares of deceased
persons at that generational level are combined and then divided equally among the takers at
the next generational level, and so on. As a result, persons in the same degree of kinship to
the decedent (e.g., grandchildren who are first cousins) always take equal shares. Under this
distribution rule, the shares would be:
Al: _________
E.
Ben: _________
All to parents or to surviving parent (majority rule). In nearly all states, collateral kin
(brothers and sisters) never inherit if an intestate decedent is survived by a parent.)
(2)
F.
(3)
The UPC and most states have abolished the distinction made at common law between
collateral kin of the whole blood and of the half blood: Half-sisters (sisters who shared one
common parent with the decedent) take the same share as sisters of the whole blood.
(4)
(5)
While most states impose no limit on the degree of kinship needed to take as an heir, the
Uniform Probate Code and several non-UPC states have enacted so-called "no laughing
heir" statutes: There is no inheritance by kin more remotely related than grandparents or
descendants of grandparents. Instead, the estate escheats to the state.
ADOPTED CHILDREN. Adopted children and their descendants have full inheritance rights
from the adoptive family (and vice versa), and are treated in all respects the same as natural
children.
General rule: Once a child has been adopted by a new family, the child has no inheritance rights
from the natural parents or their kin. (This is consistent with the law and policy of most states,
under which adoption records are sealed, and an adopted child has no right to learn the identity of her
natural parents.)
Exception: Where child is adopted by spouse of a natural parent. (E.g., Clyde's father dies; mother
remarries, and second husband adopts Clyde. Clyde has inheritance rights from natural mother and
adoptive fatherand (in nearly all states) from the deceased natural fathers kin as well.)
G.
NONMARITAL CHILDREN. Constitutional litigation in 1970s and 1980s expanded the rights
of nonmarital children. As a result, in most states a nonmarital child can inherit from natural father
if [the acronym is PAPfor Pappy]:
-- Paternity suit: The man was adjudicated to be the father in a paternity suit; or
-- Acknowledged paternity: The man acknowledged in writing that he was the father; or
-- Probate proceedings: After the man's death, he is proved to have been the father of the child
in the probate proceeding by clear and convincing evidence.
H.
already having received $60,000 of his share. (In most states, the advanced property is
valued at its date-of-gift value for this purpose.)
UPC and majority rule: A lifetime gift to an heir is not an advancement unless
(i) declared as such in a _______________________________________ by donor; or
(ii) acknowledged as such in a ____________________________________ by donee.
Therefore, under the majority rule distribute Marys estate:
In most states, the same rules apply to lifetime gifts made to a beneficiary named in a
previously executed will (called the doctrine of satisfaction of legacies), as where a
testator executes a will bequeathing $25,000 to her nephew Norman, and thereafter
gives Norman $10,000 cash.
UPC and majority rule: A gift to a beneficiary named in an earlier will is not treated
as in satisfaction of legacy unless
(i) declared as such in a contemporaneous writing by the donor, or
(ii) acknowledged as such in writing by the donee, or
(iii) the will provides for reduction of legacies by any lifetime gifts.
Since there is no writing, we ignore the lifetime gift. Norman takes the full $25,000
under the will.
I.
[For irrevocable inter vivos trusts, disclaimer must be made within 9 months
of the transfer; the trust is read as through the disclaimant was dead when trust
was created.
#3. Disclaimer can be partial ("I disclaim one-half of the interest bequeathed to me").
#4. A beneficiary or heir cannot disclaim after accepting an interest or its benefits.
(Essentially an estoppel principle.)
#5. Disclaimant cannot exercise dominion by attempting to direct who takes by reason of
the disclaimer. ("I disclaim, and I want the interest to go to my husband Horace.")
If Sue makes an effective disclaimer, how should T's estate be distributed?
J.
________ If the state has enacted the Uniform Probate Codes 120-hour rule?
The 120-hour rule also applies to wills. A will beneficiary who fails survive the testator by
120 hours is deemed to have predeceased the testator (absent contrary provision). This
would invoke that lapsed gift rule and anti-lapse statute (discussed infra).
Signed by the testator (or someone at T's direction and in her conscious presence
proxy signature);
#2.
Testator must sign the will (or acknowledge his earlier signature or acknowledge the
will as his will) in each witnesss presence;
#3.
Two attesting witnesses, each of whom witnessed either Ts signing of the will or T's
acknowledgment of his earlier signature or of the will; and
#4.
Witnesses must sign within a reasonable time after witnessing either T's signing of the
will, or Ts acknowledgment of her earlier signature or of the will.
(The UPC
that the testator sign "at the foot or end" of the will.
--
that the witnesses know they are witnessing a will, as distinguished from some other
document (called the "will publication" requirement).
--
Codicil (later amendment or supplement to a will) must be executed with the same formalities.
6. Tom types a will that leaves all of all his property to his sister Sue and his neighbor Nell in
equal shares. The will, which names a friend as executor, contains no attestation clause;
below the signature line for the testator the will simply provides "Witnesses" and has two
signature lines. Tom takes the will across the street to his neighbor Nell and asks Nell to
"witness my will." Nell signs on the first witness line, then Tom signs; Tom's signature is
barely legible because of an arthritic condition. Tom then takes the will to his neighbor
Oscar and asks: "Would you mind witnessing this legal document for me? It needs two
signatures besides mine." Tom proffers the will with his signature showing. Oscar signs,
thinking he is witnessing a power of attorney. After Toms death the will, which is undated,
is offered for probate. Should it be admitted?
The exact order of signing is not critical when execution (will signing) ceremony is
_________________________________________________________________
(But where T forgot to sign when witnesses signed, and added his signature three days later
in the same witnesses' presence, will denied probate; not a contemporaneous transaction.
Witnesses are attesting witnesses and must attest to T's signature when they sign.)
_______ Does it matter that Tom's signature is barely legible?
_______ Does the fact that Nell is a beneficiary invalidate either the will or the bequest
to Nell?
Minority rule: Interested witness situation doesn't affect validity of a will, but
witness-beneficiary loses legacy (subject to exceptions). However, the UPC and most
states have abolished the interested witness rule. "The signing of a will by an
interested person does not invalidate the will or any provision of it."
________ Does it matter that Oscar did not know that he was witnessing a will?
(majority rule)
________ Does it matter that Nell and Oscar didn't sign in each other's presence?
(majority rule)
________ Does it matter that Toms will did not contain an attestation clause?
Attestation clause, which appears below the testator's signature line and above the witnesses'
signature line, recites the elements required for due execution: "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 now sign the will as
attesting witnesses in testator's presence and in the presence of each other."
Witness with bad memory. "Probate of a will does not turn on memory of the attesting
witnesses."
(2)
Hostile witness.
Self-proving affidavit procedure now available in nearly all states recognizes that most probates
are harmonious, nonlitigious affairs in which no one is challenging the validity of the will's
execution. Can be executed at any time after the will is signed, but invariably is signed at the same
ceremony. T and witnesses sign will, then T and witnesses execute sworn affidavit before notary
public. Affidavit recites statements witnesses would testify to in open court (T was over age 18;
witnesses signed in T's presence; in witnesses' opinion T was of sound mind, etc.). Unlike an
attestation clause (which merely corroborates the witnesses' testimony), the affidavit serves the
same function as a deposition or interrogatory. It is a total substitute for live testimony of the
attesting witnesses in open court.
7. Tillie downloads a will form from the Internet, and carefully fills in the blanks by typing in
the names of the beneficiaries, executor, etc. After she has completed the form, Tillie asks
Norman, a notary public, to assist her in signing the will. Tillie signs; then Norman signs and
affixes his notarial seal, overlooking the fact that there are two signature lines for witnesses.
Tillie dies two years later.
NO
Can Tillies will be admitted to probate in most states, given that it has only
one witness?
YES
Can Tillies will be admitted to probate in a state that has enacted the Revised
Uniform Probate Code?
Under the Revised UPCs dispensing power statute (also known as the harmless error
statute), the probate judge can excuse full compliance with the formalities required for
execution of a will if there is clear and convincing evidence that the testator intended the
document to be her will.
B.
WHAT CONSTITUTES PRESENCE? A number of states require that the witnesses must sign
in testator's presence, and the UPC requires that the testator either sign the will or acknowledge his
signature or the will in each witness's presence. What constitutes "presence"?
8. T is confined to a hospital with a contagious disease, his bed hidden by a heavy vinyl screen.
The will is handed to T at a point when the two witnesses are standing in the doorway to the
room, not in T's line of sight because of the screen. From behind the screen T says, "This
looks all right; where do I sign?" After T signs the will, a nurse carries the will to the
doorway where the two witnesses sign under the attestation clause; T cannot see either of
them sign. Was the will validly executed?
Under the line of sight ("scope of vision") test (minority rule): NO Witnesses must be
in testator's line of sight. Testator does not have to see the witnesses sign, but the
witnesses must be within the uninterrupted range of testator's vision when they sign, so
that testator could have seen them sign if he had looked. (Swivel chair case: If testator,
staring out window when witnesses signed on a table behind her, had turned around in her
swivel chair, she could see the witnesses.)
Under the conscious presence test (majority rule): YES It is not necessary that testator
should actually be able to see the witnesses when they sign. They are in his presence
whenever he is so near to them that he is conscious of where they are and what they are
doing, and he could see them with a slight physical effort on his part. (e.g., by peeking
around that vinyl screen.)
BUT where (after testator and W-1 signed) the attorney took the will to an adjoining
room where W-2 signed it, W-2 did not sign in testator's presence under either test.
9. Mel was in a hospital's Intensive Care Unit, having suffered a heart attack. A will was
prepared for Mel and was brought to the hospital room along with two of Mel's neighbors
who were to serve as witnesses to the will. The lawyer read the will aloud to Mel, who said
"That's just fine; where do I sign?" Mel signed the willbut immediately thereafter suffered
a massive seizure and collapsed back on the bed. Paramedics rushed in and, in the presence
of the stunned neighbors, worked alongside two nurses in administering CPR to Melto no
avail. About seven minutes later, Mel was pronounced dead. At that point, the lawyer said to
the neighbors, "well, that's too bad; but as long as you're here you might as well sign the will
as witnesses," which they did. Is Mel's will admissible to probate?
NO
______
C.
NO
D.
HOLOGRAPHIC WILLS
11. Winkie writes a document in her own handwriting that reads: "July 24, 1998. I, Winkie
Waters, declare that this is my last will. I leave all my property to the Morris Crippled
Children's Home." The writing is not witnessed; is it admissible to probate?
"The UPC and about half the states recognize holographic willshandwritten and signed
but unwitnessed wills. In these states, upon proof that the will was wholly in Winkies
handwriting, it is admissible to probate as a holographic will."
But all states that allow holographic wills require that such wills be signed by the testator. Was
this will signed by Winkie???
"However, many states do not recognize holographic wills. Except (in a few states) for
persons serving in the armed forces or mariners at sea, all wills must be in writing and
attested by two witnesses. In those states, the handwritten, unwitnessed document is not
admissible to probate."
Important note: If the facts of ANY Wills question include a handwritten letter, note or
memorandum signed by the testator, you must discuss majority and minority rule (as above);
whether it can be given effect as a holographic will (or holographic codicil to an attested will).
E.
CONDITIONAL WILL
12. Ted writes a will that is properly signed and witnessed: "I am going on a mountain-climbing
expedition to the Himalayas. If anything happens to me on the trip, I leave all of my property
to my good friend, Alice Adams." Ted climbs Mt. Everest that summer, returns from the trip
in July, and dies three years later without having changed his will. Does Alice take Ted's
estate under the will?
Was this a conditional will, meaning that probate should be denied because the condition did
not occur (i.e., nothing happened to Ted on his trip)?
Or did Ted's reference to the dangerous journey he was about to undertake merely reflect the
motive or inducement for making a will? (i.e., the dangers he faced on the trip prompted
him to think of the possibility of death and the need for a will.)
YES
________ Valid revocation by subsequent testamentary instrument if the state does not
recognize holographic wills (and has not enacted the UPCs dispensing
power statute)?
________ Suppose Hobie had crossed out his signature with an X. Revocation by
physical act?
14. The executed copy of Adam's will is in his safety deposit box; a xerographic copy showing
all of the signatures is in Adam's desk at home. Adam destroys the xerox copy with the intent
to revoke his will. Valid revocation by physical act?
15. Ted calls his attorney on the phone and tells him, "Revoke my will. I'll come down to your
office next Monday and write a new one, but for now I don't want that old will." The
attorney gets Ted's will out of the file, puts a large X across each page, and then tears the will
into twelve pieces. He tells Ted, "I have destroyed your will. Be sure to come in on Monday.
We sure wouldn't like to have you die intestate. Heh, heh." Ted is struck by lightning and is
killed on Sunday. Was Ted's will validly revoked?
________ Revocation by physical act by another person (proxy revocation), must be:
(1) ______________________________ and (2) ______________________________
15a.
(Must overcome
B.
Neither presumption arises if the will was last seen in the possession of someone adversely
affected by its contents. [Recent case: Shortly after T's death, desk where will was located
was "tidied up" by one adversely affected by the will.]
(ii)
Where a will is executed in duplicate (two signed and witnessed copies), both copies must be
accounted for, or the reason for not producing both copies must be explained.
16. Tim executes "my last will." Two years later, Tim executes another "my last will." The
second will does not contain language of revocation, and does not even mention the earlier
will.
To the extent possible, you read the two instruments together. The second "last will" is
treated as a codicil to the first will, and revokes it only to the extent of inconsistent
provisions. But if the second will is wholly inconsistent with the earlier will (the first will
gives "all my property to Al" and the second gives "all my property to Betty," the first will
is revoked by implication.
Revocation of codicil to a will does not revoke the will, and (majority rule) the part of the
will that was modified or revoked by the codicil is restored and takes effect as though the
codicil had never been written.
C.
D.
________ Was the legacy to Hobie Gates validly revoked? (Majority rule)
"A few states (Illinois, New York, Texas) do not recognize partial revocation by
physical act. However, in most states and under the Uniform Probate Code, partial
revocations by physical act are valid."
________ Does Susan get the $5,000 legacy? (Overwhelming majority rule)
Words added to a will after it has been signed and witnessed are:
But under the Revised Uniform Probate Code (that harmless error or dispensing power
statute once again), the answer is YES. Susan takes the $5,000 because we have clear and
convincing evidence that Elsie intended to modify the will by making the alteration.
________ When Elsie crossed out the "$2,000" before writing in "$5,000," she revoked
the $2,000 legacy by physical act. Is Susan nonetheless entitled to the
$2,000?
________ Suppose that Elsie, after crossing out the $2,000, writes in "$500" above it.
Does Susan get the crossed-out $2,000 under dependent relative revocation?
[What was Elsie telling us when she crossed out "$2,000" and wrote in "$500"?]
________ Suppose Elsie crossed out "$2,000" and wrote in "$5,000" immediately before
the will was signed and witnessed. Are the changes valid?
d. But what of the fact that Sam left a will devising "all my property" to Wendy???
(Doesn't the anti-lapse statute save the gift for the deceased beneficiary's estate?)
e. What if Sam was not survived by descendants, meaning that the anti-lapse statute
doesn't apply; who would take Blackacre?
If a bequest or devise lapses and the anti-lapse statute does not apply, the lapsed gift:
f.
Suppose the will gave Blackacre "to my son Sam if he survives me."
________ Would the anti-lapse statute apply in favor of Junior (majority rule)?
B.
120-HOUR RULE
20. In a state that has enacted the UPCs 120-hour rule, Tim's will provides: "I give all of my
Microsoft common stock to my sister Sarah, and my residuary estate to my mother Macree."
Tim and Sarah are fatally injured an automobile accident. Tim is pronounced dead at the
scene of the accident; Sarah dies two days later. Sarah is survived by her daughter Donna
and her mother; Sarah leaves a will that devises "all my property" to the Red Cross. Who
takes the Microsoft stock under Tim's will?
________ Does the 120-hour rule apply to wills?
A will beneficiary who fails to survive the testator by 120 hours is treated as if he
predeceased the testator (absent contrary will provision).
Therefore, the Microsoft stock passes:
20a. Same facts as in #20, except that Tim's will provides: "I bequeath all of my Microsoft stock
to my sister Sarah if she survives me." Who takes the AT&T stock?
________ Does the 120-hour rule apply (majority rule)?
C.
If the residuary estate is devised to two or more persons and the gift to one of them
fails for any reason, the other residuary devisees take the entire residuary estate, in
proportion to their interests in the residue (absent contrary will provision).
21a. What if, in #21, it was T's son Charlie who predeceased T, leaving a child (Junior) who
survived T? Hobie Gates and Bill Baker survived T. Who takes Charlie's share of the
residuary estate?
The anti-lapse statute ______________________________ the "surviving residuary
beneficiaries" rule.
D.
CLASS GIFTS
22. Ted's will devises Blackacre "to the children of my good friend, Joe Barnes," and devises his
residuary estate to his wife Rose. At the time the will is executed, Joe has two children:
Andy and Bill. After the will is executed but before Ted's death, another child (Carol) is born
to Joe, and Andy dies survived by a son, Andy Jr. Then Ted dies and his will is admitted to
probate. Eighteen months later Joe has another child, Donny. Who owns Blackacre?
Andy?
Class gift rule of construction: In a gift by will to a class of persons ("children,"
"brothers and sisters," etc.) if a member of the class predeceases the testator, the CLASS
MEMBERS WHO SURVIVE THE TESTATOR TAKE (absent a contrary will
provision). Basis: testator was "group-minded" in making the gift to the class and wanted
this group and only this group to share the property. [You read the will, and determine
the takers of the class gift, as of testator's death.]
Compare gifts to individuals: Suppose Ted's will devised Blackacre "in equal shares to
Andy, Bill and Carol, the children of my good friend Joe Barnes." Andy predeceases
Ted. The one-third share bequeathed to Andy lapses, and falls into the residuary estate as
undisposed-of property. The residuary beneficiaries would own a share of Blackacre
along with Bill and Carol.
Subject to: possible application of the anti-lapse statute. E.g., if the disposition were "to
the children of my son, Joe Barnes," since the beneficiary who predeceased the testator
was within the degree of relationship covered by the anti-lapse statute, and since he left a
child who survived the testator, Andy Jr. would take under the anti-lapse statute. The
class gift rule gives way to the anti-lapse statute when the predeceasing class member is
within the degree of relationship called for by the anti-lapse statute.
Why is Donny excluded from sharing in the gift, when he's a child of Joe Barnes???
Rule of convenience ["class closing" rule]: Rule of construction used to define the takers
of a class gift. The class is closed, meaning that later-born class members do not share in
the gift, when some class member is entitled to a distribution. This is done in order to
determine the minimum share of each class member, so a distribution can be made
without the necessity of rebate. It's called the Rule of Convenience because any other
result would be inconvenient.
Outright gift by will: the class closes at T's death.*
* Subject to gestation principle.
Common law presumption: 280 days from conception to birth
UNLESS:
(i)
(ii)
provision was made for the spouse by transfers outside the will and it is
shown that the transfers were intended in lieu of testamentary gifts by
testator's declarations, by amount of the transfer, or otherwise. [E.g., John
named Marsha as beneficiary of a $100,000 life insurance policy; or as
beneficiary of a revocable trust.]
23a. Consider the same facts, except that the above events took place in a jurisdiction that has
enacted the Revised Uniform Probate Code. Under the Revised UPC, the new spouse is
entitled to receive an amount equal to an intestate sharebut only as to that portion of the
estate not devised to testator's children from an earlier marriage; i.e., children who were
born before the marriage (or their descendants) and who are not the surviving spouses
children. Thus:
$600,000
-100,000
$500,000
Johns estate
value of Blackacre bequeathed to son Sam
amount subject to Marshas share as omitted spouse
Reviewing the Revised UPCs intestate distribution rules (see p. 2), Marsha would be
entitled to:
$100,000
+200,000
$300,000
The remaining estate (property worth $200,000) would pass under the wills residuary
clause to sister Sue.
B.
But if the couple divorces and then remarries, so that W is H's wife at death, she takes
under the will. The statute operates to revoke gifts and appointments only if they are
divorced at testator's death.
C.
Unless [says UPC] omission of the child was not intentional but was by accident or
mistake. [E.g., T mistakenly thought Alvin was killed in Viet Nam. Statute applies
only to mistake as to child of testator. If he mistakenly thought his brother was
killed in Viet Nam, UPC statute does not apply.]
Billy? Pretermitted child (born or adopted after the will was executed) takes:
Unless it appears from the will (no extrinsic evidence) that omission was
intentional.
25a. Same facts, except that two years after adopting Billy, Tank executes a codicil to his will
that names Second Bank rather than First Bank as executor.
Under the doctrine of republication by codicil, the will speaks (is republishedis
deemed to have been executed) on the date of the last codicil thereto. Billy is treated as
having been born before the will was executed, and has no rights as a pretermitted child.
General legacy:
Residuary gift:
"I give all the rest, residue and remainder of my estate to Betty."
Intestate property:
A.
B.
Majority rule: Absent contrary will provision, death taxes are apportioned (on a pro rata
basis) among all persons interested in the estate (beneficiaries of both probate and nonprobate transfers).
Exception: Beneficiary of an interest that qualifies for an estate tax charitable or marital
deduction gets benefit of that deduction (does not have to contribute pro rata).
Numerator:
Denominator:
C.
Residuary trust:
$1,200,000
$1,800,000
x $108,000 = $72,000
28. Henny's will contains this provision: "I bequeath the sum of $25,000, to be paid out of the
proceeds of sale of my Shell Oil stock, to Sally." [Demonstrative legacy.] One year before
her death, Henny sells all of her Shell Oil stock and uses the sale proceeds to buy Exxon
stock.
________ Does ademption apply to demonstrative (or general) legacies?
(But if Henny owned any Shell Oil stock at her death, executor would be under duty
to sell it to raise the $5,000.)
D.
These UPC provisions, which have been enacted in a number of non-UPC states, reverse the
common law rules, which applied ademption to any case where specifically devised property was
not in the estate at death. (At common law, testators probable intent was immaterial.)
#1.
--
Any unpaid balance of purchase price (together with any security interest) by
reason of sale of the property.
--
Any amount of condemnation award for taking of the property, to the extent
unpaid at testator's death.
--
--
#2.
E.
31. Suppose, instead, that Tony does not sell his Kodak stock? After Tony executes the will but
before his death, Kodak splits two-for-one, and certificates for 200 shares of Kodak stock are
found in Tony's safe deposit box after his death.
[Majority rule: A specific bequest of stock includes any stock produced by a stock split,
stock dividend, and stock resulting from a merger, reorganization, or other action
initiated by the entity after the will was executed, but does not include stock acquired by
the exercise of a stock option.]
Held: Baker takes all 200 shares of Kodak stock, because the gift of stock was a specific
bequest!
But how can that be, when the gift was called a general legacy in #30?? Something is going on
herebut let us recognize where it is. In #30, the courts have seized on the absence of a possessive
pronoun "my," calling it a general bequest to avoid ademption. But the issue here is different (stock
split). A gift of stock can be specific for one purpose (stock split) and general for another purpose
(ademption).
F.
An extrinsic document, not present when the will was executed (and thus not part of the duly
executed will), can be INCORPORATED BY REFERENCE into the will . . . IF:
#1.
#2.
#3.
Will must describe the writing sufficiently to permit its identification. ("So there can be
no mistake as to the identity of the document referred to.")
33a. Same facts, except that the memo was dated May 4, 1999.
34. With Tom's will in his safe deposit box was the following typewritten, unwitnessed memo
written after Tom signed his will: "In my will I referred to a list that I would prepare at a
later date leaving certain items of personal property, and this is it: I leave my golf clubs to
my friend, Hobie Gates, my fishing tackle to my son Sam, $2,000 to my daughter Donna, and
my IBM stock to my brother Ivan. /s/ Tom Testator." If the state has enacted the controlling
UPC provision, valid disposition . . .
________ as to $2,000?
Under the UPC and several non-UPC states, statutory exception to incorporation by reference rule:
Will may refer to written statement or list that disposes of TANGIBLE PERSONAL PROPERTY
(other than money, intangibles, property used in trade or business) not specifically disposed of by
the will. The written list must be signed by testator, must describe the property with reasonable
certainty. Can be written before or after the will is executed; can be altered at any time.
Statute provides a simple and inexpensive procedure for making gifts of personal items of
sentimental value, without having to amend the will every time the client changes his mind, or
wants to add to the list.
B.
38. Rod's will includes this gift: "I give the sum of Twenty-five Dollars ($25,000) to my niece
Nora."
This is called a ______________________________________________________.
evidence? (evidence about the testator, his family, the claimants under the
will and their relationship to the testator, testator's habits and thoughts,
etc.)
________ [majority rule:] Does the admissible evidence include testator's
declarations of intent to a third party? (E.g., he told a friend he had
bequeathed $25,000 to his niece Nora.)
[But modern trend is to admit all types of extrinsic evidence to cure patent as well as latent
ambiguities.]
________ Does the admissible evidence include anything testator said to his
attorney?
B.
C.
Most states apply the common law rule, which says: When a will does not make a complete
disposition of the estate (partial intestacy), words of disinheritance in the will are ineffective.
Rationale: When property passes by intestate succession, it passes pursuant to the intestacy
statute, not the decedent's will.
"However, under the Uniform Probate Code's negative bequest rule, a will can provide
how property shall NOT be disposed of, meaning that words of disinheritance are given
effect; estate is distributed as though disinherited person predeceased the testator.
Under the UPC, Sam would inherit the entire residuary estate.
D.
NONPROBATE ASSETS are interests in property that are not subject to disposition by will or
inheritance, and do not pass through a person's probate estate for purposes of administration. Major
types (also called nontestamentary assets):
#1.
#2.
#3.
Property held in trust, including a revocable trust, where trust terms govern
distribution of assets.
#4.
40. T has a $50,000 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 Painter." Who takes the $50,000 policy proceeds?
The Revised 1990 UPC takes an accrual approach (c.f. pension plan vesting rules),
under which the amount of the elective share is tied to the length of marriage. The
surviving spouse is entitled to an elective share percentage of 3% per year for the
first 10 years of marriage, and 4% for the next 5 years until after 15 years of
marriage the elective share is fully phased in at of the estate.
2. Spouse must file notice of election. The right to an elective share is not automatic.
The spouse must file a notice of election within a specified period (usually within 6
months after the will is admitted to probate).
3. Who may make the election. Election can be made on behalf of a legally
incapacitated spouse by a guardian or conservator, with court approval, upon a
showing that an election is necessary to provide adequate support for the spouse
during his probable life expectancy. But if the spouse dies before election is made,
an election cannot be made by the deceased spouse's personal representative.
[Rationale: Purpose of elective share is to protect the surviving spouse against
disinheritance, not to provide benefits to the spouse's heirs.]
4. In making up the elective share all beneficiaries of the estate contribute pro rata, and
their interests in the estate are reduced pro rata. However, property left outright to
the spouse by will is first applied. (Purpose: To avoid disruption of decedent's
testamentary plan as far as possible.) If, for example, Rick's will devises Blackacre
to his wife Lucy and the rest of his estate to his daughter, and Lucy files for an
elective share, the value of Blackacre is first applied in making up the elective share
entitlement.
42. Two years before his death, Hank established a revocable trust naming Acme Bank as trustee:
Income to Hank for life, and on Hank's death remainder to his son Steve (by a former
marriage). Hank died two months ago, leaving a will that bequeathed his estate to his wife
Wendy and Steve in equal shares. While that sounds fair enough, nearly all of Hank's property
had been placed in the trust. Hank left a net probate estate (after expenses) of $36,000; the
value of the assets in the revocable trust at Hank's death is $900,000. Wendy files for an
elective share. Does Wendy's elective share right apply to the assets in the revocable trust?
Minority rule: NO. Elective share statute giving one-third or one-half of the decedent's
"estate" means the probate estate. The elective share does not apply to non-probate
transfers such as revocable trusts, etc., because these are not part of the transferor's
"estate."
UPC and majority rule: YES. The policy underlying the elective share should not be
defeated by lifetime and nonprobate transfers in which the donor retains rights, powers, or
economic benefits. In most states, the elective share applies to the AUGMENTED
ESTATE, which includes the net probate estate and also lifetime transfers in which the
grantor retained the power to revoke, or to invade, consume or dispose of principal. In
addition to revocable trusts, this includes Totten Trust ("A, Trustee for B") bank accounts,
joint and survivor bank accounts, etc.
X. WILL CONTESTS
Only interested parties can bring a will contest: Persons with an economic interest adversely
affected by the will's probate. (Heirs, legatees under earlier will whose interest would be defeated
by this will.) Thus a close personal friend, not named as legatee in an earlier will, has no standing
to contest the decedent's will.
A.
Understand the nature of the act he was doing? (He was writing a will.)
2.
3.
4.
Evidence of capacity or lack of it must relate to circumstances at the time the will was executed, or
shortly before or shortly thereafter. The more distant in time from the will's execution a particular
fact may be, the less significance it has on the question in issue: Did the testator, at the time the
will was executed, have capacity? [Recent case: Six months before signing his will, T had been in
a mental hospital suffering from paranoia and manic depression: Evidence was too remote to be
relevant to condition at the time the will was signed.]
Mere old age, poor health, frailty, failing memory, or vacillating judgment are not inconsistent with
testamentary capacity if the testamentary prerequisites [above] were possessed by testator.
43. T was 93 years old when he signed his will. Six months earlier, T had been adjudicated
incapacitated, and a guardian [or conservator] was appointed to manage his property. The
trial judge granted the heirs' motion for a directed verdict on the ground that T did not have
testamentary capacity.
________ Was this decision proper?
#1: Adjudication of incapacity involves ______________________________
(capacity to contract, to manage one's affairs).
#2. Jury could find that the will was executed during a ______________________.
B.
UNDUE INFLUENCE: Where one with testamentary capacity is subjected to and controlled by a
dominant influence or power. Burden of proof is on contestants, who must show:
1.
2.
3.
Product is a will (or a gift therein) that would not have been made but for the
influence. (Undue influence may be shown as to the entire will, or as to one gift in the
will.)
"Influence is not undue unless the free agency of the testator was destroyed and a will produced
that expresses the will, not of the testator, but of the one exerting the influence." ["mental duress"]
While evidence of undue influence is usually circumstantial, these alone are not enough:
1.
Mere opportunity to exert influence. Fact that one child (who received major share of
the estate) lived with mother, wrote checks for her, balanced the checkbook, helped on
income tax, held a power of attorney . . . is not evidence that the opportunity was taken
advantage of.
2.
Mere susceptibility to influence due to illness, age. Fact that Mother was very old, had
broken her hip, had memory lapses, took Valium . . . this is not evidence of undue
influence.
3.
Mere fact of unnatural disposition Fact that will gave daughter of estate and her
two sons one-sixth eachthat is not evidence that the will was the product of undue
influence.
44. Tommy's girlfriend Gloria nagged him, badgered him, and threatened to leave him unless he
"proved his love" by writing a will in her favor, which he did. Undue influence?
45. Will drafted by Attorney's law partner devised entire estate to Attorney, whom client had never
met before.
Where there exists a confidential relationship between the testator and a party, and that party
will benefit from the will, and that party had the opportunity to exert undue influence,
there is an _________________________________________________ of undue influence,
which is strengthened when there are ___________________________________________
If an inference is raised, this doesn't affect the burden of proof (contestant still has burden of
proof), but will proponent now has the burden of going forward with evidence that no undue
influence was exerted. If will proponent does not produce sufficient rebuttal evidence, the
inference satisfies the contestant's burden of proof on the issue of undue influence.
46. Terry (who has no children) leaves a will that bequeaths $10,000 to his niece Nell and his
residuary estate to his cousin Sam. The will contains a no contest ("in terrorem") clause: "If
any beneficiary contests this will or any part thereof, he shall forfeit any interest given to him
by my will." Nell contests the will on grounds of incapacity and undue influence, but loses;
the will is admitted to probate. Does Nell forfeit her legacy?
___________ . . . unless she had ______________________________________________.
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 strike suit designed to
extract a settlement). Thus Nell does not forfeit the legacy IF court finds she had probable
cause for filing the will contest.
THE "UNLESS" IS THE MOST IMPORTANT PART OF THE MAJORITY RULE!
In several states (e.g., Massachusetts, New York), no-contest clauses are given full effect
regardless of whether the contest was filed with probable cause. Rationale: A testator
should be permitted to protect his testamentary plan, and his reputation, against post-death
attack.
________ [Current law:] Is Hospital entitled to collect the $24,000 from Tom's estate?
Traditionally, nearly all states had nonclaim statutes (special short statutes of limitation) applicable
to claims against a decedents estate. All claims not presented within a prescribed period of time
after the first publication of notice of administration [e.g., Illinois, 6 months, Uniform Probate
Code, 4 months; Oklahoma, 2 months) were barred.
In Tulsa Professional Collection Service v. Pope (1988), the U.S. Supreme Court held that the
Oklahoma nonclaim statute (which provided for notice by publication only) was unconstitutional as
applied to known creditors or creditors who were reasonably ascertainable. The Due Process
clause requires personal notice to known creditors before their claims can be barred. As a result,
all states with similar nonclaim statutes had to amend their statutes.
The Uniform Probate Code has three provisions relating to creditors claims. Under UPC 3-801(b),
the personal representative may (its optional) give personal notice to creditors, requiring them to
present their claims within the later of (i) 60 days after receipt of the notice or (ii) 4 months after
the first publication of notice; otherwise their claims will be barred. The personal representative
who wants to expedite matters can give personal notice to any creditor, and can shorten the time
required for presenting the claim.
Under UPC 3-801(a), all claims not presented within 4 months after the first publication of notice
of administration are barred. This the very type of statute that was ruled unconstitutional in Tulsa
Professional Collection Service v. Popebut only as applied to known or ascertainable creditors.
This UPC provision recognizes that it is still constitutionally permissible to cut off the claims of
unknown and unascertainable creditors with notice by publication only.
UPC 3-803 sets out a one-year statute of limitations applicable in all cases, whether the decedent
left a will or died intestate, and even if no permissive personal notice or notice by publication was
given. All claims not presented within one year of the decedents death are barred. Dictum in
Tulsa Professional Collection indicated that such a self-executing statute of limitations, which
applies to all cases and is not dependent on any probate court, would be constitutionally
permissible.
TRUSTS
TRUST is an arrangement for making gifts of property and for the management of assets, under which
the trustee holds legal title to the trust assets for the benefit of the beneficiaries, who hold equitable title.
Trustee has the burdens of ownership (duty to manage, safeguard, invest, etc.); beneficiaries have
equitable title and the benefits of ownership.
SETTLOR must have legal capacity. (must be age 18 or over; must have capacity to convey legal
title to the trustee, a higher test for capacity than for wills.)
B.
DELIVERY requirement does not apply to a self-declaration of trust ["I hereby declare myself
trustee..."] or testamentary trust. But for an inter vivos trust that names third party as trustee, the
mere intent to create a trust, or a gratuitous promise to create a trust, is not sufficient. As with the
law of gifts there must be delivery of subject matter of the trust, with the intent to convey legal title
to the trustee.
1. Sam told lawyer he wanted to create trust for his daughter, but died before signing trust
instrument or delivering assets to the trustee. Valid trust?
________ because no delivery of the trust assets with intent to transfer title during
Sam's lifetime.
Same answer where trust signed by Dad purported to create trust to be funded with
"whatever money or property that I contribute to the trust over the next ten years." This
was merely a promise to create a trust in the future, not supported by consideration.
C.
RES: the corpus, the principal, the subject matter of the trust.
To have a trust, legal title to a specific interest in property must be conveyed to the trustee. The
subject matter of the trust must be certain and identifiable. If there is no trust property, there is no
trust.
2. When Grandpa told Uncle Hobie Gates that he was leaving Whiteacre to Hobie in his will,
Hobie signed an irrevocable Declaration of Trust: "I declare myself trustee of my interest in
Whiteacre; and when I receive it from Grandpa's estate, I shall pay the income therefrom to
Nephew Ned for life, remainder to his issue." After Grandpa's death Uncle Hobie received
Whiteacre pursuant to the will. Can Nephew Ned enforce the trust against Uncle Hobie?
________ Was valid trust created when Hobie wrote the irrevocable Declaration of
Trust?
Because at that time, Hobie had an:
A different result is reached when the promise to hold property (to be received in the
future) in trust is supported by consideration. Under contract principles, the trust
automatically attaches when the property is received.
3. Willa, who owns common stock that pays her over $100,000/year, writes, signs and notarizes
a document: "I hereby create a trust for the benefit of my maid Mimi. I shall pay Mimi
$3,000/month from dividends paid on stock that I own. After my death, [Bank] as trustee
shall continue to pay Mimi $3,000/month until her death." No cash, stock or other property
was set aside as the corpus of the trust.
________ Valid trust?
D.
TRUSTEE
Must have legal capacity to deal with the property (must be over age 18; must have capacity to
contract and to execute a deed).
4. Ann's will devises her residuary estate in trust: "income to my daughter Martha for life, and
on her death to distribute the trust principal to her descendants." However, the will does not
name anyone as trustee.
________ Valid trust?
No trust fails for lack of a trustee. If the intent to create a trust is clearly manifested but no
trustee is named or if the named trustee dies or resigns with no provision for a successor
trustee, the court will appoint a suitable successor to carry out the trust.
5. Irreconcilable conflicts arise between First Bank (the trustee) and the beneficiaries. May
First Bank resign as trustee? If so, what procedure must it follow?
#1:
#2:
5a. Same facts in #5, except that First Bank does not want to resign as trustee. The beneficiaries
bring an action seeking to remove First Bank as trustee, citing the irreconcilable conflicts.
Should they prevail?
________ . . . unless the beneficiaries can show that conflicts prevent trustee from
carrying out duties, or that trustee has breached a material term of the trust.
What explains the different results in #5 and #5a?
6. Albert transfers title to Blackacre to Hobie Gates as trustee for the benefit of Albert's's son
Carl. Under the agreement, Carl has the power to manage and control the use of Blackacre,
and Hobie as trustee has no powers or active duties over the property. [Cf. Statute of Uses,
1536!]
________ Valid trust with respect to Blackacre?
If named trustee has no powers or active duties to perform,
6a. Suppose the instrument in #6 contains a spendthrift clause with respect to Carl's interest: "No
beneficiary shall have the power to transfer his interest, nor shall such interest be reachable
by the beneficiary's creditors."
The spendthrift clause in #6 is _______________________________
spendthrift trust,
E.
To have a
BENEFICIARIES
For a private (noncharitable) trust, the beneficiaries must be definite and ascertainable, and their
interests must vest, if at all, within period of Rule Against Perpetuities. (Rule for charitable trusts
exactly the opposite; see below.)
7. "I bequeath $100,000 to my friend Hobie Gates as trustee, and I direct him to pay the income
therefrom to my best friends. I bequeath my residuary estate to my brother, Sam Slade."
________ Valid trust?
________ Does Hobie get to keep the money, then?
Hobie holds on a resulting trust for Sam Slade, the residuary beneficiary. [A resulting trust
is not a trust. It's the term the courts use to describe the situation where a trust fails for
some reason. The court will order that the $100,000 be distributed directly to Sam Slade.]
a. What if the instrument provided that Hobie as trustee was "to pay the income to
my family," or "to my wife's next of kin." Valid trust?
8. $200,000 left to bank as trustee, "to use the income to train spiritualistic mediums." Valid
trust?
Cf. Estate of Kidd (Ariz. 1971): Holographic will left $240,000 estate left "for reserach [sic] or
some scientific proof of a sole of the human body which leaves at death. I think in time their
[there?] can be a Photograph of sole leaving the human body at death."
a. Testamentary capacity????
b. Valid gift?
F.
10. Granny gives Sonny a check for $10,000 with the notation (on the check) "for the use and
benefit of [grandson] Gary." Sonny deposits the money in his personal account and refuses
to disburse funds for Gary's benefit.
________ Was a valid trust created, given that the words "trust" and "trustee" were not
used?
G.
LAWFUL PURPOSE
Trust whose purpose is to further the commission of a crime, or calls for the destruction of
property, is invalid as against public policy. Also, unlawful conditions are unenforceable.
11. Trust "to pay the income to my daughter Betty until such time as Betty divorces her husband
Hobie Gates, at which time the trust shall terminate and all trust principal shall be distributed
to Betty. If Betty does not divorce Hobie, on Betty's death the principal shall go to the
National Organization for Women."
12. Dad's will bequeaths $200,000 to his son David, "provided he marries a Jewish woman within
seven years after my death. If David does not meet this condition, the $200,000 shall go to
the State of Israel."
________ Valid condition?
Compare testamentary trust "to pay the income to my wife for life or until she remarries. If
my wife remarries, the trustee shall pay the income to my daughter Bonnie for life." Valid
condition?
Compare reputed will of Heinrich Heine, German poet: Money bequeathed to wife "on the
express condition that she remarry. I want at least one person to be truly bereaved by my
death."
Settlor can name herself as trustee, to serve as long as she has capacity to serve.
The testamentary gift to the trust, called a pourover will gift, provides a mechanism
for adding testamentary assets to a trust created by the testator during lifetime. By
statute, such a pourover gift is valid:
(i) even if trust is subject to revocation and amendment and is later amended,
and
(ii) even if trust is unfunded life insurance trust (eliminates concern about "res"
in an unfunded life insurance trust).
Majority rule: To be a valid recipient of a pourover gift from a will, trust must be in
existence before or executed concurrently with will.
UNIFORM TRANSFERS TO MINORS ACT provides a convenient method for making gifts to
minor children that:
(i)
avoid the need for appointing a guardian to manage the property, and
(ii)
qualify for the $11,000 per-donee annual exclusion under the federal gift tax.
14. John Jones buys securities and takes title in the name of "First Bank, as custodian for Sam
Jones, under the [name of state] Uniform Transfers to Minors Act. I hereby direct the bank to
postpone distribution of the securities to Sam until he attains age 35."
The UTMA custodianship will terminate at age ______ because the terms of a UTMA
Custodianship are:
polio." [Note: Trust doesn't have ascertainable beneficiaries. Who can enforce the trust,
then?]
Twenty years later the cure for polio is found, and all research on the disease is comes to an
end. The trustee petitions the court: What should be done with the trust income and
principal? The testator's heirs intervene: Since the purposes of the trust can no longer be
accomplished, the trust should be terminated and the corpus distributed to them. At issue is
whether the court should apply:
General charitable intent that can still be given effect: To devote the entire estate to
medical research, for the prevention and cure of disease.
Specific direction that no longer can be accomplished.
If cy pres is applied, the court will probably instruct the trustee to pay the income to:
16. Turner's will bequeaths his residuary estate "to the Springfield Lighthouse for the Blind."
During Turner's lifetime the Springfield Lighthouse disbands.
________ Can cy pres doctrine be applied to outright gifts to charity as well as to
charitable trusts?
General charitable purpose:
Specific direction:
17. Related doctrine (as to reasoning; applies to private as well as charitable trusts): judicial
modification of trust administrative terms because of changed circumstances. (Most cases
involve restriction on sale of trust assets.)
Leading case: Estate of Joseph Pulitzer. Will created trust for family. The trust
provided that Pulitzer's stock in the New York World newspaper was not to be sold so
long as the trust was in existence. Many years later the World suffered losses to the point
that trustees had to use income from other assets to cover them. Court authorized
deviation under primary intent-specific direction reasoning. Primary purpose of the trust
was to provide for Pulitzer's family; in connection therewith he gave specific direction
that stock should never be sold. But to continue to adhere to specific direction would
frustrate the primary purpose of the trust.
18. Trevor's will creates a trust which provides that his house should never be sold and that his
widow Wanda shall be allowed to occupy the house rent-free for life; upon Wanda's death the
house is to pass to Trevor's son Donald. Some years later the house becomes the center of a
manufacturing district and is no longer suitable as a residence. The trustee petitions for
authority to remove restriction on sale so that house can be sold and proceeds used to buy a
house for Wanda in a more suitable neighborhood.
________ Should a court authorize modification of the trust to remove the restriction
on sale?
Specific direction:
19. Client wants to bequeath $25,000 to his sister Sarah as trustee of a 30-year trust, to use the
income [to care for his beloved cat, Figaro] [to pay for a weekly polish-and-wax job on his
beloved Porsche, which is to be parked as a headstone over his grave at the cemetery].
Client's residuary estate will be devised to his brother Bob. Can Client create an enforceable
trust for either purpose?
__________ To have a trust, the trustee must owe enforceable duties to someone. This
it is not a charitable trust, and it has no individual beneficiaries who can
enforce the trust. Cats, nor cars cannot file lawsuits. This type of gift (in
which an animal or an object is the beneficiary) is sometimes called an
honorary trust gift. The trustee is on her honor in deciding whether to
perform the trust. The gift is valid only in the sense that it will be upheld if
Sarah chooses to perform. If she doesn't, the gift fails and there is a
resulting trusthere, in favor of the residuary beneficiary.
Additional problem with such gifts: ____________________________________ unless
the trust is limited to 21 years' duration. Because animals cannot be used as measuring
lives, trust might last longer than LIB + 21 years.
20. A pays the purchase price for land, and causes the title to be taken in B's name. A and B are
not related. Thereafter, A brings suit seeking to impress a resulting trust in his favor,
contending that he did not intend to make a gift of beneficial ownership to B, but had some
other reason for taking title in Bs name. Presumption:
20a. Same facts, except that A is B's father (or sister). Presumption:
Constructive trust IS NOT A TRUST. It is the name given to a flexible equitable remedy designed
to disgorge unjust enrichment. Two elements: (1) wrongful conduct, and (2) unjust enrichment.
21. Tanya had a will that devised all her property to Ann and Bill. Now in her last illness, Tanya
asked a friend to have a lawyer prepare a new will that devised her entire estate to Donna.
Several days later, the friend and the lawyer returned with the new will, which revoked Tanya's
present will. The lawyer began to explain the will's terms to her. Ann and Bill were present;
as soon as they learn what was happening, they create a disturbance and physically prevented
Tanya from signing the new will. Highly agitated, Tanya lapsed into a coma, and died three
days later. She was survived by Ann, Bill, and Donna. Who takes what?
Step 1: Apply the law. Is the new will admissible to probate? No; it was not signed and
witnessed.
Was the old will validly revoked? No; new will with its revocation clause was not
executed.
Law result: Admit the old will to probate. Ann and Bill take Tanya's entire estate
under the will.
22. Fred, a widower, has two children (Sam and Donna) and Sam has two children. After a
heated family argument, Sam bludgeons Fred to death with an axe. Fred left no will. Who
takes Fred's estate? Donna takes , of course. As to the other :
Many states have enacted a "slayer" statute [meaning no constructive trust analysis is
needed]: Killer forfeits interest in victim's estate if he:
22a. Consider the same facts, except that a sizeable number of states have not enacted slayer
statutes. In these jurisdictions:
_________________________________________________________ because we have
____________________________ that would lead to ___________________________.
23. Billy, named as beneficiary on a life insurance policy, was tried and acquitted on charges of
murdering the insured. Nonetheless, in a civil action brought under the states "slayer"
statute, the trial court found as fact that Billy had murdered the insured.
________ Should the decision be affirmed on appeal?
24. Another constructive trust case: In a divorce settlement, Harry agrees to keep a $100,000 life
insurance policy in force that names the couple's child Carl as beneficiary. Harry remarries,
and names his second wife Wendy as beneficiary on the policy. Wendy holds on a
constructive trust for Carl even though Wendy herself was innocent of wrongdoing. She
would be unjustly enriched by Harry's wrongful conduct.
25. Sam promised his sister Marie that he would provide a home for her and her daughter Angie,
if Marie would keep house and serve as hostess in his home. In the presence of witnesses,
Sam handed his brother Hobie Gates a deed naming Hobie as grantee (with no mention of a
trust) saying: "Hold this property in trust until Marie's death, then convey to Angie. This is
in consideration of services rendered by Marie as agreed." Sam died; Hobie denies the
existence of a trust, and claims the home as his own. Marie contacts you regarding legal
action to establish a trust in the property. Discuss issues presented and probable result of
legal action.
a. ________ Valid express trust?
Statute of Frauds: A trust of land must be evidenced by a writing that satisfies
Statute of Frauds; oral trust of land is unenforceable.
However, constructive trust may be imposed if:
(1) Fraud in the inducement. If Hobie orally promised to serve as trustee
but had no intention to perform his promise.
(2) Grantee-trustee was in confidential relationship with grantor-settlor.
(Business associates; father-child; etc.) If Marie can prove Hobie's
promise by clear and convincing evidence, constructive trust imposed:
equity's concern that one would take advantage of a confidential
relationship outweighs the concern of the Statute of Frauds that trusts of
land be in writing.
b. Suppose that Marie is unable to establish Hobie's promise by clear and convincing
evidence, and no constructive trust is imposed. Would Marie have any action against
Sam's estate?
26. Frank's will devised Greenacre to Jones; the will makes no mention of any trust. Frank's
secretary now alleges that Frank orally told Jones that Jones was to hold the land as trustee
for the secretary's benefit, and that Jones agreed to serve as trustee. Can the secretary enforce
the promise?
YES. Her testimony is admissible to show existence of the promise. If she is able to
establish Jones' promise by clear and convincing evidence, the promise is
enforceable via constructive trust. Equity's concern that one should not be
allowed to be unjustly enriched in violation of his promise outweighs concern that
will beneficiaries should be identified by language in the will. A constructive
trust is imposed to prevent unjust enrichment.
27. Same will, except Frank never told Jones about any trust. With Frank's will is an envelope,
marked "Personal," addressed to Jones. Inside is a typewritten note, signed by Frank,
instructing Jones to hold the land in trust for Frank's secretary. Can the secretary enforce this
as an express trust?
NO
because the will makes no mention of a trust. (And the typewritten note, not
witnessed, is not a valid codicil to the will.)
28. Tim's will devises land "to my good friend Sam Smith, as trustee, for purposes I have already
communicated to him," and devises his residuary estate to Hobie Gates. Smith is willing to
identify Tim's trust purpose and intended beneficiaries, as orally communicated to him by
Tim, and is willing to serve as trustee. Hobie objects, saying no valid trust was created.
What result?
No trust arises. To impose a trust would violate requirement of Wills law that
beneficiaries be named in the will, not by oral testimony. Smith holds on a resulting trust
for Hobie Gates, the residuary beneficiary.
Aaron borrows $100,000 for a business venture, and signs a note that Hobie signs as
guarantor. In performance of the obligation, Aaron assigns Creditor $10,000 yearly for eight
years out of trust income. Three years later, Aaron instructs the trustee to make no more
payments to Creditor.
a.
Creditor sues Aaron and seeks to enforce the assignment, or to reach Aaron's
interest in the trust by garnishment or execution. Result?
Does Aaron have an action against the trustee for paying $30,000 to Creditor
under what was clearly an invalid assignment?
________ Beneficiary who participates in breach of trust:
c. Creditor sues Hobie as guarantor and seeks to reach the trust principal or Hobie's
right to of the trust income.
What result as to Hobie's trust income interest? As to any interest retained
by the settlor:
30. Trust provides: "Income to my daughter Dolly for life, remainder to her children. In addition,
if the trustee determines that the income is insufficient for Dolly's support, the trustee may in
its sole discretion, not subject to challenge by any person, distribute to Dolly so much of the
principal as is needed for her support." Dolly, laid off by her employer, sues trustee to
compel a principal distribution, contending that the income is insufficient for her support
needs.
________ Does Dolly have a cause of action?
Dolly can compel a distribution of the amount she shows is needed for her support.
Purpose of the trust was not to give the trustee discretion; it was to provide for
Dolly's support. It would be an abuse of discretion to not make a distribution if
needed for support.
Conversely, any distribution of principal far in excess of Dolly's actual support needs
(taking into account other resources available to Dolly for her support) is a breach of
trust, and the remaindermen have an action against the trustee.
f.
Duty to segregate trust assets from personal assets, and duty to earmark trust assets by taking
title in the trustees name. Trustee cannot commingle trust funds with her own. If commingled
funds used to purchase asset and the asset goes down in value, conclusive presumption that (to
the extent available) personal funds were used. If the asset goes up in value, conclusive
presumption that (to the extent available) trusts funds were used.
Statute of Limitations does not begin to run on action against a fiduciary (trustee, executor,
guardian) unless and until he
(1) repudiates the trust [buzz words used by the courts] by denying existence of trust as to
the particular assets in issue;
(2) dies or resigns; or
(3) gives accounting that makes full disclosure of the facts on which action would be based
(e.g., an accounting that shows, not just that the trust loaned funds to someone, but that
the trustee was the borrower).
Whenever a trustee breaches any fiduciary duty (commits a "breach of trust"), whether self-dealing,
speculative investment, exercises a power not given to the trustee) in addition to bringing action to
remove trustee, beneficiary has option:
(i) He can ratify the transaction and waive the breach. (E.g., if speculative mining stock
goes up in value, "Thanks for doing such a good job of investing.")
(ii) He can sue for resulting loss. Name of the action is surcharge. Moreover, if (as in #31)
the case involves self-dealing, under the no further inquiry rule breach of a fiduciary
duty is an automatic wrong; good faith reasonableness, is no defense. Only issue in a
self-dealing case: measure of damages.
If (as in #31) trustee borrows trust funds and invests the proceeds, if value of purchased property
goes up in value, beneficiary can "trace" and claim the property for the trust via the imposition of a
constructive trust.
31a. Do the beneficiaries have any action against Hazel, who purchased the rental property from
Hobie, when she knew that Hobie was a trustee? (The rental property is now worth
$300,000)?
INVESTMENTS
32. Trust (current value $800,000) provides for income to Wife for life, remainder to Children.
The trust does not authorize distributions of principal to Wife. Current investments include
6% corporate bonds ($200,000) yielding $12,000 in annual income, and common stocks
listed on New York Stock Exchange ($600,000) producing cash dividends at an average of
2% ($12,000 per year). Trustee sells some common stock and invests the $200,000 sale
proceeds to buy stock in an IPO ("initial public offering") for Bodacious Inc., a three-yearold Internet start-up company that has lost money every year, has never paid dividends, and
is not likely to do so for at least five years. Six months later, the Bodacious stock has
declined in value to $80,000. Should the trustee be held liable for the $120,000 loss?
Former (pre-1990) law in most states: probably YES. (i) investing in a company with no
investment history or track record too speculative. (ii) investing 25% of trust in asset that
produces no income violated duty of fairness trustee owed to the income beneficiary vis a
vis the remaindmen.
Current law: Nearly all states have enacted the Uniform Prudent Investor Act ["UPIA"],
which is based on the modern portfolio theory of investing.
Trustee must establish a custom-tailored investment strategy for each trust, taking
into account such factors as:
-- general economic conditions,
-- the possible effect of inflation or deflation,
-- the expected tax consequences of investment decisions or strategies,
-- the role that each investment plays within the overall trust portfolio,
-- the expected TOTAL RETURN from income and capital gain,
-- needs for liquidity,
-- an asset's special relationship or value to the purposes of the trust or a
beneficiary, and
-- any differing interests of the income beneficiaries and the remaindermen.
________ But doesn't the investment's sharp decline in value create a res ipsa case that
the investment was imprudent, leading to trustee liability?
But what of the fact that the trustee knew that the IPO stock was unlikely to pay
dividends; and that for a $800,000 (oops! now $680,000) trust portfolio, the ordinary
income (bond interest and cash dividends) to be distributed to Wife will only be about
$20,000?
#1: Under UPIA, investment returns are measured by:
#2: Under the Uniform Principal & Income Act, trustee can exercise:
Starting point: Trustee distributes "income" items (interest income, rental income,
dividends on common stocks, etc.) to the income beneficiary; and adds capital gains (part
of proceeds of sale of a principal asset) to the corpus of the trust. However, .
Factors to be considered in exercising adjustment power (i.e., power to adjust total
return between income and principal, and allocate capital gain to principal):
Model answer: "The [name of state] Trust Code, which applies to all trusts in
[state] except to the extent the trustee's powers are expanded or limited by the
settlor, gives broad fiduciary powers. Specifically, the Trust Code expressly
authorizes a trustee to [do whatever the question involves]."
Exception: There are two situations where the answer is "NO, the trustee
DOESN'T have the power to do this." (There is a third casewhere the settlor
limits the trustee's powersbut that one isn't tested upon.)
1. ___________________________________________________
2. ___________________________________________________
33. Tom's will created a trust that named Larry, Curly and Moe as co-trustees. Some years later,
Larry and Curly want to sell Greenacre (a trust asset) and invest the sale proceeds in other
assets. Moe objects, and takes the position that since the trustees are not unanimous,
Greenacre cannot be sold. The trust instrument is silent on the question. Under the Trust
Codes of most states, is Moe correct?
ALL beneficiaries, all of whom are sui juris (over age 18, all have capacity), consent; and
(ii)
Spendthrift clause makes the trust indestructible (beneficiaries cannot terminate without settlor's
consent). Idea is that there is a further trust purpose of the settlor to be served: To provide
beneficiary with income interest that could not be assigned by him or reached by his creditors. To
terminate the trust would defeat a material trust purpose of the settlor.
Settlor can terminate a trust (including a spendthrift trust) even though it is irrevocable if all
beneficiaries consent. Point: If all parties who are interested in the trust say let's quit, no point in
continuing. However, that means ALL beneficiaries: They must be sui juris (i.e., can't be any minor
beneficiaries).
34. Mom died 15 years ago, leaving a will that created a trust: "Income to my daughter Mary
until she attains the age of 35, at which time the trustee shall distribute the trust principal to
her." Mary, who just turned 26, petitions to terminate the trust, pointing out that she is a CPA
and has a MBA from the Harvard Business School, has been successful in several business
ventures, and doesn't need a trust to manage the assets.
________ Should the court order termination of the trust?
What was the primary purpose of the trust?
including Dana's estate, as she appoints by her last will. If Dana does not exercise this power
of appointment, on Dana's death the trustee shall distribute the trust principal to Dana's
children." [Purpose of a power of appointment: permits the income beneficiary to designate
the remaindermen.]
Tom was the donor of the power of appointment as his will created the power.
Dana is the donee of a ______________________________________ testamentary
power of appointment, because she is not limited in the class of beneficiaries to
whom she can appoint; she can appoint the property to herself, her creditors, OR her
estate.
Dana's children are takers in default of appointment, as they will take the property
on Dana's death if the power of appointment is not exercised.
35a. Dana died three weeks ago, leaving a will that bequeaths her residuary estate "one-half to
my husband Harry and one-half to my son Steve."
_______ [Majority rule] Did the residuary clause in Dana's will operate to exercise the
testamentary power of appointment, even though her will made no reference
to the power of appointment?
36. Mom's will creates a trust: "Income to my daughter Beulah for life, and on her death
principal to such of Beulah's descendants as she shall appoint by her last will. In default of
appointment, to Beulah's children in equal shares."
36a. Beulah dies ten years later. Her will devises "all my property, including any property over
which I may have a power of appointment, to my daughter Diane."
________ Did Beulah's will exercise the special testamentary power in favor of
Diane?
36b. Same facts, except that the trust provided: ... and on Beulahs death principal to such
of Beulahs descendants as she appoints by a will that specifically refers to this power
of appointment. In default of appointment, to Beulahs descendants. Beulah dies ten
years later. Her will devises "all my property, including any property over which I may
have a power of appointment, to my daughter Diane."
________ Did Beulah's will exercise the special testamentary power in favor of
Diane?
36c. Original facts (no "specific reference" clause). During Beulah's lifetime, for a
consideration she enters into a contract under which she agrees to execute a will that
exercises the power of appointment in favor of her son Roger. Beulah later dies
leaving a will that exercises the power in favor of Roger. Valid exercise of the power
of appointment?
. . . because: