Wills, Estates, and Trusts Fall 2013

Freedom of Disposition
1. Power to Transmit property at Death
2. Mechanics of Succession
a. Probate and Nonprobate property probate property is property that
passes through probate under the decedents will or by intestacy.
Nonprobate property is property that passes by way of a will substitute.
(see below)
i. Inter Vivos Trust
1. Property put in trust, trustee holds it for the benefit of one
or more beneficiaries.
2. Testementary trust passes through probate, but property in
I.V. trust during the decedents life passes in accordance
with the trust avoiding probate administration
ii. Life Insurance
iii. Pay-on-Death (POD) and Transfer-on-Death (TOD) Contracts
iv. Joint Tenancy
1. Decedents interest vanishes at death
b. Probate terminology
i. Personal representative a fiduciary who collects and inventories
the property of the decedent (to be used in this class in lieu of
executor/executrix, or other tor/-trixes)
ii. Testate her will names the person to execute the will (the
executor)
1. Devise real property to devisees and bequeath personal
property to legatees
iii. Intestate court names a representative (administrator)
iv. Probate is a type of court, or specialized court within the state
1. May have a subsystem of referees
2. Can be analogized to bankruptcy case judicially
supervised procedure
c. Probate administration serves 3 purposes 1) Evidence of transfer of title,
2) protects creditors, and 3) distributes the decedents property
i. Opening Probate and Choice of Law
1. Primary or domiciliary jurisdiction if where decedent
domiciled at death
2. Ancillary probate if real property is located in another
jurisdiction
ii. Common Form and Solemn Form Probate
1. Common form ex parte proceeding in which no notice or
process was issued
2. With a period of years, an interested party could file a
caveat, compelling probate of the will in solemn form
a. Notice was issued
iii. Formal and Informal Probate (difference is lack of notice)

1. Informal probate used quite a bit, however claims can be

filed up to 7 years later, can be unsupervised
iv. Supervised and Unsupervised Administration (everyone is notified,
but not necessarily require that the PR constantly file with the
court)
v. Barring Creditors
1. Every state has a nonclaim statute, which requires creditors
to file claims within a specified time period
vi. Closing the Estate
vii. Note: cost of probate
d. Is Probate Necessary?
i. Probate is the process that determines whose name should go on
the ownership of title line
e. Notes Problem
i. Aaron Green probate problem
1. Bunch of non-probate property will transfer immediately to
Mrs. Green (probably a POD provision on mutual fund
property). Personal property usually divided up the family.
Probably dont have to probate this estate
2. Owning a house worth 170K and lot worth 16K means
that we need to probate the estate to get the title in her
name. can avoid by setting up a joint tenancy or IV trust
3. Professional Responsibility
a. Duties to Intended Beneficiaries
i. Simpson v. Calivas (1994)
1. Drafting a will includes a duty to the beneficiaries of the
will
b. Conflicts of Interest
i. A. v. B. (1999)
1. Problem is that the wifes property may transfer to the
illegitimate child of the husband
2. (look up RPC 1.6 in Idaho) follows the basic ABA rule
and so we cannot make this disclosure to the client
a. So withdraw from representation
Intestacy: An Estate Plan by Default
1. Estate plan by default
a. Why do so many people die intestate?
b. Purpose of Intestacy statutes
i. To carry out the probable intent of the average testator
c. Applicable Law and Uniform Probate Code
i. Non-community property and UPC
1. If there are issue - Surviving spouse gets to depending
on if the issue belongs to the decedent, plus another portion
of the estate (might be $150K) - (essentially trying to give
the entire estate to the spouse in a small estate)
ii. Community property state and UPC

1. Surviving spouse gets all the community property (retains

interest in community property and inherits the
remaining half)
2. If there is separate property, the UPC provisions kick in for
the remainder (more than $100K of non-community
property left to others)
d. Heirship and Expectancy of an Heir Apparent
2. Basic Structure of Intestate Succession
a. Surviving Spouse
i. Spouses share
1. Common that testator leaves the entire estate to the
surviving spouse (better than 75% of those polled)
2. UPC and applicable law tries to reflect this
ii. Domestic Partners and Same-Sex Marriage
1. WA state has revised intestate succession to take into
account Domestic partnership (different than most states)
iii. Problem of Simultaneous Death
1. Janus v. Tarasewicz
a. F: A couple was poisoned and the court is left to
look at evidence to determine which person died
first. Case involves Uniform Simultaneous Death
Act (USDA)
b. I: Was there sufficient evidence that the wife
survived the husband
c. R:
d. A: Life Insurance passes to W (who dies) which
passes to her estate and her beneficiaries (here the
father through the probate estate
e. Difficulty in this case comes from the determining
of sufficiency of evidence used in the USDA
language
f. Intent of legislature in USDA to avoid probate and
confusion seen in this case
g. Notes: many states have repealed the USDA and
now follow the UPC defining survivorship as 120
hrs. (personal note: draft this into your will just in
case the state you die in has different law)
b. Descendants (Issue) persons related to you in a straight line of descent
i. Representation (Know the difference for the final!)
1. Common law (English Per Stirpes)
a. Children would take their share if alive (p. 82)
b. Took care of vertical equality in the family
2. Old UPC (as in Idaho) a.k.a. Modern law
a. Goes to first living descendant (and generation) and
then more remote generations take according to
representation

b. Wanted more horizontal equality

c. Good but tiny reform
3. New UPC (1990 reformed) (a.k.a. per Capita at each
generation)
a. Not adopted in Idaho, however Washington,
Montana
b. Gets rid of the concept of representation
c. Go to first level of living descendant, then treat the
shares as one big pot when you drop it down
ii. Representation in Wills and Trusts
c. Ancestors, Collaterals, and Others
Ancestors related straight line up (e.g. parents, grandparents, great-grandparents, etc.)
Collaterals related through a common ancestor
i. Parents
1. UPC takes account when the decedent is not married and
has surviving parents and allows parents to take a portion
of the estate
ii. Other Ancestors and Collaterals
1. Parentelic system
a. Statute will look more like the UPC
b. Always by representation
c. Favors the relatives closest to the decedent by the
common ancestor
d. Most go to the level of great-grandparents before
cutting off
2. Degree-of-relationship system
a. Next of kin used to identify the statute
b. Count the steps up from decedent to the claimant
i. Closest degree relative takes per Capita
3. All states have a preference for a first-line collateral
a. They take everything, but in representation
i. Goes to parents, then siblings and their issue
iii. Laughing Heirs
iv. Stepchildren and in-Laws
v. Half-bloods
vi. Escheat
d. Disinheritance by Negative Will
3. Transfers to Children
a. Adopted Children
i. Formal Adoption
1. Hall v. Vallandingham (1988)
a. F: Four children are adopted after the death of their
father upon their mothers remarriage. After an
uncle dies, they allege they should be given part of
the estate

b. I: Did the trial court err in regarding natural

inheritance by adopted persons in denying the
Appellants right to inherit through their natural
uncle
c. R: Adoption is treated as a rebirth, severing ties
with both the natural parents and relatives.
d. A: In an effort to avoid double-dipping, the courts
in effect say that a childs right to inherit goes to the
new step-dad, and not the bio-dad
e. C: Adoption eliminates the adopted childs right to
inherit from the natural parent. Judgment affirmed
f. Question of inheritance from Dad and StepDad
versus Through. Going to intent of average
testator
g. Hall is not the majority approach anymore, as most
states allow double-dipping
h. 2008 Amendments of the UPC in effect the court
needs to determine if there was a parental
relationship with the child
ii. Adult Adoption
1. Becoming a tool used to create familial relationships
(starting primarily in the 1980s). Popularity blossomed in
Gay/lesbian communities.
iii. Adoption and Wills and Trusts
1. Minary v. Citizens Fidelity Bank & Trust (1967)
a. F:
b. I: Did an heirs adoption of his wife make her
eligible to inherit under the provisions of his
mothers will (inheriting from a trust)
c. R: An adult person may be adopted in the same
manner as provided by law for the adoption of a
child with the same legal effect
d. A: However, the adoption of an adult for the
purpose of bringing that person under the provisions
of a preexisting testamentary instrument when he
clearly was not intended to be so covered should not
be permitted
e. C: Judgment is reversed
iv. Equitable Adoption
1. ONeal v. Wilkes (1994)
b. Posthumous Children
c. Nonmarital Children
d. Reproductive Technology and New Forms of Parentage
i. Posthumously Conceived Children
1. Woodward v. Commissioner of Social Security (2002)

a. I: Married couple has sperm preserved to help them

have children in the future. Man dies and then
woman uses his sperm to have children. Are the
children able to enjoy inheritance rights of natural
children under Mass. State law?
b. R: Balancing test - best interests of the children
balanced against other state interests (children alive
or already conceived, reproductive choices of the
individual, and notice given to that effect - consent)
c. C: In certain limited circumstances, a child
resulting from posthumous reproduction may enjoy
the inheritance rights of issue
ii. Posthumously Conceived Children and Wills and Trusts
1. In re Martin B (2008)
iii. Surrogacy and Married Couples
iv. Assisted Reproduction and Same-Sex Couples
v. 2008 Amendment to the UPC
e. Advancements and Hotchpot
i. Advancements at Common Law
ii. Hotchpot
iii. Advancements in Modern Law
1. Uniform Probate Code (1990)
a. 2-109 Advancements
f. Guardianship and Conservatorship of Minors
i. Guardian of the Person
ii. Property Management Options
1. Guardianship of the Property
2. Conservatorship
3. Custodianship
4. Trusteeship
4. Bars to Succession these apply to both intestate and testate succession
a. The Slayer Rule
i. In re Estate of Mahoney (1966)
1. F: Vermont in 1960s had a separation of law and equity in
courts still and probate court was a court of law, thus did
not have equity jurisdiction. Wife was convicted of
manslaughter of her husband and father of decedent was
appointed administer of the estate
2. I: Whether a widow convicted of manslaughter in
connection with the death of her husband may inherit from
his estate. Jurisdiction issues as well as Probate court could
not order a constructive trust (equity remedy) which would
be the best course here.
3. R: Due to the nature of the crime, a constructive trust is the
most equitable solution in a slayer case as a slayer should
not be permitted to improve his position by the killing, but

should not be compelled to surrender property to which he

would have been entitled if there had been no killing
4. C: Reverse the decision of the probate court
5. Remedy in this case was a constructive trust
a. Equitable remedy in which wrong owner was forced
to convey property to the true owner. Only courts
can order constructive trusts (they are NOT real
trusts)
6. UPC a slayer who feloniously and intentionally kills the
decedent is barred from inheriting
a. Dont need a criminal conviction, burden is a
preponderance of the evidence
b. We treat the slayer as if they predeceased the
decedent for the purpose of determining who
inheritance
ii. Application of the law of restitution and unjust enrichment
b. Disclaimer two reasons
i. From Common law to statutory law
1. Common law renunciation
2. Statute- disclaimer
ii. Avoiding taxes
1. Limit tax exposure, avoid estate tax
iii. Avoiding creditors
1. Ordinary creditors
a. Property jumps over A to B (As child), meaning
that As creditors cant attach to it
2. Federal Tax Lien
iv. Disclaimers to qualify for Medicaid
1. Scenario: A is disabled, 75 y.o., receiving care in a facility
paid for by Medicaid
2. Almost all states have passed statutes requiring A to spend
down the inheritance until they qualify for Medicaid,
disclaimer is not typically effective as the person is still
treated as having the inheritance
a. In Idaho, you CANNOT disclaim and retain
Medicaid
Wills: Formalities and Forms
Question: What could the estate planner have done? Litigation is based more
often on failure to plan
1. Execution of Wills rules as they pertain to 1) attested wills, 2) holographic wills,
and 3) notarized wills
a. Attested Wills
i. Core Formalities
1. Writing
2. Signature
3. Attestation

a. Depends
i. SoF (1677) 3 witnesses
ii. Wills Act (1837) 2 witnesses
iii. UPC (1990) 2 witnesses and signatures
iv. UPC (rev.2008) 2 witnesses signatures or
notarization
ii. Functions of Formalities
1. Four policies
a. Evidentiary
b. Protective
c. Ritual
d. Channeling
2. Classification of Gratuitous Transfers
3. Substantial Compliance with the Wills Act
iii. Strict Compliance Rule
1. In re Groffman (1969)
2. Stevens v. Casdorph (1998)
a. F:
b. I: Whether a will is valid if it was not witnessed
properly by the witness?
c. R: Testamentary intent and a written instrument,
executed in a manner provided by statute, existing
concurrently, are essential to the creation of a valid
will
d. Meaning of Presence policy need more than a
gut feeling . Both old and new UPC have presence
requirement if someone is signing for the testator
i. Line of Sight
1. Can argue conscious presence. Case
law moving more toward a more
expansive definition
ii. Conscious Presence
1. Doesnt require you to see pen touch
paper and comprehends the act of
signing
iii. Uniform Probate Code 2-502(a)
e. Signature Requirement
i. Signature by Mark, with Assistance, or by
Another
ii. Order of signing
iii. Subscription and addition after signature
iv. Delayed attestation
v. Meaning of Writing and Video or Electronic
Wills
iv. Interested Witnesses and Purging Statutes
1. Estate of Morea (1996)

a. Tradition dictated that you needed disinterested

witnesses.
b. Purging provision applies, the will stands and the
interested witness is taken out of having any interest
in the will.
c. Here, there were two good witnesses, who receive
no beneficial disposition
2. Need 2 witnesses under UPC, but they do not need to be
disinterested anymore
v. Model Execution Ceremony p. 167
1. Where client is domiciled at death governs the will, so
following the model execution ceremony should comply
with all state statutes.
2. Always want 3 witnesses to comply with the strictest
requirements
3. Self-proving affidavit
a. At the time of signing the will, you want the testator
and witnesses to sign a separate affidavit, swearing
to the execution.
b. People sign twice and affidavit notarized.
c. Make sure the affidavit follows the statutory format
d. Some try to combine the affidavit and the will, but
to be in full compliance, a separate affidavit is best.
4. Safeguarding a will
a. Only one original will, but can make clear copies of
the will
b. Put the original in a firebox or someplace
accessible.
c. Give copies of the will to important people
vi. Ad Hoc Relief from Strict Compliance
1. In re Pavlinkos Estate (1959)
a. A couple mistakenly signed each others copy of the
will.
b. There was no need to probate the first decedents
will since the spouse was still alive, so the mistake
went unnoticed.
c. Court did not allow the wills to stand, in part
because the wills did not match, and court would
have to make more changes to have the will make
sense
2. In re Snide (1981)
a. In this case, the wills were mirror images. However
this case is in the minority
3. Black letter rule There is no doctrine of mistake in wills!
a. Harder to show what the testators intent

b. Relatively small amount of errors and clear

evidence of intent may be able to overcome the
problems with the will determined by statute
though.
vii. Substantial compliance Doctrine
1. Near miss rule requires you to show that you almost
complied
2. Only about three or four states adopted it. But courts really
had a hard time determining where the line is for
compliance.
viii. Harmless Error Rule Dispensing power
1. Uniform Probate Code (1990, amended 1997)
a. Allows the court to dispense with some of the
formalities in presence of strong intent
b. CA has adopted the Harmless Error rule.
c. MT has the Harmless Error rule
2. In re Estate of Hall (2002)
a. Described in the case as joint will contract
implied in fact to not revoke the will.
b. Do not execute a joint will in your practice!
c. Needed clear and convincing evidence that decedent
intended that will to be his will.
i. Here, they ripped up the previous will, had
the draft notarized.
3. In re Probate of Will and Codicil of Macool (2010)
a. Problem was a gap in the evidence between
handwritten note and rough will that the decedent
never physically saw prior to death.
b. Notarized Wills
i. In 08 UPC state, notarization is enough to constitute a valid will
ii. In most other states, notarization is not enough to validate the will
c. Holographic Wills key requirement is that it is not witnessed! Material
portions must be in testators handwriting
i. Discerning Testamentary Intent
1. In re Kimmels Estate (1924)
2. Question of testamentary intent
a. Did the testator mean for this letter to be a will, as
in did he intend for this letter to be the document to
dispose of their estate
ii. Preprinted Will Forms
1. In re Estate of Gonzalez (2004)
2. New UPC states that material portions must be in testators
handwriting
a. Attempt to get out of hyper-technical analysis
iii. Signature and Handwriting
1. Signature

2. Extent of the Testators Handwriting

a. First Generation: Entirely written, signed, and
dated
b. Second Generation: Material Provisions
c. Third Generation: Material portions and extrinsic
evidence allowed
d. Extrinsic evidence
i. In re Estate of Kuralt (2000)
2. Revocation of Wills
a. Revocation by writing or by Physical act wills are ambulatory meaning
it can walk around. Not enforceable at time of execution, but rather upon
the testators death.
i. Express and Implied Revocatory writings
1. States permit revocation by:
a. Subsequent writing with Wills Act formalities, and
b. A physical act such as destroying, obliterating, or
burning the will
2. Express revocation A writing executed with Wills Act
formalities may revoke the will in whole or in part by using
express revocation
a. Must meet the requirement of the Wills Act!
3. Later Inconsistency Will use the inconsistency of a
comprehensive later will to revoke or partially revoke the
earlier will
4. Act to the Document and Intent to Revoke burn it up, tear
it up, etc.
ii. Formalities, Writings, and Physical Acts
1. Thompson v. Royall (1934)
a. F: Verbal statement in front of witnesses that she
wants to revoke the will, plus a notation on the back
that declared the will void and signed by testator
b. Court goes to intent to revoke test of intent to
revoke The act had to touch and concern the
words of the will.
c. Writing on the back was not enough. Here there
was no harmless error rule. May have been
different if she had handwritten the notation
(express written holographic revocation)
2. In re Estate of Stoker (2011)
a. F:
b. Here the court applies the harmless error doctrine
iii. Presumption of Physical Act Revocation
1. Harrison v. Bird (1993)
a. F: Court found the attorneys destruction of the will
was not sufficient (outside of her presence)

b. Presumption (weak)(1) in her possession, (2) not

in her affects after death or found among the affects
destroyed. Burden shifts to the other party, but can
be rebutted by preponderance of evidence
c. Can rebut the presumption by showing other people
had access to the will. Or by statements of the
testator around the time of death indicating a belief
they had a will
d. Alabama rule when you revoke a will, you revoke
the will and all copies and codicils
2. Lost Wills and Presumption of Revocation
iv. Partial Revocation by Physical Act
b. Dependent Relative Revocation
i. Elements: Where T has a will, there is a presumption against
intestacy.
1. (executed codicil) and revoked the earlier will based on
mistake of law
ii. LaCroix v. Senecal (1953)
1. Had a will leaving a portion of her estate to her nephew and
friend. Then a few years later she had a codicil revoke the
previous portion of the will and restating it to more
correctly identify her nephew. but the codicil is
ineffective since it was a spouse who witnessed the will.
2. So the codicil revokes the clause, and then the codicil fails
as to Aurea
3. MISTAKE can apply DRR
a. Policy reason
4. And so we undue the revocation.
c. Revival of Revoked Wills
i. 2-509 Uniform Probate Code (1990)
1. (a) if a subsequent will that wholly revoked the previous
will is itself revoked by physical act, the presumption is
that the previous will remains revoked
2. (b) if a subsequent will the partly revoked the will is itself
revoked, the presumption is that the previous will is
revived.
ii. In re Estate of Alburn (1963)
d. Revocation by Operation of Law
i. Divorce
1. In all but a handful of states, statutes provide that a divorce
revokes any provision in a decedents will for the
decedents divorced spouse.
2. In the remainder, revocation occurs only if the divorce is
accompanied by property settlement
ii. Marriage
iii. Birth of Children

3. Components of a Will
a. Integration all papers present at the time of execution and are intended to
be part of the will are treated as part of the will
i. In re Estate of Rigby (1992)
1. F: Two pages presented for probate. The first appears to be
testamentary while the second is offered as part of the will.
2. I: Can the second page be treated as part of a valid
holographic will?
3. R:
b. Republication by Codocil
i. A validly executed will is treated as re-executed as of the date of
the codicil.
ii. Idea of updating the execution of the entire will
c. Incorporation by Reference
i. Existing Writings
1. Clark v. Greenhalge (1991)
a. F:
b. I:Whether a document may be incorporated by
reference into a will if the will refers to the
document even though it may not be in the same
form as stated in the will, but serves the same
function as the document stated in the will, and was
in existence at the time the codicils to the will were
created.
c. R: A document may be incorporated into a will by
reference if (1) the will makes reference to the
document, (2) the document existed at the time the
will was created, and (3) is the document
sufficiently identifiable in the will.
d. Court held yes.
2. Again, the writing must (1) predate the will and be (2)
clearly referenced in the will.
3. 2-513 list: Tangible Personal Property
a. Not available in all jurisdictions
d. Acts of independent significance
i. UPC 1990 (2 512) Events of independent significance
1. A will may dispose of property by reference to acts and
events that have significance apart from their effect upon
the dispositions made by the will, whether they occur
before or after the execution of the will or before or after
the testators death. The execution or revocation of another
individuals will is such an event.
Wills: Capacity and Contests
1. Capacity to make a will
a. Mental Capacity Traditional 4 part test: the testator must be capable of
knowing (1) the nature and extent of his or her property, (2) the natural

objects of his or her bounty [the people who take the testators estate], and
(3) the disposition that he or she is making of that property, and must be
capable of (4) relating these elements to one another and forming an
orderly desire regarding the disposition of the property.
i. In re Wrights Estate (1936)
1. F: An old man left an unusual will. Various witnesses
claimed he was of unsound mind will the will was
executed. The witnesses ranged from testimony devoid of
fact to those who gave specific details of quirks or unusual
behavior
2. I: Whether there is a good contest of this will by claiming
the testator was of unsound mind during the execution of
the will.
3. R: Legal presumption is always in favor of sanity,
especially after attestation by subscribing witnesses. It is
the duty of the witnesses to be satisfied of the testators
sanity before they subscribe the instrument (the latter
seems to be a stretch by the court)
4. Testamentary capacity cannot be destroyed by showing a
few isolated acts unless they directly bear upon and have
influenced the testamentary act.
5. C: The will was held to be valid
ii. Wilson v. Lane (2005)
1. F: the woman was showing signs of senile dementia.
2. I: Was there enough evidence of mental incapacity to
invalidate her will
3. R: The will standard is lower. There needs to be evidence
of mental incapacity during the execution of the will
b. Insane delusion held that idiots and persons of non-sane memory
could not make wills, but accepted as valid the will of the testator who met
the four elements, but was crazy.
To be considered insane - 1) False conception of reality, 2) will related
to the insanity as the causation element
i. In re Strittmaters Estate (1947)
1. F: Woman appeared to be a crazy man hater (may have
been justified, with appropriate facts) and left her estate to
the national woman party
2. I:
3. R:
ii. Breeden v. Stone (2000)
1. F: Man was paranoid about the government and went on a
drug binge. Executed a holographic will, killed his dog,
and then killed himself.
2. I:
3. R: Defined insanity belief w/ no existence in fact adhere
to it against all the evidence

4. However, the entire will does not fail if only part of it are
affected by delusion.
2. Undue Influence
a. What is undue influence? (Use both approaches when analyzing) First
question though, ask if the testator had free agency.
i. Influence exerted over the donor overcame the donors free will
and caused the donor to make a transfer that the donor would not
have made otherwise
1. Approach 1
a. Show confidential relationship
b. Suspicious circumstances
i. Unexpected disposition of the estate (i.e.
bulk of the estate going to a non-relative)
ii. Strange facts in the execution of the estate
c. Raising the prior two facts raises the presumption of
undue influence rebuttable presumption
2. Approach 2 - Inference of undue influence from
a. Donor was susceptible to undue influence
b. Alleged wrongdoer had opportunity to exert undue
influence
c. Alleged wrongdoer had a disposition to exert undue
influence,(Bad motive) AND
d. There was a result appearing to be the effect of the
undue influence (usually this means a benefit)
b. Undue influences in cases
i. Estate of Lakatosh (1995)
1. Suspicious circumstances offered in the Restatement 3d p.
290
ii. In re Estate of Reid (2002)
1. Cupit had many methods to try to get the property
(adoption, holographic will, having it deeded to him)
2. R: Look to the factors of a confidential relationship. Once
a confidential relationship is found, the burden shifts to the
beneficiary to disprove the presumption of undue influence
by clear and convincing evidence.
3. To over the presumption, proponents must show 1) good
faith on the part of the beneficiary, 2) grantors full
knowledge and deliberation of the consequences of her
actions, and 3) the grantors independent consent and
action
4. Independent counsel key aspect of rebutting the
presumption
iii. Lipper v. Weslow (1963)
1. Attempts to prevent will from being contested
a. Includes a no contest clause
b. Explanation about the disinheritance

i. Problem here, makes it look like the lawyer

drafted it, not the client
ii. Potential factual inaccuracies
iv. Bequests to lawyers and fiduciary appointments
1. Lawyers cannot be a beneficiary (shall not)
a. 1.8 cannot solicit a gift or draft an instrument
c. Planning for and Avoiding a Will Contest
i. Warning signs
1. Disinheriting objects of natural bounty
2. Significant changes in the estate plan
3. Relationships outside the box (outside the typical family)
ii. Strategies
1. A letter to the lawyer with explanation of disposition
wishes
2. No contest clause
3. Video recording or dictation to stenographer
4. Family meeting where testator explains why they have
dispositive plan and rationale
5. Professional examination of clients capacity before
executing the will or trust
6. Inter vivos trust or gifts
7. Write a check on the day of the will execution to potential
contestants. (gimmicky)
3. Duress
a. Latham v. Father Divine (1949)
i. R: Where a devisee under a will already executed prevents the
testator by fraud, duress, or undue influence from revoking the will
and executing a new will in favor of another or codicil, so that the
testator dies leaving the original will in force, the devisee holds the
property thus acquired upon a constructive trust for the intended
devisee
ii. Remedy in an equitable remedy (cant happen in probate court)
constructive trust. Difficulty is that this imposes a constructive
trust on the innocent people as well as the fraudfeasers
4. Fraud has to be pled with specificity and has proof requirement of clear and
convincing evidence (just not preponderance). Usually requires an affirmative
act of wrongdoing.
3 types of information failure intentional tort, and need evidence of scienter
omission (usually not actionable as fraud)
half-truth (true but misleading, more info left unsaid, again not usually
actionable as fraud),
affirmative misrepresentation (said something not true, are generally
actionable as fraud).
a. Fraud in the execution
b. Fraud in the inducement
5. Tortious interference with an expectancy

a. Schilling v. Herrera (2007)

i. Ct. points out that person must exhaust his remedies in probate ct.
before a tortious interference claim can be made
ii. Here, brother was entitled to notice (due to his being able to take
through intestacy)
iii. Necessary elements for intentional interference:
1. Existence of an expectancy
2. Intentional interference with the expectancy through
tortious conduct (show conduct and intention)
3. Causation
4. Damages
Probate Court Phases
1. Admission - Proving due to Execution
2. Construction
Contests occur during construction phases is this what the testator
intended?
Goes to intent allows extrinsic evidence
Or (not really a big chasm between these two, but if possibly frame as a contest)
Construing Document limits on extrinsic evidence
Note: There is a distinction in types of mistake different rules for mistake in
execution/formation and mistake in the wills written words/construction
Wills: Construction
1. Mistaken or Ambiguous language in wills
a. Plain Meaning and No Reformation
i. Mahoney v. Grainger (1933)
1. F: to my heirs at law living to be shared equally. Meant
to include her first cousins and her aunt.
2. Under parentalic system, the aunt takes all. In degree of
relationship, she is the closest step-wise.
3. I: Can we get evidence in to interpret the term heirs at
law
4. R: The letter of the law is that the will is taken as it is
written and thus heirs at law cannot be construed to include
persons beyond the actual heirs at law.
5. The first cousins did not get any shares -court says this
mistake cannot be fixed no ambiguity
ii. In re Estate of Cole (2001)
1. F: Will had an error in amount bequested (written out sum
of two hundred thousand and numeric sum of 25K).
2. I: Can extrinsic evidence be allowed to clarify a patent
ambiguity in the will?
3. R: If, after examining the surrounding circumstances at the
time of the wills execution an ambiguity or inconsistency

persists, we may resort to extrinsic evidence and the rules

of will construction
4. Court fixes the mistake and creates a distinct between
patent and latent ambiguity
a. Patent on its face a mistake
i. Stuck with the four corners of the will, not
allowed to alter the written will and NO
extrinsic evidence
b. Latent only when the will is applied to the facts
i. Sometimes allowed extrinsic evidence
5. Are the words reasonably capable of meaning what the
contestant says usually how you prove the ambiguity
b. Ad Hoc Relief for Mistaken Terms
i. Arnheiter v. Arnheiter (1956)
1. F: Mistake in the construction of the will because an
address did not match the property owned by the devisor
2. I: Can relief be granted when the property devised does not
match the property actually owned by the testator
3. R: Doctrine of Falsa demonstratio non nocet where a
description of a thing or person consists of several
particulars and all of them do not fit any one person or
thing, less essential particulars may be rejected provided
the remainder of the description clearly fits.
4. Court fixes the mistake ii. In re Gibbs Estate (1961)
1. F: Mistake of identity where two persons share the same
name with different middle initials. Meant to give
property to w not j, and gave the wrong address.
2. I: Can the court fix the mistake by allowing extrinsic
evidence
3. R: Uses the false description doctrine.
4. Court fixes the mistake.
Case
Mistake
Intent
Court fixes?
Doctrine
Mahoney
Heirs at law
Cousins
No
No ambiguity
Cole
two hundred
Twenty five
Yes
Patent/Latent
thousand
thousand
ambiguity
(25,000)
Arnheiter
304 Harrison
317 Harrison
Yes
False description
doctrine
Gibbs
Robert J of 4708 Robert W of
Yes
False description
somewhere else
doctrine
The Court is more willing to cross out words than to add words to the will
Court may require evidence of intent
Court may require clear and convincing evidence of mistake
Court has mostly abandoned patent/latent distinction
c. Openly reforming Wills for Mistake

i. UPC 2-805 court may reform terms of a governing instrument,

even if unambiguous, to conform to the testators intention if it is
proved by clear and convincing evidence what the transferors
intention was and that the terms of the governing instrument were
affected by a mistake of fact or law, whether in the expression or
inducement
1. Note that is doesnt have a procedural component. (no
initial proffer)
ii. In re Estate of Herceg (2002)
1. F: the residual clause is incomplete. There is a prior will
that has a complete residual
2. I: Can the court fix the mistake
3. R: Court looks at intention and requires clear and
convincing evidence that there is a mistake of fact or law
4. Court fixes the mistake
2. Death of Beneficiary before Death of Testator
a. Lapsed and Void Devises
i. Specific or General Devise if a specific or general devise lapses,
the devise falls into the residue
ii. Residuary Devise If the residuary devise lapses, the heirs of the
testator take by intestacy. If only a share of the residue lapses,
such as when one of two residuary devisees predeceases the
testator, at common law the lapsed share passes by intestacy to the
testators heirs rather than to the remaining residuary devisees.
1. No-residue of a residue rule
iii. Class Gift If a devise is to a class of persons, and one member of
the class predeceases the testator, the surviving members of the
class divide the gift
iv. Void Devise if a devisee is already dead at the time the will is
executed, or the devisee is a dog or cat or some other ineligible
taker, the devise is void. Same rules that apply to a lapsed devise
apply to a void devise
1. In re Estate of Russell (1968)
a. F: Testator left a residuary clause that devised a
portion of her estate to her dog and to Chester, a
friend.
b. Possible solutions
i. Give to Chester to take care of Roxy
ii. Chester gets and partial intestacy
iii. Chester gets it all
c. Court decides to give Chester and the rest passed
through intestacy to a niece
d. Court applied the no residue of a residue rule so
no gift over to Chester
Note for exams: devise (real property) or bequest (personal property) verb for bequest is to
bequeath

b. Antilapse Statutes does not prevent lapse but rather substitute other
beneficiaries if certain requirements are met - UPC 2-605
(1) Who is covered? grandparent or lineal descendant of GP(notice spouse is
not covered)
(2) Substitute beneficiaries issue of the deceased relative
i. Presumed Intent for certain predeceasing devisees, the testator
would prefer a substitute gift to the devisees descendants rather
than for the gift to pass in accordance with the common law of
lapse
ii. Scope applies to a lapse devise only if the devisee bears the
particular relationship to the testator specified in the statute
1. Some apply to descendants
2. Others are broader, applying to grandparents or to all
kindred of the testator (occasionally to kindred of testators
spouse as well)
iii. Default rules
1. Designed to implement presumed intent, they are default
rules that yield to an expression of the testators actual
intent that is contrary to the statute
iv. Words of survivorship To A, if he survives me may
accidently draft out of antilapse statute, and maybe even out of
survive longer than 120 hrs
1. Ruotolo v. Tietjen (2006)
a. F: will contained the words if X survives me. TC
held the words as a contingency.
b. I: Did TC err in construing words as words of
survivorship
c. R: Antilapse statutes provide that there is a
presumption of intent of testator to avoid intestacy
or disinheritance
d. Court emphasizing the avoidance of passing
through intestacy. Words like if he survives me
are in many case surplusage
e. Burden is on the people who want the bequest to
lapse
c. Class Gifts
i. What is a class? problems: is this meant to be a group bequest?
Was the testator group minded? Difficulty mixing named
individuals and a group
1. 13.1 Class gift defined
2. 13.2 class gift distinguished
3. Dawson v. Yucus (1968)
a. F: Clause gave interest to two relatives. TC held it
was a gift to individuals. Contention was that the
bequest was a class gift.

b. I: whether the gift to the nephews was a class gift,

so that the surviving nephew would take the other
nephews share
c. R: Under the definition of the factors of a class gift,
the clause cannot be construed as a class gift, but
rather individual bequests.
d. C: the gift in the clause to the second nephew
lapsed and passed into residue.
e. Court achieved a result contrary to the intention of
the testator. No antilapse statute because they were
not blood relatives
ii. Application of Antilapse Statutes to Class Gifts
Great diagram on p. 373 for lapse and antilapse
Types of Provisions in wills:
Specific leaving a particular item of property to a beneficiary (very particular and
possessory
General Leaving more general portions of the estate (leave of the estate to X.
or Leave 10K to Y)
Demonstrative A hybrid of specific and general, that becomes more of a general
bequest (sell my property and give the cash to X)
Residuary leaving the residue of estate to a person, a catch-all clause
3. Changes in Property after Execution of Will
a. Ademption by Extinction only applies to specific bequests
i. In re Estate of Anton (2007)
1. F: Old woman in nursing home who appointed her daughter
as durable power of attorney. The daughter sold off her
home in order to pay for the woman to live at the nursing
home. After the womans death, the son wanted the
property devised to him (but it was sold), or the amount
from the proceeds
2. I: Was the sale of property in this case an ademption by
extinction
3. R: two theories identity theory or modified intention
theory
a. Identity theory specific item gone, then the gift
fails
b. Modified intention theory meant to give the item,
but if it is gone then the person will be its
equivalent (usually in cash)
c. Rests on knowledge of the property being taken
from the will
i. No knowledge no ademption

4. Court tries to be more flexible, and ultimately gives half of

the current remainder of the sale to each devisee (not the
full value of the amount it sold for)
5. Held that the sale of the duplex did not cause ademption to
the extent that there were specifically identifiable proceeds
in the estate at the time of death
UPC 2-606 Nonademption of specific devises, unpaid proceeds of sale, condemnation,
or insurance, sale by conservator or agent (p. 380)
Planning practice avoid specific bequests if at all possible too many problems can
arise. Instead do a separate memorandum(2-15 list) to add to the will. Letter of last
instruction to the PR
b. Stock Splits and Problem of Increase better to use proportions instead of
specific bequests
c. Satisfaction of General Pecuniary Interests
d. Exoneration of Liens old law was that property had to be free of liens
(so residuary was reduced to pay down the mortgage), however the UPC
reverses that rule
i. Check the state to see if there are ways to draft around this
e. Abatement abates reduce in order of 1) residuary, 2) general, and 3)
specific and demonstrative
Hypo: will with following provisions
(1)Like the GC to care for and nurture my rare rose
(2)The PR should sell all the art in my home and the home, and give proceeds of
the sale to GC to care for the roses
(3) rest and residue to the daughter
Facts: very involved in botanical gardens (may be the GC), had a prize
winning rose
One year before testators death, daughter with POA sells the art, and
reverse mortgage on the home, to pay for the testators care (mom in late
60s, but in good health). An account with approx. 500K that was a
common fund that mom used to pay for moms care
Both testator and daughter die in same care crash testator dead at the
scene, daughter kept on life support for 6 days, when spouse pulls the plug
No children of daughter and shes the only child
Limits on Freedom of Disposition: Protection of the Spouse and Children
1. Protection of the surviving spouse
Community property states v. non-community property states
Concerns:
(1) Avoid dependency
(2) Marital equity
Limits on Testamentary power (non-community property) and possible additional
limitations
Community property
Non-community property
Property interest acquired during marriage
No particular property rights created by being

presumed to be CP, except when acquired by

gift to one spouse, or inheritance. Present
vested property interest you cant give away
your spouses property interest
No election statute generally- adopted quasicommunity property statutory legal fiction
(would have been community property if
acquired in a CP state) leads to an election
(but only against quasi-CP)

in a marriage

Limitations on testamentary power:

Spousal Election statutes spouse does not
have to take

a. Elective Share of a Separate Property Surviving Spouse

i. Economic Partnership or Support Obligation
1. Spousal election statutes
a. sledgehammer- both over inclusive and under inclusive
b. Spouse may elect to take a share,
i. Can be over-inclusive (disaffirm and disrupt a will)
1. Despite it not accomplishing either of the
concerns (dependency, equity)
ii. Can be under-inclusive
1. Most states it only applies to probate
a. Can get around by creating Trusts,
POD accounts
2. UPC Art II, Part 2
ii. Cohabitating Partners and Same-sex Marriage
iii. Variation across the states
1. Must the surviving spouse accept a Life estate?
2. Subsequently deceased surviving spouse
3. Incompetent surviving spouse
4. Abandonment
iv. Non-probate property
1. Judicial responses
a. Sullivan v. Burkin (1984)
i. F: Ct. looking at revocable inter vivos trusts. Main
reason is to have the remainder interests pass to a
third party
ii. I:
iii. R:
b. Other Judicial responses
2. Statutory Reform
a. In re Estate of Myers (2012)
i. F: Previously held that POD accounts were will
substitutes
ii. I:
iii. R:
v. Uniform Probate Code
1. 1969 UPC Augmented Estate

a. Quasi-Community property allows an election. Applies

in non-community property that have adopted the UPC.
b. Wants to minimize the disruption of the testators estate
plan
c. Tries to address the over-inclusive/under-inclusive
d. Example - Steps:
i. Consider the probate estate, e.g. 500K
ii. Add in non-probate transfers from the decedent to
the surviving spouse: Life insurance, Inter Vivos
trusts, POD accounts, Joint and survivorship
tenancy, large cash transfers close to time of death.
E.g. another 500K
iii. Add in a third category: transfers decedent made to
third party, where the D keeps control over the
property during Ds life, but structured to pass
outside of probate. Inter Vivos trusts to 3d parties,
POD, large cash transfers close to death, J&S
tenancy. E.g. another 250K
iv. So under UPC, we get a value of 1.25M for
augmented estate. Surviving spouse gets 1/3 so
400+K
v. Next look at abatement statutes, and will
1. E.g will grants SS 50K
2. Go to second category e.g. 500K
3. Since SS share was 400+K, were done.
2. 1990 UPC and 2008 amendments
vi. Waiver by premarital or Postnuptial Agreement
b. Community property creates present vested interest in undivided of the
property acquired during marriage (except received through gift or inheritance).
If we layer the law of wills on that, then each spouse has testamentary power over
their of the community property.
i. Spread of the Community property system
ii. Management and disposition of Community property
1. Aggregate distribution in divorce of CP
a. Negotiated for and so on
2. In contrast, the majority of CP states give each person interest in
each piece of property acquired
a. SS would have interest as tenants in common with the
beneficiary of the Ds estate. Partition may be forced
b. Common law doctrine Widows election (Separate from
Spousal Election in the UPC Do not confuse the two)
i. Based on law of equity not specific to CP
ii. Can either affirm the will and take the IV trust or
disaffirm the will, take interest in the CP and run
c. Most court construe the will against an election (not giving
more than the Ts interest)

Surviving Spouse Hypo

1st characterize the assets (probate v. non-probate)
Probate necessary to 1) clear title, and 2)
Non-probate
huge annuity dumping into the estate
750 K annuity benefit (the original beneficiary Life insurance of 100K to Wileen
died)
500K in accounts (again, original beneficiary
died)
500K Montana real estate
150K of personal property
Community property
Non-community property
Most of the probated property would not be
considered community property
Step 2 Divide the Estate Does Wileen have He set up the trust to take care of the 2nd wife
any claims?
and wants the will to take care of the children.
No she would not have a claim on the personal
property in the estate
Does quasi-community property election
No, this would not have been CP in Wileens
apply? Do we go to the augmented estate?
and Harrys marriage
c. Migrating couples and multistate property holdings
Traditional conflict of laws rules used to determine which state law governs
marital property are as follows:
(1) Law of the situs controls problems related to land
(2) Law of the marital domicile at the time that personal property is acquired
controls the characterization of the property as separate or community
(3) the law of marital domicile at the death of one spouse controls the survivors
rights.
i. Moving from Separate property to Community property
ii. Moving from Community property to Separate property
d. Misc. additional rights
i. Social Security
ii. Pension and Retirement accounts
iii. Homestead
iv. Personal Property Set-Aside
v. Family Allowance
vi. Dower and Curtesy
2. Intentional Omission of a child
a. American Law
b. Family Maintenance System of the Commonwealth
i. Lambeff v. Farmers Co-operative Executors & Trustees Ltd. (1991)
1. F:
2. I:
3. R:
3. Protection against unintentional Omission

a. Spouse omitted from Premarital Will

i. UPC 2-301 Entitlement of Spouse, Premarital will
ii. Idaho statute 15-2-301
iii. In re Estate of Prestie (2006)
b. Unintentional Disinheritance of a Child
i. UPC 2-302 Omitted Children
ii. Gray v. Gray (2006)
iii. In re Estate of Jackson (2008)
TRUSTS
Trusts: Characteristics and creation
1. Trust in American Law
a. Origins of the Trust
b. Sources of Law
c. Vocabulary, Typology, and Illustrative Uses (p 391)
i. Settlor, grantor, trustor person who creates the trust
ii. Created during the settlors life inter vivos trust
1. May be revocable or irrevocable depending on intent
2. Created either by declaration of trust
3. Created by deed of trust
iii. Created by a will testamentary trust
1. irrevocable
d. Bifurcation of Ownership
i. Assert Partitioning and the Rights of Third Parties
ii. Fiduciary Administration and Rights of the Beneficiaries
iii. Four functions of trusteeship (396)
e. Trust Compared with a Legal Life
i. Legal Life Estate
ii. Equitable Life Estate A Trust
f. Business Trusts
g. Foreign Trust Law
2. Creation of a Trust
a. Intent to Create a Trust need to have To A for B
i. Testamentary Trust
ii. Deed of Trust
1. Jimenez v. Lee (1976)
a. F: grandma was the settlor, made the dad the trustee,
beneficiary was the daughter. Gma gave 1K bond, Mrs. D
gave 500 for Bitsys education
b. I:Was a trust created?
c. Dad wants this to be a custodial account because a statute
of limitations would apply (end when child turns 18).
i. UGMA not a good place to a good chuck of
change
d. R: it is enough if the transfer of property is made with the
intent to vest the beneficial ownership in a third person
e. What responsibilities does Lee have a trustee

i. Safeguard the trust property, keep the property

separate - Custodial
ii. Proper accounting and record keeping
administrative
iii. Place them in investment, responsibility under
prudent investor rule investment
iv. How he uses his discretion in distributing funds for
bitsys education distributive
f. Remedy in trusts equitable remedy Surcharge
personal liability for the trustee
i. In this case, entitled to the present value in the
property (or cash substitute)
iii. Declaration of Trust
1. Hebrew University Assn v. Nye (1961)
a. F: Professor died and gave property of books to wife.
Wife promises library to Hebrew university. She
catalogues it but never delivers it.
b. Wife is the settlor, Trust was created after Yahudas death,
Wife is also trustee, Hebrew U is the beneficiary
i. Declaration of trust
c. I: Was this a gift or a trust
i. As a gift, it fails for want of delivery
ii. Ct. said that she didnt do anything that shows she
took on the trust duties in regard to the library
1. However she repeatedly told people that the
books did not belong to her
d. R:
2. Hebrew University Assn v. Nye (1966)
3. Main requirement need to declare an intent
b. Trust Property there must be trust property (corpus or res)
i. Unthank v. Rippstein (1964)
1. F: A letter sent that stated an intent to give 200 a month to a lady.
Shes arguing it is a holographic codicil. (problem is that he is
stating it will start now, not upon death, therefore not
testamentary). She then argues it may be a trust
2. Upon trust theory, Craft is Settlor, Estate is trustee, and Rippstein
is Ben.
3. R: An expectation or hope of receiving property in the future, or
an interest that has not come into existence or has ceased to exist,
cannot be held in trust.
ii. Cant assign future profits or income into a trust. Must be present.
However, designating a trust as the beneficiary of a life insurance policy is
allowable (insurance is different, big exception to res requirement)
c. Ascertainable Beneficiaries
i. Beneficiary Principle
1. Clark v. Campbell (1926)

a. F: person left bric-a-brac in his estate to among my

friends as trustees to give
b. I: Whether the bequest for the benefit of the testators
friends must fail for want of certainty of the beneficiaries
c. R: The trust fails for lack of an ascertainable beneficiary
2. Power of Appointment (Donor/donee, similar to a principle/agent
relationship)
a. Property device give the property to an individual with
the power to give the property to someone else (fill in the
blank)
b. Transferee has a nonfiduciary power of appointment
c. If the class of beneficiaries is described such that some
person might reasonably be said to answer the description,
such a power is valid
d. Donees PoA - Cant violate the scope, but not compelled
to act
e. Can embed inside of a trust
ii. Pet and Other Noncharitable Purpose Trusts
1. Idaho Code - 15-7-601 Purpose Trusts
a. Under (2), does not need a beneficiary
b. No definition of noncharitable trust and purpose is not
specifically defined either.
2. In re Searights Estate (1950)
a. F: man bequests a pet and money to care for the pet to a
friend.
b. I:
c. R:
d. A written Instrument? No writing requirement for trusts. They come from
property (real estate) and wills. Evidence though for oral trusts (creation and
terms) only by clear and convincing evidence
i. Oral Inter Vivos Trusts of Personal Property
1. UPC (2000) 407 Evidence of Oral Trust
a. Established by clear and convincing evidence
2. In re Estate of Fournier (2006)
a. F: man gives cash in a box to two friends to hold for his
sister
b. I: was there an oral trust?
i. If there was, then Faustina gets it
ii. If not, then it goes into the estate and its split
c. R: Evidence must come in to prove the existence of a trust
d. Ct. felt that there was sufficient evidence of a trust through
witnesses
e. Post-script new evidence came in showing that he wanted
to split the money
ii. Secret Testamentary Trusts and the Wills Act
1. Olliffe v. Wells (1881)

a. F: 2 scenarios in example to help conceptualize this case

i. Rest and residue to Frank. On the side, a
conversation with Frank says give the money to
ACLU
ii. Rest and residue to Frank to do as I as instructed.
Same conversation with Frank.
iii. First scenario will pass the property to Frank (secret
trust), the second is a semi-secret trust. Problem
is that the second scenario does not pass in fee
simple, nor have I specified the instructions
b. I:
c. R: Semi-secret trusts are not enforceable
2. Writing requirement in wills creates the problem in Wells.
iii. Oral Inter Vivos Trusts of Land and the Statute of Fraudsa
Nonprobate transfers and planning for incapacity
1. Revocable trusts
a. Wills Act and Present Interest in the Beneficiary
i. R. trust may be created by a deed of trust whereby the settlor transfers to
the trustee the property to be held in trust
ii. Farkas v. Williams (1955)
1. F: Farkas is the settlor/trustee and sets Farkas as beneficiary for
life, Williams beneficiary upon death. F reserved powers.
2. In property terms, Farkas has a life estate, and Williams has a
contingent remainder
3. I: Why is this a revocable trust and not a will? What interest was
given up?
4. Benefit was to disinherit the children and avoid probate
5. Ct. found it was a valid inter vivos trust (now memorialized in
UTC)
6. Present interest and control to determine the validity of a trust,
the court applied 2 tests:
a. Whether W. acquired a present interest when the trust was
created
b. Whether F retained so much control over the trust property
that he still owned it at death, rendering the trust
testamentary
b. Abandoning the present interest fiction
i. UTC 603 Settlors powers power of withdrawal
ii. Moon v. Lesiker (2007)
1. F: Dad sets up trust to benefit family. Then he amends to transfer
stock to a new trust. Then sells airport stock for a loss, amend
family trust (but does not include airport stock).
2. I:
3. R: Contingent remainderman had no standing
c. Revoking or amending a Revocable Trust
i. UTC 602 Revocation or Amendment of Revocable Trust

ii. Patterson v. Patterson (2011)

1. F: Predominantly decided by the Utah UTC
2. R:
Practice point always good to have a back-up will. IV trusts are good for avoiding
probate, and good if person has significant wealth, and/or minor children
Testamentary pour-over to an IV trust 1) Will contains the pour-over (Do not say you
have a pour-over trust) clause that leaves property to the trust (goes through probate).
Usually in the residuary clause. 2) receptacle trust (IV trust) receives property from the
will, but often has other property (lifetime transfers)
d. Subsidiary Law of Wills
i. State Street Bank and Trust Co. v. Reiser (1979)
1. F: man transfers stock in business to himself as trustee, Life
Tenant, designating remainder to family members. Trust owns all
the stock. The bank loans 75K to the man, unsecured, and then
man dies 4 months later. Bank want to reach into the assets of the
trust
2. Trust transferred to possession, vested outside of probate. Thus the
assets
3. I: Can the bank reach into the assets of the trust to pay back the
loan
4. R: A settlor of a trust who retains administrative powers (to
revoke, to control beneficial enjoyment) owns that trust property
and provides that it shall be included in the settlors personal estate
5. Consistent with UTC
6. Where settlor reserved unfettered control over the property during
life = creditors may reach the property at death (IV trust is not a
creditor avoidance tool)
ii. Clymer v. Mayo (1985)
1. F: Woman was married, executed a will naming husband as
beneficiary. Created a new will and revocable trust (will was pour
over into the trust) H was beneficiary for life, remainder to
nieces and universities. W gets divorced and changes beneficiaries
except for trust (still left H, by accident?)
2. I: Does the divorce revoke the Hs interest in the trust
3. R: Statute stated that the divorce revokes the ex-spouses interests
under a will. By extension, the statute revokes Hs interest under
the trust
4. Policy last thing a party wishes is for an ex-spouse to take under
a will. And treating the components of the estate plan separately
and not as part of whole bring about inconsistent results.
Trusts: Fiduciary Administration
1. Limited powers to Fiduciary Administration
a. From Conveyance to management
i. Three types of trusts in practice

1. Business trusts
a. For commercial deals organizing a mutual fund or
facilitating asset securitization
b. Not donative in purpose
c. Involve an exercise of freedom of contract, not freedom of
disposition
2. Revocable trusts
a. For nonprobate transfers
b. Subject to the control of the settlor
3. Irrevocable trusts
a. For ongoing fiduciary administration by a trustee in
accordance with settlors intent
b. Trustees powers
i. Permitting the settlor to incorporate by reference in the trust instrument all
or some enumerated powers, or
ii. Changing the default law to give trustees a statutory list of powers, such
as under the UTPA
c. Fiduciary Governance
2. Duty of Loyalty loyalty to beneficiary
a. Hartman v. Hartle (1923)
i. F: Part of the Real estate was sold to the wife of one of the executors
ii. R: a trustee cannot purchase from himself at his own sale, and that his
wife is subject to the same disability, unless leave so to do has been
previously obtained under an order of the court
b. In re Gleesons Will (1955)
i. F: Trustee was given land to hold and lease and leased the property to his
own partnership.
ii. R: General rule is that a trustee cannot deal in his individual capacity with
the trust property
No-Further-Inquiry Rule: If a trustee undertakes a transaction that involves self-dealing
or a conflict between the trustees fiduciary capacity and personal interests, good faith
and fairness are not enough to save a trustee from liability. No further inquiry is made,
trustees good faith and reasonableness of the transaction are irrelevant
Only defenses are:
Settlor authorized the particular self-dealing
The beneficiary consented after full disclosure
Trustee obtained judicial approval in advance
Categorical exceptions:
Most states allow corporate trustees usually allow a dept. to handle
transactions
Structural self-dealing
c. In re Rothko (1977)
i. F: executors of a will rapidly disposed of the estate, selling paintings at a
very reduced rate to a couple of companies (who then sold them to further
purchasers). At least one of the executors had a conflict of interest,

another was gaining a personal advantage, and the third was not stopping
the other two in their dealings with MAG and MNY
ii. There were procedural issues in not getting appraisal, moreover there was
no opportunity for appraisal (sale in 3 weeks)
1. Flooding the market and may depreciate the value
iii. The actors and coexecutors:
Reis
Stamos
Levine
CPA/ dir, Sec., Treas. MNY
not too successful
College prof.
financially artist
Consignment K with Rothko
Curry favor w/ MNY in order Went along with the others
for 10%
to sell his own paintings to
MNY
iv. R: a few rules from this case
1. The duty of loyalty imposed on the fiduciary prevents him from
accepting employment from a third party who is entering into a
business transaction with the trust
2. An executor who knows that his coexecutor is committing
breaches of trust and not only fails to exert efforts directed toward
prevention but accedes to them is legally accountable even though
he was acting on the advice of counsel
3. If the only breach of trust is selling for less than value (and the
person is authorized to sell), then the person is not chargeable with
the amount of any subsequent increase in value of the property.
4. If a trustee in breach of trust transfers trust property to a person
who takes with notice of breach of trust, and the transferee has
disposed of the propertyit seems proper to charge him with the
value at the time of the decree, since if it had not been for the
breach of trust the property would still have been a part of the trust
estate
3. Duty of Prudence
UTC 804
Trustee shall administer the trust as a prudent person would, by considering the
purposes, terms, distributional requirements, and other circumstances of the trust.
In satisfying this standard, the trustee shall exercise reasonable care, skill, and
caution.
a. Distribution Function
In a mandatory trust trustee must make specific distributions to an identified
beneficiary
In a discretionary trust trustee has discretion over when, to whom, or in what
amounts to make a distribution
Power to distributing income, or principle, or both
May be virtually unlimited, or very limited
Standards for forcing trustee range from good faith standard to reasonable
i. Discretionary Distribution
1. Marsman v. Nasca (1991)

a. I: Does a trustee, holding a discretionary power to pay

principal for the comfortable support and maintenance of
a beneficiary, have a duty to inquire into the financial
resources of that beneficiary so as to recognize his needs?
b. R: Prudence and reasonableness, not caprice or careless
good naturefurnish the standard of conduct of discretion
c. Trustee has an affirmative duty of inquiry
d. Ct. held that the trustee had a duty to inquire ct. treats the
trust as if it was limited to support, not absolute discretion
e. Tendency is that trustees are to be parsimonious
f. Ct. hold that Farr breached his fiduciary duty in not making
distributions from the trust
g. Bona fide purchaser for value without notice trumps all.
ii. Sole, absolute, or uncontrolled discretion held to good faith standard
iii. Exculpatory clauses
1. Problem was the that trustee was the lawyer who drafted the trust
in Marsman, however in that case there wasnt sufficient evidence
to show he was doing to purely for his own protection
iv. Mandatory arbitration
b. Investment Function
i. From Legal Lists to Prudent Man to Prudent Investor
ii. Prudent Investor Rule and its rationale does not judge individual assets
but overall performance
1. Uniform Prudent Investor Act (1994)
a. Prudent Investor invest and manage trust assets by
considering the purposes, terms, distribution requirements,
and other circumstances of the trust. Trustee shall exercise
reasonable care, skill, and caution.
b. Factors to consider in investing and managing
i. General economic conditions
ii. Possible effect of inflation or deflation
iii. Expected tax consequences of investment decisions
iv. Role each investment or course of action plays
within the overall trust portfolio
v. Expected total return from income and appreciation
of capital
vi. Other resources of the beneficiaries
vii. Needs for liquidity, regularity of income, and
preservation or appreciation of capital
viii. Assets special relationship or special value to the
purposes of the trust or to one or more of the
beneficiaries
c. Duty of diversification trustee shall diversify unless the
trustee reasonably determines that, because of special
circumstances, the purposes of the trust are better served
without diversifying

d. Sensitivity to Risk/Return Curve no per se ban on

investments, but rather is the trust balanced in its
investments to accomplish its purpose. Totality of the
trust investments and look to meet the purpose
i. e.g. might have more high risk investments if the
goal is retirement income
ii. e.g. for immediate support, look more at low risk
investments and stable income
iii. Recurring problems in applying the prudent investor rule
1. Duty to Diversify and Inception Assets
a. In re Estate of Janes (1997)
i. F: trust had a concentration of stocks invested in
Kodak. Over the course of 8 years, the stock
declined to the point where a majority of the trusts
value was lost. Trial court held that the trustees
should have divested by mid 73, and imposed a
surcharge.
1. Trial court uses a market index to determine
damages lost profits or appreciation test
(like Rothko) came up with $6M
2. Appellate court uses value of capital lost
value at date it should have been sold minus
the value at the actual sale = result plus
interest. lowers damages to $4M.
a. Can only use appreciation test when
there is affirmative bad faith conduct
and breach
ii. I: Did the trustee breach their duty of prudence in
continually holding the stock despite its decline of
value
iii. R: In prudent person rule, there was no outright
rule to diversify
1. Now Trustee has a duty to diversify as per
the prudent investor rule
b. Compensatory Damages for Imprudent Investment
2. Terms of the Trust
a. Wood v. US Bank, N.A. (2005)
i. F: Shares in a company (Firstar, subsequent trustee)
were part of a trust. The trust stated that the
company was allowed to hold its own stock
(allowing them to get around the Undivided
Loyalty). The company during its control of the
trust, kept selling off other companies stock and
retained its own (avoiding diversification further).
ii. I: Did the trustee have a special circumstance to
retain the stock

iii. R: No, there was still a duty to diversify that that

trustee failed.
3. Custodial and Administrative Functions
a. Duty to Collect and Protect Trust Property
i. Testamentary trusts especially!
b. Duty to Earmark Trust Property
i. Important to mark property as trust property
1. Be it bank accounts, needs to be earmarked
for trust to prevent creditors from getting at
it
c. Duty not to Mingle Trust Funds with the Trustees Own
d. Duty to Keep Adequate Records of Administration
i. Hemanez v. Lee for an example on this
e. Duty to Bring and Defend Claims
4. Trustee Selection and Divided Trusteeship
a. Choosing a trustee
b. Delegation by a Trustee
c. Division by a Settlor
i. Co-Trustees
ii. Power of Appointment
iii. Directed Trusts and Trust Protectors
d. Private Trust Company
4. Duty of Impartiality UTC 803(2000)
a. Due Regard and the Terms of the Trust does not require impartiality in sense of
equality, but rather a balancing by giving due regard to the beneficiaries
respective interests defined by the settlor in the terms of the trust
i. Howard v. Howard (2007)
1. R:
2. Blended families, choice of trustee and Structural Conflicts
b. Principal and Income Problem uniform principal and income act (1997)
The unitrust development has to be developed into the trust
Set that a percentage goes to A, and the remainder goes back to the principal
This allows income to be determined early
Can have a provision in the trust to allow trustees to make a unitrust election
i. In re Heller (2006)
1. R:
5. Duty to Inform and Account
UTC 813 trustee has a duty to keep the beneficiary informed
a. Affirmative Disclosure
i. Allard v. Pacific National Bank (1983)
1. F: trustee did their job but did not keep the B informed
2. R: Trustee must inform the beneficiaries of all material facts in
connection with a nonroutine transaction which significantly
affects the trust estate.
b. Responding to a Request of Information
i. Fletcher v. Fletcher (1997)

1. R: the terms of the trust may regulate the amount of information

which the trustee must give and the frequency with which it must
be given, however the beneficiary is always entitled to such
information as is reasonably necessary to enable him to enforce his
rights under the trust
c. Accounting and Repose trustees have a duty to provide regular accountings
i. Trustees must set up some system to make sure there is an accounting
1. Trail of paper
ii. National Academy of Sciences v. Cambridge Trust Co. (1976)
1. R:
2. Accounting protects the trustee
Trusts: Alienation and Modification
1. Alienation of the beneficial interest
a. Discretionary trusts
i. Pure discretionary trust
1. Trustees discretion is to make distributions as they see fit.
2. Absolute discretion good for trustee to be flexible in dealing with
situations that arise (distribute income as needed, dip into
principle)
ii. Support trust
1. The trustees discretion is limited to making distributions for the
comfortable support of the beneficiary.
2. Limited to support may be education, financial, medical, etc.
iii. Discretionary support trust
iv. Collapsing the categories
1. UTC 504 Discretionary Trusts, Effect of Standard
v. Protective trusts types of protective provisions protecting the
beneficiary from access from third party (creditor)
1. Discretionary clauses (absolute)
a. Does beneficiary have a property interest? Law held that
beneficiary had no property interest, unless or until the
trustee exercised their discretion
b. Can we force the trustee to exercise discretion? Historic
test was good faith to exercise discretion
c. In sum, nothing that the creditor can attach
d. However, post Hamilton v. Drogo
i. Gave beneficiaries too much protection, and so:
ii. Courts recognize there is a property interest and
changed the std. to reasonableness
iii. But still creditors cannot force exercise of discretion
been turned into public policy
iv. But Hamilton order can allow Creditors can get a
lien
2. Support clauses creditor can get what beneficiary has
a. Trustee has to exercise discretion to pay for support
beneficiary interest is sufficiently more present

b. reasonableness is the standard for exercise of discretion

to pay for support
c. Creditor who was the provider of necessities (like housing,
where beneficiary hasnt paid rent), creditor can force
trustee to exercise their discretion to satisfy the judgment
for rent.
3. Spendthrift provisions
a. Disabling restraint on alienation.
i. Ben. cant anticipate or assign would be void
ii. Property cant be attached
b. Must have both prongs satisfied
b. Spendthrift Trusts there is a presumption now that trust created is a spendthrift
trust if it mentions the spendthrift word
i. UTC 502 Spendthrift provision
ii. UTC 503 Exceptions to Spendthrift Provision
1. Creditor for child support can get into the trust
a. Spousal support available in a majority of the states
iii. Scheffel v. Krueger (2001)
1. F: man was ordered to pay damages and plaintiff sought to attach
the judgment to the s beneficial interest in an irrevocable trust.
Trust had a spendthrift provision. This is a tort creditor going after
the trust
2. I: Does a tort judgment attach to a spendthrift trust?
3. C: No. it is not an effective exception to get around a trust
child/spousal support only recognized exceptions
Note: If you can get the money, then the creditors can get the money only exceptions are
spendthrift trusts and asset protection trusts
c. Self-Settled Asset Protection Trusts
i. FTC v. Affordable Media (1999)
1. Off-shore trusts create a lot of leverage
2. Modification and termination
a. Consent of the Beneficiaries can do so if 1) settlor and all beneficiaries agree or
if settlor dead 1) if all the beneficiaries agree, and 2) change must not be contrary
to material purpose of the trust Clafin doctrine
i. English Law
ii. Clafin Doctrine In general, a trust cannot be terminated if (1) it is a
spendthrift trust, (2) the beneficiary is not to receive the principal until
attaining a specified age (enjoyment is postponed), (3) it is a discretionary
trust, or (4) it is a trust for support of the beneficiary.
1. In re Estate of Brown (1987)
a. I: when the main purpose of a trust has been accomplished
may the trust be terminated?
b. R: Ct. is not going to terminate the trust because it had two
purposes: education and life-long support.
c. Ct. felt the settlors intent would be frustrated by
terminating the trust early

2. UTC and Restatement Third of Trusts

a. 411 Modification or Termination of Noncharitable
Irrevocable Trust by Consent
b. Deviation and Changed Circumstances equitable deviation doctrine: changed
circumstances not anticipated by the settlor that would defeat or substantially
impair the accomplishment of the purposes of the trust
i. Traditional Law
ii. UTC 412 - broadens the test beyond a material purpose to further the
purposes of the trust
1. In re Riddell (2007)
a. F: trustee wished to modify the trust to create a special
needs trust for his daughter.
b. Ct. applied a two prong test to determine if modification of
the trust was appropriate
i. Unanticipated circumstances
ii. Further the purposes of the trust
c. special needs trust comply with medicaid
2. Ladysmith Rescue Squad v. Newlin (2010)
a. F: One party wanted to terminate the trust by stating they
wished to have the money now. To accomplish this, they
first sought a division of the trust which a lower court
granted, and then used that division to say the second party
had no standing to dispute the termination of the trust
b. I: Does the UTC provision soften the standard needed to
be met to modify a trust
c. UTC does have a provision to divide into two trusts
equitably
d. I need the money now is not an unanticipated
circumstance
3. Trustee Removal
a. UTC 706
i. Ct. may remove a trustee if:
1. Trustee has committed a serious breach of trust
2. Lack of cooperation among co-trustees substantially impairs the
administration of the trust
3. Because of unfitness, unwillingness, or persistent failure of the
trustee to administer the trust effectively
4. Substantial change in circumstances or requested by all the
beneficiaries and ct. finds the removal serves the best interests
(Removal without cause is generally not available in most states)
b. Davis v. U.S. Bank National Assoc. (2007)
i. F: seeking the removal of one corporate trustee and the appointment of a
new trustee (would charge lower rates, better location, maybe some
personal knowledge)
ii. Ct. allows it (practice point: draft a provision allowing the change of
corporate trustees allows for rate shopping)

Trusts: Powers of Appointment

1. Purposes, Terminology, and types of powers
a. Doesnt require any special words or designations relationship similar to
agency
i. Donor of the power settlor
ii. Donee of the power beneficiary has no duty to exercise the
power
b. Creation confers discretion on the done
i. Similar to trustee, except it is a duty in a trust, and power for the
done
We are in a 1969 UPC jurisdiction know the majority rules of decision. Know the rules
and policy