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Wills, Trusts and Estates -- Grossman Fall '13

1. Overview
a. Gratuitous gifts: giving something away and getting nothing in return
b. intestacy: estates with no will
c. probate administration: how people get $ from the courts based on a will or intestacy
i. probate property: everything left at TOD that T hasn't given away by other means
ii. ex: tenure goes away at death, it cannot be given away
d. volitional descent + testamentary freedom (freedom of disposition) = USA
e. possible types of succession:
i. "up for grabs"
ii. confiscation by the gov't
iii. destruction of prop after death
iv. volitional descent
v. forces succession
f. escheat: when there's no place for prop to go, it goes to the state
g. mechanisms by which you can give prop away
i. will - that names beneficiary X
ii. trust - held by X for benefit of Y
iii. gift - intent, delivery, acceptance
iv. PROMISES TO MAKE A FUTURE GIFT ARE WORTHLESS
h. state statutes govern will's ability to transfer prop
i. right to testate given by statute
ii. each statute governs requirements of will's formality that make it valid
i. your wishes must be expressed in a legally recognizable way in order to validly transfer property at
death
j. rules of intestacy are default in a statute when there is no will
k. There are LIMITS on volitional descent
i. "dead-hand control" : conditional transfer of property
ii. Shapira v. Union Nat'l Bank (1974)
1. dad leaves will saying that son gets 1/3 of estate ONLY if within 7 years of dad's
death the son marries a jewish woman
2. the constitutional issue of equal protection is a nonissue, the will isn't interfering with
the son's right to marry, it's just giving him an extra bonus if he marries jewish
a. by enforcing this restriction in the will, the ct is not interfering with the son's
right to marry
b. complete restraint on marriage (not OK) vs. partial restraint (OK)
i. if the restriction is such that the son would never get married, then it
may be struck down
3. here, the restriction wasn't making marriage impossible + gov't is in favor of marriage
(PP of promoting marriage and against divorce)
4. Const. + PP restrictions on the "dead" hand
a. animals being euthanized in wills goes both ways depending on the ct.
b. mostly requesting that prop be destroyed is not OK ( think Franz Kafka)
iii. Hodel v. Irving
1. fed. law passed to consolidate lands + reduce fractionation
a. it stipulates that certain land holdings cannot be conveyed by will or intestacy
+ upon the holders death, those lands escheat to tribe
2. Native American lands split into smaller and smaller fragments causing problems
because each landholder owed more than their land was worth and some plots were
worth < $1
3. NA's were holding onto shares worth almost nothing
4. was this a "taking" w/o just compensation?
a. SCOTUS: the right to give away property at death is inherent in the "bundle
of sticks"
b. regulating is OK but this statute went beyond regulation to completely deprive
s of land
c. the right to descend is a tradt'l right that has been part of the legal system
since feudal times
l. Probate Property
i. whatever you own @ TOD that you haven't already designated to go elsewhere
ii. dealt w/ in probate ct.
1. someone comes to ct. to open a proceeding w/ or w/o a will
a. that person must have standing
b. they file a petition for probate
iii. ultimate goal is to move prop from decedent to Bs
m. Non- Probate
i. prop that transfers @ death through some means other than a will or intestacy
1. life insurance - K
2. joint tenancy - ROS
3. inter-vivos trust
ii. must be a personal rep. of T to oversee distribution of estate
1. this person is the fiduciary for the estate
a. if named by will: executor
b. if not named, but appointed by ct.: administrator (also intestacy)
2. ct. issues letters saying who's been apptd executor and that person goes to ct. with the
letters to collect decedent's prop
n. Probate Proceeding
i. meant for
1. clearing title
2. paying off taxes
3. protecting from creditors
4. shifting ownership
5. etc
ii. will becomes public record once in probate and is the prop of the ct.
1. is there a will?
2. are there creditors?
3. are there Bs?
4. are there taxes that need to be paid?
5. are there contestants to the will?
iii. at probate, the burden is on the creditors to come forward w/I the SOLs which would be shorter
than the regular credit SOLs
1. probate offers protection from unknown creditors
iv. non-probate property is given to Bs without having to go through probate ct.
v. not titled prop (ie: furniture) can usually just be kept w/o going through probate
vi. statutory car provisions allow the DMV to change title of vehicle w/death certificate and
affidavit instead of going to probate
2. WILLS
a. the primary way people convey property at death
b. Capacity
i. one of the 3 mandatory requirements of a valid will
ii. "of sound mind and body"
iii. if T has no capacity, the entire will is revoked and prop goes through intestacy
iv. Age: must be 18 years old
v. Mental Capacity:
1. understand the nature and extend of your prop
2. natural objects of your bounty (who gets your stuff)
3. effects of the disposition of the will
4. relate to an orderly plan
a. these are very low standards
vi. In Re Wright's Estate (1936)
1. daughter (named in will) brings a challenge to the will because she doesn't think her
father's 50 year old lady friend should get the house as the will dictates
2. if T had no capacity at time of execution of will, then no will, everything flows
through intestacy and the daughter will get it all
vii. Insanity and Delusions
1. if the content of the will is brought about by delusions, the it may be questionable
a. the content of the will must be the product of the insane delusion
b. the insane delusion "might have caused" the content of the will
2. Breeden v. Stone (2000)
a. decedent was involved in a hit + run where the vic died, two days later
decedent committed suicide
b. he wrote a holographic will that leaves everything to someone named Sydney
Stone (who isn't related to T)
c. T's family challenges the will: they don't need the $ but they don't believe
Stone should have it
d. the family has standing because they are intestate heirs
e. attempt to show that T was suffering from insane delusions when he wrote his
will
f. ct. adopts the 5-part Cunningham test
i. T understands the nature of his act
ii. he knows the extent of his prop
iii. he understands his proposed testamentary disposition
iv. he knows the natural objects of his bounty
v. the will represent's T's wishes
g. the facts that T clearly wrote the Bs name + address on the will, testamentary
language of the note, there's a P.S. that tells us he's pretty emotionally
distraught, but he has an awareness of what's going on
i. this will was pretty good work for someone in T's state
h. T knew what he wanted, why he wanted it, and enough to make it clear in the
instrument
i. you don't have to be sober when writing a will
i. you only need to know
1. who's getting your stuff
2. what that stuff is
3. who would have gotten it if not for the will
4. and what the will is doing
j. here, it is unclear that insane delusions cause the content of T's will
c. Intent
i. Undue Influence
1. T is capable of expressing their own wishes, but does the will express their intent or
is it the intent of the 3rd p?
2. Test for UI:
a. Susceptibility of T (vulnerable to influence)
b. Opportunity (to influence will or the mind of T)
c. Motive (did 3rd p do it to get something?)
d. Causation (did it work?)
e. Substitution of will (can we say that the 3rd p successfully subbed in his own
desires for Ts?)
3. Estate of Lakatosh (1995)
a. T is 85 year old woman
b. is a handsome handyman who helps T out with odd jobs and errands for two
years. T doesn't really see anyone but him
c. is given PoA by T and he begins to take her $
d. T revokes PoA before she dies but after will is executed
e. Burden of Proof is on the contestant of the will, then it shifts to proponent to
disprove undue influence
i. to shift BoP to proponent, contestant must show
1. confidential relationship
2. proponent () got bulk of the estate
3. T's intellect was weakened
ii. this must be shown by clear + convincing ev.
f. if contestant shows all 3 components, it is then up to to prove the absence of
UI by clear + convincing ev.
g. it is EXTREMELY difficult to prove absence of UI after the burden shifts
4. if UI is proven, denial of probate of the entire will can occur if the whole instrument
is tainted by UI
a. otherwise, simply the clause tainted by UI can be stricken
5. Restatement: "confid. relationship" + some suspicious circumstances that are
enumerated are enough to shift the burden to the person accused of UI
6. Some jurisdictions apply presumption of UI based on the gift + the B (BoP is then
placed on the B accused of UI from the beginning)
7. In Re Estate of Reid (2002)
a. old woman, young man sketchy relationship
b. she adopts him, gives him $, deeds him her prop (but keeps a life estate, so it's
a non-probate transfer)
c. he helps her write a holographic will leaving all of her prop to him. she had no
children. she's not married
d. she was pretty happy with their relationship
e. Adoption deprives all other relatives of standing b/c even if you throw out the
will due to UI, is the heir through adoption and the only person with a stake
in the will + he inherits through intestacy
f. UI policies police the puppeteering of the party w/ the weakened will in the
relationship, not the possible sketchy motive behind the initial relationship
g. if is in it for the $ and T knows it, it's fine: it's the pulling of T's strings
without T realizing it that matters
h. Heirs only have standing to contest the adoption b/c it's the adoption of an
adult, not a child
i. to overcome the presumption of UI, must prove:
i. GF on part of B ()
ii. Ts full knowledge + deliberation of consequences
iii. Ts independent consent + action
8. Lipper v. Weslow (1963)
a. T leaves 1/2 to each of her two surviving children and leaves nothing to the
widow and grandchildren of her deceased third child
b. one of the two B children is the "attorney drafter" of will of which he is a B
i. if intestacy applied, he would only be entitled to 1/3 of the estate
c. T put in her will why she was cutting out the widow and grandkids
d. did the will reflect Ts desires or attorney drafter son's desires?
i. there was not enough ev. here to claim son is puppetmaster and T is
puppet
e. this will would have been much less likely to be contested if it was in the Ts
own words/handwriting
9. There is a CoA for testamentary libel
a. can sue for tort damages of defamation
10. No-Contest Clause: segment in will that says if you challenge the will, you get
nothing
a. if you bring a challenge contest and win, the whole will gets thrown out
including the no contest clause so you get whatever you'd get by intestacy.
b. If you lose, you are cut out of the will entirely
11. ABA rule is that a lawyer should not draft a will in which he is a B unless he is a
family member of T
ii. Duress
1. a donative transfer (whole or part) procured by duress is invalid
2. Latham v. Father Divine (1949)
a. T had a will that left everything to father divine, she was going to change it,
but before she could do so, father divine convinced her to have a surgery that
killed her, so she never wrote a new will
i. allegations that FD murdered T before she could write him out of her
will
b. intent to make a second will is not execution or revocation
c. what can the s do? (in this case, T's heirs by intestacy, her cousins)
i. constructive trust: fake trust to avoid unjust enrichment and unjust
deprivation
1. equitable powers - equitable remedy
2. constructive trust only lasts for a moment
iii. Fraud
1. Test:
a. T is deceived
b. by misrepresentation
c. made with the intent to deceive
d. that has the purpose + effect of influencing a testamentary act
2. either the entire instrument or the part that is tainted by fraud is revoked
3. fraud in the inducement: fraud in fact that shapes Ts desires
4. fraud in execution (factum): fraud in the document itself. T believes it says what T
wants, but it actually doesn't. If T were forced to read the doc over, they would realize
it's not what they wanted
5. often, UI and fraud overlap
6. Tortious Interference: a tort action not a will contest
a. sue the wrongdoer directly for punitive + compensatory damages
b. half of the jurisdictions don't have this as a CoA
i. the half that do may require to exhaust probate remedies first
ii. it can be blocked by res judicata or collateral estoppel
d. Due Execution
i. History
1. 1540: Statute of wills passed in England
a. said that land could be willed
b. little formality, only requirement was to be in writing
2. 1677: SoFs (3 witnesses)
a. applies to wills, requires all wills to be in writing
b. if they passed real prop, they had to be signed AND witnessed
3. 1837: Wills act
a. applies only to wills (2 witnesses)
b. requires compliance w/ SoFs and more
c. no difference between realty and personalty wills
d. it's a due execution statute
i. sets out the formalities required
ii. if the will doesn't meet this statute, it cannot be operative to pass prop
@ death (cannot be admitted to probate)
iii. every state has a wills act
4. 1969, major revision in 1990 + 2008: Uniform Probate Code (UPC)
a. uniform act passed by NCCUSL (they decide what the law should be on "x")
b. only becomes law when states vote to pass it or part of it through their state
legislature
c. not universally adopted
d. UPC has due execution law
i. takes the wills act language and tinkers with it in order to modernize
ii. Wills Act of 1837 Formality Requirements
1. a writing
2. T must
a. sign at "foot or end" of doc OR
b. have someone else sign at "foot or end"
i. in T's presence AND
ii. at T's direction
c. AND T must sign or acknowledge the signature in front of two or more
witnesses present at the same time
3. Witnesses must
a. observe T sign or acknowledge signature @ the same time and in T's presence
b. sign their own names in the presence of T below Ts signature
iii. In Re Groffman (1969)
1. what witnesses are validating is the SIGNATURE not the will itself
2. T acknowledges (if he didn't sign in front of them) his signature to two witnesses
present AT THE SAME TIME
3. T must acknowledge his signature to 2 wits @ the same time or sign physically in
front of them both
4. when witnesses watch T they must be together, but when they sign only T has to be
present
iv. Formalities function to have T say "I'm done"
1. protective: they reduce the chances of forgery
2. ritual: importance to T of the event of the creation of a legal doc
a. dont want it to happen accidentally
3. channeling: if you do what we say, we don't have to guess what you mean
4. evidentiary: want ev. of what T wanted - this is the best ev. of Ts intent
5. formalities are a proxy for intent: prove intent by proving the formalities are met
v. UPC Due Execution Requirements
1. no location requirement for Ts (or Ts proxy's) signature
2. T's proxy must be w/I T's conscious presence
3. T must (to witnesses)
a. sign OR
b. acknowledge signature OR
c. acknowledge will
4. T can have notary instead of witnesses
5. 2 or more witnesses do not have to be present @ the same time to see T
sign/acknowledge signature/will
6. witnesses sign w/I a r'sble time of observing T's sing/acknowledge signature/will
(r'sble time may be after T's death)
a. NY requires no more than 30 days to sign between witnesses
7. Stevens v. Casdorph (1998)
a. T is in a wheelchair at a bank and asks the notary to take his will around to
witnesses and have them sign it while T remains at her desk
b. statute says witnesses must be present @ the same time when T (1) signs or
(2) acknowledges the will
i. neither like wills act OR UPC
c. b/c witnesses weren't present for signature OR the acknowledgement of the
will, nor did they sign the will in the presence of T (he was at the notary's
desk) AND one another
i. wills act says: witnesses must sign together w/ T present
ii. UPC says witness can sign alone w/I r'sble time of T
signing/acknowledging signature/will
d. here, T didn't sign in the presence of witnesses, nor did they sign in his
presence. T didn't acknowledge his will to the witnesses
8. Witnesses must understand that T is calling the signature present on the instrument
their own by either
a. watching T write it OR
b. understanding that T is claiming the pre-written signature as his own
e. Presence
i. Line of Sight Test: presence standard in the wills act
1. witnesses could see, were the witnesses to look
2. not folded, obstructed, bad angle, wall between you etc
ii. Conscious Presence: UPC's test
1. either through sight, hearing or knowledge witnesses can tell T is signing
2. more liberal standard
3. trying to simplify the act
f. Signature
i. if it is clear you meant it to be your signature, it's OK
g. Order of Events
i. T signs (or acknowledges etc)
ii. Witnesses sign
iii. NY has no order as long as it's all part of a contemporaneous transaction
iv. generally, you don't have to tell your witnesses that the doc their witnessing is a will
1. NY has a publication requirement where T MUST tell witnesses that the doc they are
witnessing is a will
h. Post-Signature + Below Signature Text
i. wills act: presence of text below the signature = not duly executed in the first place, so entire
will is invalid and thrown out
ii. UPC: doesn't matter where signature is, so long as there is one
1. "later-in-time" addition after will is signed it's not coming into the will, but doesn't
invalidate the document
i. Notary
i. only two states have adopted this
ii. must do everything witnesses must do
iii. wills do not NEED to be notarized to be valid
iv. still need two witnesses, one may be a notary, but you still need 2 total
v. notarizing doesn't help you
j. What is a Writing?
i. r'sbly permanent record
ii. words, physical language
k. Rules for interested witnesses
i. Estate of Morea (1996)
1. T has 3 witnesses
a. son (gets less than intestate share in will)
b. friend (wouldn't inherit intestate but gets benefit under will)
c. third guy w/no interest
2. witnesses have to be DISINTERESTED in will
a. mostly under SoFs, but also under old English law
b. consequence of this mistake is that the interested witness is purged of their
bequest
i. this removes their incentive to lie at a probate proceeding about
following rules OR influencing wil
c. If the will gives you less than intestacy and you witness, you don't purge
because you technically aren't getting a benefit by there being a will, you're
getting less than you would if the will were thrown out.
ii. UPC does not require disinterested witnesses and has no purging rule
iii. California has no purging, but there is a presumption of UI if you're an interested witness
iv. 50/50 split between states that follow a tradt'l purging rule vs. either no purging or a
newfangled rule
l. Safeguarding a Will
i. maybe it's unethical for lawyers to hold onto wills because Bs may think that THAT lawyer
must be the one who HAS to be hired to probate which could lead to price fixing or taking
advantage of the Bs
ii. Where do you keep the will?
1. someone has to be able to find it after T dies
2. but T wants to keep it safe from being read or tampered with
3. tension between secrecy and availability of being discovered after death
4. in the middle of probate, sometimes a newer will is found
3. Formalistic Interpretation of Wills (Exceptions to Due Execution)
a. Three types of interpretation adopted by various states:
i. Strict Adherence to formalism + bright line rules
ii. Every once in a while, if it's a serious injustice, you can fudge the system in favor of a will
iii. Screw the system + rules: we must look directly at Ts intent and whatever helps us to find that
intent (extrinsic ev, letters, etc)
b. In Re Pavlinko's Estate (1959)
i. H + W don't speak English well - wills are written by lawyer in English + they accidentally
sign the wrong wills - they sign each other's
ii. they were reciprocal wills in the sense that they transfer to each other unless the other pre-
deceases them, then to a 3rd p
iii. if probate is denied, the desired legatees cannot benefit
iv. ct. holds that they will not fix the words of the will b/c that would signify that Ts writing is not
sacred and cts. can just change wills willy-nilly
1. stick to bright line rules, or wills act becomes meaningless and the door will open to
countless fraudulent claims
c. In Re Snyde (1981)
i. same facts as Pavlinko's
ii. ct. says EXACT OPPOSITE : it's a genuine mistake
iii. Intent of T is more important than the formalistic rules
iv. no danger of fraud, want to benefit Bs and keep Ts intent intact
v. very limited exception: this case specifically and to its specific facts
d. Substantial Compliance Doctrine
i. does the nonconforming doc express Ts intent?
ii. Does its form sufficiently approximate wills act formality to enable the ct. to conclude that it
serves the purpose of the wills act?
1. formalities are good, but we need to be looser in our demand of adherence
2. cts. shouldn't look for perfect compliance
a. T really, really tried to comply w/ wills act, but it was a near miss
iii. with SC, cts. can interpret statutes less strictly to require less so the legislature doesn't have to
change the law
1. its "good enough"
a. serves the purpose of the wills act
b. formalities are carried out well enough for ct. to say that T meant it to be their
final expression of testamentary intent
2. overlook minor, insignificant defects in formalities
iv. Still need to shift more towards admitting more wills to probate
1. dispensing power: cts could do away w/ statutory requirements entirely if they had
other ev. of Ts intent
2. harmless error doctrine:
a. comply w/ due execution OR
b. clear + convincing ev that T intended this to be their will
3. legislature must change statute to apply a dispensing power/harmless error standard in
order for cts to adopt it
a. if no statute = no dispensing power
v. In Re Estate of Hall (2002)
1. couple makes a new draft of their joint will and tear up the original. the draft isn't
finished, but the couple wants to make it "official" until they can change it. they get it
notarized
2. joint will was not signed by 2 witnesses but instead by 1 notary
a. no due execution
3. husband dies before they get to make the changes to the draft to make it a "final will"
4. tearing up the original suggests a desire to replace it with the new will. the joint will
also says to disavow all previous wills
5. joint wills: can be probated twice, once when first T dies then when the second T dies
6. dispensing power is applied here will is admitted to probate b/c ev. showed Ts
intent to make it his will
a. what was said by T and to whom
b. actions
c. conversations
d. witness testimony
7. all add up to clear + convincing ev
8. The idea is: if you could bring T back from the dead, and they would tell you they
meant the doc in question would be used to dictate where his prop went, jurisdictions
w/ dispensing power must admit the will to probate
vi. In Re Macool (2010)
1. couple had wills, he died + she goes back to the lawyer w/a new estate plan adding in
some of her relatives
a. she gives note to lawyer, he takes notes and she dictates
b. no signature, not finalized
c. she goes to lunch saying that she will return later to finalize the will, she dies
at lunch
2. the note's intent wasn't entirely clear
3. there was no moment in time when she says "yes, this is meant to be final act of
assent
4. signature is VERY important
4. Holographic Wills
a. Must be
i. entirely handwritten
ii. testamentary in nature and intent
iii. signed by T
b. they are not universally valid, though over half the states allow them
i. if validly written + created in a state that allows them but is probated in a st. that doesn't
formally allow them, it can still go to probate
c. usually unwitnessed (don't need witnesses)
d. surplusage: if you cover the typed words with your hands, does the rest of the handwritten will make
sense?
i. if so, it is a valid holographic will
e. why is the complete handwriting by T so important?
i. we know it's Ts real intent
ii. handwriting may show duress
iii. shows Ts capacity + contents of Ts mind
iv. proves T actually wrote it
f. Why write a holographic will?
i. some people may thing you have to handwrite a will
ii. some people are very private and don't want anyone to know what they're doing
iii. sometimes there is impending death and Ts need to write quickly their desires
iv. Ts are actually contemplating mortality in a holographic will
v. the act of writing itself makes Ts actions more significant
g. In Re Kimmel's Estate (1924)
i. father writes a letter to his son saying "if anything happens to me " but the letter is very
informal and casual. it is not a will in structure
ii. handwritten doc that is not obviously a will can we show that it is still meant to be a
testamentary instrument?
iii. does this letter reflect testamentary intent?
1. conditioning gift to sons on the phrase "if anything happens to me"
2. also discussing property transfer
3. language of future, beneficiaries, bequests
iv. Ct. holds that this is a legitimate holographic will
5. Revocation of Wills
a. Revocation by a Physical Act
i. Harrison v. Bird (1993)
1. lawyer rips up will under Ts direction but was not in Ts presence
a. the will is still valid up to this point
2. lawyer mails the pieces to T w/ a letter
a. will is still valid
3. after Ts death, the pieces of the will cannot be found
a. the presumption is that T destroyed them
b. here, the will becomes revoked
4. T dies intestate because the presumption is not rebutted
5. RULE
a. T was last person to have will
b. will is not found in Ts effects after T dies
i. presumption that T destroyed will
ii. can be rebutted, and burden shifts
6. this is a scenario in which there is no ev to the contrary
7. in most cases, we are never going to know what happened to the doc when T was
least to have it and it cannot be found.
ii. In order to revoke by physical act:
1. need an actual physical act AND
2. intent to revoke
a. presume intent to revoke, because that's the reason to destroy it, why else
would you destroy your own will?
i. also rebuttable
3. if the will was found, but was mutilated, the same presumption would apply
b. UPC Revocation
i. executing subsequent will that revokes previous will expressly or by inconsistency OR
ii. performing a revacatory act on will
1. if T performed the act w/ intent and for the purpose of revoking OR
2. if another individual performs the act in the Ts conscious presence and by Ts direction
c. Thompson v. Royal (1934)
i. T wants to revoke her will but keep it as a template in the event that she later wants to write a
subsequent will
ii. lawyer writes "this will is null and void" on the back of the will and T signs
iii. T never writes a second will
1. does this satisfy either of the two ways to revoke? (subsequent instrument or physical
act?)
iv. In order to revoke by subsequent instrument you must validly execute a later attested or
holographic will they must have testamentary legitimacy under statute
1. here, the subsequent writing is not an attested will b/c there were no witnesses and
therefore no due execution
2. it is also not a valid holographic will b/c the lawyer wrote it and it must be in the
handwriting of T in order to be a valid holographic will
a. therefore, not valid revocation by subs. instr.
v. is it a revocation by physical act?
1. was there a physical act of cancellation?
2. ct says no: the act of cancellation must "touch the words of the will"
a. common law rule: any destruction must touch the words
b. this shows meaningful intent of revocation in order to screen out cases where
we are unsure of Ts intent
vi. BE OBVIOUS, make yourself clear
d. UPC: revocation by physical act does not have to touch the words of the will
e. In Re Estate of Stoker (2011)
i. 1997 attested will leaves everything to then-GF
ii. 2005 handwritten instrument leaving things to Ts kids instead (but it's not in Ts handwriting)
iii. T pees on the 1997 will and lights in on fire
iv. harmless error rule applies to both handwritten and typewritten docs
1. apply harmless error rule from statute
a. says even if formalities aren't satisfied (in 2005 will) as long as there is ev.
that it was Ts intent for this doc to be their last eill and testament, it is valid
v. ct holds 2005 handwritten instrument to be a valid subsequent instrument revoking the 1997
will
f. Partial Revocation by a Physical Act
i. Will: everything to A, B, C (is crossed out) and D
1. presume T put the markings over C
2. question turns on whether the jurisdiction allows PRPA
a. if yes, C is disinherited
3. here, A, B and D each get 1/3
4. if no PRPA, then everyone gets 1/4 and you ignore the marking
a. however, T could write a subsequent instrument disinheriting C (codicil or
new will)
5. "lost will statute" can help supply ev. from elsewhere if "C" is entirely impossible to
read on the face of the will
ii. there is a greater opportunity for fraud + forgery is PRPA is allowed
iii. Juris. that do not allow PRPA sometimes allow partial revocation of a complete devise
1. $100 to A (A is crossed out) - revocation valid
2. $100 to A (A is crossed out) and B - revocation invalid
a. B shouldn't get more than they were supposed to get originally
iv. 3 types of jurisdictions
1. never allow PRPA
2. always allow PRPA
3. only allow it in complete devises
v. what if? $1000(last 0 is crossed out) to John
1. T is trying to lessen gift from $1000 to $100
2. PRPA allows T to get rid of an entire devise, not change a gift
a. T cannot edit their will, they can only revoke an entire bequest to a person
3. in this case, under a PRPA statute, John would get NOTHING
4. T successfully took away John's gift, but cannot give a new gift
6. Revival of a Will
a. validly executed will validly revoked then brought back
b. will #1 will #2 revokes #1 will #2 is revoked
i. will #1 is revised OR
ii. T dies intestate
c. THREE WAYS TO REVIVE A WILL
i. English Rule: no revocation until death
1. if you get rid of later will, earlier will is operative
ii. Most Common Rule: Will #1 is revived if T so intends
1. how do we know what T intended?
a. UPC says if #2 completely revokes #1, presumption is that there is no revival
iii. Minority Rule: Will #1 is not revived unless re-executed with testamentary formality and
validity
1. NY follows this rule
7. Dependent Relative Revocation (DRR)
a. un-revoke a revoked will that was revoked by mistake
b. judicially created rule, non-statutory
c. allows a ct. to un-revoke a revoked will, if applicable
i. used to clean up mistakes
ii. T revokes a will, pretend revocation was conditioned on a mistake of fact or law. if T had
known the truth, they never would have revoked
1. conditional on mistake AND
2. T would prefer application of DRR to the alternative (ie: intestacy or another
instrument)
d. La Croix v. Senecal (1953)
i. T leaves $ to nephew and a friend
ii. T realizes she's used a possibly non-legal name for her nephew, so issues a codicil w/ his full
legal name, everything else remains the same.
iii. codicil is signed by witnesses who violate the disinterested witnesses rule.
1. If this instrument is used, the friend will be purged of their gift
2. the codicil revokes the original will's provision
iv. Want DRR to un-revoke original will's provision which was revoked by codicil
1. go back to original will + original witnesses to save friend from being purged
v. T's mistake is that she believed she had to revoke will #1 b/c original doc had "wrong" name of
nephew.
vi. THE MISTAKE CAUSED THE REVOCATION OF THE WILL WE WANT TO REINSTATE
vii. easy case here for DRR b/c it's clear R wanted her friend to get $ as evidenced by the identical
intent of the two instruments.
e. In most cases, DRR gives B the second best gift
i. maybe not what T intended, but not nothing
ii. Ex:
1. $1000 (is crossed out and $1500 is written above it) to A
a. if the juris allows PRPA: A gets nothing
b. if it doesn't allow PRPA: A gets $1000
2. If we apply DRR here, the best case is that A gets $1000
iii. T would not have revoked the will if he knew he was making a mistake
1. would prefer un-revocation (A gets $1000) to the alternative (A gets nothing)
f. In Re Estate of Alburn (1963)
i. T has two wills
1. 1955 will in Milwaulkee (viola inherits)
2. 1959 will in Kankakee (doris + lulu inherit)
3. Intestacy (robert inherits)
ii. will #2 revoked will #1 by subsequent instrument
iii. T rips up will #2 (revocation by physical act) thinking that would re-instate will #1
iv. YOU CAN ONLY USE DRR TO UN-REVOKE THE WILL ON WHICH THE
REVOCATION WAS BASED ON THE MISTAKE
1. Here, DRR will only revive will #2, because that will was revoked (ripped up) on the
mistaken belief that it would reinstate will #1.
2. Will #1 was revoked properly by subsequent instrument not based on mistake.
3. The only options here are to use DRR to un-revoke will #2 or to probate through
intestacy
v. What would T prefer?
1. since intestacy would benefit people not mentioned in either will, the ct decides that T
would prefer to un-revoke will #2 and have it probated
g. Revocation by Operation of Law
i. marriage, for example, revokes premarital wills
1. it will be in the statute
ii. divorce also revokes all bequests in favor of ex-spouse
iii. NY: when you get divorced, ex-spouse provisions are revoked, if you remarry the same person,
they are revived
8. Components of a Will
a. What words and what writings are entitled to testamentary effect?
b. Doctrine of Integration
i. what pieces of paper constitute the will?
1. if it's present @ time of execution AND intended to be a part of the will, it's part of
the will.
2. Make sure this happens by #-ing pages out of the total (ie: 1/5, 2/5 etc)
3. memo describing will provisions, stapling the pieces together, date each page, T
initial each page in the same pen
ii. In Re Estate of Rigsby (1992)
1. doc. offered for probate consisted of two pages
a. the formal will
b. and the list of property and who gets it
2. both are found folded together and initialed
3. there must be a clear intent that T subjectively intended that both parts went together
as their last will + test
a. the second page is not a testamentary instrument on its own
b. information on the pages was inconsistent with one another
c. pages don't reference one anther
d. there is no internal coherence to the docs
4. ct. holds both pages are NOT the will, only page 1 coutns
c. Republication by Codicil Doctrine
i. valid instrument repub'd by 2nd valid instrument
ii. ex:
1. 1980: will #1
2. 1985: will #2 (revokes will #1)
3. 1988: codicil to will #1
a. squeezes out will #1 and repubs will #1
b. only applied if it will further Ts intent, in theory
iii. if there is a subsequent codicil, we generally act as though the will to which the codicil applies
was executed on the day the codicil was executed
iv. if "no revival" rule, repub by codicil can still "revive" will by re-executing it with testamentary
formality
d. Doctrine of Incorporation by Reference
i. will can incorporate by reference:
1. a writing in existence @ time will is executed that is
2. clearly ID'd in will and is
3. intended to be incorporated
ii. Clark v. Greenhalge (1991)
1. 1972- Memorandum
2. 1976- amended memo
3. 1977- will
4. 1979- notebook
5. may 1980- codicil to will
6. oct 1980- codicil #2 to will
7. Did T intend notebook to be incorporated by reference into will?
a. notebook was written after the will so how can it be a writing in existence @
time of execution?
b. Apply repub by codicil so will becomes executed in 1980 which includes the
1977 will and both codicils.
i. legal date of will is now changed to oct 1980 (legal fiction)
c. does the phrase "a memorandum" in the will apply to the notebook as well as
the memo?
i. notebook did not exist when T wrote this part
d. ct. says notebook is a memorandum of sorts and w/ repub by codicil, it did
exist prior to pub of will (oct 1980)
iii. There is no right to change will as T sees fit over time, for example keeping a notebook in your
bedside table to alter as T pleases and then just reference "notebook in bedside table" in will
1. tension between what the law allows and that T wants: their human behavior
iv. only writings can be incorporated by reference
v. UPC has a section that says tangible goods not including $ can be devised in a separate list not
on the will that T can add to over time
vi. NY does not allow incorp by reference
vii. Negative Will: an instrument that effectively disinherits someone and the rest of the estate
passes through intestacy because there is no other testamentary instrument.
e. Acts of Independent Significance Doctrine
i. permits ex. ev. to tell where prop should go when it applies
1. ID prop OR
2. ID Bs
ii. if will refers to events or facts outside will that have independent sig. they can be used to
dictate disposition of prop.
iii. Ex:
1. "I leave X to the students that take my wills class the last semester before I stop
teaching:
a. since this act is in the future, no way of knowing who Bs will be
b. T isn't controlling who is in the class, people add and drop classes
independently of Ts will, so T doesn't know who Bs will be
i. separate and apart from will
c. TEST:
i. (1) future fact (2) separate and apart from will
f. cannot give testamentary effect to words outside of a will unless there is a doctrine to
incorporate them
g. sometimes T wants their estate to pass in such a way, but they don't have the information necessary
at the time
i. so long as T isn't manipulating contents, the act has independent significance
9. Interpretation / Construction of Wills
a. when the doc has been duly executed + probated, but the ct is trying to interpret the language of the
will
i. words aren't clear, multiple meanings, mistaken language: AMBIGUITY
b. Start with the plain meaning rule: if words have a plain, ordinary meaning, that meaning is what
controls
c. NO EX EV
i. objective meaning controls even if T meant something else
d. no reformation rule: cts don't reform wills as a general rule
e. Mahoney v. Granger (1933)
i. language of will says residual prop goes to "heirs at law"
ii. T believed her cousins were her heirs at law so this is what she told the lawyer who drafted her
will when he asked, and so this is what he wrote
iii. in reality, the phrase "heirs at law" legally refers to Ts aunt
iv. ct. adopts PMR and says "heir" means Ts aunt
1. no ex ev comes in b/c "heirs at law" has a legal meaning and is not ambiguous
f. Latent Ambiguity: words that don't describe any one thing specifically or any exact person
i. latent means hidden, words are not apparently ambiguous on their face, they seem to have a
plain meaning
ii. equivocation: words that describe two things exactly
1. ie: "my cousin John" when T has two cousin Johns
2. if T were to read through their will, they wouldn't catch the mistake, it would read as
correct to them
3. these can be proven and resolved
a. ex ev allowed to clear them up
b. cts are most forgiving of these
iii. in the case of a latent ambiguity, ex ev is allowed into probate proceeding in order to:
1. prove the existence of the ambiguity AND
2. to resolve it
iv. if ex ev was not allowed, then we'd have unjust enrichment if prop goes to the wrong person /
unjust deprivation if nobody gets it
g. Personal Usage Exception
i. exception to PMR will be in statute
ii. T used a certain name to describe someone as a habit even if it's not the persons real or
accurate name and even if the name has a plain meaning that's not the intended B. If T has
always referred to them in this way, ex ev can be brought in to explain who they meant
iii. when what doc means is in question, you need to look at the rules of ex ev in order to
incorporate it
iv. when the validity of the doc is in question, any and all ex ev is allowed (ie: capacity, intent, due
execution)
1. Fleming v. Morrison (1904)
a. will is used as a tool of seduction, meant to be a scam, but duly executed
b. ct. says ex ev of sham is ok b/c it goes to the validity of the entire doc
h. Patent Ambiguities
i. In Re Estate of Cole (2001)
1. will says "leave two hundred thousand dollars ($25,000)"
a. what does T mean here?
2. Patent Ambiguity: appears ambiguous on the fact of the document
3. drafter of will said he was copying and pasting sections from other parts of the will,
he fixed the parenthetical but forgot to retype the wording
4. if ct doesn't allow ex ev, this devise fails completely and goes to the residuary B no
ex ev in tradt'l rule, just strike the amb bequest
5. cts want to avoid reformation: once they find the answer, they'd have to physically
alter the will to cross our the wrong information
a. in patent amb, you'd have to change the words of the will which is against the
tradition of wills
b. in latent amb, nothing is altered, only the interpretation of the language
changes
6. On a second read of the will, patent amb are obvious whereas latent amb may not be
caught
7. with patent amb, the fault is in the language, so ex ev is tradt'ly not allowed and the
devise goes through intestacy
a. technically this is not going against the words of the will since the words
make no sense
8. Here, the ct says patent ambs are usually typos and it's a common enough mistake, the
overriding principle is to carry out Ts intent and the tradt'l rule is outdated. They use
ex ev to show B gets $25,000
ii. Patent Ambiguities Ex Ev Limitations
1. surrounding circumstances examined first + direct ev. of Ts intention considered only
if amb persists (indirect ev is less subject to fraud)
2. ex ev used to determine what T meant by the words used, not to determine an intent
that cannot be found in the words of the instrument
a. indirect ev: circumstantial ev. draw an inference
b. direct ev: ev of a thing that needs to be proven, no inferences need to be
drawn
iii. cts are starting to reject the distinction between latent and patent amb
1. NY still sticks to the tradt'l distinctions
10. Lapses
a. what happens when the info in the will is inaccurate at the time of Ts death?
i. gap-filler rules of lapse for changes in people and changes in prop
b. lapse rules are default rules rules of presumed intent
i. B's not alive at time of Ts death cannot take
1. Bs must be alive to take (unless otherwise in statute)
ii. gifts have lapsed when: there is a gift to B who is alive @ the time the will was executed but B
predeceases T
iii. gifts are void when: Bs are dead @ time of execution
c. what happens to lapsed gifts?
i. types of gift devises:
1. specific: ID'd property
2. general: gift of $ value
3. residuary: all that's left
ii. gen or spec gift to A and A dies gift goes to resid
1. if no resid, or resid B dies goes through intestacy
iii. resid gift to A and A dies gift goes through intestacy
iv. resid gift to A and B (only A dies) doctrine of presumed intent
1. either:
a. B gets 100% of resid (more common) OR
b. B gets 50% and 50% goes to intestate heirs no residue of the residue rule
i. minority view
v. Class gift: devise to a class/ group of non-enumerated persons
1. ex: $10,000 to children of A
a. kids are X, Y and Z
b. X predeceases T
c. Y and Z share $10,000
2. when a class member predeceases T, the gift stays with the class, the dead class
members share does not go to resid.
3. the theory is that we don't know who will be in the class until T dies
4. Resid gift to class = same idea
a. unless entire class dies then all resid goes through intestacy
d. In Re Estate of Russell (1968)
i. T leaves holographic will and gifts to her dog
ii. estate left to dogs/pets is void b/c they are not persons who can inherit
iii. this gift becomes a lapsed gift
iv. will says "1/2 to chester and 1/2 to roxy"
1. ct. uses ex ev to find out who "roxy" is but once it's determined she is a dog, the
words have plain meaning that 1/2 goes to chester and 1/2 goes to roxy and not that it
all goes to chester to take care of roxy.
2. this ct. decides that there is amb when there is more than one r'sble interpretation of
words ex ev is ok in this scenario
3. because chester's interp (that he gets it all to take care of roxy) is not a r'sble
competing interp (according to the ct) there is no amb so no ex ev is allowed in the
proceeding
v. state has no residue of residue rule
1. lapsed gift goes to heirs at law
vi. ct. looks at alt interps to see if words have plain meaning
11. Anti-Lapse Statutes
a. rule of lapse: you must be alive to take
b. legislatures think they have been making the wrong presumption with the rule of lapses, so they've
adopted Anti-Lapse Statutes (ALS) in order for gifts to go to the children of the B instead of into the
residuary when a gift lapses
c. ALS carve out certain kinds of bequests, saying sometimes instead of allowing gifts to lapse, they'll
give substitute gifts instead
d. when do ALS apply?
i. statutes create substitute gifts in other people
ii. (1) Identity of Beneficiary / Special Relationship to T
1. ALS only apply when original B + T have a certain close relationship
a. ex: particular blood-relative, other close relationship
b. generally, ALS are not applied to friends, only blood relatives, generally not
spouses
i. most ALS create a subst. gift in the issue of a deceased B
2. ALS don't go to children b/c it's assumed that T has already provided for them in
other ways
3. if no special relationship, go to step 2
iii. (2) Covered Heirs
1. subst. gifts usually go to issue of deceased B
a. ex: $15,000 to girlfriend A, residuary clause to wife
b. girlfriend A predeceases T
c. usually in the ALS "girlfriend" won't be enumerated as a "special relationship"
(step 1)
d. if no ALS "special relationship" requirement, and just a general ALS statute,
then gf A's issue gets the gift
2. if ALS doesn't apply, then go to rules of lapse
iv. (3) Timing of B's Death
1. void: B was dead @ time of execution of will
2. lapsed: B dies after execution of will but before T
a. if ALS is silent on timing, it doesn't draw a distinction between void and
lapsed gifts
v. (4) Class Gift
1. what is a class gift?
a. uncertain # of B's @ time of execution
b. common characteristics between members of class
c. shares are not specified to each member
d. group-mindedness when T thought of them
2. ALS may apply to individual but not class gifts
3. or, it will apply differently to class gifts
a. ex: "$10,000 to my grandchildren" (A, B, C, + D)
i. C has children, 1,2 + 3 (C predeceases T)
b. if the ALS applies to this class gift, C's issue will receive C's 1/4 and A, B and
D all get 1/4
c. UPC applies to class gifts in this way
d. if the ALS is silent on class gifts, it is usually understood to apply in this way
vi. (5) Contrary Intention
1. ALS are default rules, wills can dictate what will happen to lapsed gifts
a. creating an alternate gift OR
b. creating a separate place for lapsed gifts to go
2. the text of a will can be contrary to ALS
12. Changes In Property
i. default, gap filler rules, flow from presumed intent
ii. this happens when the will describes prop differently than what the estate actually possesses at
Ts TOD
iii. types of gifts:
1. specific: any identifiable piece of prop
2. general: gifts of $ value
3. demonstrative: hybrid of specific + general a general gift from a specific source
a. ex: "$100 payable from sale of my google stocks
i. preferred but not exclusive source of $
ii. gift is not extinguished if source is not available
4. residuary: undefined, all that's left
iv. possibly also intestate shares will come into play
v. some gifts are more important than others
b. (1) Ademption by Extinction
i. will gives out a piece of prop that either no longer exists or is no longer owned by T's estate
1. if it's not there, you don't get it
2. gift has been adeemed by extinction
ii. we are assuming that T has the knowledge that by giving away a gift to someone else prior to
T's death, they understand that the B in their will no longer gets the gift presumed intent
iii. rule of ademption only applies to specific gifts
iv. the benefit of this rule is that it's a bright-line. It's easy. But it's also very harsh
1. modifications of this rule vary state by state
v. In Re Estate of Anton (2007)
1. T has left land prop by will to be shared by 2 people (son and a step-child)
2. later in life, T gets into an accident and transfers PoA to her daughter
3. daughter uses PoA to sell prop in order to pay for T's hospital bills
a. T didn't really have mental competence to understand land prop was sold @
time of actual sale BUT when T was initially told that the land prop may have
had to be sold to pay the bills, she seemes ok w/it being on the list of things to
sell
4. original B's of that prop want the net proceeds that were left after the sale of the land
a. under the tradt'l rule of ademption, Bs get nothing because T no longer owns
the land, so there's nothing for Bs to have
i. ct goes into a 3-pronged analysis modified intent rule that if met,
tradt'l rule will apply ademption
1. T had knowledge of the transaction
2. T realizes the effect the transaction has on their estate plan
3. T has an opportunity to revise the will
ii. whenever someone else is taking Ts prop (ie: PoA), then the presumed
intent may be that the prop is not adeemed
1. must look @ 3-step process
2. Bs still won't get the full value of the gift
vi. Conservator Exception: not a voluntary act of T that led to the removal of the prop from
probate estate, so B's should get the full value of the prop
1. not trying to make Bs whole like in a tort action
2. if Bs happen to get less than originally planned in Ts will, cts. don't care. they are
attempting to decrease the harshness of tradt'l ademption, but don't need to make you
whole
3. Codified version of ademption will have a list of exceptions
a. ex: prop destroyed prior to Ts death but had unpaid proceeds after Ts death
specific B will get proceeds
b. ex: T committed to K for a sale of prop during Ts life, T dies before K closes,
B will get prop subject to K of sale. B has to become party to K in Ts place
and sell prop, but B will get proceeds of sale
4. UPC has a rebuttable presumption of ademption
c. If prop has changed form not substance, you may be able to argue that the gift is not adeemed
i. ex: "two strand pearl necklace to A"
ii. necklace was re-strung into two necklaces
d. when do you read the will as temporal?
i. "my car to A"
1. if car is different at time of writing will can you argue that the will speaks @ time of
writing or at time of Ts death?
2. usually, the will speaks to prop at the time of Ts death
e. (2) Partial Ademption
i. part of the general rule of ademption
1. ex: "20 acres to A"
2. T deeds away 5 acres during his lifetime
3. A can still get the remaining 15 acres
f. (3) Ademption by Satisfaction
i. T gave gift to B during life - gift may be adeemed by satisfaction
1. this only applies to general gifts
2. if T is a parent of B and transfer of $ is similar to that allotted in Ts will, usually this
creates a rebuttable presumption of ademption by satisfaction
a. modern UPC rule is a presumption against satisfaction
g. (4) Additions to Property
i. if a stock has given cash dividends, they aren't tied to the gift of stock, but if a stock has
acquired stock dividends or stock splits, they will go to the specific B of the stock gift
h. (5) Exoneration
i. property given subjcet to an encumbrance (like a mortgage)
1. does executor pay off mortgage with other estate assets or does B get the gift with the
encumbrance?
a. tradt'l rule was that executor paid off encumbrance as best they could w/estate
before giving gift to B
b. Modern Rule is against exonerations B gets gift w/encumbrances
i. nobody can force B to take the bequest, so if it's not worth it to have
the encumbrances also, B can disclaim and say "no thanks"
ii. language in will can exonerate property
1. ex: "house to A free and clear" implies exoneration of encumbrances
i. (6) Abatement
i. what do you do if there isn't enough property to go around?
1. which gifts get abated first?
a. look for a statute:
i. whether or not there is priority on gifts for children and spouses
ii. may also dictate order and priority of gifts
ii. general (default) order of priority:
1. specific + demonstrative gifts
2. general gifts
a. If you run out of general gifts in the middle of giving them out, you reduce the
value of the gifts pro-rata (by the same rate)
i. don't reduce everyone by the same amount, but rather by a % or ratio
3. residual gifts
4. intestate shares
iii. all gifts within one of the 4 categories are of equal priority
13. Intestacy
i. default rules for average person whose will either doesn't exist or doesn't go through probate
ii. every single fam has same intestate rules no matter what individual factors are
iii. heavily favors descendants over ancestors
1. prop drops down first
iv. intent is non-existent, all rules are based on presumed intent
1. never ask what intestate decedent wanted
2. estate plan that intestacy represents is the presumed intent of T mixed with social
policies
v. only deals with the administration of probate property
vi. except for Ts spouse, blood determines inheritance
vii. most significant long-term trend is that a spouse went from not being an intestate heir (tradt'l
rule) to getting majority of the estate now
viii. also there is a trend toward accommodating for the changing fam step-children, adopted
children, etc
ix. descent + distribution code in each state will dictate how prop transfers through intestacy
b. What makes you eligible to be an intestate taker?
i. (a) you can't have been disinherited
1. negative will
a. ex: "nothing for john"
2. disinherited by valid testamentary instrument
ii. (b) you must survive to take
1. no such thing as lapse in intestacy
2. what does it mean to survive someone?
a. Janus v. Tarasewicz (1985)
i. Brother dies of tylenol cyanide poisoning, H+W fly home from
honeymoon and take same tylenol and they die
ii. argument is over H's life-insurance policy
1. W is the beneficiary
2. W died just a few hours after H died
3. W's dad wants $ because he claims "W survived H"
4. H's mom wants it because she claims that living a few hours
longer isn't "surviving"
iii. if there's not enough ev of survival, cts assume they died
simultaneously
1. if they die simultaneously:
a. when distributing H's prop, assume H survived W
b. when distributing W's prop, assume W survived H
iv. statute based on the uniform simultaneous death act
1. if we can tell who survived w/ factual ev- then that person
takes no matter how long they lived after T, so long as it can be
proven
v. too much subjectivity in this original rule while we're guessing who
died first, we're torturing family members
vi. UPC has a 120-hour (5 day) survivorship rule
1. USDA also follows this rule now
2. proof of survival by clear + convincing
3. idea is to put prop in place T would have put it
a. presumed intent
vii. here, ct decided that there was sufficient ev to prove that W survived H
so $ went to W's dad
c. Order in which people take
i. spouses
1. almost always the highest priority taker
2. presumed intent who would average T want their $ to go to?
3. PP favoring marriage: society thinks that relationship matters
4. spouse will assumedly use $ to help children
a. what if children are older?
i. they will get it when 2nd spouse dies, most likley
5. PP "better him than us"
a. if there's private $ in the estate and a spouse can be supported by it, it's better
to give it to the spouse than have society and the state (welfare, etc) support
them with public funds
6. majority rule: spouse gets everything
7. some states: if no descendants but a spouse, spouse gets everything unless there are
surviving parents of T, then parents may share w/ spouse.
a. descendants knock out parents, always
8. some states: if there are descendants, share w/ spouse spouse gets 1/2 and
descendants split the remaining 1/2
ii. Systems of representation
1. Steps:
a. (1) find generation where you start
b. (2) count shares w/I that generation
c. (3) allocate shares to living takers w/I that gen
d. (4) drop + divide to other gens
2. Strict Per Stirpes
a. shares divided by # of stocks (lines headed by first gen removed from T
regardless of whether there are any survivors in that gen, so T's kids)
i. get a share if either:
1. you're alive
2. you've left behind descendants
3. if you're dead and have no kids you get NOTHING
b. see chart
3. Modern Per Stirpes
a. starting generation is the closes gen to T with AT LEAST ONE SURVIVOR
i. "equally near, equally dear"
ii. T would think of their grandchildren as all equal since T's children are
all dead
b. If the first gen (Ts kids) has a survivor, then SPS and MPS will have the same
result
c. see chart
4. Per Capita @ Each Generation (UPC)
a. find the closest gen w/ a survivor like MPS
i. T has three kids (A, B + C)
ii. A and B are dead, C takes 1/3
1. there are 2/3 of the estate left
iii. A has one child, D
iv. B has two children, E + F
1. each of three grandchildren grandchild gets 1/3 of the
remaining 2/3 of the estate
2. 2/3 x 1/3 = 2/9
a. D, E + F all get 2/9 of the estate
b. see chart
c. NY adopts this approach
d. Systems for Collateral Relatives
i. Parentelic System: closer (vertical) line you are in to decedent, the closer you are blood related
to them. If you come from a closer ancestor, the closer line wins
1. multiple people in a line, they all take equally if they are the same sype of relative
a. ex: (cousin 1) gets 1/3 (cousin 2) gets 1/3 (cousin 3 is dead but has one child)
i. (cousin 3's child) gets 1/3
ii. concept of representation is part of this system
ii. Degree of Relationships: people are related by degrees, the lower their degree #, the closer they
are to you
1. start w/ deceased, count UP to the common ancestor, then count DOWN to the
specific relative to determine degrees
2. relatives w/I same degree share equally
3. relatives in a closer degree beat everyone in a more distant degree
iii. some statutes combine parts of both of these systems
iv. in most states there is a cut off saying some people who are blood relatives but are just too
remote from T cannot take
1. "laughing heirs" inherits from a distant relative they didn't know they had
2. cut offs are in place because finding distant takers is just not worth the
effort/resources/time/money etc
3. UPC cuts off after line of grandparents + their descendants
v. if there are no eligible takers, your estate escheats to the state
vi. most states make no distinction between half-blood and whole-blood relatives
e. Adopted Children
i. until the 1850s there was no legal recognition of adoption
ii. @ common law, adopted child could inherit from BOTH its biological AND adoptive parents
1. BUT not from adoptive parents' family, only from the parents themselves
a. they're technically still a part of their biological family treee
iii. modern trend: child is no longer part of their biological fam tree they are severed
completely and accepted into adoptive family
1. they therefore can now inherit through AND from their adoptive parents
iv. inheritance law changes again w/divorce + remarriage rates increasing
v. law begins to move away from the bright-line rules
1. Hall v. Valladingham
a. biological father of children dies, mom remarries, new husband adopts kids
b. kids biological uncle through their deceased father dies
i. can the kids inherit through their deceased father from their biological
uncle?
c. as a general rule, kids can only have TWO legal parents
i. when stefather adopts, kids can now inherit through him
ii. but, step-relations do not last beyond marriage, so if they get divorced,
kids get nothing from dad
1. isn't fair to leave kids w/o 2nd inheritance by cutting out bio
father's fam tree
d. ct. here was worried about a windfall for the adopted children who would then
be able to inherit from 3 fam trees while the natural children would only
inherit from 2
i. disrupts notions of fairness and equality
vi. UPC rule: kids retain inheritance rights from dead bio parents, but dead parent's fam cannot
inherit from the kids
1. 1-way inheritance
2. special rules for adoption by relatives
f. Adult Adoption
i. Minary v. Citizens
1. H adopts W so she can inherit from his mother whose will is governed by the rules of
intestacy
2. stranger to adoption rule: old rule that says you can only inherit from adoptive parent
and not through them
3. wills are governed by the law when written not at Ts TOD
4. ct does not allow W to inherit b/c it disrupts the spirit of intestacy law - takes $ away
from intended Bs possibly disrupting Ts intent
5. don't want to promote that kind of adoption b/c when an adult gets adopted, they are
severed from their own family tree and can't inherit from their own family
a. ct imposes a limit it's not okay to adopt if the sole purpose behind adoption
is to benefit from an instrument that already existed
g. Equitable Adoption
i. no legal adoption has occurred, but we think it's appropriate to create a 1-way inheritance to
protect the child
1. child can inherit from others but they cannot inherit from the child
ii. sometimes, relationships seem so much like an adoptive relationship that we should bump it up
to one in the name of equity
1. not all states observe this idea
iii. Estoppel Adoption: parent acts like a parent in every way and child believes there is a parent-
child relationship, then the parent's estate will go to the child
iv. this ct cares a lot about the K made between parent and child
1. if equitable adoption does not exist in a certain juris, you must then find what it's
rooted in whether it's estoppel or K or functionality of relationship
h. Posthumous Children
i. (1) born after death of father
1. mom must have been married to dead dad
2. if child is born w/I 280 days of deceased father, then child has a parent/child
relationship with father
a. if born AFTER 280 days post-fathers-death, then child must PROVE a
relationship w/father
3. unmarried women: used to be that a child born out of wedlock had no parents, then
changed to them only having a mother. in the 1970s, SCOTUS held that unwed
fathers have parental rights- but don't have the same rights as unwed mothers
a. now there has to be a scheme to allow unwed fathers to have a legal
parent/child relationship and allow kids to inherit from him in most states,
unwed father has to show that he is a legal parent
i. statute will explain steps he must take
ii. if he can establish a parent/child relation under the statute, he can give
full inheritance rights to child
b. if unwed father dies before birth, you still have to establish parent/child
relation most likely through DNA
ii. (2) posthumously conceived children
1. child conceived after death of parents using either or both parents' gametes
2. NY has no intestacy rights for posthumously conceived children
i. Advancement
i. parallel to ademption by satisfaction in a will, advancement is for intestate estates
ii. when does something count as an advancement?
1. @ common law: lifetime gifts from parents to children is presumed to be an advance
2. modern rule: reverse presumption but allow for proof that lifetime gift was meant to
be an advancement
a. this can only be proven w/ express, written declaration of donor @ time of
transfer OR
b. written acknowledgement by the donee (always make phone calls, no thank-
you cards)
iii. only talking about transfers through families b/c intestacy only flows through fam
iv. if you received an advancement, what does that mean?
1. hotchpot: a fictional place where the donee who received an advancement during T's
life brings the amount of their advancement to be re-distributed through the estate
2. T has three children, A, B + C
3. A gets a $100K advancement during Ts lifetime
4. at probate, if A wants a share of the probate estate, they must bring the $100K to
hotchpot and then divide equally
a. ex: estate is worth $500K @ Ts TOD
b. A brings their $100K advancement to hotchpot
c. estate is now work $600K on paper
d. A, B + C all get $200K on paper
i. in reality, A only gets an additional 100K because they already got the
other 100K during Ts lifetime
5. it is up to A whether or not to come to hotchpot. if estate is worth less and A got more
than their fair share, they may not want to participate in hotchpot
a. A may still want to come to hotchpot in this scenario in order to obtain
property in exchange for cash OR
b. to promote family harmony between his relatives
14. Slayer Rule
a. one of the bars to succession
i. murdering the decedent
ii. how does a ct decide whether to apply the slayer rule if it's not in the statute?
1. dont want to punish the slayer twice they already have to go to jail, probably, so
why also take their inheritance?
2. but, you don't want to reward people for killing incentives to kill for profit
3. third option: let legal title pass to the slayer in a constructive trust for the heirs or next
of kin or descendants of slayer
a. don't want to punish descendants for what slayer did
b. still following ideas of inheritance + statutes
c. equitable device
iii. sometimes, if the slayer is determined not to have had the requisite mens rea (mental intent)
they still inherit
1. self-defense, duress, involuntary manslaughter, etc
a. this is because you can't deter unintentional behavior
iv. donor opting out of a slayer rule is not default, only about 2 states allow it
v. who takes in place of slayer?
1. usually their heirs, but resolved by statute
2. statute will say whether slayer rule applies to all types of property that passes by
death
a. intestate
b. will
c. non-probate transfers
vi. no such thing as an unworthy heir: you can treat people as badly as you want so long as you
don't kill them
1. some states are moving towards protecting from elder abuse
15. Disclaiming Gifts
a. saying "no thank you" to a bequest or inheritance
b. no longer a tax on gifts, it just becomes yours
c. you have the right to disclaim a gift
i. ex: evading creditors, mortgage on a house
d. gift then goes to whomever is left in line
i. drops through lapsed gift rules (w/ a will) or through intestacy
e. creditors cannot force you to not disclaim
f. Bs can enter into a K saying they won't disclaim
g. most states have very strict rules for disclaiming
h. generally treat disclaimer as the B having pre-deceased T
i. don't want to be able to manipulate shares going to heirs
1. keep the disclaimant alive until you allocate shares, then you drop down those shares
as if the disclaimant was dead
16. Marital Property
a. Marital Property Systems by State
b. system depends on state
c. separate prop: anything by gift, inheritance, lottery, premarital
d. community prop: earnings of either spouse during marriage
e. separate prop systems:
i. during marriage "eat what you kill" - everything you make or obtain is yours as separate
property
ii. at divorce equitable distribution - ct. can redistribute assets, a process by which ct figures
who gets what. "marital property" like community prop
iii. at death elective share: protection against intentional disinheritance by a decedent spouse
f. community prop systems:
i. during marriage community prop is owned 50/50 from moment of acquisition. separate prop
stays w/owner
ii. at divorce SP goes w/ owner, CP is split 50/50
iii. at death SP goes w/owner + their issue, CP is split 50/50
1. this usually means that half of the CP goes to the surviving spouse and half to the
heirs of the decedent
2. decedent spouse can give away half of CP to whomever they like and ALL of SP
3. the idea is that the spouse already owns half of the estate anyway
g. Spousal Protection
i. Support Rights (sometimes called "fam prop exception")
1. federal
a. social security benefits to a surviving spouse
i. incorporating the principle that married people earn on behalf of a
unit: loose community prop feel
ii. 2nd spouse to reach retirement can earn either their own SS benefits or
1/2 of their spouse's benefits, whichever is higher.
1. if higher wage earner dies, other spouse can collect their full
benefits
2. this is true even for people who get divorced so long as they
have been married for the 10 years it takes to become fully
insured
b. pension rights (ERISA) preempts state law
i. spouse is the B
ii. this can be waived, but only after marriage and it usually requires
consideration
iii. some benefits can't be waived until you're 35
iv. the clear message under ERISA is that the benefits are for you and
your spouse only
c. tax-free transfers from one spouse to another through a will
2. state-level
a. homestead right
i. protection of fam home for surviving spouse + minor children
ii.sometimes exempts creditors from putting a lien on a fam home
iii.can also be a $ amount to secure housing for "x" amount of time
iv. or the right to occupy the home for life
v. in a joint tenancy, the house is non-probate property, it goes
automatically to the spouse (or whomever is joint tenant)
b. personal prop set-aside
i. surviving spouse pick items in the house up to a certain $ amount to
keep even if decedent spouse willed those things away
ii. could list actual things so they're not sold off to cover the estate
1. this list is made prior to Ts death
c. family allowance
i. sort of like temporary alimony to have $ until estate is probated
ii. can limit the amount of time or $
iii. almost always end @ time of close of probate
iv. individualized assessment of circumstances
v. this $ is taken out BEFORE you calculate the probate estate
ii. Ownership Rights
1. Elective Share
a. no matter what T wants, they can't completely disinherit their spouse. A
spouse ALWAYS gets a portion of T's estate
b. You incur obligations through marriage by staying married, T is indicating
that they're OK with this system
i. prenuptual agreements: waive equitable distribution, maintenance
(alimony, etc), family support rights, elective share, intestacy share
c. ES is for spouse only, children have to rights to it
d. gives surviving spouse a fixed portion of Ts estate
i. survivor gets to choose: do they want what they'd get via will or will
they take the ES instad? (ES is typically 1/3 of the estate)
e. this applies when we KNOW that T wanted to give their spouse either nothing
or very little, so we try to avoid this
f. PP that you can't disinherit your spouse
i. assumption that spouse helped T earn that $
ii. gov't would have to take care of the disinherited spouse, rather private
$ take care of them than public $
iii. married people labor in a joint enterprise
iv. some of this $ does belong to the survivor
g. ES is only for LEGAL spouses
i. severed by divorce, annulment or death
ii. common-law marriage is OK in states that recognize it
iii. same-sex marriage works the same in states that recognize it
h. what prop is subject to ES?
i. 1/3 of probate estate
ii. to get around ES, T can give things away outside of probate convert
prop to non-prob prop so surviving spouse can't take in ES
1. ex: trust $, joint banking accounts, inter-vivos gifts, payable-
on-death account, prop w/right of survivorship, inter-vivos
trusts
2. cts come up with some doctrines to limit this
a. illusory transfer property: looks like T doesn't own prop
but really still does if you effectively own it, it's
included in ES
b. subjective test: did T do this type of transfer on purpose
to attempt to disinherit and defeat ES? If so, it comes
back into ES
3. if T retains control + ownership of non-probate transfer, the ct
is going to count it as prob prop
i. NY: net estate law spouse gets $50K or 1/3 whichever is greater
i. ES is 1/3 of prob estate + other kinds of transfers
ii. focus on types of transfers intended to defeat ES
iii. generally exclude transfers prior to marriage
iv. target transfers w/I a year of death
v. transfers during marriage that create non-prob prop in others
1. things that make it look like T got rid of the $ but actually
didn't
j. UPC is modeled on NY approach: called augmented estate: start w/ probate
estate and then add things to it
i. ES + transfers intended to defeat ES
k. 1990 UPC redesign: express purpose of creating results to be more like
community prop
1. ie: the longer you're married, the more you should get
a. sliding scale percentage
ii. how much did they have together and how much should survivor get
pretty much what they do in divorce how much to we feel
survivor is entitled to?
iii. (1) add together
1. T's probate estate
2. survivor's probate estate
3. transfers from either of them
iv. (2) then, calculate % on sliding scale based on length of marriage
v. (3) whatever survivor's entitled to that her own estate doesn't cover, the
difference is made up by T's estate
1. this includes prop from any source, not just income and from
any time, not just during marriage
l. 1998 UPC revision: adopts community prop principle that says survivor is
entitled to 50% of marital prop
i. use sliding scale to see what ratio should be on comm prop vs. separate
prop
1. the longer you've been married, the larger % of your prop is
considered marital prop
2. survivor gets 50% of this marital prop
m. who contributes to ES?
i. want to fulfill ES while doing the least disruption to the estate
ii. spouse MUST take things that were left to them outright if it doesn't
add up to 1/3
iii. survivor can't be forced to take prop they weren't left outright, like a
life estate
iv. all beneficiaries contribute pro-rata to ES
1. abate everyone equally
v. if this is still not enough, then go after non-prob transfer
vi. if you're the B of a non-prob transfer, survivor takes those too as part
of ES
n. ES statutes attempt to address certain problems:
i. intentional defeat of ES
ii. giving surviving spouse only 1/3
iii. windfall effect of ES
17. Waiver of Benefits
a. all of the nonsense of the ES can be avoided through a pre-nup
i. post-nups too are becoming more enforcible
b. NY has a ton of ways to waive ES
c. No-fault divorce in the 70s
d. Uniform Pre-Marital Acceptance Act - 1983
i. as a general matter, pre-nups are enforcible
1. UNLESS
a. signature was involuntary
b. they are unconscionable either substantively or procedurally
i. this must be coupled w/a lack of disclosure in order to invalidate the
pre-nup
1. @ time of signature, non-propertied spouse did not have
sufficient information about how much the other spouse really
has
2. what is disclosure?
a. non-propertied spouse knew qantum/kind of propety
b. they were given an opportunity to learn more/ask
questions
ii. need either adequate disclosure or waiver of disclosure in order to
have a valid pre-nup
c. unconscionability is a matter of law not fact a judge must determine it, not
a jury
e. 2012 reboot of UPMAA
i. pre- and post-nups are on equal footing
ii. increase emphasis on adequate legal representation for non-propertied spouse
1. this is a factor of enforcibility
iii. some statutes give a time limit ie: pre-nup can't be signed w/I 7 days of marriage
iv. ct can say after divorce that agreement was so unfair (in terms of alimony and support post-
marriage) that it is unenforcible
18. Intentionally Omitted Children
a. you can disinherit your children
b. Louisiana has a forced heirship rule: kids have a RIGHT to inherit if they're under 23
c. juries don't like children being disinherited, unless T leaves it all to other parent
i. who does that?!
ii. you have a good sob story you can probably convince a jury that T wasn't in their right mind
get will thrown out intestacy governs and kids inherit
1. capacity, duress etc
2. much greater chance of will contests if you leave nothing to kids
a. settlements outside of ct
19. Unintentionally Disinherited Family
a. spouses who come after will is written
i. presumed intent T forgot to amend will
1. probably correct in assuming forgetting as opposed to intentional disinheritance
ii. @ common law/tradt'l rule: when you get married, pre-marital wills are revoked and we use
intestate succession if you don't write a new one
1. still used in some states
iii. statute creates an accidentally omitted spouse's share somewhere between ES (1/3) and 50%
iv. sometimes, instead of re-writing the will, T gives a gratuitous transfer to spouse during life to
make up for not including them in the will
1. cts want to think of those spouses that were TRULY forgotten and not taken care of in
some other way
2. if survivor is accounted for in a gratuitous transfer, they aren't really forgotten
v. NY has no omitted spouse statute they just get ES
b. accidental disinheritance of children
i. statutes provide protection usually to kids born or adopted after will
ii. if the will is after some kids but prior to others, and leaves pre-will kids nothing, we will
assume that post-will kids get nothing either
iii. if prior living kids are left something in the will, afterborn shares in the pool of $ given to the
prior kids
iv. pretermitted: pre-existing instrument before you have a spouse or kids, they're not omitted,
they're pretermitted
a. if a will before all kids leaves nothing, we presume that parents love their kids
and after they are born it's an accidental omission
i. default is that we assume if you didn't rewrite a will after having kids,
it's accidental
ii. pretermitted child gets intestacy share
v. sometimes ex ev of intent to disinherit is included to prove intent
20. TRUSTS
i. idea that one person holds legal title and has responsibilities to prop while another benefits
from that prop
ii. financial assets are the most common thing people keep in trust
iii. benefits of a trust?
1. used to protect the legally incompetent (either by age or by other legal reason) under
conservatorship
2. allow decisions to be made over time and you can still get $ from them while you're
alive
3. creation can be important to tax planning
4. used as a way to protect family wealth over time prevents one gen from dissipating
fam's entire wealth
iv. trust law is rooted in common law, not statutes
1. recently they have been codified by the Uniform Trust Code
2. NY has no UTC
3. some states create trust law in favor of grantor
4. trust law is almost entirely default rules designed to be opted out of by the
language of the trust instrument. small list of requirements.
a. trust instrument is driven by personal desires
v. private express trust: created by a private individual intentionally. it's the way an individual
wants to transfer his/her assets
vi. charitable trust: created by a private individual for a charitable purpose
vii. three parts to a trust
1. grantor: creates the trust, person whose assets are being distributed
2. trustee: legal title owner (can be the same person as the grantor) must accept being
trustee.
3. beneficiary: equitable or beneficial owner
viii. timing of trust
1. inter-vivos trusts: created during grantor's lifetime, are revocable
2. testamentary trusts: created in grantor's will and are irrevocable
ix. method of creating trusts
1. deed of trust: grantor creates a trust that names a 3rd p as trustee
2. declaration of trust: grantor names themselves as trustee
b. Role of the Trustee
i. title holders of prop, can interact w/ prop any way that an owner could
1. buy, sell, use etc
2. but, they can only do these things if they are:
a. consistent w/ the words of the trust instrument AND
b. for the interest of the beneficiary
ii. in order for anything to be considered a trust, there must be an equitable duty to a B who is not
the grantor
1. G can be trustee AND B, but there must be an additional B to whom the trustee owes
a duty
2. G doesn't need to name a trustee, they can be appointed
3. trustee has to have some responsibility, otherwise the trust just passes right to the B
iii. so long as trustee can show that his actions benefitted the B, they're usually OK
iv. trustee is personally responsible for the way he acts w/ regard to trust prop
v. UPC: parents can do anything with trust that would benefit their child
vi. trustees are typically compensated determined by the terms of trust
vii. must affirmatively indicate that they are willing to take the position
viii. doubts in court are held against the trustee because they are held to a higher standard
c. Role of the Beneficiary
i. have a legal role to enforce the terms of the trust and ensure the trustee is acting in their
interests
ii. can sue trustees for violating their duties
1. can sue for value of prop that trustee gave away AND
2. for the $ that trustee made on the sale of that prop
a. $ comes from trustee's pocket when he breaches his duty
iii. Damages = what $ B would have gotten from trust if trustee hadn't spent it + $ trustee already
spend for the benefit of B
d. Requirements of a Trust
i. (1) intent (2) beneficiaries (3) trust property (4) formality -- ?
1. depends on the requirements of the trust, they are more lax w/form than wills
ii. Determining Intent
1. look to the language of the instrument
2. is the prop is left to minors, it might indicate that there's a trust created so someone
else can maintain the prop for the children
a. preservation of prop is essential to every trust trustee often purchases
insurance to protect prop
3. G does not need to specify with language that it is a trust
a. G needs only to contemplate gratuitously giving someone prop that is to be
maintained and cared for by someone else who has legal ownership.
4. precatory language: unenforceable language that manifests a hope or desire of a
person as to how they should use the $ T gives them
a. trusts must use much stricter language to place restrictions on how to use the $
in order to qualify as a trust
b. Intent is relative to structure and function, doesn't have to be in express
language to create a trust.
c. if language is intended to be mandatory, we are more likely to find a trust
5. guardianship: adult trustee for child B ct. appoints the guardian, everything
guardian does is supervised by ct. they must get cts approval before making any
changes
6. a trust doesn't fail for lack of a trustee, if a trustee dies, B goes to ct and asks for a
new one
7. the line between trust and gift is extremely narrow
iii. Necessity of Trust Property
1. Unthank v. Rippstein (1964)
a. man writes letter promising to give woman $200 monthly for 5 years
b. promises of future gifts are worthless
c. he gave $200/mo for a while, but died before the 5 years were up
d. can't be a holographic will b/c it starts making payments before Ts death
e. if there's no trust prop @ outset, there's no trust
i. what is trust prop?
1. if there is $ left in trust after trust expires, it goes back to G's
estate, usually to next of kin
2. here, the prop in trust would be the $ necessary to make
$200/mo payments or the principal necessary to finance these
payments, or the entire estate even??
a. b/c there are too many options, and what, precisely the
prop is is too ambig, perhaps a trust was not
contemplated
b. T didn't tell us what's in the trust
c. T doesn't expressly tell us there's n intent to create a
trust
d. amb description of assets and amb intent
i. too much amb, ct will not draw this many
inferences
iv. Ascertainable Beneficiaries
1. charitable trusts cannot have private, specific, ascertainable Bs
2. every other trust must have this
3. Clark v. Campbell (1926)
a. assets intended to be placed in trust will fall to resid. or intestacy if the trust
fails
b. mans leaves his estate to "those of my friends as mu trustees shall select."
i. no meaning of the word "friend" that is objectively r'sble
ii. the language is too subjective to impose a secure trust
iii. if we don't know who's included, we don't know who has standing to
sue or whose interests need to be served
1. no watchdog on the trustees
iv. there's no legal standard for what a "friend" is
4. language of Bs can be ascertainable in the future or after we go out and find facts, but
it must be objective
5. pets cannot be Bs in a typical trust
a. trust for a specific animal is not charitable
b. can just say all animal trusts are invalid OR
i. say this type of gift creates an honorary trust, $ stays w/trustee who
promises to take care of animal or $ goes back to G's estate
ii. most states have statutory rules on trusts for animals or other non-
human entities (ie: gravesites)
iii. they have a durational limit to avoid the rule against perpetuities
iv. $ must be proportional to the needs of the animal
v. Formality--?
1. NY requires formality with every trust no oral trusts allowed
a. but this is not the norm
b. the norm is that some trusts require some formality and some trusts require no
formality
2. In Re Estate of Forneier (2006)
a. guy gives friend $400K in cash to hold on to it secretly and then when he dies
for them to give it to one of his sisters
i. when he dies, what happens to his money?
b. why didn't T just put this into a will?
i. maybe he wanted to avoid the gift tax on this gift to sister, also he
didn't have $ to pay for a lawyer to create a real trust, avoiding
transaction cost trusts are more expensive than wills so T picks
this informal mechanism
ii. if there is a trust, then $ will go to sister
1. we know terms on the trust based on what T told the friends it
was they will testify
2. they testified that he said to hold it and then give it to his sister
after he died
3. they're not required to invest $, T only told them to hold onto it
4. is friend obligated to turn over the $ to sister when T dies? if
friend is the only one who knew about T's desire to make a
trust, they could really just keep it. But in this case, friend
comes in and testifies to the idea that the $ was for them to
hold
a. implied duty to make money productive?
i. cash in a trust is supposed to be used to make
more money
b. does seem here what T really wants to do is just have
friend sit on $ until after he dies
iii. if there is no trust, then the $ gets split 50/50 between T's two sisters
(poor and rich) which T wanted to avoid. He only wanted $ to go to
poor sister
iv. if this transfer was actually a gift and not a trust, friend would just
keep the $
1. but the friend comes into court and testify that it was a trust, so
that defeats this possibility
c. creation of an oral trust must be established by clear + convincing ev. will
substitute, no equivalent to attestation, but there is a heightened risk of fraud
and fabrication so we raise the BoP
i. in this case, the party adverse to the creation of the trust is the person
advocating for it, so it works out. But this is not usually the case.
d. here, since everyone tells the same story, creation of the trust is proven by c+c
ev.
vi. what are we missing by having a trust created solely by oral statements?
1. benefits of formality even when the law doesn't require formality:
a. downsides of an oral trust
i. fraud later on, T is relying on the honesty of others after T dies. No
way of knowing what's going to happen in the future. Circumstances
might change.
ii. what if the friends in whom you place the trust die?
1. then the $ ends up in their estate, because there's no one else to
carry out Ts wishes
iii. things are never going to go exactly how you plan once you're gone
2. Grantor must clearly dispense with the possibility of compensation for the trustees in
order for them not to have a claim of being paid
a. usually paying Trustees for investing, obligations, insurance of trust
vii. Many states allow oral trusts if they are for personal property
e. When do we not allow oral trusts?
i. when the only asset of the trust is land
1. statute of frauds says you can't transfer land w/o a writing EVEN IF IT'S IN A
TRUST
ii. testamentary trusts must have formality/writing as well
1. they are part of the will so whatever you need to make the will valid is also
required to make the trust valid
f. Olliffe v. Wells
i. T has a will that says resid is in trust goes to Wells to distribute in "such manner as I have
expressed to him or may express to him"
1. this is referring ct to something else in order to express the desires of the T
2. but you must stick to the words of the will can't include Well's ex ev unless there's
a doctrine in which you can bring in ex ev
a. doctrine of formality which allows you to look at some outside source
3. this bequest is missing the name of the beneficiary. Why can't we go find the name of
B from Wells ?
a. not an act of independent significance
b. not incorp. by reference b/c not a document
c. nothing else to allow the ex ev of Well's info into the probate ct
i. if it's not in the will or in an outside source brought into the will
through these two doctrines, can't bring it it
1. formality with which you execute the will is the reason we trust
it
4. this trust doesn't have any beneficiaries, which is why a trust fails. but since this trust
is created in a will, the rules of formality of the will apply. the terms of the trust must
be in the will which itself is duly executed. if we don't have the terms of the trust in
the will then we don't have the formality necessary to make it a valid trust.
5. is this an outright gift to Wells with the precatory hope that it ends up with the charity
T wanted it to go to?
a. NO. PMR! These words have a plain meaning that don't say "give to a charity
if Wells feels like" it's clearly for Wells to distribute to somebody else. Plain
meaning of words is clear, can't go directly against the words of the will
ii. What can we do with this?
1. either just strike it for being incomplete. Rules of formality require us to know who
the Bs are either by the words of the will of by an incorporated writing brought in by
a legal doctrine. Since we can't do either, we strike it completely.
2. pretend like we're honoring the wills act but getting to the right result by using a
"constructive trust." Even though B's are not listed, we just pretend that it did and
then just use who Wells says as the B
a. should we care if Ts intent is expressed if T didn't do it in the way that we
allow?
3. here, the problem is fixed by simply allowing the bequest to fail because Wells won't
outright get the gift.
iii. What does the court do with the arrangement?
1. semi-secret: will knows there's supposed to be a trust but some of the terms have
been kept secret
a. RULE: no ex ev, gift fails, and $ goes to wherever failed gift $ goes (resid
or intest)
b. clear that T intended to create a trust, and clear that Wells is not supposed to
be a B but a trustee, but we don't know who the Bs are.
2. secret trust: will doesn't disclose the existence of a trust at all
a. RULE: we admit ex ev to show existence of trust and the terms
b. secret is being kept from the will, as far as the will understands, it's an outright
bequest from T to somebody ID'd in the will. Secret part is that that person is
not supposed to be a B but instead a trustee. It is a transfer of trust assets. Will
makes it seem like they're an outright B, but that person really knows they're
intended to be a trustee.
i. if we don't allow ex ev in to prove existence of secret trust, $ has to go
to Wells. PMR dictates this, this is what the words of the will tell us
without including any ex ev. cannot just say bequest fails. Words of
the will are clear. We read them and give effect to them.
1. solution this would be unjust enrichment
c. doesn't matter who knows
i. the solution to a secret trust is that we must include ex ev. This was a
trust masquerading as a bequest. use ex ev to prove existence of the
trust and then use a constructive trust on Wells in order to solve the
problem.
ii. w/o ex ev there is an attempt to create a trust that fails. just an outright
beneficiary.
3. here the rules of wills would lead us to unjust enrichment, so we use a constructive
trust to avoid violating the rules of equity and having unjust enrichment
g. what do we do if someone transfers land in a way that looks like an outright conveyance but is
intended to be a trust?
i. O deeds prop to X, but O says to X it's not really for them, X must give land to O's children
when O dies
1. X takes prop as grantee according to the writing
2. then Children come up to X and demand they get the land
3. nothing in the deed that discloses the existence of the oral truss
a. SOFs requires writing and since trust was oral here, X is outright owner
ii. Parent deeds land to child and says "I'm giving this to you but really I'm keeping it until I die"
attempting to create an oral life interest and life estate. Child then evicts parent.
1. but deed only says parent gives child prop
2. can we enforce terms of the oral trust?
a. some cts say NOPE, SOFs says no. No proof and enforcement of oral trusts
for transfers of land
b. some cts say use a constructive trust yes, conveyance says it's child's but it's
an equitable problem.
i. use this only when they're in a confidential relationship
ii. or when there is outright fraud or outright misrep. as to what child will
do with prop once they get it
21. Revocable Trusts
a. what purpose does this serve?
i. it's a will substitute. a way of holding prop as similar to what one does with a will which is that
a revocable trust provides that "everything is mine, but I'm also the trustee and while it's in
trust I have all the rights and all the benefits until my death. then at my death other people have
interests."
b. if this is basically a will, why don't we require the rules of will formality?
i. doesn't have to be attested, no rules of interpretation
ii. starting in the 50s and 60s movement towards avoiding probate
1. this is the thing that allows you to retain interest in the prop despite having removed it
from your prob estate also can avoid ES with this
c. Farkas v. Williams (1955)
i. RT is not a will and should be recognized independently
ii. veterenarian creates what he thinks are a series of four trusts for an employee he buys stock
and titles it as his name in trust for employee and executes a written declaration of trust for
employee as B
iii. language of the trust instrument:
1. what does vet retain the right to do?
a. sell, redeem stock, get dividends
b. if he sells stock, then he can keep the money, and the trust in regards to those
sold shares, the trust is terminated
c. he can change Bs at any time (must provide written notice)
d. terminate the trust (revoke it), he can amend it, change the terms in any way
e. give stock away to someone else
2. is there anything vet can't do?
a. burn the stock certificates has vet reserved powers to give him the right to
destroy the property?
iv. trust requires that a B retain some sort of rights they can enforce against the trustee. There must
be something B can sue trustee for. B must have actually obtained something from trustee
(including the ability to sue for fiduciary violations)
1. if there are no interests transferred to B upon the declaration of trust, then this is not a
trust instrument. It's a will need will formality
2. as soon as trustee is accused of revoking the trust during his lifetime, there are no
damages because trustee has power to revoke and B was never going to get anything
if trust was revoked before trustee's death
v. something changed hands from Farkas to Williams when there was a declaration of trust (this is
a fiction) but trying to fit it into our conventional understanding of the rules
1. fiction that there was a transfer of present interest when in fact there was no such
thing
a. maybe it was that Farkas couldn't burn the stock or maybe it was that F
couldn't change B without written notice, but whatever it was, it was
transferred and Williams acquired something
d. Is a revocable inter vivos trust a valid form of ownership??
i. YES. because there was something intangible that changed hands, there is an interest
ii. every state recognizes these as something that in effect, does exactly what a will does but don't
have the rules that pertain to wills and only rules that pertain to trusts
iii. if you want to avoid probate, this is the way to do it
iv. it's a fiction of a trust because grantor is reserving every conceivable right and only transferring
them upon death still subject to rules of trusts
e. Modern Treatment of Revocable Inter Vivos Trusts
i. recently there has been a destruction of this fiction.
ii. B who's going to get something at some point, but they haven't gotten anything yet
iii. statute abandons this fiction
iv. UTC: even though nothing changed hands, this is a valid trust
v. validate this, and during the lifetime of the settlor, the B's have no rights
1. only duties that settlor/trustees knows are to himself as settlor
2. future B's don't have any claim, rights, standing
a. can't sue
vi. by doing away with the fiction, we do away with the lawsuits
vii. this is a policy choice why tell people they have standing to sue if there's never going to be
any provable harm?
1. they get nothing, because they were never going to get them anyways, doesn't seem to
be a good use of resources to allow Bs to sue for nothing
2. B's are under the control of the settlor
viii. Moon v Lesikar (2007)
1. revocable inter vivos trusts with lots of complications
2. bottom line: what's at issue is father perports to put remains of his ownership int a
trust for his son and daughter and part of it is the airport stock
3. before he dies, he "sells" airport stock to his son, fictional sale, he just gives it to son
a. when he sold the stock at below market price to his son, was there any point at
which the daughter (who would have had half of the stock) she could sue and
challenge the sale
i. might not be that she wins, but did she even have the standing?
b. power to revoke gets rid of anything else
i. if father had power to revoke the trust, no one else has any rights
1. power to revoke only is destroyed when father dies or when he
converts the trust to irrevocable trust
2. until one of these things happens, or if the trust started out as
irrevocable, the future contingent Bs don't have any standing to
complain about how trustee (father) handles the trust property
4. during lifetime it's the settlor's trust not really the Bs
a. Bs have no standing
ix. because revocability comes with such power, it becomes very important as to wether a trust is
revocable or irrevocable
1. tradt'l rule on revocability:: by default, trusts are irrevocable
a. if trusts are silent on revocability, it cannot be revoked
b. settlor who wants to have a revocable trust must reserve that power and must
do so in a way that's obvious
i. language
ii. or structure is such that there's clearly and implied power to revoke
2. modern rule: trust that is silent on revocability IS revocable (direct opposite of tradt'l
rule)
a. the new rule has NOT overtaken the old rule
b. NY old rule applies
c. UTC states new rule applies
d. each state adopts a different rule by statute
3. rule based almost exclusively on probable/presumed intent when the rules were
developed, these were the most common forms of trusts
4. a well-drafted trust will be clear on revocability
5. revocability will be a bright line rule if it's silent
f. most complicated rule of revocability: if a trust is revocable, HOW DO YOU REVOKE IT?
i. want to avoid inadvertent revocation of trusts, make clear settlor's intent to revoke
ii. want to have notice of revocation to the trustee
1. what do you do as a trustee?
a. making payments to the beneficiary maybe interest payments
b. managing and investing
c. trustee couldn't be in breach of trust if no one tells them it's been revoked
2. trustee's responsibilities after revocation are limited to transactions that are necessary
to winding up the affairs of the trust
iii. acceptable methods of revocation:
1. written notice from settlor to trustee
2. actual notice from settlor to trustee
3. settlor can be clear about what is acceptable form of revocation in the trust instrument
4. any method that clearly manifests the settlor's intent to revoke
iv. what about revocation by physical act?
1. in the presence of the trustee
2. trust, unlike a will, is an ongoing operation
a. without the will, it's a pretty safe method to ensuring that there's no will
3. with the trust, tearing up the paper is unnecessary show that might make it more
difficult for trustee to wind up + have Bs interests protected
a. too much if we say to trustee, what did you have and what were you supposed
to do with it?
b. Bs have ability to sue for breach of trust once trust winds up
c. need to know what's in the trust
4. writing of the trust is never that primary, so destroying it isn't really as significant an
act as it is with tearing up the wills instrument
5. you could pick this method, but why?
6. also, sometimes the instrument itself is the property (deeds, stock certificates, etc)
a. wills, otherwise, have no independent value
v. if you reserve the power to revoke, and you say nothing about the method of revocation, in
most jurisdictions it can be revoked in any manner which clearly shows your intent to do so
1. cts will not apply the presumptions reltated to revocation of trusts that they will for
wills
2. want more ev that settlor was one to "tear it up"
vi. if you reserved power to revoke AND specified manner of revocation, then there's a question of
is that the only permissible method of revocation, or is it just illustrative of a valid method?
1. older cases say if you reserve any method, it is the only method
2. newer cases say if you reserve a method, it is just a possibility unless you have said
expressly that it is the only way
a. greater trend towards revocability
b. give settlor of revocable trust more freedom
c. modern trends protect settlor and not Bs
vii. Patterson v. Patterson (2011)
1. if we're going to have he-said-she-saids between Bs and settlors, we're going to
assume settlor has benefit of the doubt
viii. State Street Bank and Trust Co. v. Reiser (1979)
1. challenge by a creditor of the settlor
2. settlor is primary B of the trusts until he dies took out a line of credit and used
shares as collateral w/o disclosing that the shares were in trust
a. after settlor dies and his loan is unpaid, can the bank go after the shares?
3. trust is an arrangement that can be valid for some purposes but not others
a. must ask: did the trust work for this reason?
i. even if this is a valid trust, does it work against these creditors?
ii. if we say no, we're not saying anything against the validity of the trust.
we're saying the trust is valid, but the creditors can reach some of
those assets. once they take those assets, whatever's left still continues
to function under the confines of the trust
4. this trust is a self-settled trust: regardless of what other features it has, it's set up by
the person that owns the money for their own benefit. (down the road, it'll go to other
B's, like when settlor dies) it's my $ and now it's in trust for my benefit.
a. owner of self-settled trust is alive
b. bank can go after whatever the settlor was entitled to , if settler could get it all
back, then bank can get it backtoo
5. if it's an irrevocable trust, then creditor can get whatever rights settlor had in the trust
during the settlor's lifetime
6. if it's a discretionary trust and the discretion allows settlor to reach up to the whole
principle, then the creditor can reach up to that whole principle as well
a. don't want to allow people to be able to hide behind a trust to avoid their debts
7. what about after settlor's die?
a. if settlor could have reached it during his life, then the creditor can reach it
now, it's unseemly for you to have money and live off of it and yet deny it to
someone to who deserves it, like a creditor
i. "if you benefit it, they can get it"
22. Pourover
a. a duly executed will that has a residuary clause that leaves everything that's left "poures over" into
an inter-vivos trust
i. if this is valid, the prop goes wherever the trust says it goes
b. why do we want this?
i. it provides a single, integrated scheme that takes probate and nonprobate assets and have them
all go to the same place
1. will will pour over your probate assets into this trust
2. life insurance/pension benefits can name this trust as a B
3. etc
ii. this is useful b/c there's only one estate plan, one scheme of Bs, if you change your mind, you
don't have to remember to change all of your things to reflect the Bs
iii. change one doc and change distribution of all your assets
1. unify estate plan combining prob and non prob assets in one vehicle
iv. facilitates joint estate plans
c. what's the problem?
i. the way that pour-overs are typically structured often result in them being declared invalid in
probate courts
1. hard to give testamentary effect to the terms of the trust
a. you must either show incorp. by reference will work to bring trust instrument
into the will
b. OR you must show that the standard for acts of independent significance are
met which will allow ct. to pass the prop according to the rules of the trust
2. how can you satisfy neither?
a. if trust instrument isn't in existence at time of writing the will, you can't
incorporate by reference.
b. if you do have the trust writing at the time the will is executed, but if you then
amend the trust, your will can't pour over into the amended version of the trust
b/c the amended version didn't exist at the time the will was executed
c. if trust isn't already a functioning trust that serves an independent purpose,
then it doesn't have independent significance
d. Uniform Testamentary Additions to Trusts Act
i. state by statute that pour over provisions are useful and here are the rules to make one valid
ii. original version of UTATA fixed some problems, but not all of them
iii. amended in 1990
1. this version is one that fixes all of the problems
a. simply says if you'd like to have a pour over addition to your will, you can do
it no matter when trust instrument is created in regard to timing of the
execution of the will
b. you can do it whether trust is funded or unfunded
c. if that trust is amended, the assets will pour into the amended version
d. if you have a trust at any point prior to T's death and it is revoked, then a pour
over provision simply lapses like any other gift
2. rules that now apply to pour over are the rules of UTATA not any other doctrinal rules
(indep. sig. or incorp. by reference)
iv. every state has adopted UTATA
1. not every state has adopted the newest version
2. NY has an older version
3. there isn't a problem with pour overs as long as you have a provision saying that you
pour over assets and there is at least a shell of a trust that matches the description in
the will, it's all VALID
23. Discretionary and Spendthrift Trusts (What kind of interest do Bs have?)
a. discretionary vs. mandatory trust
i. the nature of the Bs interests
ii. mandatory trust: (or mandatory trust interest) there's some right over which trustee has no
discretion (ie: all the net income from the trust) clearly ID'd, objectively measurable.
1. support trust: a mandatory trust in which the amount of payment is determined by the
Bs need for support, no discretion involved, how much B gets isn't pre-determined.
Some objectivity to the question of how much B needs. It's a determinable fact. Only
get what you need.
iii. discretionary trust: (or interest) everything where the trustee has discretion over the amount
that's paid, the circumstances that trigger payment, even the ID of the Bs, but there's some
point between trust $ and trust Bs at which the trustee says "I'm going to exercise my discretion
to pay you this amount"
1. discretionary support trust: trust that is only supposed to get B what they need, but
trustee has discretion to decide if you need it or not, as opposed to some potentially
fictional sense of objective measurement
iv. most trusts keyed to "need" are keyed to station in life
1. rich people need more money than poor people
2. "need" is not universal: we need what we're used to having
b. if you're a potential trustee, is discretion good or bad?
i. if you choose wrong, B can sue you for breach of duty
1. but if trustee has complete discretion, then they're likely to win in court
2. you'll get sued more often if there's discretion b/c Bs will perceive that trustee is the
problem but in the end you're going to win as trustee if you have all the discretion
ii. with a mandatory trust, you're less likely to be sued, but more likely to lose
c. longer the trust lasts, the more the trustee will get paid lots of trustees get paid based on the
amount of principal, so the more $ is still in the trust, the more trustee will get paid
d. default implied duty of fairness to all beneficiaries : cannot favor one B over another
e. even if trustees only job is to make Bs happy, they have to keep them happy for longer
i. so trustee has to make decisions about short term long term dispersement of $
ii. when trustees get sued for breach of trust (surcharge action) they get sued personally, if money
from trust is gone, trustee has to pay the trust back
1. if trustee should have been more generous, then the $ can come out of the trust. there
is no liability on the part of trustees own pockets if a ct. decides that they were too
stingy in their discretion
2. instrument will usually tell trustee if they must pay for their legal fees
iii. as settlor, if you want a trust to last longer over time, you may want there to be more discretion
because you can't see the future, you don't know what's going to happen
iv. but, you don't really trust anybody the way you trust yourself so most trusts have SOME
structure and constraints, limits, bright line rules, and with some discretion built in in order to
adapt to changes over time
1. this is really a negotiation between settlor and potential trustee
f. principle: what's placed in the trust initially
g. income: what's made off of the trust
i. these are types of interest in the trust that B has
24. Beneficiary's Creditor's Rights
a. discretionary, support and spendthrift trusts all have different rules as to when can the creditor of a B
reach trust assets directly
i. creditors are much more likely to get paid if they can get $ directly from trustees than if they
have to wait for B to get $ and then have B decide to pay the creditor
ii. trustee jus does whatever they're supposed to do
iii. when a creditor is not being paid by a B who is getting trust money, what happens?
1. discretionary trust: tradt'l answer is that a creditor does not have any recourse against
the trust interest -- can't get an order saying the trustee pays creditor instead of B
a. we used to say that B can't compel distribution, so ct. can't compel it either
b. it reflects policy choice saying that sometimes we're going to prefer B over B's
creditors
c. in some states, (esp UTC states) it is possible for a ct. to issue a cut off order:
says to trustee that they don't have to pay creditor, but you have to stop paying
B also. If trustee chooses to make any payments, it must be to creditor. Stop
paying B because they refused to pay their debts. B is cut off from trust until
creditor gets paid. Incentive to B to pay their debts.
2. support trusts: tradt'l view is two-fold
a. if you are B of support trust, you cannot alienate your support interest you
can't sell it, assign it, give it away etc.
b. we protect the interest from Bs creditors. they cannot reach your trust assets
c. protective B from their creditors and protecting the trust assets from B
d. like w/ discretionary trust, creditors cannot get an order compelling payment
from trustee
i. some creditors can reach assets in a support trust and get payment
compelled from trustee
1. holders of child support judgments
2. and alimony or maintenance orders
3. creditor of necessaries: things you need (food, shelter or
emergency medical care on credit)
3. spendthrift trust: a way of allowing a settlor to protest trust assets from:
a. (1) beneficiaries who might engage in swaps and trades that would cause
interest to dissipate and lost value
i. Bs can normally sell their right to collect interest (JG Wentworth) if
there are no special rules
ii. if there are no special rules, creditors have the same rights as B if B
can sell their rights, creditors can attach them
b. (2) and from the creditors of the Bs who would want to attach the trust assets
as a way of compelling payment owed to them by Bs
i. settlors don't like if there are no special rules, because it leaves their
income up to too much discretion of the Bs
c. idea of trusts is that B has no bundle of sticks like other property owners
i. can't sell it, assign it, lease it, trade it, give it away
ii. and creditors can't do that either
d. if what settlors want is that their hard earned $ is only used in the way that
they want it to be used, then they are allowed to make that happen a
spendthrift clause makes this allowed to happen
i. spendthrift protections are boilerplate
ii. sometimes trusts are spendthrift by default, and you have to opt out of
spendthrift (income interests for example)
e. stops Bs from alienating property and creditors from reaching it
i. but once the $ is out of the trust, it's not special. once B gets the $ out
of the trust, creditors can get it however they usually do
ii. doesn't matter that $ came FROM a trust. Creditors can't get to trustee
directly, but can get the $ once it's in Bs hands
f. issues:
i. under spendthrift law, we see that spendthrift clauses, while valid,
don't work against all creditors equally which creditors have which
rights?
25. Exceptions to the Spendthrift Clause
a. Scheffel v. Krueger
i. can a tort creditor reach the assets of a trust?
1. woman sues B in ct. wins a settlement, wants to collect $ from the trust
2. have to ask whether B has say over whether creditor has ability to reach $
a. some trusts say B can dictate certain things
b. provisions in the trust that says creditors can't reach it (spendthrift clause)
i. if there's no special rules, and no spendthrift by default rule, then trust
instrument itself has to preclude creditors from touching $
c. if you tried to put in a spendthrift clause that restricts the creditors of the B but
not the B itself, most cts will call that an invalid spendthrift clause
i. must have both provisions, it's a trade off
3. is settlor entitled to say that tort creditors can't reach the trust $?
a. does spendthrift clause work against this type of creditor?
b. go to state statute
i. does the statute create exceptions to the general spendthrift rule?
1. self-settled trust settlor who takes his own assets, puts them
in trust and then tries to protect them from the settlors own
creditors b/c settlor is current B
a. can't protect your own assets from your own creditors
b. still a valid trust, but can't bar creditors from reaching
those assets directly by virtue of spendthrift clause
2. tort creditors ct. judgment creditors, ct is actually saying
that B owes the tort creditor $, but also tort creditors right to
compensation is perhaps greater because they've been
physically or emotionally harmed (as opposed to breach of K
claims for example)
a. tort creditors didn't have the opportunity to protect
themselves in advance like loan creditors do (loan Cs
can demand disclosure and statements of financial
status etc)
c. Ct. rejects the idea that tort creditors are an exception to spendthrift clause
because the legislature didn't put them in the statute on spendthrift clauses
(there need not be a statute, could be entirely common law, but in this case
there is a statute, so ct. decides to stick with its language)
4. trend going toward not protecting tort creditors as an exception
b. Typical List of Exceptions to Spendthrift
i. varies by jurisdiction
1. child support and alimony creditors can reach most trusts (all support trusts, some
spendthrift)
2. creditors of necessaries : food, shelter, emergency medical care (UTC rejects this)
3. federal tax liens person you owe $ to is the IRS, you're out of luck (preemption)
a. whether state taxing authorities apply in this way varies, as they can't preempt
4. self-settled trust whatever B can get, C can get
a. some states now offer self-settled asset protection trusts rich people can
hide their own stuff from their own creditors states want trust business
ii. types that are not about which creditor you are, it's about how much of the trust you can reach
1. creditors of all kinds can reach whatever amount of income that is in excess of
whatever B needs for support need/support follows station in life
a. B comes first, and if there's enough to go around, Cs get something
2. or, through a %age no matter what nature of trust is, Cs can reach ex: 10% of
interest that B can get (and cannot reach more than that no matter how big Bs debt is)
iii. special spendthrift rules under (don't need to know but know they exist)
1. pension/ERISA trusts
2. bankruptcy
26. Fiduciary Administration (Relationship between Bs and Trustees)
a. trust is an ongoing, functioning entity of some kind, continuing relationship
b. primary holdings of trust went from being land to liquid financial assets
c. along with that, primary function of trust went from being conveyance of title to active
management of assets
d. primary responsibilities of trustee have shifted from preservation to actually doing something
e. typical trustee used to be a trusted friend, lawyer, minister to being a professional, paid trustee,
expertise in finance, rather than law, a financial investor, a banker
i. trustee needs more power now, tradt'l rules were that T had none except those granted to trustee
by settlor in trust instrument to giving trustee every power (anything a private, unmarried,
private, competent owner would do) unless settlors take it away from them
1. must add in safeguards: trustees have all this power, but they're a fiduciary w/
responsibilities to the Bs
2. enforcement provisions if trustees don't carry out fiduciary responsibilities
f. 3rd ps used to have to make sure trustee had the power to do what they are doing now, i3rd ps
should assume trustees have the powers that they tell you they have, 3rd ps have no duty to inquire
further, and if 3rd ps get cheated, they can go after trustee personally and trustee has no defense by
saying if 3rd p was worried, they should have asked more questions
g. Beneficiary Safeguards
i. trustee has duty to inquire duty to know when B needs money
1. how do you fulfill this obligation?
a. every so often check up on Bs, find out how they're living, how they're
spending their money etc
2. if there's a failure to disperse that amounts to a breach of trust, what is the remedy?
a. trustees generally have personal liability for mismanagement of funds
i. unless there's an exculpatory clause: in trust instrument excusing
trustee from liability for breaches of trust
1. can be broad or narrow excusing trustee from types of breaches
ii. what kind of conduct are you purporting to excuse?
1. most cts says can't sign away liability of trustees for intentional
acts, more bad the conduct, less likely cts will allow
exculpatory clause to cover this conduct, cts will read limits
into them beyond the textual limits
iii. why is the exculpatory clause in the instrument in the first place?
1. did trustee write it to excuse himself?
2. assume it's the settlor's document even if trustee/lawyer drafted
3. if there's something to suggest that trustee overreached or had
something to do with it being put in the instrument in the first
place, it will be less likely to be enforced to protect trustee
3. clear that not all grants of discretion to trustee are alike
a. at a min requires trustee to act (1) in GF and (2) R'sbly
b. no such thing as truly absolute discretion don't allow trustees to engage in
intentional breach, still need to act in GF
ii. trustee has a duty against self-dealing
27. Modification and Termination of Private Trusts
a. when can the B get out from under the restrictions on a trust?
i. when you can terminate or modify w/ consent of settlor (who is alive)
1. irrevocable trust can be modified or terminated if the settlor and all the Bs consent
2. revocable trust can be mod/terminated in whatever way is reserved in the trust and
settlor has all power to do so and Bs have no power
ii. if settlor can't/won't consent (they're dead or they refuse)
1. english view the trust as belonging to Bs so in english rule if all Bs are adults and
they all agree, they can terminate/modify trust old rule
a. this was expanded in 20th century to include Bs who were not adults
2. US doesn't view trust as being an outright prop interest of Bs in this way
a. starting point is that settlor created trust, dictated its terms and provided when
it should terminate so we shouldn't touch that
i. it's either going to terminate when it's supposed to, or when settlor says
it can by giving consent
ii. settlor's intent is the single most important thing
b. Clafflin doctrine: came out of MA in 1880s from a case basic rule for
mod/term w/o consent of settlor
i. **trust cannot be terminated w/o consent of settlor unless (1) all Bs
consent to termination and (2) the material purpose of the trust has
been fulfilled**
1. can ct allow trust to be prematurely terminated earlier than
settlor desired? (terminate: accelerate the endpoint of trust,
faster dispersal)
2. ct says the purpose of the trust is to make B wait (hence the
desire of settlor to create installments) material purpose
a. material purpose of trust can be found in the words of
the trust instrument
b. and the structure, context (no particular set of limits on
what constitutes the purpose)
c. question is: what was settlor trying to accomplish?
ii. certain types of trusts can almost never be terminated under this
doctrine
1. ie: spendthrift trust: spendthrift nature of the trust IS its
purpose, it can never be terminated prior to its natural
expiration date b/c if it is terminated, $ loses its spendthrift
2. support trust: inherent feature of that trust is making sure $is
available over time to meet basic needs
3. discretionary trusts: purpose in most is having a nest egg or
safety net for B
4. any trust that delays payments until B is a particular age
iii. should be a rare case when both prongs of Clafflin are met
c. is there any way around the purpose of the trust?
i. Bs can assign their rights under a trust and give it to someone else (if
it's not a spendthrift trust) Bs have power over their interests in the
same way they have rights over their prop trustee then becomes
obligated to pay assignee instead of B
1. if you want a trust to last for a lifetime, you have to couple it
with spendthrift protections
3. general sense that these doctrines are too limiting and there are a lot of instances
where mod/term should be able to occur, and tradt'l doctrine frustrates that
a. In Re Stutchel
i. multiple generations of B in a trust @ death of last person in one
gen, it would be split into 4 remainder shares for grandchildren for the
2nd generation
ii. one of the 4 grandchildren was disabled and on gov't assistance
(anything that you could make yours counts in your eligibility for gov't
assistance, inheritance may make them lose eligibility for medicaid or
may go all to gov't to pay them back)
iii. siblings go to ct to modify trust to say that when parents die, trust goes
into 4 shares, 3 paid outright and the disabled brothers share will go
into a supplemental needs trust for the remainder of his life
motivation for this was recognizing if brother got an outright share, he
wouldn't see any of it, it would go to gov't
iv. supplemental needs trust: discretionary, designed consistent w/
eligibility rules for gov't assistance programs, such that they give you
only enough so it doesn't count for eligibility purposes must be
limited in quality and can only be used for certain kinds of
expenditures (cannot be used to provide food, clothing, shelter, or med
care) can only be used for limited extras, non-necessities
1. congress passed a law which said they accept possibility of
these kinds of state trusts and they recognize that B can have
one of these and that they can work to not offend your
eligibility for gov't assistance
v. if the only reason you're asking for a mod, is that it would be
beneficial to Bs, a ct. won't do it
1. so, ct. denies modification of trust
2. but they never ask what settlor would have wanted!
a. settlor would never have wanted 4th Bs trust $ to go to
the gov't
3. ct says if Bs want change, and it's good for them, they're not
going to do it.
a. this is ridiculous
b. since this case, there has been a big push to take a more
lenient approach on modification
iii. when people want a mod, not a term, they tend to plead for a equitable deviation a power
that cts interpreting trusts thought they had, and were more willing to exercise than
termination/modification
1. deviation from an administrative provision vs. a dispositive provision
a. substantive/dispositive mods: change B IDs or terms of trust cts will
generally say no under Clafflin
b. change trustee, change permissible investments, change where prop is held or
how it's held, (the way it is done) then must be able to get a deviation
i. for this to be granted, cts require some ev. of changed circumstances
AND a showing that not deviating would impair the purposes of the
trust
2. general consensus is that all rules need to be modernized. push to modernize is
underway
a. take standard for deviation and apply it for substantive mods position of
UTC
i. on basis of
1. unanticipated circumstances
2. AND a showing that doing the change will promote the trust
iv. In Re Riddle
1. B should inherit over 1mil after parents die, but she's schizophrenic and
institutionalized
2. ct uses modern principles
3. what would the grandparents (settlors) have wanted?
a. mod is the only way B will get the $
28. Charitible Trusts
a. four key differences between private and charitable
i. creation: private trusts require definite and ascertainable Bs, charitable can't have them
ii. purpose; private trust can be created for any lawful purpose, charitable must serve a
recognized charitable purpose
iii. duration: private trusts must comply w/ rule against perpetuities, charitable can last forever
iv. mod/term: private trust rules do not apply to charitable, doctrine that governs mod of
charitable is doctrine of see pray
b. Purpose: because they get special protections and can last forever and there are tax implications, we
have limits on the purpose must serve a "charitable purpose'
i. how do you know if it's a valid charitable purpose?
1. look for a statute in the trust code which delineated valid chritable purposes
a. relief of poverty
b. advancement of education
c. advancement of religion
d. promotion of health
e. gov'tal purposes
f. any other purpose beneficial to the community
2. possible there's a state purpose that's ok but that fed tax code does not allow a
deduction for but generally, there's a very strong overlap
3. trust itself must support the purpose and show that it really is the true intent
a. if it goes to a single B, clearly ID'd B, or a small group will weigh against
the fact that it is charitable
b. want some indefinite group of people that people in general might have access
to indefiniteness and publicness
ii. structure of the trust must support its stated purpose not just what trust says, but what it does
iii. there is a difference between being charitable and being nice
iv. doesn't have to, in the end, benefit more than one person, but there must be an indefinite person
to whom the $ could go and multiple people might benefit from it
v. mortmain's statutes: old statutes that restricted chartitible gifts either close in time to death or
over a certain percentage of the estate trying to avoid clergy from showing up at death and
saying dying person should give a ton of money to church
1. all have been repealed or left unenforced
c. Modification:
i. Cy Pres: "As near as possible" the next best thing
1. when the thing that trust was made for no longer exists
2. difficult to predict how money will be best used in the distant future
3. if there's $ there, but the object of the trust has become obsolete (ie: typewriters for
law students)
a. trustee will go to ct. for permission to mod trust to buy something else (ie:
laptops instead of typewriters)
i. question is what would settlor want if they found out their intended
purpose was
1. no longer possible
2. practical
3. legal
4. or wasteful
4. doctrine of Cy Pres should apply
a. if it is applied, we're going to allow trustee to redirect trust assets to a different
purpose
b. when is it a good case for this doctrine?
i. (1) proof of changed circumstances that have made the original
purpose impossible, impracticable, or illegal (or more modernly,
wasteful)
ii. (2) AND must find that settlor had general charitable intent: settlor
did not just want to serve the one narrow purpose they ID'd but
broadly wanted to do something charitable so that they would be OK if
we shifted from A to B
1. how do you know if GCI exists?
a. look at language a factor, but not dispositive
b. are they trying to narrow discretion of trustee up front
of in the future?
c. UTC say there is a presumption of GCI in all charitable
trusts
2. is wasteful a good enough reason to deviate from settlor's
original purpose or is settlor entitled to allow us to waste their
money if that's what they wanted?
a. modern efforts add wastefulness to Cy Pres analysis
c. basically, the settlor would not have wanted this
5. who's suing over Cy Pres cases?
a. Bs generally don't have standing to sue b/c there is no one person
b. charitable trusts are enforced by state AG's and are necessary parties to defend
the terms of the trust

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