TRUSTS AND WILLS

I. INTRODUCTION
A. Constitutional Right to Dispose of your property at death
1. Hodel v. Irving: About the Indian land consolidation act of 1983: no undivided
fractional interest of any tract… shall descend by intestacy or devise but shall
escheat to the tribe if the interest represents less then 2%of the total acreage in the
tract and has earned its owner less then $100 in the last year. At some point the land
will begin to accumulate with the tribe. Issue: is this unconstitutional under the
takings clause? There was no compensation of any sort to the owner for the interest
in the property. Govt cannot take private property for public use without just
compensation. Is this actually a taking.
a. Where on the continuum between a taking and a regulation does this fit:
Look at the
i. economic impact: is there much of an economic impact on them.
Depends on how you look at it. They get less then $100 a year for it
but the interest has value in itself somewhere between 1 and 2
thousand. It does have an economic impact.
ii. Does it interfere with investment backed expectation: they did not
have any investment backed expectation but the tribe had gave up
the rights to their previous reservation when they accepted this deal.
But iffy because these people had no real investment backed
expectation. They were not improving the land and it was just give
to them.
iii. Character of the governmental action: This is what tips the scale.
Otherwise it might be constitutional. The character is extraordinary.
This one of the sticks in the bundle for property rights, it has been
that way since fuddle time (but this is wrong also the Indians did not
have this right they had common land). They do get back a
communal interest in the land as it goes back to the tribe this is the
communal interest in reciprocity.
b. Holding: Yes, it was a constitutional violation but only if it completely
abrogates the rights to descent and devise. The rights is of the decedent.
• Dissent: when the property passes to the family through the laws of
intestate
• Devise: when property passes on by the will of the decedent.
2. There is no constitutional right to an expectancy in property
3. Could be a standing issue with heirs enforcing the rights of decedents, but court
turned a blind eye to that issue.
B. Partial and complete Restraints
1. Complete restraints that violate public policy are void
2. Partial restraints are allowed.
a. Shapira v. Union National Bank: There was a condition in a will that the
testator’s son marry a Jewish girl within seven years to get his share. Both
of her parents had to be Jewish. The P tried many arguments including:
violation of a constitutional right, fundamental right to marry and to equal
protection and the court could not enforce this condition because of the
doctrine of shelley v. kraemer. There was no state action because courts did
not have to enforce the condition for it to have an effect (executor would
just not give him the money). Public policy is in favor of marriage and so
 full restraints will be invalid but there is one exception when you prevent a
remarriage. A partial restraint is only some condition on who you can
marry. These are usually permissible unless there are extraordinary
circumstances. The partial restraints cannot be unreasonable.
i. Rule: a restraint to induce a person to marry within a religious faith
is valid “if and only if under the circumstances, the restraint does not
unreasonable limit the transferee’s opportunity to marry. This makes
the standard whether it is reasonable as to him.” Whether he would
be deterred or prevented to marry.
• What if he is gay? It could be unreasonable as applied to him.
• There is a pubic policy against divorce just like there is for marriage.
• Sometimes the question of who is Jewish or catholic is vague and
too vague to enforce.
• What if there is a condition subsequent that a person remain a
practicing catholic? That involves too much intrusion into
questioning the religion and then continuing the supervision. So
most courts will not enforce that type of condition.
• destruction of property: Ex. I would like to have my works of art
destroyed, etc. (house). It is unclear but for our purposes the answer
is not if it is particularly wasteful. Courts refuse to carry it out on
public policy grounds.
b. Among the rules of law that prohibit or restrict freedom of disposition in
certain instances are those relating to spousal rights; creditor’s rights;
unreasonable restraints on alienation or marriage; provisions promoting
separation or divorce; impermissible racial or other categorical restrictions;
provisions encouraging illegal activity; and the rules against perpetuities
and accumulations. In one case the court in NJ did not uphold a provision
that required the testator’s brothers and sisters not to communicate with a
disliked brother and sister.
C. Probate
1. probate and non-probate property
a. Probate property is property that passes under the decedent’s will or by
intestacy. Probate property may have to go through a court proceeding
including probate of a will or a finding of intestacy.
i. what is the purpose of probate? proving that the will a valid. Also
probate functions to pay off creditors and also to distribute the
money.
ii. Why bother to go through probate? It will transfer title to property
that has a title. Also you need access to bank accounts. The bank
wants good evidence and typically the evidence from the probate
court is good enough. The bank has no way itself to determine the
validity of the will. Probate also determines which will is valid and
any ambiguities.
b. Non-probate property is property passing under an instrument other than a
will in manners including:
i. Joint tenancy property, both real and personal: the survivor gets the
decedent’s share of the property. It is common for bank accounts,
brokerage and mutual fund accounts, and real estate to be held like
this by married couples.
 ii. Life insurance: paid to beneficiary on the policy
iii. Contracts with payable on death provisions: for example, pensions
could have a death beneficiary.
iv. Interests in trust: trusts assets are distributed directly b y the trustee
to the beneficiaries named in the will and do not go through probate.
v. Why try to avoid probate? It is expensive, generally need a lawyer to
help you. There are fees set by statute, it is about 2-3% of the estate.
But for a small estate it is not profitable to avoid probate. Another
reason to avoid probate is that it can be slow. Most states can get
through probate in less then a year if no problems. That could cause
problems if for example there is a family business that way you
won’t need the judges approval for every thing.
2. administration of probate estates
a. History and terminology
i. Executor: the person who is named in the will as the one to execute
the will and administer the probate estate
ii. Administrator: what the person is called when a person dies testate
or intestate and there is no person so named. They are appointed by
and under the control of the probate court. Use the following order
spouse, children, parents, siblings, creditors
In either case they are the one who 1. inventories and collects the
assets of the decedent; 2. manages the assets during administration;
3. receives and pays the claims of creditors and tax collectors; 4
clears any titles to cars, real estate, or other assets; and 5. distributes
the remaining assets to those entitled.
• The administrator must give a bond unless the will waives
that requirement.
iii. A person dying testate devises real property to devisees and
bequeaths personal property to legatees. Or you can just use the
words “I give” for either.
iv. When a person dies intestate we say that real property descends to
heirs and personal property is distributed to next of kin. At common
law they did not mean the same thing but today there is a single
statute of descent and distribution governing intestacy so they are
the same thing.
b. a summary of probate procedure
i. 3 functions of probate
• Provides evidence of transfer of title by a probated will or
decree of intestate succession;
• it protects creditors by requiring payment of debts; and
• it distributes the decedent’s property to those intended after
the creditors are paid.
ii. Where should an estate be probated:
• It should first be probated in the domiciliary jurisdiction:
place there person was domiciled at death.
• If there is real property in another jurisdiction then ancillary
administration is required in that jurisdiction.
iii. Process
 • Someone files a petition to open probate (usually one of the heirs)
and they attach the will. Probate must be open in the state where the
decedent is domiciled.
• The court then notifies any potential known heirs or beneficiaries
(so if someone else has a different will they have notice)
• If no one contest within a couple of months, then the court generally
admits the will to probate.
• The court then appoints someone to guide the probate process
(generally a family member is appointed to be the executer). The
executer receives from the court a document called a letters
testamentary (papers of authority to act on behalf of the state; so
now you can collect the assets like the bank accounts). The executor
must post a bond to compensate the heirs if they do something
wrong; however in a will this requirement can be waived in the will.
This person is entitled to fees (2 or 3%) but they may waive the fees
if they inherit under the will.
• The executer must give notice to creditors that the estate is about to
go through probate and that they have a limited amount of time to
bring their claims and get the money from the estate before it is
distributed to the heirs/beneficiaries (because once its distributed,
then their claims can no longer be recovered on).
c. Ways to Probate a Will:
i. English form:
• ex parte form: this is where the administrator admits the will to
probate and began administration of the estate, execution of the
will was proved by the oath of the executor. This was fine if
nobody raised any questions, if they did they could file a caveat
with the court to compel the probate in solemn form.
• Solemn form: notice to interested parties was given by citation,
execution of the will was proved by attesting witness.
ii. Modern approach: Most states don’t use the English form and they
don’t have ex parte. They required notice to interested parties before
appointment of administrator or the probate of the will.
d. Courts duties to supervise: Usually the court has to supervise and approve
the inventory and appraisal, payment of debts, family allowance, granting
options on real estate, sale of real estate, borrowing of funds and
mortgaging of property, leasing of property, proration of federal estate tax,
personal representative’s commissions, attorney’s fees, preliminary and
final distributions, and discharge of the personal representative.
• In some states the court does not have to supervise if all of the
interested parties are adults.
• The UPC says that it will be supervised if an interested party
demands it if not the probate is unsupervised.
e. Advantages to probate:
• Someone may have many creditors that they don't know about
(doctor that may have malpractice claims), and statute of limitations
(non-claim statutes) may limit the claims.
- Self-executing non-claim statutes: statute of limitations
starts by itself upon death (two months or forever barred)
 (for estates not handled through probate)(no notice
requirement).
- Non-Self-executing non-claim statutes: statute of
limitations are started by the probate process and once
someone is named as executor. Generally are much
shorter (one to two years) (notice required: actual notice
to all known or reasonably ascertainable beneficiaries).
• Have to follow due process because this is state
action taking away property: they need actual notice. Letter in the
mail is good enough
• Will Contest:
- Must have standing (pecuniary interest in the outcome,
more money if the contest is successful, trustees fee is
not considered a pecuniary interest)
- Only a limited period of time to bring a will contest.
- Trustee: the trustee gets 1% of the trust as a fee per year.
A trustees fee does not qualify as a pecuniary interest to
bring a will contest.
f. Closing the estate: The representative is not discharged from fiduciary
duties until the court grants discharge.
D. Professional responsibility: not in probate court but in a separate proceeding in trial ct.
1. duties to intended beneficiaries
a. Modern rule is that an attorney has a duty to the intended beneficiaries of a
will.
i. Simpson v. Calivas: Malpractice action against father attorney. The
problem was that the will left a life estate to the step mother in the
“homestead” and the term was ambiguous, it could have meant just
the house or the whole 100 acres of land including the house. The D
had notes indicating that it was the decedent's intent to leave just the
house in life estate but the court did not consider that. The court
found that there was a duty for negligence because the beneficiaries
under a will are intended beneficiaries and are the ones that
foreseeably would be injured by the breach, also the father would be
the only one to have standing to sue but he would have no damages.
There is a contract action because the son was a third party
beneficiary. A person is a third party beneficiary where the contract
is so expressed as to give the promisor reason to know that a benefit
to a third party is contemplated by the promisee as one of the
motivating causes of his making the contract. The intended
beneficiary is a third party where the client has identified whom he
wishes his estate to pass to.
• In this case the conclusion of the testator’s intent was not
determinative in a malpractice action because the probate
court determines the intent of the testator as expressed in the
language of the will and if ambiguous then some other
extrinsic evidence, but that is not necessarily the testator’s
actual intent.
• If there is a change in a law that will effect a persons will
there is an ethical obligation to notify the person of the
 change in the law that might effect the will unless the client
had gone to another lawyer.
b. There are only 9 states that hold that strict privy is required for the drafter of
a will to owe a duty to the intended beneficiaries.
INTESTATE SUCESSION
I Introduction
A. How Intestacy Questions usually arise
1. person does not have a will
2. person has will that does not dispose of all of their assets
3. part of all of the will is invalid.
B. Rules of intestate succession are set by the legislature. They have two considerations:
1 determine what the average person would want and
2. what they should want to happen with their assets.
II. Qualifying property
A. Community Property:
1. California’s rule: All Property acquired in CA during marriage is community
property.
a. §100 In ca when a spouse dies the community property is split
When the husband dies (for example) the wife owns half of the community
property. If you have a will each spouse can only give away half of their
community property.
2. Separate property: in a separate property jurisdiction each spouse owns what ever
they earned. But where is there is a divorce in those jurisdictions the husband does
not automatically get it all, they usually have an equitable split of the property.
a. When the H dies if he owns all of the property then he can cut the wife out
of the will and all of the money. To protect from this happening most of
these separate property jurisdictions have a forced share/spousal share, on
average a spouse has to leave at least 1/3 of the estate to the surviving
spouse and if they don’t the spouse can force the share in probate.
B. Quasi-community Property: , this is personal property acquired by a married couple
outside of the state in a separate property jurisdiction and would have been community
property if earned in CA. the effect of calling quasi community property is that it effects
inheritance and intestacy but does not change it from separate property. (if they had gotten
a divorce then H would get it all). Basically the same thing happens on death under §101 as
happens under §100.
C. Separate Property: People can have separate property in California. If you have separate
property and you don’t co-mingle then it stays separate. (inherit and prior property and gift
are ways to get separate property and if you earn money or property in a separate property
jurisdiction).
D. The Intestate Share of Community and Quasi-Community Property: §6400
Spouse gets everything: she gets the one half of the community property and quasi
community property that still belongs to the decedent after the wife takes her half. If they
had a will the decedent could have given away his half of the community property.
III. Laws of Intestate Succession
A. Community and quasi Community: Half of the community and quasi-community estate
goes directly to the surviving spouse (100 & 101). The other half goes to the surviving
spouse as well if it is not disposed of by will. (6401).
1. Special problem of simultaneous death of spouses: A person succeeds to the
property of a decedent only if the person survives the decedent for an instant of
 time. What happens when people die in common disasters? In a will try to draft
around this.
a. Original statutes: The problem with the original simultaneous death statutes
was that that they required sufficient evidence of survival or else the
property (either community, or joint property, etc.) would pass as if the heir
had predeceased the decedent. The common law standard for when
someone was alive was whether they had a pulse or were breathing. If those
two things stopped and could not be revived then you were dead.
Irreversible cessation of circulatory and respiratory function.
i. Janus v. Tarasewicz: The couple was attending the wake of the
brother at his house and so they took Tylenol that was laced with cyanide
and it killed them both. The lower court determined that the wife did
survive and so her heirs received the benefits of the husband’s life insurance
and community property. The deaths certificates said that she died 2 days
after him. The mother of the husband challenged the findings of the
insurance company. The death certificate is not conclusive on the issue of
time of death. The court found that there was a preponderance of the
evidence that the wife survived the husband based on an EEG which was
not flat, the fact that she had some spontaneous pulse and blood pressure
and some pupil reaction to light. There were two conflicting experts but it
was ok to believe one over the other. Finally it was ok for the court not to
determine how long she survived him or exactly when she died, all that is
needed is to prove that she did survive him for some time (no requirement
for an amount of time).
b. Modern Standard: The new standard is brain death. In the average case the
common law standard is fine, but if circulation and respiration are kept
going artificially then the courts use the new standard of brain death.
i. Note: This is not a legal standard it is a medical standard. If the
medical standard changes then this standard will no longer be used.
ii. Look for lack of responsiveness to extremely painful stimuli; No
spontaneous breathing or movement for at least one hour; No
blinking or swallowing and fixed and dilated pupils; Flat EEGs
taken twice with at least a 24 hour intervening period; Absence of
drug intoxication or hyperthermia; The result of this low standard of
proof is that there is a perverse result.
c. CA rule 220: title depends on timing of death and has to be established by
clear and convincing evidence that the heir survived and if not then it passes
as if they predeceased the decedent.
i. Same thing with joint tenancy
ii. Life insurance: if the insured was a beneficiary then clear and
convincing evidence is required that the insured survived the
beneficiary.
iii. can be overridden by a provision in a will.
iv. There is a special provision that deals with intestacy, if it goes by
intestacy then you have to show survival by 120 hours. Why?
Because by will you can specify a period, and so they assume if you
want it then you would have said it.
B. Separate Property
1. Start off by determining what the surviving spouse’s share will be. Depends on
whether there are other claimants. (6401 c).
 a. All separate property to the surviving spouse where decedent leaves no
surviving issue, parent, sibling, issue of sibling.
b. ½ of the separate property where (i) the decedent leaves only one child or
the issue of one deceased child, or (2) where the decedent leaves no issue
but leaves a parent or parents or their issue or the issue of them (nieces and
nephews).
c. 1/3 of the Separate property, (i) where the decedent leaves more than one
child, (ii) Where the decedent leaves one child and the issue of one or more
deceased children, or (iii) where the decedent leaves issue of two or more
deceased children.
2. Intestate estate not passing to surviving spouse (either just separate property or if
there is no surviving spouse, then it includes all property).
a. To the issue, if they are all of the same degree then they all take equally. If
of unequal degree then look to 240. this is the first parentela.
b. if there are no surviving issue then to the deceased parents equally.
c. if no issue or parents then to the issue of the parents, if they are all of the
same degree then they take equally, if not then follow 240. b and c make up
the second parentela.
d. if none of the above go the grandparents generation, if none of them survive
it goes to their issue taking equally if they are all of the same degree is
kinship, otherwise look to 240. this is called the third parentela. In most
jurisdictions it stops here and the estate will escheat to the state.
e. if none of the above survive it goes to the issue of the predeceased spouse.
If they are all of the same degree of kinship they take equally, otherwise
follow 240.
f. if none of the above, then to the kindred in equal degree. But where there
are two or more collateral kindred in equal degree who claim through
different ancestors, those who claim through the closest ancestor are
preferred to those claiming through an ancestor more remote.
g. If no next of kin then it goes to the mother and father in law if they are not
alive then to their issue.
C. Distribution among heirs or beneficiaries: four models
1. Per Capita: Not a representational system. Literally means by the head.
i. If you say per capita to my children: what means only to the living children.
Courts usually assume that if you say per capita you actually mean per
stirpes. If you want to use this then you have to explain that you know what
you mean and you want per capita.
2. English per stirpes: the generation below the decedent is where the money is
divided up and then the lower generation takes by representation. About 14 states
3. Modern per stirpes: ½ of the states including California (240). This is where the
money is divided up at the highest generation what has representation. If there is no
representation in the children’s generation then the estate is divided per capita at
the next generation with representation. Work out the same as the English rule if
the generation below the decedent has a representative.
4. Per capita at each generation (UPC): at the generation closest to decedent where
there are living heirs the estate is divided into equal shares and that living person
gets his share. Then the rest of the estate combined into a pot and then in the next
generation the pot is divided equally among those whose parents have predeceased
them. This is the law in 12 states including Colorado and New York.
5. General notes:
 a. In some cases a will that says to decedents of A per stirpes, the will be
interpreted under the intestate succession rules of the state.
b. the estate is only divided among people then living or those deceased
members of the generation with issue otherwise they are ignored.
IV. Who Counts as Heirs
A. Half bloods: treated as if they were whole bloods.
B. Disclaimers: Disclaimed interest passes as though disclaimant predeceased decedent.
1. Procedure: must be in writing, signed, identify the decedent, describe the interest
being disclaimed, and state that it is a disclaimer and the extent of it.
2. A disclaimer is valid against disclaimant’s creditors
3. a disclaimer of a life estate accelerates the remainderman’s interest.
4. Disclaimer can be made on behalf of an infant, incompetent, or decedent.
5. should be filed with the probate court within the specified time period.
C. Disinheriting: a person cannot disinherit a person just by putting a statement in a will.
essentially they have to account for all of their estate because anything that goes by
intestacy will pass under the laws which are not changed by any statement in the will.
however the new upc will allow it and the person is treated as if he had disclaimed his
intestate interest.
D. What it means to be children
1. Adopted children
a. Inherit from adoptive parents same as natural child: for purposes of
succession, an adopted child is deemed a descendant of the person who
adopted her. She inherits from the adoptive parents and from their relatives;
they inherit from her.
b. Do not inherit from natural parents: an adoption severs the relationship of
natural parent and child, thus the adopted person does not inherit from her
natural parents or their relatives.
i. Hall v. Vallandingham: child was adopted by a step father, and
would have inherited from natural father’s relatives. The court held that
children cannot inherit. The law relieves the biological parents of all
parental duties and obligations and the estate and trusts article governs
inheritance. The estates and trusts article says that an adopted child shall be
treated as the natural child of the adopted parent or parents, this means that
they can inherit from their adopted parents. On adoption a child is no longer
considered a child of either natural parent except that upon adoption of the
spouse of a natural parent the child will be considered the child of that
natural parent as well.
c. Exception to the no not inherit from natural parents rule: UPC 2114
i. the natural parent and adopted person lived together at any time as
parent and child, or the natural parent was married to, a domestic
partner of, or cohabitating with, the other natural parent at the time
the child was conceived and that parent died before the birth of the
child; and
ii. the adoption was by the spouse or domestic partner of either of the
natural parents of the adopted person or after the death of either of
the natural parents.
iii. The natural parent still will not inherit from the child.
d. Inheritance from or through a child by either natural parent or his kindred is
precluded unless that natural parent has openly treated the child as his and
 has not refused to support the child. Follow this rule for purposes of this
course.
e. Note case: lesbian couple, one parent has a kid and the partner adopts it.
Under the UPC the rights of the mother may be cut off because the adopting
parent is not the spouse of the natural parent.
2. Adult Adoption
a. In most jurisdictions they are treated the same as minors. One effect can be
to reduce the possibility of a will contest. It can be to make sure they inherit
money. This could also deprive other relatives of standing to contest a will.
b. Rule against allowing subterfuge: an adoption of a spouse by the other
spouse for the purpose of making the adopted spouse an heir is not going to
confer any inheritance rights on the adopted spouse, but it may still be
effective for other uses. (such as avoiding a will contest)
i. Minary: the holder of a life estate adopted his wife because the
children of the life estate holders were the remainderman. The court
did not allow this because it would have frustrated the intent of the
testator (even though under the code, she should have taken.)
3. Equitable Adoption
O’neal v. Wilkes: P was born out of wedlock and father disappeared and never
supported her, the mother dies at age 8. she was later taken in by Estella Page who
was her father’s sister. Ms. Page gave her to the Cooks because they really wanted
a daughter. Non of these people were her legal guardian or adopted parents. The
cooks divorce and she stays with Mr. Cook. He died and she wanted to inherit
under the laws of intestate. She tried to use the theory of equitable or virtual
adoption. And in this case Page did not have capacity to enter into a contract with
the Cooks and so there was no contract/agreement. The court did not say that the
aunt was acting on behalf of the father. This result does not seem equitable because
they focused on capacity and not equitability.
i. Rule: there has to be some showing of an agreement between the natural
and adoptive parents, performance by the natural parents of the child in
giving up custody, performance by the child by living in the home of the
adoptive parents, partial performance of the foster parents in taking the
child into the home and treating it as their child, and the intestacy of the
foster parent. This only lets them inherit from the foster parents it does not
give them all of the rights of an adopted child. (does not go both ways)
4. Post humus children and post humously conceived children
a. Posthumous Children: Typically involves a child who is conceived before,
but born after, her father’s death. If it is to the child’s advantage to be
treated as in being from the time of conception rather then the time of birth
then the child will so be treated. There can be a presumption for paternity
when a child is born to a widow within 20 to 300 days after the father’s
death
b. Posthumously-conceived child: born and conceived after the death of one or
both of the child’s genetic parents.
i. Hecth v. Superior court: case where natural children of decedent
challenged a provision in his will that gave vials of his sperm to his
girlfriend to have children. The court allowed it because it did not
violate the law or public policy, also it does not violate public policy
for single women to conceive children.
 ii. Problem with posthumously conceived children: Inconvenient
because you cannot close probate and distribute money to children
when you don’t know how many there will be.
iii. Woodward v. Commissioner of Social Security: This mother gave
birth to twins after conceiving the children from sperm of her
husband that was frozen after he learned he had leukemia. She tried
to get death benefits for both her and her two girls. Under the law of
social security administration the court should look to whether the
child would have been able to inherit under the state’s intestacy laws
to determine if they were actually a child. The wife argued that the
genetic child should always inherit and the government argued that
they were not in being at the time of death and so could never
inherit. The court did not adopt either of these. The court said there
were three considerations
- the best interests of the children
- the states interest: (a) in requiring certainty of filiation between
the decedent and his issue (was he really the dad); and (b) by
establishing limitations periods for the commencement of claims
against the estate (used within a reasonable amount of time so
that probate can be closed).
- honoring the reproductive choices of individuals: the mother
does not have an argument because she obviously was allowed
to conceive the children without interference by the state. The
father may have an argument but the court says that just by the
fact that he donated the sperm does not indicate that he chose to
have a child after his death, there could be many other reasons
for having the sperm frozen.
Outcome: 1. There needs to be a judgment of paternity: marriage,
acknowledgment, court determination. Need to get this within a
reasonable amount of time. You may not have to do it in 1 year
because that is unreasonable. They leave it up to the legislature. 2.
The mother needs to prove that the father consented to use the sperm
to create the child after death. 3. And the father needs to accept
financial responsibility and agree to support the child
5. Illegitimate children
a. At common law they were treated as the children as nobody. Reason:
because they don’t want the illegitimate children of the upper class to
inherit the family money.
b. Modern Rule: Apply mid level scrutiny because of equal protection
problems.
i. Need a substantial justification that serves a legitimate state interest.
There is not justification for denying the child to inherit from the
mother in intestacy. There could be a problem for the father because
you cannot be sure. The state does have a justification for insisting
upon reliable proof of paternity. Have to file a petition to establish
parental relationship, or by acknowledgment by the father, or by
clear and convincing evidence of paternity after the death of the
father (this is hard to prove, need genetic testing).
c. CA rules
 i. Mother: relationship is established by giving birth or having
someone act as a surrogate mother for her.
ii. Father:
- presumption created by marriage, or attempted marriage
before the birth or within 300 days of termination
- presumption if they married after birth but father is on
the birth certificate or the father makes a voluntary or
involuntary promise to pay child support
- Paternity action: but if after death of the father have to
have clear and convincing evidence that father held the
children out as his own.
- By the father receiving the child into his home and
holding it out as his natural child.
6. Children and property in a will
a. Can make someone a guardian of children
b. Can make someone a guardian of property (this will result in more court
interference)
c. If you want less interference then appoint a custodian to minors.
d. You can also set up a trust and make someone a trustee who will allocate
the money to the children. This is the most flexible and expensive way to
allocate things to the children.
E. The Slayer Rule
1. For purposes of the test we will use the method that allows the person to inherit but
will impose a constructive trust.
2. In Re Estate of Mahoney: A wife was convicted of manslaughter for killing her
husband after his wife shot him. The probate court distributed his estate to his
parents under the intestacy laws as if his wife was dead. The wife appealed the
decision. There was no law on this in Vermont, but they did look at other state.
They said there were three options
a. use the slayer statute so that the killer will not profit from the wrongdoing
b. give legal title to the slayer anyway because it would be unwarranted
judicial legislation in not following the statutes and don’t want to impose
additional punishment for the crime.
c. give the legal title to the slayer but under the laws of equity hold him to be
a constructive trustee for the heirs or next of kin of the decedent. The
reasoning is that it does not interfere with the laws of descent and devise but
it prevents the slayer from profiting. But if there were any property the he
would have been entitled to had there been no killing is allowed to pass to
him so that it is not an additional penalty.
- Voluntary v. involuntary: The court says that the line is drawn between
involuntary manslaughter and manslaughter because one had intent and
so bad faith and the other is an accident.
- However the court says that the probate court does not have authority to
order a constructive trust and the heirs with standing asks the court of
chancery (with equitable powers) for the constructive trust.
- Burden of Proof: The conviction of a crime is enough to be evidence of
wrong doing but that is not required. The court imposes the standard of
preponderance of the evidence. The court can even decide that a person
was a slayer even if they were acquitted of criminal charges.
WILLS
I. WILLS: CAPACITY AND CONTESTS
A. Will Contests
1. Typical grounds
a. failure to satisfy requirements of a valid will
b. lack of testamentary capacity.
2. Procedure: after a will is admitted into probate, the statute for contesting a will in
CA is 120 days.
3. Standing
a. must have a pecuniary interest in the outcome of the contest (i.e. better off)
b. look closely when there are multiple wills
4. judge/jury
a. juries are more sympathetic to the family of the decedent
b. judges are less sympathetic and often overturn decisions by juries.
c. CA only uses judges
5. Preventing will contests
a. No contest clause: if any legatee contest this will that person will loose any
benefit under the will. if you win then the whole clause is ineffective but if
you loose you loose everything you would have gotten. If you don’t give
something, then it won’t have any effect. The most widely used test is that
even if they loose the no contest clause will not be enforced if the
challenger had probable clause.
b. consider adult adoption or a no contest clause.

B. Mental Capacity: Have to be 18 and have mental capacity CA §6100 and 6100.5.
1. A person is not mentally competent when they do not have sufficient mental
capacity to be able to
a. understand the nature of the testamentary act (what making a will is about,
probably this is the most stringent)
b. understand and recollect the nature and situation of the individual’s
property, or
c. remember and understand the individual’s relations to living descendants,
spouse, and parents, and those whose interests are affected by the will.
2. Estate of Wright: This old man died and left one of his properties to a friend and his
daughter contested. He approached Grace Thomas who was not an attorney but a
notary public and a realtor. She helped him write the will and two people attested to
it. He had a paper of where he wanted his assets to go. One house to his friend one
to his daughter and some property to his grand-daughter, and one dollar to a
number of people. Her contest was that he was of unsound mind. The court said
that the evidence was not sufficient to support a finding that he was not of sound
mind to make a will. At the probate hearing they offered a lot of evidence. The
notary said that he was unsound because he gave a dollar to some people and she
thought he was clear. Others said that he was of unsound mind but could not say
way. Others had examples of weird things he had done and how he alienated some
family members, had been injured in the head, he drank. But this does not indicate
that he did not know who his heirs were and that he did not recollect the nature of
his property and he probably understood the nature of the testamentary act.
3. Witness to a will will be scrutinized when they try to challenge the capacity of the
testator, because they signed the will and they are attesting that he was competent
 to make the will. usually there is an attestation clause that says that the testator was
of sound mind.
C. insane delusions
1. A delusion is: an incorrect belief that may or may not be influenced by a mental
aberration but it cannot be corrected if you are presented with the facts. If no
rational person could reach that conclusion based upon those facts.
a. § 6100.5: the individual suffers from a mental disorder with symptoms
including delusions or hallucination, which delusions or hallucinations
result in the individual’s devising property in a way which, except for the
existence of the delusions or hallucinations, the individual would not have
done. (causation requirement)
- Must show insane delusion
- Must show delusion cause the individual to do something she
otherwise would not have done.
b. In re Strittmater (wrongly decided): Ms. S left her estate to the national
women’s society. Her problem was that she hated men and had problems
with her parents after they died. She said really mean things about her
parents and men and wanted to kill male babies. The court says that this is
an insane delusion. Has she lost contact with reality? No. Did she have a
false belief about reality? No. What is the delusion? Even if there was an
insane delusion what is the other problem with the case? That there is a
causation element, the delusion caused her to dispose of her estate in a
manner that she would not have chosen otherwise. There is a problem with
this element. But the court came out the other way.
c. In re Honigman: This is the case where the husband only left her statutory
share (a life estate) $2,500 dollars to his wife and left some money to his
grand nieces and nephew and left half of his estate to his brothers and
sisters. He did this because he believed his wife was cheating. She had the
burden of proof, she has to prove by a preponderance of the evidence. The
evidence is that they were happily married and he got sick and started acting
strange. More evidence was that he expressed suspicions to people, that she
hid men in the cellars and closets and pulled them in the window using bed
sheets, and that he heard noises of men running from the house. There is
evidence that supports an affair. There was a suspicious anniversary card
addressed only to her and not on their anniversary. He also saw a man enter
the house after he left and she always answered the telephone, but you have
to belief this evidence. This seems to be the rational basis for the belief, but
a rational person probably would not come to this conclusion under the test
we apply. The cases go back and forth on whether the standard is could or
would. Also have to have causation. Assuming that he was wrong, is it
insane? The majority rule is that if a rational person could or would reach
that conclusion then it is not insane. In this jurisdiction they use the
minority test is that if there is a delusion then it is up to the proponents of
the will to show that there is a rational basis for the belief (this is a weaker
standard).
2. Mistake v. delusion
a. If it were a mistake you would change your mind if presented with the truth
and if it were a delusion you still would not change your mind. Courts will
not invalidate a will because of a mistake.
D. Undue influence §6104: the execution or revocation of a will or a part of a will is
ineffective to the extent the execution or revocation was procured by duress, menace, fraud
or undue influence.
1. The test for undue influence
a. Have to show that the testator is susceptible to undue influence
b. The influencer had disposition or motive to exercise the influence.
c. That the influencer had an opportunity to exercise undue influence.
d. The disposition is the result of the influence (this is a causation
requirement).
2. Lipper v. Weslow: This woman died and she had two children and grandchildren
by a predeceased son. They contested the will on the grounds of undue influence by
the son Lipper. He lived next door and was an attorney. They said that he despised
the deceased brother and did not want his children to get anything. she was 81 years
old and he drafted the will. also they argued that the will was not read to the testator
after it was written. The will had a specific clause saying that they did not get
anything and why. This may not have been effective because the son wrote it.
There were witness who said that she had stated to them that she did not intend to
leave them anything and later that she did not leave them anything. the court held
that there was no causation and that the testator was not susceptible to undue
influence.
3. Presumption of Undue influence
a. Lawyers who write wills:
i. If you are a family member you can usually benefit yourself (or your
relatives). Under both MR 1.8 and CA law. Also the lawyer could
get disbarred.
ii. If you are not a relative you cannot give yourself a gift a
presumption arises that there was undue influence and the lawyer
has to disprove it by clear and convincing evidence.
b. Will of Moses: Ms. Moses had a lover who was a lawyer, 15 years her
junior, whom she left her estate too. They were not married and he did not
help in drafting her will. She was a successful business who owned and
managed apartments. The court there allowed the presumption of undue
influence because of the confidential relationship (this is a minority state
that does not required that the person in the confidential relationship be
active in the procurement or execution of the will)(in CA you need more
then the confidential relationship, you need to show that the lawyer
participated in the drafting and preparation of the will) He could overcome
the presumption by proving that she had the advice of independent counsel.
(this is the only way to shift the burden in Mississippi)The court held that
the evidence of the independent attorney was not sufficient to rebutted
presumption. They said that he did not ask about her relationship with
people that are being discluded, and they did not discuss the problem of the
attorney client relationship. This lawyer just wrote down what he was told
and did not give much advice. He did ask about her close relatives.
c. Rebutting the presumption, The Rule we use: when the presumption is
shifted the party has to show by a preponderance of the evidence that the
party is not susceptible, of any of the other three things. Not all are
necessary because they are just factors to consider. Most jurisdictions
required the person in the confidential relationship to actively participate in
the drafting of the will. don’t follow the rule that there is only one way to
 rebut the presumption, instead we will say you can rebut the presumption
any way you want.
3. What does undue influence mean? Look at what the influencer is doing along with
the state of the person they are influencing. Lord Hannen says the essence of undue
influence is coercion. But really it is substitution the influencer’s action and desires
for those of the testator.
4. can a person use undue influence over a great distance? Example: son left Germany
and his mother wanted to escape. He required that she leave everything to him
before he brought her here. Also the will indicated that he wrote it in English and it
was translated to German.
5. Problem of courts abusing the doctrine of undue influence, when the actions of the
testator do not comport with societal norms.
a. In Re Keufmann’s will: Robert was a wealthy man who owned considerable
shares in Kay Jewelers. He had a gay relationship in NY with a man named
Walter. Robert made wills each year leaving more and more of his estate to
Walter, he also gave him authority to make medical decisions and wrote a
“coming out on death” letter to his family to explain the relationship.
Robert pursued his art while Walter managed the household and the money
and gets involved in the family business. Upon death Robert’s brother
challenged the will and two juries found that there was undue influence. An
appeals court agreed saying that Walter dominated Robert, that Robert was
basically susceptible to undue influence. The court even said that the letter
was more evidence of undue influence. The letter in this case seems like it
should have helped more then in the lipman case because it was separate
and seemed to be in his own words. He could have video taped something.
E. Fraud
1. Elements
a. Misrepresentation (false statement of fact, generally to the testator)
b. made with intent to deceive the testator
c. with the purpose of influencing the testamentary disposition
d. the misrepresentation causes the testator to dispose of property as they
otherwise would not have done.
2. Invalidates parts of a will or the whole will if the fraud is inseparable or effects the
entire thing.
3. 2 types
a. Fraud in the inducement: when a person misrepresents facts causing the
testator to execute a will, to include provisions in wrongdoers favor, or to
refrain from executing or revoking a will.
i. Puckett v. Krida: The Ds were two nurses who had agreed to be the
full time nurses of this women. They convinced the testator that her
family was misappropriating her money and that they intended to
put her in a nursing home. The jury found that these facts were
untrue, and before the manipulation she was very close to her
family. After they became the full time nurses they started to cut her
off from everyone she previously knew, they listened in on her
phone calls, etc. the appeals court said that there was a confidential
relationship from the fact that they were her nurses and because one
of them had power of attorney. This lead to a presumption of undue
influence and fraud which the defendants could not rebut. Going
through the elements: there was a misrepresentation, with intent to
 deceive, it looks like they had the purpose to influence the
disposition, and it was the apparent cause. Striking down the will
may not do justice because what if the relative that was actually
taking care of her would not have taken by intestate.
ii. Estate of Carson: this man married the testator but she did not know
that he was already married (several times over). She died less then
one year later leaving most of her estate to her husband. How do you
know if she would not have left the money to him had she known he
had deceived her. She could have just be grateful for the memories,
etc. Also don’t know his purpose he could have done it for other
reasons.
iii. Problem: friend tells testator that her niece was dead because she
would have gotten everything under the will. seems to fulfill all of
the elements. If she did think that jean was dead then there probably
was no intent to deceive and may not be misrepresentation, keeping
in mind that there could be negligent and intentional
misrepresentation.
b. Fraud on the execution: when a person misrepresents the character or
contents of the instrument signed by the testator, which does not in fact
carry out the testator’s intent.
i. Problems: husband fakes that he burned the will but when wife dies
he probates that will. was there fraud? Yes misrepresentation
because the act of holding up the will was a communication that the
will was in the envelope, intent to deceive, purpose, and it caused
the wife to not destroy the will or not to write a new will.
4. Remedy
1. if the fraud taints the whole will, the will is denied probate. But if the fraud
only causes the testator to insert certain provisions, only those provisions
are denied probate and the rest of the will is probated.
2. Constructive trust: used there denial or probate may be an inadequate
remedy. If the will is not executed, equity will impress a constructive trust
in favor of the intended beneficiary against the wrongdoer. If a person by
fraud prevents the testator from revoking his will, the will is probated but a
constructive trust is imposed on the beneficiaries in favor of the intended
beneficiary.
a. In Pope v. Garrett there were heirs who wrongfully prevented the
testator from executing a will in favor of her friend. The court
imposed a constructive trust on both the innocent heirs and the
wrongdoers because they reasoned by the innocent ones had been
unjustly enriched by the others’ wrongdoing because they would
have gotten nothing.
F. Duress: When undue influence becomes overtly coercive, it becomes duress. (ex: force or
threats of force or violence)
1. Latham v. Father Divine: The D was a father and a group of other members of this
cult. The P was the testator’s first cousins (not entitled to the estate by intestate
succession). The testator was a member of this cult headed up by Father Divine.
The P’s argued that the testator intended to create a will that left them $350,000 and
revoke the old will. they said after the new will was drafted the defendants used
undue influence to prevent her from signing the new will. before her death she
expressed intent to sign the new will, and so the D’s conspired and killed her by
 way of a surgery. The court said that in a situation like this they cannot invalidate
the will because the new will did not comply with the statute of wills (no signature)
but they could create a constructive trust (which acts on the property and not on the
will) to prevent the wrong doers from benefiting from their wrong doing. While
there was no case law on point the court relied on other states laws and other state
law cases with dissimilar facts. The constructive trust is a cause of action in equity
because justice demands it.
G. Tortuous interference with expectancy
1. Benefits
a. Longer statute of limitation, allows for punitive damages.
b. This is not a will contest but it a tort cause of action.
2. Not a Will Contest, it is a tort action.
3. Elements:
a. P must prove interference involved conduct tortuous in itself (fraud, duress,
or undue influence).
4. Anna Nichole Smith Case: The testator was an oil billionaire with two sons. He met
Anna Nichole Smith at a strip club. He pursued her after that meeting. Three years
later they were married. When he proposed he promised to give her half of his
estate. After they met but before they married she was in playboy and was playmate
of the year and a jeans spokes model. She brought a will contest in Texas but lost.
In Ca there was a case because she spent a lot of money, and the son cuts off her
money and she has to go to bankruptcy court. The bankruptcy court is involved
because she said that she was entitled to half of the estate and that the son had
tortuously interfered with her expectancy. She got $45 million in a judgment and
$45 million in punitive damages. On appeal there was an issue over the jurisdiction
of the bankruptcy, and the appeals court overturned it because they said that court
did not have jurisdiction over a probate matter.
II. Execution of a Will
A. Introduction
1. need testamentary capacity (Above)
2. need testamentary intent
3. need compliance with the requisite formalities
B. Testamentary Intent: For an alleged will to be valid, the testator must have had the
intention to make the particular instrument her will.
1. Present intent required: when the decedent sign the instrument, she must intend to
make a will now. A written statement of an intention to make a will in the future is
not enough.
2. An ineffective inter vivos transfer by deed is also not effective as a will because of
lack of testamentary intent.
3. Sham wills: just because something says will on it, the court do not stop there with
their inquiry. They examine the will and the surrounding circumstances.
4. Wrong will signed: there are two views
a. Majority view: a wrong will cannot be probated
b. minority view: the court will infer that there was mistake and that the
testator intended to sign their own will.
5. Conditional Wills: a will may be made expressly conditional upon the happening of
a certain event. If the condition does not happen, the will will not be given effect.
However, the language that sounds like a condition may be interpreted by a court as
constituting the testator’s declaration of motive for making the will and not as a
 true condition. Most often court do not read a condition to invalidate a will. The
courts will consider extrinsic evidence.
C. Formalities
1. Introduction: CA formalities
a. Must be in writing
b. Signed by one of the following: the testator, in the testator’s name by
someone in the testator’s presence and in their direction, by a conservator
pursuant to a court order to make a will under §2580
c. Must be witnessed and signed by at least 2 people (both of) whom are
present at the testators signing of the will or the testators acknowledgment
of the signature or the will, also they have to understand that they are
signing the testator’s will.
i. the witnesses may not be interested, or inherit something under the
will.
- under common law the signature of an interested witness
is invalid.
- In CA §6112 says that the will is not invalid but instead
it creates a presumption that the witness engaged in
fraud, undue influence, duress or menace, then the
witness has to rebut the presumption. Also the witness
can still take up to their intestate share if they cannot
rebut the presumption.
ii. Only one jurisdiction requires 3 people.
d. Choice of law for formalities: What happens when people execute a will in
another jurisdiction. What states formalities are required? §6113 a will is
valid if the will was properly executed in Ca or properly executed at the
place it was executed or complies with the law of the place where the
testator was domiciled either at the time of execution or death.
e. recommended method for executing a will that is valid in any jurisdiction
(keeping in mind that a state may not recognize a will properly executed in
the state at the time but not proper under the laws of the state.
i. Fasten the pages together with a staple and number them and have
the testator initial every page, though not essential.
ii. Make sure that the testator has read the will and understands its
contents.
iii. The lawyer and three disinterested witness and a notary are in a
room and everyone else is excluded, and the testator and have them
sign.
iv. The lawyer asks the testator if it is the will and does it dispose of the
property as he wishes, and lawyer asks the testator if he wishes the
witness to sign the will. have witnesses be able to see them sign the
will. then one witness reads allowed the attestation clause.
v. The testator signs above the attestation clause and dates and the
witnesses sign below the attestation clause.
vi. Below that there is a self proving affidavit (not essential) have the
notary notarize the signatures or add a statement about the approval
of the witnesses. Why have it? Because when probating the will you
won’t need the witnesses to testify in court to the signing of the will.
2. The function of formalities
 a. Ritual function: has to do with the fact that people are not really serious
when they say things. The rituals help the testator realize the legal effects
of what they are doing. The testator intends to engage in a legally effective
act.
b. Evidentiary function: because the main witness as to intention is dead there
is lack of evidence. The existence of a writing is good evidence of what you
would want to have happen. Before people would go to a church and have
witnesses to listen to them orally say what they want to happen to their
estate.
c. Protective function: on aspect of the witnesses is so that there is some
evidence that the testator is not acting under duress and might be some
evidence of mental capacity.
d. Channeling function: make is easier to determine whether it is actually a
will. the testator knows that if he or she goes through the function that his or
her desires will be carried out.
3. Failure to comply with the formalities
a. Wrong will signed:
i. In Re Pavlinko’s Estate: In this case the husband signed the wife’s
will and the wife signed the husbands will on accident. They are trying to
probate the will that says will of Hellen because that is the one that Vasil
signed. This will made a gift to the brother and the residue would go to
Vasil. After that it would go to someone’s brother. What they want the court
to do is make some changes to the will just to switch the husband with the
wife and the wife to the husband where pertinent. The court is not willing to
make these changes because the will does not comply with the formalities.
Courts are reluctant to correct mistakes because they don’t want people to
make mistakes commonly. Dissent: should change the will because in both
wills it seemed that the residue would go to the brother in law (Elias
Martin.) in this case it seems that they did not speak English so could not
read their own wills.
ii. In re Snide: The will of Harvey was signed by Rose and the will of
Rose signed by Harvey. The main focus in this case was on testamentary
intent. Basically what is the intent if you sign a will that is not in fact your
will. the Guardian is arguing that your intent is that he did not intend to
execute the document you sign. This argument is that by signing a will you
intent for the disposition in the will to represent his desires and in this case
that is not true because he did not want the things in the will. The court said
that signing a document does not mean you want this will to be your own
will. the Courts view is committing to a testamentary scheme, or that you
intend to dispose of assets at death when you sign a will. Here by signing
this will be did have intent to dispose of his property. Result is that the court
upholds the will. What is the legal basis? Harmless error or substantial
compliance, but they don’t give a clear explanation. The dissent argues that
there is no legal grounds for switching this stuff around. Further the court is
not following the statuary rule.
- Some jurisdictions have rules that allow for in some
cases for courts to override the formalities.
- Cannot predict how a CA court would come out on this
issue. For purposes of MC assume that the formalities have
to be followed.
b. There are different approaches to the level of compliance required
i. Traditional rule is strict compliance: because courts don’t usually
correct mistakes.
ii. Minority rule: substantial compliance/harmless error doctrines
- Harmless error: if there is clear and convincing evidence
testator intended document to be will. applies to the
revocation as well as the execution of wills. Courts can
use there dispensing powers to dispense formalities.
- Substantial compliance: clear and convincing evidence
of testamentary intent, clear and convincing evidence
that the will substantially complies with the formalities.
(for purposes of the essay note that CA uses this rule but
on MC we will use strict compliance).
iii. In re Will of Ranney: Russell had a will that left a life estate to his
wife and left some money from a trust to this institute. The wife
challenged the will and the institute wanted to probate the will. the
problem was that the witnesses signed the self proving affidavit that
stated that they had already signed the will as witnesses, when in
fact they did not sign the will as witnesses at all. The affidavits are
in the past tense. When signing an affidavit you are under oath. Also
it will be notarized. The court found that this will was not properly
executed because it was not properly witnessed. But the court also
says that if there is substantial compliance then that will suffice.
What is the standard? In this case it is clear and convincing evidence
that the witnesses intended to sign the will. the reasoning is that the
formalities should not stand in the way when all of the formalities
are satisfied. See formalities above. CA does not require clear and
convincing evidence. This is called the near miss standard.
iv. In re Estate of Hall: Jim had a will and he and his wife went into a
lawyer’s office to make a joint will. A joint will is usually where
two people sign the same will and it is almost always husband and
wife. (it says “we”…)This is different from reciprocal wills (when
each have own will but give to each other) The lawyer drafts the will
and they want to make some changes, the changes are written into
the draft by hand and lawyer was supposed to make the changes, but
Jim wants to make this will formal in the mean time. The lawyer
agrees and notarizes it to confirm that it was their signature after
they sign but with no witnesses. Jim dies before the formal will is
drawn up, his wife wants to probate the joint will but his daughter
from a previous marriage wants to probate the old will. The lawyer
told them it was a valid will. the judge says that the notary does not
equal witness and so there were no witnesses, period. Montana has
adopted the statutory provision that says that if two people don’t
witness the execution of the document it will still be treated as if
they had if there is clear and convincing evidence that this was the
testators intent(decedent intended the document to be his will) This
is called the harmless error will or the dispensing power. Most states
have not adopted this provision. The court said that there was clear
and convincing evidence that the testator intended this to be his will.
 Evidence: He had his new wife destroy the old will, The decedent
believed that the will was enforceable. Is the lack of witnesses
enough to comply with substantial performance? Doesn’t seem like
it because witnesses are a really important part of the process.
v. In case where man took will to a notary who signed the will while
her husband watched. After testator died the notary’s husband
signed because he would have been a valid witness had he actually
signed at that time. This case is before the supreme court in CA and
the three other cases in the appeals courts are split. The issue is
whether there was substantial compliance.
4. Holographic Wills
a. holographic wills dispense with the requirement that the will be witnessed.
b. only half of the state allow them. Fraud is a concern because of lack of
witnesses
c. requirements
i. the signature and the material provisions must be in the handwriting
of testator
ii. does not need to be witnessed
iii. date not required, but lack of a date may invalidate all or part of the
will if another will contains an inconsistent provision, or if there is a
question about whether the testator had testamentary capacity.
d. What qualifies as a material provision?
i. who gets what
ii. naming of executor, other administrative provisions, revoking other
wills.
e. Intent is often a problem
Have to show that the testator had the testamentary intent that this is their
will. when there is a less formal document then it could be harder to prove
that the testator had the testamentary intent
i. Kimmel’s estate: A father writes a letter to his sons. The beginning
of the letter is just conversation about the weather and whether he
would be able to come and visit them. The end talked about a few
documents that he wanted them to keep. Then he said that if
anything happens he wanted all of the money in three bank loans or
stocks or something and his house to go to his two sons, Irvin and
George. Then he signed Father. Is there testamentary intent? The
court said that it looks like he had the testamentary intent because he
says if anything happens to me. He also tells them to keep the letter
because it might help them out. In addition the fact that he is
disposing of his property. Another common indicator of
testamentary intent is the use of legal language, though not used
here. Next the court considers whether he signed the document. The
court said that he did sign by writing father, because that is how he
has signed in the past. The courts are not strict about the way you
sign things, you just have to be trying to authenticate the document.
Also the material provisions have to be in the testator’s handwriting.
f. Standard Form Wills
i. Estate of Johnson: He made a will on a standard form and just wrote
in who he gave things to and how much. The court held that this was
not a valid holographic will because they used the 69 UPC statute
 that says that the material terms have to be in hand writing and has
to be signed, and the printed parts cannot be used. First is there
testamentary intent, this is clear by the fact that he is disposing of
his property, but the court said that the intent cannot be found in the
printed part. He also used the word estate, which is a legal term, but
the court says that this is not enough. Are the material terms in the
testator’s handwriting? Yeah it looks like it because all of the parts
where he is disposing of his estate were in his own writing.
ii. When you are looking for material provisions most jurisdictions
including CA says that you cannot look at the printed parts. You
have to make sense of the handwritten parts so that you understand
that it is a material provision.
iii. The modern rule and CA rule is that you can look at the type written
parts to determine if there is testamentary intent.
iv. In re estate of Kuralt: this guy was a newspaper reporter who was
married but had a girlfriend in Montana living on a piece of his
property. He wrote a letter in 89 saying that she gets all of the
property in Montana, then he wrote a formal will and the beneficiary
being his wife, then just before he died he wrote a letter saying that
he would have a lawyer come and make sure that she gets all of the
property in Montana. This looks like there was no testamentary
intent. The court held that this was a valid holographic will. Tiersma
disagrees.
v. Case where the testator just used an arrow to signify that he gives
his stuff to his girlfriend, was not enough to be a material term. The
court could not tell what he meant by the arrow, they did not find the
intent.
vi. Case where guy in hospital made a will, and gave it to a doctor who
signed Dr.’s name, problem is that he could not direct someone to
sign his will if it was a holographic will, and the Dr. signed in his
own name but not the testators.

III. REVOCATION OF WILLS

A. Introduction
1. Capacity requirement: a person who has testamentary capacity and who has
previously executed a will is entitled to revoke his will at any time prior to death.
2. A contract not to revoke a will will not prevent a testator from revoking the will,
there could be a breach of contract action.
B. Methods for revoking a will
1. By Written instrument
a. By a subsequent will (properly executed) which revokes the prior will either
expressly or by inconsistency.
i. The revocation clause goes into effect immediately
b. by some other written instrument that complies with the statute of wills.
2. Revocation by destruction: by burning it, tearing it, canceling it, destroying or
obliterating it, with the intent of revoking it and done by either the testator or by
another person in the testators presence in the testators direction.
a. must be destroying the actual will and not just a copy.
b. If a will is executed in duplicate then the effect of revoking one duplicate is
revoking the other.
 c. Harrison v. Bird: the attorney was directed to destroy the will however it
was not done in the testator’s presence.
d. Partial Revocation by Destruction
i. California allows partial revocation by destruction the intent to
revoke that part must be present.
ii. Some states don’t allow it but maybe it could be a holographic will
if all of the requirements are present.
- Thompson v Royal: The testator has a will drawn up
along with a codicil. Later she wants to revoke the will,
but instead of destroying it the lawyer just writes null and
void because they might want to use it as a memorandum
to make another will. the court said that this was not a
valid revocation.
3. Presumed Revocation: There is a presumption, that if the testator had possession of
the will before her death, but the will is not found among her personal effects at her
death, the presumption arises that she destroyed the will. The presumption falls on
the one who wants the probate the will. They have to prove that the will is not lost
because the testator did not destroy it.
a. What happens if the person who looks for the will is an heir who stands to
benefit from the revocation, this could help rebut the presumption.
4. Codicils: a change, amendment, or supplement to a previously executed will
a. a revoked codicil has no effect and the first will as written is valid.
b. revocation of a will generally does revoke any codicils.
5. Revocation by operation of law
a. Divorce: If after executing a will a testator’s marriage is dissolved, the
dissolution revokes the following: property given by a will by a former
spouse, appointment of an executive or trustee, or a power of appointment.
This does not seem to apply to gifts made by other substitutes (that we
talked about at the beginning of the semester.)
i. revoked property passes as if former spouse predeceased the testator
ii. remarriage revives any revoked provisions
iii. legal separation does not revoke the will
b. Pretermitted Spouse: applies were decedent made all testamentary
dispositions before marriage but seems to unintentionally leave out his new
spouse.
i. spouse takes intestate share of the decedent’s personal property and
all community property they are entitled to.
ii. covers all testamentary instruments, not just wills.
c. pretermitted child: applies where child born or adopted after testamentary
6. Dependent relative revocation and revival
a. DRR or conditional revocation: this is when the testator purports to revoke
his will upon a mistaken assumption of law or fact, the revocation is
ineffective if the testator would not have revoked his will had he known the
truth. (thus the court will uphold the previously revoked will). this doctrine
does not carryout the testators intent but the courts assume that it is better
and approximates the testators intend more closely then going through
intestate.
b. Requires a particular state of mind (testator must have acted under a mistake
belief of law or fact) and that the testator would not have revoked if the
testator had known the truth= the will will be probated.
 c. LaCroix v. Senecal: The testator left half of her estate to her (friend) and
half to her nephew but uses his nickname. She executes a codicil the
revokes that specific provision because they want to use the real name of
the nephew along with his nickname. Other wise the clause stayed the same.
The codicil was ineffective because it was witnessed by one of the grantee’s
husband. Can the court apply DRR? She did make a mistake of law (that
having this guy sign would mean the friend gets nothing) and the testator
would not have revoked the clause if she had known because she clearly
wants the friend to get something so if she had known the truth she would
not have revoked the original will.
d. when a testator reduces a grant then it is harder to make the argument that
she wouldn’t have revoked but for the mistake.
7. Revival:
a. Most jurisdictions will hold that then a will or codicil that revokes a
previous will, will not automatically revive the previous will upon
revocation unless there is evidence concurrent or afterwards that the testator
intended the first will to take effect as executed. This includes CA.
b. Minority of the states will allow the revocation of the newer will to
automatically revive the previous will.

IV. COMPONENTS OF A WILL

A. Integration of wills: under this doctrine all papers present at the time of execution, intended
to be part of the will, are integrated into the will. have to be careful to keep the pages
together so that there aren’t any disputes. Some states that don’t have this doctrine are
strange because the implication is that wills have to be on one page.
B. Republication by codicil: this doctrine says that when the codicil is properly executed, it
will re-execute the old will as of the date of the codicil so that the will is now dated with
the same date of the codicil.
i. a codicil can republish a will that was previously invalid.
Johnson v. Johnson: The testator had an invalid will. Later he hand writes at the
bottom of the will a clause saying that he only gives $10 to his brother. Then he
signs. The court said that this was a valid holographic codicil. The will was held to
be valid due to the codicil. That is because by republishing the will it validates a
previously invalid will. “the general principle of law is that a codicil validly
executed operates as a republication of the will no matter what defects may have
existed in the execution of the earlier document, that the instruments are
incorporated as one, and that a proper execution of the codicil extends also to the
will.” this does make sense if you go by the testators intent. The Second document
has to be a codicil to the will, it cannot be a separate document. That is why the fact
that it was on the same page is more important.
ii. look out for the effect this could have on omitted spouses and children.
C. Incorporation by reference: Any writing in existence when a will is executed may be
incorporated by reference if the language of the will manifests his intent and describes the
writing sufficiently to permit its identification.
1. Requirements:
a. the doc is in existence
b. manifest intent
c. describe the document with enough specificity to identify the document.
2. The incorporation by reference can work with republication by codicil to allow
incorporation of documents not originally in existence
 a. Clark v. Greenhalge: Testator incorporated one document into her will, later
she added a bequest of a painting to a friend, and then she added two
codicils. This republished the will with the date of the codicils, allowing
the new bequest to be incorporated by reference.
D. Acts of independent significance
1. This doctrine allows the courts to fill in certain blanks in the testator’s will by
referring to documents or act effectuated during the testator’s lifetime for primarily
non-testamentary motives. The documents or acts may be those executed or done
by the testator or a third person. The normal formalities are not required.
a. UPC 2-512 and Cal code: acts of independent significance: A will may
dispose of property by reference to acts and events that have significance
apart from their effect upon the disposition made by the will, whether they
occur before or after the execution of the will or before or after the testator’s
death. The execution or revocation of another individual’s will is such an
event.
b. Examples
i. it can work to identify beneficiaries: I give $ to all person whom I
employ at the time of my death.
ii. it ca work to identify the gift: I give so and so all of my furniture at
the time of my death.
E. Contracts relating to wills
1. Contracts to make a will:
a. Usually testator would make an agreement with B to take care of them and
in return testator will leave her house to B. What happens if testator does
not comply? This is a breach of contract action. Wills law will operate first.
The remedy usually is a constructive trust.
i. constructive trust against the beneficiaries of the will.
ii. give the contract beneficiary the value of the property out of the
estate.
iii. specific performance (if testator is still alive then can use courts to
force them to make a will) (quasi specific performance is when the
court forces the estate to do something to perform a contract after
the testator dies.) (ordering the successors to transfer the property to
the contract beneficiary.)
b. Most states require Statute of Frauds (in writing)
c. A contract to take care of your spouse is ineffective because there is no
consideration due to the obligation to take care of your spouse.
2. Contract not to revoke a will
a. Usually in the case of a joint (one will two people) or a reciprocal will (two
people with reciprocal wills). What happens if 2 people have a reciprocal
will and after spouse A dies B changes his mind an leaves the residue of the
estate to someone other then what they had in the reciprocal will. usually
the argument was that there was a contract not to revoke the will. people In
this situation need to make sure that they have a valid contract.
b. In CA you need one of three things
i. provisions of a will stating material provisions of the contract
ii. an express reference in a will to a contract and extrinsic evidence
proving the terms of the contract
iii. a writing signed by the decedent evidencing the contract. (Basically
just has to be in writing because this section has been repealed.)
 c. Via v. Putnam: There is a husband and wife who make a reciprocal will and
the residuary is supposed to go to the children. The Wife dies first and the
husband gets the former wife’s estate. He remarries and he did not change
his will. In the will there was a promise not to revoke the will (so he would
be breaching a contract if he had changed the will.) He dies and the lower
court determines that the children get their share under the residual will. the
new wife sues to get her pretermitted spouse share. The children sue as third
party beneficiaries. The lower court treats them as creditors and so the wife
did not get her share. This court says that public policy weights against
leaving the wife with nothing and against this outcome which deters
marriage.
i. some states may look at the length of the marriage when
determining the spousal share.
ii. We follow this rule, pretermitted spouse and the spousal share trump
V. INERPRETATION AND CONSTRUCTON OF WILLS
A. Interpreting a will
1. interpreting the meaning of terms in a will
a. old rule is the plain meaning rule: if the language of the will is plain you
must give the words their plain ordinary meaning, and you cannot use
extrinsic evidence to vary the language of the will.
i. There are two types of meaning:
- One type is word meaning: every word has a meaning
even if we cannot give a definition of each and every
word.
- Context: words often need to be looked at in context to
determine the meaning. But that still may not tell you
what exactly the speaker meant.
ii. Mahoney v. Grainger: There was a will of Helen Sullivan. The first
cousins were contesting the probate of the will. The will left the
residue of her estate to her heirs at law to be divided between them
equally. In a statement to her lawyers she thought that her heirs were
her about 25 cousins. But actually her only heir at law was her aunt.
The court says that the will is valid because the words she used in
her will were not ambiguous. There is a very specific meaning of
heirs at law. The court says that the heirs at law are the intestate
heirs. The court applies the plain meaning rule and refuses to look at
the extrinsic evidence. The cousins argue that it was ambiguous
because she wrote heirs at law and wanted them to share and share
alike. The court did not buy this argument
iii. Notes case: This guy dies and leaves part of his estate to the national
society for the prevention of children. There was one in the UK and
there was one called the Scottish national society for the prevention
of children. The UK had no relationship with the testator and he
lived right down the street from the Scottish group. However, the
court held that this was plain meaning and gave it to the UK group.
iv. Note case: The testator went to this store called Mosely’s cigar shop.
When he died he left something to a woman named Mrs. Mosely.
The women he meant was Mrs. Trimble but he always called her
Mrs. Mosely. There was a Mrs. Mosely that was somehow related to
the landlord. The court allowed Mrs. Tremble to get the money after
 they decided to allow evidence of the testator’s personal usage of
referring the heir.
b. Erickson v. Erickson: The testator made a will two days before his wedding.
He had three kids. The will was reciprocal and left some money to his wife
and if she predeceased him the money was divided between his kids and the
new wife’s kids. One of his daughters challenged the will and argued that
the will was not valid on the basis of a statute. It says that if you write a will
and do not provide for the contingency of marriage then the will will be
invalid, this is similar to the pretermitted spouse. The mother argues that
the will is valid because the will did provide for the contingency of the
marriage. The lower court held that the will did expressly provide for the
contingency of marriage. The appeals court held that it did not. but then
concluded that extrinsic evidence could be admitted because they don’t use
the plain error will. The extrinsic evidence has to establish the testator’s
intent and the fact that there was an error by the lawyer (scrivener’s) by
clear and convincing evidence for the court to determine that the will
provides for the contingency of marriage. The court overrules a previous
case and used the dissent in that case and agreed with the reasons in that
dissent. There were three reasons to overrule the old case, 1. there is really
no difference between allowing extrinsic evidence for things like fraud,
duress, or undue influence. In both instances the testamentary process was
distorted by the interference of a third person who misled the testator into
executing the will that would not otherwise have been made. 2. the risk of
subversion of the intent of the testator is not strong and in fact this would
bring out the testator’s correct intent. 3. signing a will should only lead to a
strong presumption that the will accurately represents the intentions of the
testator, and that presumption should be rebuttable with extrinsic evidence
to the contrary. Very few jurisdictions have adopted this rule. and CA has
not. Not the law for this class on MC.
4. California Rule: look to extrinsic evidence to determine if a term is
ambiguous and if so then use extrinsic evidence to determine what the term
means.
Estate of Russell: Thelma Russell dies and left the residue of her estate to
Chester H. Quinn & Roxy Russell. This was a holographic will. She gave a
$10 gold piece and her diamonds to her Niece who is the P in this case.
P challenges the part of the will that was left to Roxy who was the testator’s
dog. However, any grant in a will to an animal is void. Chester was arguing
that the language was that the estate was meant to go to Chester to take case
of Roxy with. There was an interpretation question in this case. The normal
interpretation is that the grant would be to Roxy and Chester to equally. The
niece argued that the court should use the plain meaning rule because this is
unambiguous language. She argued that the court should not look at the
extrinsic evidence. The trial court did look at extrinsic evidence and
determined that it was intended to mean the half went Chester to take care
of Roxy and he got the other half. The evidence that was admitted was an
address book that stated that the niece should not get the residuary, also a
quit claim deed intended to show that she did not want to die intestate, and
evidence that Roxy go to Chester. The CA supreme court said that you can
look at extrinsic evidence to determine if the language is ambiguous. If after
that the language of the will is susceptible to at least two interpretations,
 then the language is ambiguous. After applying this rule the court
determines that the will cannot reasonably be construed to make an absolute
and outright gift of the entire residue of her estate to Quinn to use the
portion he found acceptable to Roxy. No words of the will give the entire
residue to Quinn much less indicate that the provision for the dog is merely
precatory in nature.
2. Mistake v. false description
a. a court will not generally correct a mistake in a will however there is an
exception for false description.
b. Arnheiter v. Arnheiter: testator dies with a will that provided that her
executor should sell her property on 304 Harrison Avenue, Harrison New
Jersey to be sold and put into trust for her nieces. The problem was that she
did not ever own that property instead she owned property at 317 Harrison.
The court held that this was not a problem. While they will not reform the
will by changing the address the court will just use this principle that mere
erroneous description does not vitiate (called the falsa demonstratio
principle: an incorrect description does to destroy a gift) a grant. So the
court just ignored the mistake and determined that without that address the
description was sufficiently to describe the property that she had owned on
317 Harrison Ave. usually only used for descriptions of real property and
names.
3. You can always use extrinsic evidence to determine the validity of a will.
a. Fleming v. Morrison: Butterfield wanted to sleep with this woman Mrs.
Fleming. He told her that if she slept with him he would make a will that
leaves her the entire estate. He goes to a lawyer, the will is made and
Butterfield signs. He has Goodrich the lawyer sign the will. B tells G that
the will is a fake and it was made for a purpose. Later he gets two others to
sign the will and does not tell them that this is a fake will. the court held
that because one of the witnesses knew that it was a fake will, that witness
was not valid and so the will is not valid. The family argued that there was
no testamentary intent. This is a requirement for even a normal will. you
cannot tell from the will that the testator did not have testamentary intent.
There was no ambiguity about his intent. But the court allowed the
extrinsic evidence in. Why? It goes to the validity of the will itself and not
the terms of the will.
VI. LAPSE AND ANTI-LAPSE STATUTES
A. Lapse
1. Common Lay: there is a basic principle that if the beneficiary predeceases the
testator their interest lapses because you cannot give something to a dead person
unless the testator specifies otherwise.
a. When the interest lapses it falls into the residue.
b. If the residue lapses then it goes by intestate
2. No residue of a residue rule: There is another common law rule that when two
people are taking the residue and one dies their half goes by intestate and not to the
other residuary legatees.
a. This rule has been abolished by the majority of the us jurisdictions
including CA.
b. Now the other residuary legatees take the predeceased person’s share.
B. Anti-lapse statutes
 1. They merely substitute other beneficiaries for the dead beneficiary if certain
requirements are met. Most only substitute the issue of the beneficiary and they
only do it if the beneficiary is a close relative or something. This is only a default
rule so if the testators will has words of survivorship it will preclude the anti lapse
statute.
a. Where there is language of survivorship in the will the anti-lapse statue will
not take effect.
i. Allen v. Talley: Mary Shoults died with a will and she had five
brothers and sisters at the time she made the will. in the will she
provided that her living brothers and sisters to share and share alike
all of the property in her estate. The issue is whether she had
survivorship language in her will that would prevent the anti lapse
statute from taking effect. It did not have a substitute disposition but
it had contrary intention because of the survivorship language.
When she died only two of them were still alive. The issue of the
dead siblings want their share and the two living ones argue that the
testator really meant for only living siblings to share. By the time
this case came about the state had abolished the no residue of the
residue rule. but there was an anti lapse statute that was in play the
would insure that the issue of the dead brothers and sisters would
take by representation. So the dead siblings share lapses and then it
goes to the surviving two.
ii. Usually language of contrary intention is to make a provision for the
event that the transferee does not survive.
b. CA 21110: This is ca’s anti lapse statue: if a transferee is dead when the instrument
is executed, or fails or is treated as failing to survive the transferor or until a future
time required by the instrument, the issue of the deceased transferee take in the
transferee’s place in the manner provided in §240 (modern per stirpes), But the
issue of the deceased transferee do not take if the will expresses a contrary intention
or a substitute disposition. Survival language of the transferor until the
administration of the estate or the probate of the will is a contrary intention.
*Further a transferee means a person who is kindred of the transferor or
kindred of a surviving, deceased, or former spouse of the transferor.
- Remember this does not include the spouse.
- But it would apply to a brother in law, silly.
- Kindred means blood related.
Jackson v. Schultz: The testator died and left the residue to his wife “to her
and her heirs and assigns forever.” He did not have any kids but his wife did
and he took care of them until they grew up. The Anti lapse statute in this
state, Delaware, did not cover wives, only lineal descendents or brothers
and sisters of the testator. The argument in this was that the language to
her and her heirs and assigns. The court said that this usually means that this
conveys a fee simple absolute and does not actually give the heirs anything.
these are words of limitation. The step children want to argue that these are
words of purchase. They say that there is a recognized rule of construction
permitting “and” to be read as “or” when so to do will carry out the
testator’s intent in will construction cases such as this. The court says that
this was a substitutionary gift.
C. Class Gifts
 1. when a gift is phrased as a class gift where a member predeceases the testator the
gift does not lapse is simply does to the other members of the class.
a. Express class: when you use group terms (to my children).
b. Natural class: when you specifically name the members but they form a
natural class.
c. intended class: where you name a group of people, not a natural class, but
intend them to be a class
i. factors that indicate a class
gift references beneficiaries collectively
gift is described in the aggregate
beneficiaries share a common characteristic
2. Dawson v. Yucus: N. Stewart died. She had inherited a 1/5 undivided interest in a
family farm and wanted that interest to stay in his family. She had given her share
equally to two of his nephews, Wilson and Burtle. However, Burtle had
predeceased her. The issue was whether the testator intended to give the gift to
them as a class, so that half of the interest would not lapse into her residuary (which
was given to her relatives). He named both individuals and did not use terms to
indicate a class. The trial court held that this was not a class gift so the interest
lapsed. This court held the same thing. They looked at the entire document to
determine whether there was an intent to create a class. Wilson tried to argue that
there was an ambiguity and so the court should look at extrinsic evidence. The
court reasoned that she did not intent to create a class because in another part of the
will she made a survivorship gift and so they reasoned that she knew how to
manifest the intent. Second there were three others that were in the same degree of
relation and she did not name them as beneficiaries to the interest. The court held
that actually she did not intent to create a class because she did not name the others
as beneficiaries, and she wanted these people to inherit because she had a
particularly close relationship with them.
3. In Re Moss: The testator owned a major newspaper. He devised his interest to his
wife and his niece Fowler as trustees to pay the income to the wife for life, and on
her death upon trust for fowler and the other children of Emily who reach age 21.
so basically after the wife dies these nieces and nephews along with Fowler were
beneficiaries. Does the fact that the testator named one member of an express class
specifically mean that she was not actually part of the class? There really was no
discussion that this was a natural class because apparently there were other nieces
and nephews who were not included. Was this an intended class? The court said
that it was because the interests were divided equally between all of these in the
class and Fowler. One justice says there where there is a gift to a class and a
named individual where they all take equally are a presumed class. He argues that
the language indicates that they were not supposed to share equally, that actually it
is supposed to be split between Fowler and the members of the class. If that were
the case this principle would not apply. Fowler predeceases the testator so does the
devise lapse?
D. Anti lapse applies to class gifts: what that means is that the first thing you do is see
if you can save the gift by anti lapse and if that does not work then you try to save
the gift by means of a class gift. So if the person has children then the result would
be that the gift goes to the children of the predeceased beneficiary.
VII. CHANGES IN PROPERTY AFTER EXECUTION OF WILL
A. Types of Gifts
1. Specific devise: a disposition of a specific item of the testator’s property.
 2. General devise: a general gift but not a particular asset, i.e. money. This is not
admonished due to extinction, instead things will be sold off to amount to this sum
of money.
3. Demonstrative devise: this is a hybrid of a general devise that is payable from a
specific source.
4. Residuary devise: self explanatory.
B. Ademption by extinction: this applies only to specific devises only.
1. There are two rules
a. Identity theory of ademption: if a specifically devised item is not in the
testator’s estate, the gift is extinguished.
b. Intent theory of ademption: if the specifically devised item is not in the
testator’s estate the beneficiary may be entitled to the case value of the item
depending on whether the beneficiary can show that this is what the testator
would have wanted.
2. Wasserman v. Cohen: This issue is whether the rule of ademption applies to a
revocable trust. Under the trust this real property was supposed to go to Plaintiff
when she died. However, one year before she died she sold the apartment building
and kept the money. The P sued to try to get the precedes to the sell. The court
decided that they would keep the rule with respect to wills and would also apply the
rule to revocable trusts because the rules are old and tried. This court says that
they will use the identity theory and not the intent theory. When applied the rule of
ademption the court will first determine what type of gift it is because it has to be a
specific legacy. Next, the court has to determine if the gift was still part of the
estate.
California has a third step: once you go through the two steps the person who is
arguing against ademption has the burden of proving that the testator did not
intend to extinguish the gift.
3. Sometimes the question of whether something was still in the estate can be more
difficult. What if the gift was to a bank account at first bank. When the testator
dies you find out that the account had been close and put into a mutual fund. First
is this a specific bequest? Yes. Is it still in the estate? Essentially yes because the
value is still there, but most jurisdictions say that by doing this you have changed
the substance of the gift and so it will be adeemed.
a. focus is on whether the substance of the gift stays the same or changes. For
example: if the money was switched from one type of an account to
another. What if the money was shifted from an account at first bank to one
at second bank. Is this a change in substance or a change in form? This is a
change in form because the character of the gift has not changed at least in
most jurisdictions. What if you turn it into a CD? What is this? Some courts
say this is a change in substance.
But here you can still try to prove an opposite intent if the rule of ademption
applies. (CA’s third step).
C. Ademption by satisfaction: this is when all of part of the gift was given while the testator
was alive
1. In order for this to apply the testator must intent that the gift satisfy the will and
that must be in writing.
D. Exoneration of liens
1. the old common law rule was that if there was a lean on property (real or personal)
the lean was not passed to the beneficiary but had to be paid off out of the estate.
Which was a disadvantage to other beneficiaries.
 2. the current law: Now assets pass with the lien or the mortgage in tact.
One reason for the old law was that we direct the executor to pay off the just debts,
but that phrase is pretty much meaningless
E. Abatement
1. Where the estate cannot cover all gifts: A bit of advice is that you should
give in percentages.
2. Order of Abatement
a. First starting with the residue
b. Next any general legacies
c. Then any/all specific and demonstrative legacies. You take these two and
determine the ration of what they are in the estate and divide them by that
ratio.
3. Hypos
a. only have 20k in estate
Ford ($10,000) to A
$30,000 ex sale of stamps to B
$100,000 to C
Residue to D
First abate the residue (nothing left in residue)
Then abate the general: the grant to C
Pay off specific and demonstrative legacies pro rata
Combining the two would equal 40 k
The ratio is 1:3 or ¼ for A and ¾ to B
There is only 20k so A gets 5k as there pro rata share. In this scenario A
can either sell the car or buy B out informally. B only gets $15,000 as his
share.
WILL SUBSTITUTES
I. Will Substitutes
A. An introduction to will substitutes
1. Not a tax avoidance scheme
a. A gift (an inter vivos transfer of property). Congress passed a gift tax so
people could not avoid the estate tax with inter vivos transfers. You can give
$12,000 to as many people as you like once per year. What if you give more then
$12,000. they have to pay tax on the excess amount of money when they die (the
rest of the money is added to amount of money that is taxable at death if they have
over the minimum amount). The property is still subject to taxes even if it does not
go into probate.
• Joint tenancy: can be in other then property. The result is that during the lifetime of
the person they cannot freely give away her half. The property passes
automatically when you die and the creditors cannot reach the decedents interest
after they die.
2. Main will substitutes
a. Revocable living trust also called an inter vivos trust
b. Payable on Death causes
c. joint tenancies
d. life insurance
e. gifts/deeds
B. Inter vivos revocable trusts
1. Characteristics
a. Executed at the time that the person (the settler) is alive.
 b. Usually the settler creates a trust and appoints a trustee and give themselves
the interest while they are alive (called the life time beneficiary) and at
death the beneficiary gets the benefit of the trust.
c. Can be revocable or irrevocable. The one used as a will substitute is a
revocable trust. Can even appoint themselves as the trustee.
d. Can be very informal. Usually in writing but not always
e. Once the trust is created the trust owns the property and not the individual.
(also titles need to be changed to reflect this)
2. benefits and disadvantages
a. benefits
i. avoids probate
ii. private document only the beneficiaries can see (less contests)
iii. avoid the court supervision of testamentary trusts
iv. avoid having to deal with ancillary jurisdiction (real property in
another state).
v. you can choose the state law that will apply.
b. Disadvantages
i. does not help with creditors and there is even a longer SoL, so less
advantageous for doctors and lawyers because SoL starts at
discovery injury.
ii. not a tax avoidance scheme.
iii. the law is unsettled and cannot predict if the court will apply trusts
law or wills law.
c. benefits During the life of the settler
i. If you appoint a professional trustee you have professional asset
management.
ii. You can build in a competency clause so that someone can take over
your assets more smoothly then having to go to court.
iii. Trusts are faster, they have an advantage if you have an ongoing
business.
3. Farkas v. Williams: the revocable trust was not a violation of the wills action
because the trustee had duties to the remainder beneficiary, the remainder
beneficiary had a present interest (a contingent remainder).
4. The law of wills is sometimes applied to revocable trusts. But not always.
a. In re Estate and Trust of Pilafas: the issue here was whether the
presumption of revocation applies when the trust document is not found
upon the death of the settlor. The court held that it does not apply. The court
reasoned that trusts commonly have provisions to revoke the trusts.
Particularly this on required that written notice to the trustee. He did not do
that. Courts do not apply the law of wills for revocation of trust. When the
trust provides how it is to be revoked that is to be the exclusive way that the
trust can be revoked. Thus at least when the terms of revocation are in the
trust then the law of wills will not apply.
5. Revoking a trust: The general principle of revoking a trust is in any way that shows
your intent to revoke. This is simpler then revoking the will. (but not when the trust
specifies another manner of revocation)
6. Creditors rights to a revocable trust
a. while settlor is living the creditor can get to as much as the settlor can get
too. In CA that is the whole thing because he has the right to revoke the
trust.
 b. after the settlor’s death creditors can still get to as much as the settlor could
have gotten to during his lifetime.
i. State Street Bank & Trust v. Reiser: Mr. Dunnebier created a living
trust with stock from 5 closely held corporation. Later he took out a
loan from the bank that was unsecured. 4 months later he died. The
issue is whether the bank can go after the trust as a creditor. The
court holds that the creditors can get to the trust for the amount that
the person who created the trust could have accessed during his life.
Holding: where a person places property in trust and reserves the
right to amend and revoke, or to direct disposition of principal and
income, the settler’s creditors may, following the death of the
settler, reach in satisfaction of the settler’s debts to them. But the
creditor has to first try to satisfy the debt out of the estate.
7. Pour over provisions
a. a funded living trust has some assets in it
b. an unfunded living trust is where the only thing that is in it is the estate
pursuant to a pour over provision.
c. reason to want a pour over provision: because you cannot name everything
you own to put into trust and you may want uniform management of the
estate. Also, It is much easier to change a trust then it is to change a will.
d. the problem with unfunded living trusts: there is no res. They were
generally not allowed
i. Uniform Testamentary Additions to Trusts Act (UTATA)
You can pour over assets into a trust that does not even exist yet
You can even pour over your assets into a trust that someone else
will later create.
Regardless of the existence size or character of the trust. (basically
this allows unfunded trusts). Does not matter that a trust is
amendable or revocable or that a trust was amended or revoked.
(even though effectively an amendment changes your will.)
ii. What happens when someone has a pour over provision in a trust
and makes an oral amendment. At least under this will an oral
amendment is valid. If the trust says amendments have to be in
writing the amendment is not valid.
e. bequests to former spouses in a pour over provision
Clymer v. Mayo: Mayo created a revocable trust with a pour over provision
but some named items were to go to the husband. She had her life insurance
policy put into the trust, and he was also the beneficiary under her pension.
The beneficiary of the trust was her husband. Before she died she was
divorced. The decedent was using the trust as a will substitute, and the trust
and the will worked to together to carryout the testators intent. It was a
single testamentary scheme, and when a trust and a will are part of a single
testamentary scheme they will apply this statute (this is the same rule we
have in CA). If this trust was incorporate into the will or testamentary the
interest would be revoked by operation of the statute. If there were no pour
over provision it would be harder to find that they are a single testamentary
scheme and so the statute may not apply. §6122: in CA a divorce revokes
any bequeaths to a former spouse under a will unless the will states
otherwise.
C. Life insurance
 1. this is a bet that you will die young.
2. Another purpose is for people who have partnerships or are involved in
corporations. Basically they want their heirs to keep the business going, but they
know that they will have to pay estate tax for it. To encourage them to keep the
business going they try to estimate the amount of the tax.
3. does a will take precedent over other will substitutes?
D. PODs
1. Are they valid
a. old rule is that they are only valid in a life insurance policy (because the
whole point of the policy is to give money to someone when you die.)
b. new rule is that they are valid. The UPC says that all of these POD type of
provisions are non-testamentary by statute.
2. Can you change a pod by will? no because companies will not know who to pay
E. Living Wills
1. Where you specify what type of treatment you would want at the end of your life.
a. the alternative is a durable power of attorney: a regular power of attorney
allows someone else to act on your behalf legally. A power of attorney
seizes to be valid when you become incompetent. By legislation you can
have a power of attorney for health care that remains in effect once you
become incompetent.
TRUSTS
I. INTRODUCTION
A. Definition: a trust is a fiduciary relationship in which trustee holds legal title to specific
property under a fiduciary duty to manage, invest, safeguard and administer the trust assets
and income for the benefit of designated beneficiaries who hold equitable title.
B Types of Trusts
1. Created by operation of law (imposed by courts or implied):
a. Resulting Trusts: There is a remedy, what is created when a normal trust
fails. Under a resulting trust the property is returned to the settlor or their
successors in interest. What you do with the assets is use a resulting trust to
convey the assets back into the estate of the settler.
i. Purchase money resulting trust: arises where supplier of purchase
money is not the person. this is one that is created when someone
buys an asset (usually land) and takes title in the name of someone
and that person is not the natural object of your bounty (family). Ex.
B buys a house using A’s money. If this applies then the (the
presumption arises that this) House is a purchase money resulting
trust for A. usually happens when someone buys land in the name
of a bank attempting to create a trust. If the trust is invalid then the
bank does not get to keep the land, but the property goes to the
proposed settler’s estate.
b. Constructive trusts: can be a remedy for something like fraud or duress. Or
as a remedy to make a will or not revoke a will. it is not actually a trust
because it is not created by the parties.
c. An equitable charge: language in a will that gives property to someone
subject to an obligation (usually to pay some money to a third person, or let
someone stay on the property). Ex. Give farm to daughter but I want her to
pay 30% of proceeds to son. If it looks like your are giving farm to son
outright but with an obligation it is an equitable charge. All son can do is
 enforce the debt but she has no fiduciary duties to him. This is sort of a
security interest in the farm.
2. Express Trust
B. There are two types of express private trusts
1. The living trust/intervivos: goes into effect while you are alive
2. A testamentary trust goes into effect when you die because it is created in you will
which goes into effect when you die.
C. Two ways to create an Express trust
1. Declaration: declare that you hold something in trust.
Either orally or on paper (especially when it is land). Where it is an
intervivos trust the settler and the trustee are the same person. But if it
involves real property it has to be in writing because of the statute of frauds.
If the settler is not the trustee then a deed of trust is required.
2. Deed or transfer into trust: if you convey something by deed then that makes the
person the trustee.
a. The deed of trust must be delivered to the trustee!
b. The trustee must accept the job of trustee.
c. But a trust will not fail for lack of a trustee so the court will have to appoint
a trustee in that situation.
EXPRESS TRUSTS
I. Express Private Trusts
A. Formalities
1. Creation: Either by declaration or by deed/transfer into trust.
a. intervivos trust: depends on who is trustee
• Is settler is also the trustee it can be by declaration or by
transfer/deed.
• Is someone other then the settlor is the trustee: this must by
deed/transfer
b. Testamentary trusts: created in a will when the settlor dies.
• The will itself must be valid
• If the will is valid you must also determine whether the trust is valid
2. Intent to create a trust: either orally, written or by conduct.
Except for limitations by the statute of wills and the statute of frauds (real property)
this intention may be manifested by written, or spoken words or by conduct and it
need not be in a particular form of language.
a. oral:
• an oral trust of personal property is valid in all jurisdictions. The settlor
should separate trust property from all of his other property and mark it so
that it can be distinguished, otherwise could be hard to establish intent.
Unthank v. Rippstein: Craft sent Rippstein letter that says that he would
sent her $200 in cash for the first week of the month for next five years
provided that he live. Later in the margin he takes back the last part and
says that he binds his estate to make the monthly payments provided by the
letter. Rippstein tries to argue that this was a trust (to the extent of the
promised payments). The problem was that he never set aside the money to
make this obligation to her. You cannot identity what the trust property is.
Rippstein argues that the trust corpus is his entire estate but any amount not
needed to fulfill the obligation goes back into his estate. The court finds this
 interesting but does not agree. The language of the letter is not really
susceptible to this interpretation. She does not get the money.
b. delivery of the deed to the trustee is sufficient to show intent.
c. when a trust is created by declaration and the beneficiaries are not notified,
if the settlor keeps property separate and separate account/book that is
evidence of intent.
d. intent must be manifested while the settlor owns the property and it must be
present intent. A promise to do something in the future is only enforceable
if it is a contract.
e. precatory language is not intent to create a trust. Precatory language
includes language that the transferor merely expresses a hope, wish or
suggestion that the property be used for a certain purpose. Look for definite
and precise directions.
• Jimenez v. Lee: P sues her father to account for certain assets that he
supposedly holds are trustee for her. The assets were $500 and a
$1000 savings bond (from his mother) the bond was for Betsy’s
education. The court holds that there was intent to create a trust. It is
enough if the transfer of the property is made with the intent to vest
the beneficial ownership in a third person. Another way of saying
that is to split the ownership into the legal and equitable ownership.
The evidence the court looked at was a letter the D sent to the settler
saying that he held the bonds in trust for the grandkids. He was a
lawyer so the court said he meant to use the legal meaning of the
words. He also testified that the settler was going to supply a bond
for P’s educational needs, i.e. not precatory language.
3. Necessity of Trust Property
a. The trust must be funded
1. the UTATA provides an exception for a pour over trust.
The trust is valid if unfunded as long as there is a pour over. It is
valid the whole time.
2. property funding the trust must qualify as an adequate property
interest. Most types of property interest will qualify
• Real or personal property
• Legal or equitable property
• Present or future interests, including contingent interests
• Chooses in action (rights that can be enforced by legal action).
3. Trust property must be an existing interest in existing property. An
expectancy such as future profits cannot be trust property. If there is
no trust res when the trust instrument is executed, the trust will not
come into effect when the res comes into existence unless the settlor
at the time manifests anew an intention to crate a trust.
• Brainard: made an oral declaration of a trust for his earnings from
his stock trading for his wife, mother, and children (so the earnings
go directly in the trust and therefore, it will not be taxed to him but
to the wife and kids) for any loses in a stock trade. In this case we
have a settler (Mr. B) and we have beneficiaries (wife, mother), and
he would be the trustee (trust by declaration). The problem in this
case was that it was an expected interest/future earning and at the
time of the declaration there was no property in the trust. The trust
 does not fail because at the time he receives the earnings and put it
in a trust, he renews his declaration of trust. The critical question for
the IRS is when does the trust arise. They find the accounting of the
profits in his book. The day he writes it in there he identifies the
property for the trust and creates the trust. So in this case he owned
the property for a short time and needed to declare it on his taxes.
What he could have done is put the actual stocks in the trust in the
first place.
• Speelman v. Pascal: G. Pascal dies intestate. He owned a license to
turn a story into a musical. The musical is not actually developed
until after his death. Before he dies he gives a share of his
anticipated profits via letter to miss. Kingman. You can transfer by
gift a present gift of future profits. To transfer a gift to someone you
have to (1) make it irrevocable (complete an irrevocable delivery of
the subject matter of the gift.) and (2) there has to be delivery.
(either manual, constructive, this is where you give someone access
to something, or symbolic, some sort of title document) the easiest
way to look at why this is different from the above case is that this
case applies the law of gifts and not the law of trusts. There could
be a problem with the letter because it looks like he intends to do
this in the future. The general rule of gifts is that you have to have a
recognized property interest.
4. Necessity of a trustee: a trust does not fail if the trustee does not accept the
position, if this scenario happens the court will appoint a trustee. If no trustee is
named at all a testamentary trust does not fail, but a trust by deed my fail because
the deed is not delivered.
a. In order to be a trust the trustee must have some duties to perform. If not
the trust fails and at that point the beneficiaries acquire legal title.
b. The trustee has to accept and cannot be forced into it. After that at common
law the person an only be released from liability by the beneficiaries or the
court. May want to draft a resignation clause.
c. Duties of trustee
1. investment: selecting securities, monitoring the investments, and voting
the shares, making new investments
2. administration: accounting, reporting, and tax filing. Special trust assets
may require keeping up insurance, etc.
3. Distribution: they have the discretion to spray, sprinkle, invade,
accumulate, terminate, and so forth.?
5. Necessity of ascertainable beneficiaries
a. Purpose: generally a trust cannot exist without someone to enforce it. Thus,
a beneficiary is necessary to the validity of every trust except a charitable
trust (which is enforceable the attorney generally), a private trust requires
that there be a definite beneficiary(or at least that the beneficiary will be
ascertainable within the period when all interests must vest under RAP). If
the trust fails for lack of a beneficiary a resulting trust in favor of the settlor
of the settlor’s beneficiaries is presumed.
b. Beneficiaries must be ascertainable
i. general rule is that you must be able to identify beneficiaries by
name
 ii. Gift to a class: there must be an objective method for determining
members. If there is an objective method for determining the
members of the class it is ok to determine members at the time the
trust interest vests, rather then when it is created.
• Clark v. Campbell: In the deceased’s will he sets up a trust so that
his trustee can pick from his friends to disburse to such of his friends
as they shall select. The court holds this invalid. By the common
law there cannot be a valid bequest to an indefinite person, a
trust has to have ascertainable beneficiaries. Here the court says
that this is an indefinite because there is no mechanism available to
determine who the beneficiaries are, considering that they were not
specifically named and are only a group called “friends”. There
were two arguments that the D’s try to make. First that he did not
intent to set up a trust, but this was an outright gift to the trustees to
do what they want with (the language was precatory). The court
does not bite because he used the terms to create a trust. Second, that
this bequest was a power. The court does not agree with that either.
A power is a power of appointment, this is were in a will or a trust
you give someone power of appointment over certain assets to do
what they want with. The court says this would have to be a power
coupled with a trust, and so the rules of trust would apply and this
trust fails because there are no ascertainable beneficiaries.
iii. the So called “honorary trust”: this is not really a trust at all because
there is no beneficiary. Usually is a trust for the benefit of a pet or
to maintain a gravesite. There are no obligations and there is
nobody to enforce the trust.
• In re Searight’s Estate: In Searight’s will he gives his dog to
Florance and sets up a trust for her to take care of the dog with. He
sets up a plan so that there is $1000 in a bank account and Florence
would get 75 cents for every day that Florence takes care of the dog.
After the dog dies then the money will be split between these five
people. There were two issues: (1) this was a valid trust; and (2) did
this violate RAP. First, the problem is that there was no beneficiary
so it cannot be a valid trust. The court held that there was an
honorary trust as long as Florence accepted the dog. Under this type
of trust there are no fiduciary obligations to the dog and it is not
enforceable. These have some sort of non charitable purpose or
goal. The purpose is not illegal. Courts are willing to carryout these
trusts were the trustee agrees to it. If the trustee does not agree then
a resulting trust will arise in favor of the testator’s residuary legatee
or next of kin. Also used for maintaining a grave site, or setting up
monuments. This did no violate RAP because all the money would
be gone within 21 years of lives in being.
6. Necessity of a valid trust purpose: cannot e illegal or against public policy.
7. Necessity of a written instrument
a. intervivos trusts
1. personal property: no writing required
2. real property: statute of frauds applies, must be in writing
• Common law; writing requirement strictly construed
 • Modern trend: may be able to get equitable remedy where oral trust
Hieble v. Hieble: The P transferred her house to herself and her
children in joint tenancy because she had cancer and thought she
might die. She made them promise to give it back to her if she did
not die from cancer upon her request. This was not a trust, she gave
it to them outright. Later her daughter gave her the interest back but
the son refused. The court made him give it back because this was
not wrongful (no intent to defraud creditors), and there is a
confidential relationship. What is her cause of action? a
constructive trust. You may be able to show that there is a
substantive right to this remedy.
The things we look for to determine is you have a substantive right
1. a confidential relationship/fiduciary relationship
2. some sort of promise, express or implied
3. a transfer in reliance on that promise
4. unjust enrichment.
Pappas: this guy went back to Greece and found a wife. A few
months after getting to the US they got a divorce. During that
process he put the house in his son’s name and they had an
agreement that the son would convey it back after the divorce. Even
thought the above 4 elements are met the P did not have unclean
hands (this is an equitable remedy so there is this equitable defense).
b. testamentary trusts: testamentary trusts will always be in writing because
they are in the will.
i. Formalities: The trust intent and the essential terms of the trust must
be ascertained in one of the following:
• the terms of the will itself
• An existing writing properly incorporated by reference into
the will (where incorporation by reference is recognized.)
• Facts having a substantial, independent significance apart
from their effect on the terms of the will. Ex: someone
creates an intervivos trust and in the will adds to the trust. In
the mean time the intervivos trust is amended. The
testamentary trust is added to the amended intervivos trust.
• The exercise of a power of appointment created by the will.
ii. Where testamentary trust fails for lack of an adequate writing
• Secret trusts: a constructive trust may be imposed. A will
makes a gift absolute on its face, to a named beneficiary,
however the gift was made on reliance upon the
beneficiary’s promise to hold the gift property in trust for
another. To prevent unjust enrichment of the named
beneficiary, courts will allow the intended trust beneficiary
to present extrinsic evidence of the agreement. If the
agreement can be proven by clear and convincing evidence a
constructive trust will be imposed. Think of this are a two
step process. First the court ignores the trust and just allow
this as an outright gift, then any third parties have to go
through the four element test to prove that they have a
 substantive right to a constructive trust. This is the majority
rule. We will follow the rule in this case.
• Semi-secret trusts: no trust is created. The will makes a gift
to a person in trust but does not name the beneficiary. The
testator may have communicated the terms to the trustee.
The majority of courts have taken the position that the trust
is unenforceable because of the statute of wills. The gift
fails for lack of a beneficiary. Falls back into the residue of
the estate via a resulting trust.
• Olliffe v. Wells: In the testator’s will she left the residuary of
her estate to Wells to distribute in such manner as in his
discretion shall appear best calculated to carry out wishes
which I have expressed to him or may express to him. The
oral expression was to use her estate for charitable purposes.
This is not a will because the instructions are not in writing
and there is no incorporation. He says that this would create
a valid charitable trust except it violates the statue of wills
because it is not in writing.
II. Charitable Trusts
A. Intro:
1. Differentiating if from a private trust: A private trust is merely benevolent and a
charitable trust is supposed to be for the good of the public.
i. Can have an indefinite duration (No RAP)
B. Characteristic
1. Purpose is charitable
2. It can last forever: indefinite duration. A Private trust is limited by the rule against
perpetuities.
3. Part of the public at large/indefinite/changing beneficiaries
C. Acceptable trust purposes:
1. The relief of poverty
2. Advancement of education
3. Advancement of religion
4. Promotion of health
5. Governmental or municipal purpose
6. Other if beneficial to community. (narrowly construed)
a. Differentiating between a benevolent purpose and a charitable purpose:
Shenondoah Valley National bank v. Taylor: Mr. Henry died and created a
trust that was meant to twice a year pay out the 1-3 graders at this particular
elementary school. He Twice a year before Easter and Christmas the
income of the trust would be divided up to pay the children for them to use
towards their education. The court held that this was not a charitable trust
because the children did not have to use the money for education, they had
to be paid no matter what they did with it. The court said that he did this
just to make the kids happy before the holidays. Also they said that they
were not necessarily poor so it was not intended to help the poor. The court
said that this was mere benevolence and there was no good to the
community as a whole. Maybe if the money did not go straight to the kids
it would have been ok. They could have tried an administrative deviation.
 If this were a private trust if violates the rule against perpetuities. It is void
from the very beginning.
b. use trusts law to see if the purpose is charitable not tax law.
c. To determine purpose the effect of the gift is what matters rather then the
settlor’s motive in creating the trust.
d. Examples
• A trust for an individual for go to med school and come back and serve an
undeserved community: that would promote the health of that community.
• A trust for the legalization of marijuana: if it is considered political then it
would not be charitable. You can argue that this is law reform and that is a
governmental or municipal purpose.
• Religion: To promote the catholic church: that would be accepted. What
about promoting atheism: promoting anti religion don’t know.
D. Modification of Charitable Trusts: Cy Pres
1. General Rule:
a. If property is given in trust to be applied to a particular charitable purpose
(a valid charitable trusts)
b. and it become impossible, impracticable or illegal to carry out that
particular purpose
c. and the settler had a more general charitable intent
The court will adopt the trust to some general charitable purpose that falls
within the settlor’s charitable intent.
2. This is a problem particular to charitable trusts because they go on for a longer
period of time and circumstances change so the purpose can become difficult to
carry out. Why did the court not consider this doctrine in the candy trust case?
Because it was not a charitable trust at the time, and this only applies to a valid
charitable trust.
3. What does Impracticable mean? It is possible but there would not be much of a
point in doing it.
In re Neher: Neher creates a trust in her will to give her property to the community
of red hook village to create a hospital in the name of her husband, called Herbert
Neher Memorial Hospital. The community petitioned the court to allow them to
apply the trust to another hospital because it was not economically feasible to build
a hospital there. Instead they want to build a building for the administration
purpose of the village to be called the Herbert Neher Memorial Hall. The court
found a more general charitable purpose, but may not have been fair because an
administrative building is nothing like a hospital.
i. Wastefulness is not Impracticable
The estate of Buck: issue was whether the trustee could apply the trust to
other counties because the county the settlor wanted it to be applied to was
already very rich. The court held that it would not apply cy pres because
wastefulness was not the same is impracticable. The trustee tried to argue
that if she had known how much her oil shares were worth she would have
shared the wealth. They used a few manors or proof (they said
philanthropists who have a lot of money try to spread it abound more).
Also that she had selected this trustee that accommodates all five counties,
this donor would be more interested in helping a greater area if she had
known. The trustee tried to argue that it was impossible to use this trust for
charitable purposes. The court did not agree because the could use the trust
 to promote health and religion, not just the poor. the foundation tried to
argue that they could use the money more efficiently if it was changed. The
court says that is a bad argument because you can always spend money
more efficiently and that does not provide a reason to circumvent the intent
of the settlor.
• Restatement and utc
Utc: courts can apply cy pres if a particular charitable purpose becomes
“unlawful, impracticable, impossible to achieve, or wasteful. The
restatement also allows it if the trust becomes wasteful. Wastefulness is
not the rule though and nobody so far uses it.
ii. Examples: Technology (typewriters), case where scholarship became so
small people stopped applying. What if you have a school for a purpose but
you don’t have enough people to qualify? Extend it so that more people can
apply. Or a hospital that treats a disease that has been eliminated.
4. Giftovers and general charitable intent: If you have a gift over (if the trust is found
invalid you specify what should happen) courts become very reluctant to apply cy
pres because they say you had a specific intent rather then a general charitable
purpose.
5. Administrative Deviation Doctrine: Even if the court refuses to apply cy pres:
because the purpose of the trust can still be carried out; it can, by exercising its
equitable power, authorize equitable deviation from an administrative term of the
trust.
i. Barnes: Barnes was this inventor who became wealthy, with his money he
bought a very large number or paintings. He wanted the art hung up in a
particular way. They were all crammed into this buildings. He created a
foundation with restrictions: no painting can be moved, nothing sold or
loaned out, nothing added, only open to public (poor people) only for free
and only open on Saturday, and the foundation could only invest in bonds.
The foundation did not have enough money to run the museum. Was it
impossible to run this museum (only half at a time)? It probably was
impracticable. Did he have a charitable intent? He wanted it displayed in a
particular way, only for free for common people. The judge allowed the
museum to move, charge and tour some of the paintings.
6. Discriminatory trusts: If you have a trust that is set up for a discriminatory purpose,
courts sometimes apply cy pres if there is a general charitable intent. If this is
illegal then cy pres could be used. Usually state action is necessary for this to be
illegal. Some courts have applied it to private trusts also. They involve state action
when they involve in some way a public school, or take on a public function.
There are two possibilities: either make an administrative deviation (leave the
state/school out of it) or use cy pres to make it legal.
7. Supervision of Charitable Trusts
a. The general rules is that the settler and potential beneficiaries have no
standing to sue charitable trustee. A settlor can have standing if he
expressly reserved the right to do so or reserved the reversionary interest.
i. Smithers v. St. Luke’s Roosevelt Hospital Center: Smither was an
alcoholic who gave a 10 million dollar gift to this hospital to set up a
rehab center. There were several restrictions. The money was only
to be used for this center and at a separate location in his name. the
hospital did buy the building to set up the center but soon there after
there was trouble and he did not make the second payment. Later
 they negotiated to get the rest of the money if they complied with
the restriction. After he died his wife found out that the hospital
have been taking loans from the fund and they also wanted to close
the building and move the center to the hospital. The AG worked it
out so that when the building was sole 1 million would got to the
fund and it would reopen at the hospital. Issue: can the widow (as
the administer of his estate) have standing to enforce the provisions
of the gift? The court here held that the donor does have standing
and so she also does because she represented the estate and she had
not bad motive. Also the donor is in a better position then the AG to
enforce the restrictions of the trust. In fact here she was the one the
discovered the malfeasance and brought about all of the agreements.
b. The Attorney General of the State has standing to enforce the trust, but
there are so many that the AG doesn’t do something without a public outcry
or something public or it benefits the state.
c. Beneficiaries with a special interest: The person must show that he or she is
entitled to receive a benefit under the trust that is not available to the public
at large or to an average beneficiary. (ex. A person living at a facility
operated by the trust that would be effected by the mishandling the trust, or
a church member). A counter example: a poor person in Merin does not
have standing just because they could benefit.
III. Beneficiaries Interests: Transfer, Modification, and Termination
A. Distributions from the trust
1. Mandatory: the trustee must distribute all the income
2. Discretionary: the trustee had discretion over payment of either the income or the
principal or both. The trustee still has duties to the beneficiary, including the duty
to inquire into the beneficiary’s needs, the duty to act in good faith, and the duty to
act reasonably. These duties remain even if trustee is given absolute or sole
discretion. Particularly with the duty of good faith, in some jurisdictions the duty to
act reasonably can be absolved by the settlor.
a. Spray trust: the trustee is given discretion to determine which of the
beneficiaries to distribute income too and in what amount.
b. Support trust: to support children for example in the manner in which they
are accustomed to living
Marsman v. Nasca: there was a support trust set up for the comfortable
support of Cappy. He was not given comfortable support and in fact lost his
house. The court held that a trustee holding a discretionary power to pay
principal for the “comfortable support and maintenance” of a beneficiary
has a duty to inquire into the financial resources of that beneficiary so as to
recognize his needs. Remedy against Marlette (sally’s beneficiary): the
court vacated the order to convey the house to Margaret because sally was a
bonefide purchaser for value. The remainder of the trust: the court will
impose a constructive trust on the amounts which should have been
distributed to cappy but were not because of the error of the trustee. Here
the res of the trust has not been distributed but if it had the beneficiaries
would have had to pay unless they were bone fide purchasers for value or
unless they had no notice and changed their position in a way that would
make it inequitable for them to pay. Personal liability of trustee: the
exculpatory clause is valid even thought they are generally disfavored.
Such provisions inserted in the trust instrument without any overreaching or
 abuse by the trustee of any fiduciary or confidential relationship to the
settler are generally held effective except as to breaches of trust committed
in bad faith or intentionally or with reckless indifference to the interest of
the beneficiary. What about the beneficiaries other resources: in this case
the instrument said to consider all means of Cappy’s support. If it has not
dealt with it it would be a matter interpretation. One professor says that
there is a presumption that the trust is intended as the sole means of support
of the beneficiary unless the presumption can be rebutted.
• Discretionary support trust: the amount necessary is under discretion of
the trustee to support the children in a manner they are accustomed to.
• Note Extended Discretion: Additional adjective of unqualified
discretion are not the effective because the trustee always has to act in
good faith, from proper motives in within reasonable judgment. But the
courts will first account for all factors that could have effected the
trustee’s decision.
• Note exculpatory clauses: Under the UTC the trustee has to prove that
the clause was fair and was adequately communicated to the settler. This
would also apply if the trustee was not the lawyer but wrote the clause.
There is a safe harbor provision (excuse) if the settler is represented by
independent counsel. But in the above case the court did not apply this
rule. Limits on extent of the clauses: cannot prevent review by the
courts. The limits are generally bad faith, reckless indifference, and
intentional or willful neglect. In NY immunity clauses are void as
against public policy.
• Note Mandatory Arbitration Clauses: one case says they are
unenforceable but the scholars disagree
B. Transfer of Beneficiaries’ Interests: Alienability
1. Voluntary alienation: in the absence of some provision in a statute or trust
instrument to the contrary the equitable interest of a trust beneficiary is freely
alienable.
2. Involuntary alienation/Rights of the Beneficiary’s Creditors: except as otherwise
provided by statute or as validly restricted by the terms of the trust instrument, the
interest of an insolvent trust beneficiary can generally be reached in appropriate
proceedings (such as a creditors bill in equity), to satisfy the claims of his creditors.
a. Discretionary trusts: a creditor cannot compel a trustee to pay assets to the
beneficiary in order to get their hands on it. In some states the creditor can
stand in the shoes of the beneficiary in case the trustee decides to pay the
beneficiary anything. the point at which the creditor has access to the funds
is after the trustee has decided to make a payment but before the payment it
made. The kinds of things that indicate that intent can be informal: oral or
written declarations to the beneficiary are included. If there is a standard of
support it is different. (ex: education or support payments). Suppliers of
necessaries may recover through the beneficiary’s right to support.
b. support trusts: Unlike discretionary trusts courts have held that children and
spouses can collect against the beneficiary’s interest in a support trust.
i. The restatement makes no distinction between discretionary trusts
and support trusts and allows the creditor to stand in the
beneficiaries shoes and ask for benefits.
 ii. UTC: when the trustee has not acted within his discretion the court
can order the payment to a creditor or to children or spouses or
former spouses of the beneficiary up to the amount the beneficiary
should have received.
c. Protective trusts: you can have a mandatory trust to pay income but once
creditors attach the beneficiaries interest the interest becomes discretionary
so the creditors cannot demand any part of it. Commonly used in England
because the spendthrift trusts is not uses there.
d. Spendthrift trust: one in which by state or more often by the terms of the
trust, the beneficiary is unable voluntarily or involuntarily to transfer his
interest in the trust. It is created by imposing a disabling restraint upon the
beneficiaries and their creditors. The creditors cannot get their hands on
something until the income is paid out to the beneficiary. Once that happens
they can try to collect on it before he gets a chance to spend it.
i. Scheffel v. Krueger: Can a spendthrift trusts be used to shield assets
from tort creditors? The court said that it can because the statute
made two specific exceptions (when beneficiary is settler and for
fraudulent transfers) and they did not included an exception for tort
actions. The court cannot create its own exception here because this
is a rule of the legislature not the courts.
ii. Shelley v. Shelley: There was a spendthrift trust set up for this guy,
he got married twice and had two sets of children and then skipped
out on them. The court held that it did have the power to require the
trust to pay his support payments. They reasoned that the legislature
has not made a law to the effect and the right to dispose property is
not absolute and is subject to the requirements the court deems
proper to impose in the interest of public policy. The trust is
available to both the children and the former spouses (even if some
states hold that spouses are like creditors and cannot reach the trust.)
the children and spouses could not reach the corpus of the trust
because that was discretionary but as a side note the kids were
beneficiaries and so could reach it but only for unusual
circumstances which were not present here.
• Other Exceptions
o Child support – yes
o Alimony – yes
o Tort Creditors – no (Ca does have exception if it’s a
felony)
o Tax Liens – yes
o Beneficiary going bankrupt? Is it available to creditors?
No
o What if beneficiary goes to grocery store and extends
credit for food? Want to encourage people to give food –
someone who provides necessities is an exception to the
spendthrift provision.
• Can you create a spendthrift trust for you own
benefit?
 o Self-Settled Trusts – set up to pay income to settlor. By
having spendthrift provision would not be available to
creditors.
o The general rule is that if the settlor is the beneficiary of
the trust and it is either discretionary or spendthrift,
creditors can get to as much as the settlor has allowed
himself to access.
o 5-6 states have decided to allow  so far it works. This
is so they can lure money to their state. Cannot be a
resident of the state but the trustee must be a resident for
the choice of law provision to apply.
o If do this to avoid current creditors, that could be
unethical
• NY has a law for excess over amount needed for support:
anything excess then the amount needed at the beneficiaries
station of life is accessible to creditors. But the courts look at
the social position and their standard of living to determine
what is needed in the station of life, making the law useless.
• Percentage levy, spendthrift caps: A few states allow
creditors to reach a small percent of the trusts and some
allow a cap on funds over a specified which are accessible to
garnishment by creditors.
• Pensions: protected against creditors except for child
support, alimony and marital property rights. ERISA.
e. Trusts for the State-Supported: Federal law draws a distinction between
self-settled trusts and trusts created by third parties.
i. Self settled trusts: if established by the beneficiary or out of the
beneficiary’s assets and one their behalf by someone authorized to
act on their behalf (spouse or court) it is counted if the trust is
revocable. If irrevocable, the corpus is counted in so far as the
trustee can use its discretion to give the corpus to the beneficiary
(the court assumes full exercise of the trustee’s discretion). A trust
set up by the will of a spouse is an exception. Also if the trust is set
up with the beneficiary’s property by a parent grandparent, guardian
or the court, and the trust corpus is payable to the state after the
individual dies.
ii. Trusts created by a third party: if a mandatory or support trust is
created wherein the beneficiary has the legal right to income, the
trust is treated as an asset. But if a discretionary trust is created,
giving the individual no legal right to trust income or principle, the
trust is not considered a resource unless it was intended for the
applicant’s support.
f. Reimbursement for state supported beneficiaries: The courts follow the
rules for creditors of beneficiaries of mandatory, support, and discretionary
trusts. A spendthrift is unenforceable against the state. Generally the state
cannot reach discretionary trusts. A hybrid that the state cannot reach is
called the supplemental needs trust: the settler has to express intent that the
state cannot reach it.
C. Modification and Termination of Trusts
1. Introduction:
a. Revocation: can only be done by settlor (revocable trust only), assets revert
to settlor (directly or by resulting trust).
b. Termination: can be natural or premature termination, by a variety of
methods. The assets go to beneficiaries.
2. Rules
a. CA: inter vivos trusts presumed revocable absent express provision
b. Majority rule: intervivos trusts presumed irrevocable absent express
provision.
3. Power of settlor to revoke or modify
a. Must Reserve Right to Revoke o Modify: in most states, without express
reservation by the settlor of a right to revoke or modify the trust, he has no
such powers.
b. Power to revoke includes power to amend: where the power to revoke
exists, it includes the power to amend. If the method of revocation is
specified in the trust instrument, it must be followed. If no method is
specified, any instrument showing the settlor’s intent will suffice. However,
an inter vivos trust usually cannot be revoked by will, unless the trust
expressly so provides.
4. Modification or termination by agreement of beneficiaries: most jurisdictions
permit modification or termination only if:
a. All beneficiaries consent (even a remote contingent interest in an unborn
beneficiary is sufficient to preclude termination. Doctrine of virtual
representation – as long as there are living beneficiaries who have same
interest as unborn, the living beneficiary can represent the interest of the
unborn beneficiaries); and
b. The modification or termination will not interfere with a material purpose of
the trust (or settlor joins). It can be hard to determine the trust purpose but
some include distributing principal at a certain age, preserving property for
remainderman, provide for successive enjoyment by life tenant and
remainderman, protect beneficiary from their own poor judgment
5. Termination of trust by its own terms: a trust terminates when the duration of the
trust as specified by the settlor has expired, or if the instrument specifies no
termination time, when the settlor’s purposes have been accomplished. Thereafter,
the trustee must wind up the affairs of the trust with reasonable promptness,
retaining only such powers as are necessary to preserve the property and to
distribute it to the beneficiaries.
6. Judicial Power to Terminate or Modify Trust
1. Premature Termination: A court may terminate a trust prior to the time
fixed in the trust instrument where: (i) the trust purposes are accomplished
early; or (ii) the trust purposes become illegal or impossible to carry out.
Trusts are not to continue where such continuation will be pointless.
2. Doctrine of Changed Circumstances: a court may authorize or direct a
trustee to deviate from the administrative terms of a trust (including
permitting acts that are not authorized or are even expressly forbidden by
trust provisions) if (i) compliance with the terms of the trust would defeat or
substantially impair the accomplishment of the trust purposes; and (ii) the
settlor did not know or anticipate the new circumstances.
• Doctrine Cannot Change beneficial rights of beneficiaries: the
doctrine of changed circumstances cannot be used to change the
 beneficial rights of beneficiaries. For example invasion of principal
when beneficiary really needs it. Some court will read in an implied
right to invade by saying that the purpose was support.
• Court can accelerate vested rights: although a court cannot, through
the doctrine of changed circumstances, change beneficiaries’’
beneficial rights, it can accelerate vested rights.

 In this country it’s hard to modify a trust – if you are drafting

a trust, could draft one that might be easier to modify.
Really don’t count on courts modifying trust
 Some cases recently – a few courts have modified the trust
when there has been a change in the tax law that takes away
benefit (if purpose of trust was to avoid taxes)
 Support trust are hard to terminate
IV. Trust Administration
A. Fiduciary duties of the Trustee
1. Introduction
a. Standard of Care: In administering the trust, the trustee must exercise that
degree of care, skill and caution that would be exercised by a reasonably
prudent person in managing her own property. Care relates to her diligence
and to the efforts she makes. skill relates to the trustee’s capabilities.
Caution is the element of conservatism in administering the trust. The
trustee has duties to the beneficiaries only after the trustee accepts the duty
of trustee. If you are a professional trustee the duty will generally be
somewhat higher.
b. standing: the duty is to the beneficiaries and so only the beneficiaries has
standing to enforce the duties.
2. Duty of Loyalty
a. Self Dealing. A trustee cannot enter into any transaction in which she is
dealing with the trust in her individual capacity.
i. Buying assets from yourself or selling assets to your self from the
trust=self dealing.
ii. If you engage in self dealing the courts make no further inquiry into
whether it is fair, etc.
• a limited exception/waiver: if the trustee before acting makes
full disclosure to beneficiaries and if they consent it is not a
per se breach, here we look to whether it is fair to the
beneficiaries and in good faith
iii. Damages: commonly is to undue the transaction. If that is not
possible because the purchaser is a BFP you have to disgorge the
profits of the transaction.
iv. The Duty extends to trustees family members.
Hartman v. Hartle: Mrs. G died testate leaving 5 children and she
named her sons in law as her executors. There was some real
property that they had to sell to distribute the assets among the five
children. They sold a farm at public auction and one of the sons
ends up buying it (this is not self dealing). The problem was that the
son was acting for one of his sisters (the wife of one of the trustees).
The function is that the wife is treated as a unit with her husband so
 the purchase was for the benefit of the trustee. One of the other
sisters objects and asks that either the transaction be taken pack of
that the profit be disgorged. What remedy? The court says that you
cannot undue the transaction because the property was sold to a
bonefide purchaser who had no notice of the trust. The remedy the
court gives is disgorgement.
v. Examples: starting a competing business, if the trustee is a stock
broker and uses his services to invest the res of the trust and charges
the fair rate. This is a breach of the duty of loyalty and fairness is
not a concern unless there is informed consent of beneficiaries.
b. conflicts of interest
i. Compared to self dealing
• self dealing is when the trustee has a motive to favor himself
• conflict is when the trustee has a motive to favor a third
person.
ii. Conflict is not a per se breach, we assess the conflict to see if it is
reasonable and fair.
iii. In Re Rothko: He was an abstract painter who committed suicide
leaving over 800 paintings. In his will he left instructions to his three
executors (Reis his business manager who also wrote the will,
Stamos an artist pal, and Levine and anthropology professor). They
had the same duties as trustees. Under the will his paintings went
into an artistic trust. 100 paintings were sold to the MAG
corporation for $1.8 million. The rest of the paintings were to be
sold on consignment to the Marlborough gallery for a 50% profit.
The paintings were to be sold over a course of 10 years. Reis: he is
a director, secretary and treasurer to Marlborough. There was a
conflict of interest because he has to get the best deal possible for
the shareholders of Marlborough while he has a duty to get the
heights price for the paintings. Would he benefit personally? He
wanted prestige in the community, also he had a deal with the
gallery to sell his families personal art collection. But personal
benefit is not required. Stamos: after he voted for this deal he ended
up getting a deal for the gallery to sell his paintings and while the
negotiations were going on the gallery bought a painting from a
third party. Where is the conflict? That he is hoping to get business
for himself out of it. Is that enough to be a conflict of interest?
Court says yes but it is not so clear. Levine: professor. Did he have
any connection with MAG? No there was no conflict but he may
have breached his duty of care to prevent breach by a co trustee. He
could have petitioned the court for instructions to tell him what to do
in this situation. He could have objected. Because there was a
conflict of interest the court also had to determine if the deal was
fair. The consignment agreement was way off the previous
agreement where he only pair 10% to the gallery. What about the
manner they the used to sell the pictures? They sold over a period of
time to get the trust stated and then not flood the market by selling
all the paintings at once. The overall scheme is fair and reasonable
but the commission is not very reasonable. Usually the better the
 artist the lower the commission. One thing that was unreasonable is
that they did not try to figure out the value of the paintings. At one
point Mr. Levine says that he acted under the advise of counsel,
does that matter? The court says that this was a business decision
and not a legal question so this is not a defense. He did not ask if
there was a conflict of interest.
iv. Damages: how do you calculate the damages?
• If this was a breach of the duty of care it would be a breach
to sell the assets for too little money. First you have to
determine whether the trustee had the right to sell. The
damages would be the difference between the amount they
should have received (fair market value) and what they
actually received (at the time of the sale). If the trustee
does not have the right to sell the point of determination of
value is at judgment because the property should be held by
the trust at that time.
• For a breach of the duty of loyalty the court uses the second
rule and determines damages at time of judgment because
they did not have the right to sell under a conflict of interest.
This is punitive in nature. This is called appreciation
damages.
3. duty of care/prudence: similar to negligence uses are reasonableness standard
a. Duty to administer the trust
b. Duty not to delegate of certain jobs/tasks
i. A trustee cannot delegate the entire administration of a trust. On the
other hand, she may delegate ministerial duties.
ii. Shriners Hospitals for Crippled Children v. Gardiner
Settler made a trust for her daughter and her two grandchildren.
They were also the trustees with the daughter being the main trustee.
She deferred/delegates to the secondary trustee who was a
stockbroker. Charles invests in himself and embezzles 300k. MJ
the daughter was sued for breach of fiduciary duty. As a trustee she
should not have delegated her duty to Charles. She could have
sought investment advice. But it is better to consult an independent
investment advisor. Rule: You can delegate ministerial duties but is
not allowed to delegate discretionary duties. When you delegate
you have to supervise. Could she have invested in a mutual fund:
probably but you have to choose one that fits the needs of the trust.
There was still a question about causation, was the loss cause by her
breach of the duty not to delegate? As an advisor/broker he does not
have authority to make payments to himself, so the court remanded.
It is likely that his delegation was not the cause.
iii. Modern Rule of Delegation:
a trustee may delegate investment and management functions that a
prudent trustee of comparable skills could properly delegate under
the circumstances. Must exercise reasonable care in selecting an
agent, establishing the scope and terms of the delegation, monitoring
the agent’s performance and compliance with the terms of the
delegation. Also the agent owes a duty to the trust to exercise
 reasonable case to comply with the terms of the delegation. This
will cut of the liability of the trustee for acts of the agent if
everything above is complied with. ONLY FOR ESSAY NOT M/C
c. Duty to keep and render accounts to the beneficiary
i. under a testamentary trust the trustee must account to the court every
year. The beneficiaries get a change to make objections to the
account. If they fail to do so, they will loose the chance to object
later unless they can prove some kind of fraud.
ii. National Academy of Sciences v. Camridge Trust
The settler set up a trust for the benefit of his wife on the condition
that she stay unmarried and not give the money/use the money to
help her family, upon that happening it goes to the National
Research Council of Washington. She at some point gets married
and has her brother in law collect the checks for her and she cashes
or signs them over to him. The amount that was sent to her wrongly
was 100K the court made the trust company pay that back with
interest. The court used the theory of constructive fraud to revoke
the accountings, because they represented that they knew that she
remained unmarried (by saying they wrote the check to her in her
original name, but they did not do the research) and the P relied on
it. The court found it important that the trustee had a duty (stay
informed?).
d. Duty to furnish information to the beneficiary
i. Fletcher v. Fletcher: Ms. Fletcher created an inter vivos trust and she
was the settler and the trustee. Some time later she created three
separate trusts for her son, James, and his two children. The trusts
were only for medical care. After she died the main trust went to
her beneficiaries. After her death one of the sons was the trustee.
James wants to see the trust documents, but the trustee only gives
him a few pages of the trust documents (he does not get the account
of the trust assets) the pages probably relate to his and his children’s
trusts. The court holds that he has a right to see the trust documents.
This is called the duty to furnish information. How much does he
have to furnish? On the beneficiary’s request, complete and accurate
information of the trust property… such information as is necessary
to enforce his rights under the trust. The trustee argues that his mom
told him to keep the trust documents confidential but the court says
there is nothing in the documents that said that and the court does
not address whether that would be a valid request. But Tiersma
thinks this would have been ok.
ii. UTC 813: A trustee shall upon request
a. beneficiaries must be reasonably informed of the
administration of the trust and the material facts necessary to
protect their interest. The trust must respond to a request to
furnish info unless it is unreasonable.
b. A trustee must:
1. furnish a copy of the trust instrument
2. after accepting the trusteeship within 60 days
notify the beneficiaries of his name, address, and
phone number.
 3. within 60 days of learning that a trust has become
irrevocable shall notify the beneficiaries of the trust’s
existence
4. notify beneficiaries of any change to the method or
rate of his (trustees) compensation
c. send to beneficiaries an annual report and a report upon the
termination of the trust, which includes the amount of the
trustee’s compensation, a listing of the trust assets, and if
feasible, their respective market values. Right to the
trustee’s report can be waived by beneficiaries.
e. Duty to exercise reasonable care in managing the investments of the trust.
Also called the prudent investor rule. is being superseded by the portfolio
theory on investment.
i. Old Rules: there was a list of safe investments. (like bank accounts,
government bonds.) Called the list approach. This is simple trustee:
to be a prudent investor you just have to put the money into
something on the list. This does not work well because returns are
low and you can run the risk of not keeping up with the rate of
inflation. (the principle can decline in value)
ii. Modern trust law uses the prudent investment standard: trustees
have to observe how men of prudence, discretion and intelligence
manage their own affairs, not in regard to speculation, but in regard
to the permanent disposition of their funds, considering the probable
income, as well as the probable safety to the capital to be invested.
(simplified: to make such investments and only such investments as
a prudent person would make of his own property having in view
the preservation of the estate and the amount and regularity of the
income to be derive.
• The trustee has to also consider the amount necessary to
fulfill the trust obligations to the beneficiary.
• Gross stock: the goal for the stock to grow in value
• Income stock: does not grow very much but it does produce
income in dividends.
• The remainder beneficiary and the interest beneficiary each
like a different one of these.
• The Prudent investor lead to very conservative trustees.
• Estate of Collins: Ex: used the trust corpus to loan to
someone else. The court held that this investment was not
prudent for many reasons: first the trustees did not diversify,
second: the second mortgage did not leave a large enough
margin of security, third; the backup security was basically
no security at all (they never took possession of the interest
in the company). Also they never checked out the actual
value of the property and just relied on some guy’s opinion,
also they did not check into the financial security of the
company or the individuals. (in fact they were being sued all
over the place). The trust instrument did give some
discretion in what they could invest in but the court said that
did not allow them to make an improper investment. Also
 they were not relieved of their fiduciary duties. (the trust
instrument can higher or lower the bar of obligation but it
cannot do away with them, even though that was not an issue
in this case). You don’t always have to diversify if it would
not be worth while, and this was a small trust. But they
could have used a mutual fund. Also the investment has to
be safe (which it was not here).
iii. Modern Portfolio theory: look at the portfolio as a whole to
determine if an investment is prudent.
iv. Duty to diversify: IN Re Estate of Janes: He was a state
senator who died very wealthy. His estate had 3.5 million in
it and 2.5 million is a stock portfolio and 71% or is was
Kodak stock. The trustee did not do anything with the stock.
During that time the stock value dropped by about 1/3. All
of this comes to a head when the trustee asks the court to
approve the accounting (this isolates the trustee from any
liability on stuff that is approved). When the widow gets a
copy of that accounting she (and the state attorney general)
objects for breach of the duty of prudence. She argues that
the trustee should have diversified the stock. WE already
talked about when it is ok not to diversify, but here this is a
large amount and should have been diversified. Also they
did nothing when the value of the stock dropping, they did
nothing actually with the stock at all. They did not even look
into it. Also the court was concerned because there was only
a 1% rate of return and the trustee was having to invade the
principle to support the widow’s standard of living. The
damages were over 4 million.
• Damages: The trial court used the lost profits theory
of damages. Instead the court determined damages
by the difference in amount they would have gotten
when it should have been obvious to the trustee that
they should have diversified. (why didn’t the court
use the lost profits theory? Don’t really know. We
will follow this case though but you do give interest.
• If the trust document said that the trustee has the right
to retain the original assets? Would that matter in this
case? It would be a more sympathetic case if this guy
was a founder of the company.
• What if the trust instrument says you cannot sell the
trust assets? You have to go to the court for
instruction
v. Uniform prudent investor act:
a: trustee shall manage as a prudent investor, By considering the
purpose and the distribution requirements of this specific trust.
b: have to consider the reasonableness of an investment after
looking at the entire portfolio.
c: the trustee has to consider general economic conditions, inflation,
tax consequences, the role of each investment in the portfolio as a
 whole, the expected total return, the other interest of the
beneficiaries, need for liquidity preservation or appreciation of
capital, and an assets special relationship or value to one of the
beneficiaries.
d. must take reasonable steps to verify facts relevant to the
investment.
e. any type of property or type of investment is ok
f: trustees with special skills or experience or were chosen in
reliance on the belief they had special skills, will be held to that
higher standard.

Class notes:
Is it a breach not to invest in a company for reasons of social welfare?
Yapping about whether pension trusts can/should invest in us companies, at the benefit to the future
beneficiaries and not so much for the current retirees. Don’t really know how this would turn out.

f. Duty to take and keep control of the trust property. Sometimes called the
duty collect the trust property.
g. Duty to preserve the trust property. Sometimes called the duty to protect the
trust property. Must collect all claims due the trust, protect title to property
by recording when needed, and invest funds promptly.
h. Duty to enforce claims on behalf of the trust. Often when the trust is
involved in the running of a business. Could include litigation. Everything
uses a reasonable standard: you cannot collect a dept if it would cost more
money then it was worth.
i. Duty to defend the trust, unless it is obvious that it would loose.
j. Duty to keep trust property separate. Two parts: duty to earmark the trust
property and not supposed to commingle trust assets with your personal
assets or with the assets of another trust.
i. Duty to earmark the trust property: make it clear that the property
belongs to the trust. Don’t want people to differentiate the trust
property after the fact. also it makes it easier when trustee dies.
ii. You may not commingle:
In most states, by statute there are certain situations when you can
commingle if you clearly earmark them. Mostly for lawyers and
client trust funds. The reasons you cannot commingle even if you
earmark is if the marking wears off it would be hard to tell who
owns what.
iii. Damages:
• Common Law: this is strict liability (no causation).
• Under the modern rule the trustee is only liable if there
is proximate cause
k. Duty with respect to bank deposits: you have to pick you bank carefully.
l. Duty to make the trust productive
m. Duty to pay income to beneficiaries
n. Duty of Impartiality and the Principal and Income Problem
i. The duty of impartiality is that the trustee has to be unbiased
between the income and remainder beneficiary. However, you have
 to keep in mind the purpose of the trust also (it may favor one class
over the other).
ii. Over productive assets: Dennis v. Rhode Island: The corpus of the
trust was building in a down town area. Over time they drastically
went down in value but the trustee never sold them or maintained
them because they produced income from rents. They could have
violated the duty to preserve and protect and also they did not
preserve the corpus of the trust. They could have sold the property
to invest in something else, but that would effect the income
beneficiaries (however they did not have a right to increased income
from the trust). This is a problem of the over productive asset.
There is one other possibility: you can take some of the money and
turn it into principle.
• Measuring damages: measure damages from the time at
which the asset should have been sold, subtract that money
received for the sale of the asset, then add the inflation rate
for each year.
iii. under productive assets: assets that go up in value but don’t produce
any income or very little.
iv. There are some assets that don’t produce any money at all: gold.
v. Income v. Principal: Sometimes it is hard to determine if something
you get back is income or principle: what if you invest in stock?
Usually income but sometimes not. But when a company distributes
stock instead of dividends it is principle. If it is a different
corporation then it is considered income. There are problems when
you have assets that deplete over time: oil wells. Income but it
creates a partiality problem. You have to allocate some of the
money to principle as well as income because you are depleting the
principle by pumping the oil.
o. Duty to use reasonable care in preventing a breach by a co-trustee.