ESTATES & TRUSTS OUTLINE

I.

INTRODUCTION TO ESTATE PLANNING

A. THE POWER TO TRANSMIT PROPER AT DEATH: ITS JUSTIFICATION & LIMITATIONS
1. Inheritance Policy Issues
a. Arguments in Favor of Inheritance & Testation
i. It is a natural human instinct & expectation (especially with the family
homestead, heirlooms and familiar objects).
ii. Support for dependant spouses & children.
iii.
Surviving family members may have assisted in accumulating wealth.
iv. Promotes family cohesiveness.
v. Promotes capital accumulation for investment in productive facilities.
b. Arguments Against Inheritance & Testation
i. Egalitarian meritocracy is frustrated (not a level playing field).
ii. Create disincentive for children to develop their own abilities.
iii.
Enables the few to create a stranglehold over the economy.
c. A fundamental attribute of land ownership is the right to devise the land.
Because the right to devise land is a fundamental attribute of landownership it is
a constitutionally protected right.
d. Reasons for Limiting Freedom of Testation
i. Conditions restrict freedom of choice of later generations.
ii. Purpose or motivation of condition may no longer be relevant or
appropriate as family or society changes.
iii.
Societal attitudes change.
iv. Condition may affect value or alienability of property.
v. Condition may violate public policy or cultural values.
vi. If a trust is involved, trustee cannot take the same risks an entrepreneur
can because of trustees fiduciary obligation to preserve the trust corpus.
B. TRANSFER OF THE DECEDENTS ESTATE
1. Probate & Non-probate Property
a. Probate Estate- Everything solely titled in the decedent
ii. House (unless JT).
iii.
Car (unless JT).
iv. Pre-marriage furniture/effects of decedent.
v. Bank accounts (unless JT).
vi. Stocks & bonds (unless JT).
vii. Other investments (unless JT).
viii.
Personal business assets of decedent.

b. Non-Probate Assets
i. JT house.
ii. JT car.
iii.
Post marriage furniture/effects (TBE in MO).
iv. JT bank accounts.
v. JT stocks & bonds.
vi. JT other investments.
vii. Pension plans.
viii.
Life insurance benefits.
c. Do you need to go through probate in order to pay estate taxes?
i. No, the estate tax collector does not care who writes the check.
ii. Both the Internal Revenue Code & the MO statutes [RSMo 145.310]
say that a family member can pay the estate tax.
d. Do you have to go through probate in order to transfer title to the house?
i. If it is joint tenancy property, NO.
ii. Who can sign the deed? It is obvious that the decedent cannot sign the
deed.
iii.
You have to go through probate in order to transfer the title. Has to be
recorded.
iv. In general, you have to probate anything that has a title that is held by the
decedent.
2. Administration of Probate Estates
a. History & Terminology
i.

Probate Terms
1. Testator- The deceased person who writes a will.
2. Heirs- Persons entitled to take realty by intestacy; today by statute
includes next of kin who are entitled to take personalty by intestacy
(RSMo 472.010).
3. Next-of-kin- Persons who take personalty by intestacy.
4. Issue- Those lineal descendents entitled to take by intestacy.
5. Distributee- Heirs & next-of-kin- Persons who are entitled to take
realty and personalty by intestacy or election against the will.
6. Devise; devisee- Testamentary disposition of realty; today it includes
a legacy of personalty; person who takes devise.
7. Legacy; legatee- Testamentary disposition of personalty; person who
takes legacy.
8. Executor- Person appointed by the will to administer the estate
9. Administrator- Person appointed when decedent dies intestate.

b. Summary of Probate Procedure

i.

Modern Probate System

1. Written wills for both realty and personalty.
2. The same scheme of intestate descent for realty and personalty.
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3. Election against wills by surviving spouses.

4. Courts of probate
a. These courts handle the administration of the estates.
b.
In MO it is the Associate Circuit Court.
5. Appointment of executor/administrator to all but the simplest estates.
6. Judicial supervision of decedents estates.
ii.

Summary of Probate Process

1. Death of deceased
2. Executor or administrator appointed.
3. Notice given to known heirs & distributes; ascertain identity &
location of others, if necessary.
4. Inventory & appraisal of assets of estate, and determine location;
collect debts of deceased.
5. Notice given to creditors; creditors paid out of assets of estate; state
and federal estate taxes paid.
6. Remainder of assets distributed to distributes and heirs; execute
necessary deeds and evidences of title.

iii.

Important Questions- Probate Process

1. Where do we go?
a. The basic premise is that you apply for probate in the county
where the deceased was domiciled.
b. Application for Letters- RSMo 473.110
i.
Apply in county of deceaseds domicile.
ii. Granted in the following order of priority:
1. Executor-designate (if there is a will).
2. Surviving spouse.
3. Distributees.
4. Any other qualified person.
5. See RSMo 473.117(1)-(2).
c. Problems
i.
Dont have permanent residence.
1. Real Property- Considered to be domiciled where
the major part of the real property is located.
2. No Real Property- Can apply for probate in any
county where the deceased had personal property
(possibly first, ask where the decedents bank
account is).
ii.

Two major residences

2. Who goes?
a. The executor designate- The person named in the will as the
executor.
b. This person goes to apply for the letters in court, etc.
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c. If the will does not designate an executor or it is an intestate,

an administrator is appointed.
d. Choices of administrator- In order of preference
i.
Member of Family- RSMo 473.110- Surviving
spouse, if there is one; One or more of the distributees
or heirs.
ii. Any other qualified person.
e. Qualifications of a Personal Representative- The following
are disqualified from being appointed as a person
representative or can be removed [RSMo 473.117(1)-(2)].
i.
Any state judge, state court clerk or deputy clerk,
unless a spouse of decedent or related to decedent
within three degrees (civil law).
ii. A minor or person with mental incapacity.
iii.
A convicted criminal (felony).
iv. A habitual drunkard.
v. A non-Missouri corporation, partnership or
association, or a national bank located out-of-state,
except any foreign bank or corporation qualifying
under RSMo 362.600 (reciprocity for banks).
vi.
A personal representative of a personal representativePersonal representative of executor who predeceases
the deceased.
vii. A corporation whose salaried employees prepared the
will.
f. County public administrator opens probate for individuals
who die intestate; this is the default.
g. Interested persons for will contest purposes [RSMo
473.083(1)]
i.
Heir
ii. Devisee, trustee, trust beneficiary (under other
purported will of same decedent).
iii.
Person who has acquired all or part of an interest of
such heir or devisee (Before or after the death of the
decedent; By purchase, gift, devise, intestate
succession, mortgage, lien.)
h. Non-residents can be administrators or executors (but they
have to have a resident agent for process to be served on them
in the state).
i. Disqualification [RSMo 473.140]
i.
Insanity
ii. Conviction of felony or other infamous crime
(Infamous crime- punishable by death, imprisonment
in state penitentiary; would include treason, forgery,
offenses affecting the public administration of justice).
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iii.
iv.
v.

Habitual drunkenness.
Unsuitability to act.
Conflict of interest.

3. How do you do it?

a. You have to prove death of the decedent- Death certificate.
b. Proving the Will
i.
File application for letters, will, and death certificate
in probate court.
ii. Prove prima facie validity of will by:
1. Will contains self-proving will affidavit signed by
testator, 2 witnesses and notary public [RSMo
473.065(1), 474.337] OR
2. Ex parte testimony of 2 witnesses to testators
signature [RSMo 473.053] (The statute provides
that if you cannot find both witnesses, you can
have one witness and prove up the handwriting of
the second witness).
iv.

Notice
1. #3 & #5 of the Probate Process.
2. Interested people have to be given notice of the opening of probate
and that any claims have to be brought within 6 months (filing of a
will contest).
3. This includes heirs, distributees, creditors, etc.
4. Any interested person can file a will contest.
5. Notice- RSMo 473.030, .033
a. Newspaper notice by personal representative: once a week for
four consecutive weeks.
i.
This is the way it used to be.
ii. There is statutory notice for the language that must be
published.
6. Notice- RSMo 474.030, .033
a. Copy mailed to known heirs & devisees (any to any person
filing request for notice with the clerk of the court). Starts
running of 6 month non-claim statutes for filing alleged later
wills, will contests, and claims [RSMo 473.050, .083, .
360(1)-(2)]
b. Copy may be mailed to creditors [RSMo 473.033]. Starts
running of 2 month non-claim statute
c. Later of 6 month and 2 month periods controls.

v.

Statutes of Limitation Against Creditors

1. General Statute [RSMo 516.120(1)]; Suits to collect upaid debts
must be filed within 5 years of date of debt due date.
2. Special Probate Statute
a. 6 Month Statute [RSMo 473.360]: Claims of creditors must
be filed with executor within 6 months after date when notice
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of granting letter testamentary or of administration is first

advertised in the newspaper.
b. 2 Month Statute [RSMo 473.033]: If mail notice is given to
creditors, claims must be filed within 2 months of mailing.
c. 1 Year Statute [RSMo 473.444]: claims of creditors must
be filed within 1 year after date of decedents death.
i.
Regardless of when notice is given [RSMo
473.033]
ii. Dont have to give notice to creditors, but then the six
month statute doesnt apply and the one year notice
requirement is controlling
vi.

Personal Representative
1. Has a duty to maintain the estate and manage any family business
during the pendency of probate.
2. This is a fiduciary obligation- Identical to a trustee to the trust
objects.
3. Can be removed for mismanagement before the probate of the estate
is complete.
a. Example- If the personal representative drags their feet in
completing the probate of the estateGross mismanagement;
Some courts will make the executor pay the excessive amount
because of the delay in the probate proceeding.
4. You can make partial settlements before the end of probate. Just
have to get permission from the court to do this.

vii.

Duties of Personal Representative

1. Inventory decedents assets [RSMo 473.233].
2. Sell assets to generate cash for payment of debts & assets [RSMo
473.460]
a. Order of sale determined by court order- RSMo 473.493, .
500.
b. Statutes require that you sell personalty first and realty
second.
c. The persons can buy treasured items and then give cash to the
estate in replacement of itThere are statutes that authorize
this.
3. Invest cash in reasonable & prudent investments- RSMo 473.333
a. These have to be approved by the court.
4. Partial settlement reports- RSMo 473.540, .543
5. Pay claims of creditors- RSMo 473.570
a. They get paid after the non-claim period has expired.
6. Distribute legacies- RSMo 473.610, .613
7. Final settlement, distribution & discharge- RSMo 473.587, .597, .
617, .660
8. Everything that the personal representative does have to be done with
the approval of the court with the exception of U.S. bonds and
savings and loan accounts.
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viii.

Order of Claim Payment [RSMo 473.397]- These come before

distributing the net assets of the estate.
1. Costs (court fees).
2. Expenses of administration (executors fee, lawyers fee,
accountants fee, appraisers fee, etc.).
3. Exempt property, family allowance, homestead allowance.
4. Funeral expenses.
5. Debts & taxes due to federal government.
6. Expenses of last sickness, wages of servants (employees), reasonable
cost of tombstone.
7. Debts & taxes due to state or local government (including welfare
costs- RSMo 473.398).
8. Judgments rendered against decedent or his property during his
lifetime.
9. All other debts (this means unsecured debts) (secured creditors can
execute their liens [RSMo 473.368(3), .387]).
10. If the surviving spouse elects against the will, they will be treated as
a distributee or heir under will (behind the claims of creditors) (THIS
IS AN IMPLIED #10).

ix.

Executors Fiduciary Responsibilities

1. Exercise normal business judgment.
2. Exercise good faith & prudence.
3. Preserve the estate from depletion.
4. Cannot delegate responsibilities.
5. Expeditiously settle the estate & distribute the assets.

c. Is Probate Necessary?
i. Functions of Probate
1. Proving the validity of a will.
2. Collecting the decedents assets.
3. Paying the decedents creditors.
4. Paying state and federal estate taxes.
5. Identifying the heirs or devisees.
6. Title clearing: Transferring the estates assets.
ii.

Alternatives to Probate
1. Family Settlement Agreement (formal or informal)
i. Allowed in majority of states
ii. Can either implement inheritance/will or make a different
distribution
iii. Not mentioned in statute recognized by common law
iv. Prerequisites:
1. all parties interest in the estate must agree
2. all such parties must agree that there should be no
probate
3. no non-contracting parties can be prejudiced
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2. Refusal of Letters Procedure [RSMo 473.090-.091] (small estates)

3. Collection by Distributees by Affidavit [RSMo 473.097] (small
estates)
iii. Refusal of Letters [RSMo 473.090-.091]
1. Purpose: Avoid probate where exemption and allowances excess
value of estate.
a. Exemptions and allowances come before the creditors and all
other distributions of the assets.
b.
Have to show that the estate is smaller than the exemptions
and allowances (allowances including the surviving spouse
allowance and the family maintenance allowance).
2. Granted to surviving spouse or unmarried minor children.
3. If no surviving spouse or unmarried minor children, granted to
creditors (if value of estates does not exceed $15,000).
4. Attorney not required for application.
5. No reference to 2 or 6 month non-claim statutes.
a. Presumably 1 year non-claim statute applies.
iv. Collection by Distributees by Affidavit [RSMo 473.097]
1. Purpose: Distribute small estates where no one applies for probate (if
net value of estates does not exceed $40,000).
2. Granted to any distributee who agrees to pay debts, inventory assets,
and identify distributees.
a. Available whether or not will exists and has been admitted to
probate.
b.
Provided letters testamentary or of administration, or refusal
of letters, has not been granted.
3. Notice referring to 1 year non-claim statute required if value of
estates exceeds $15,000.
v. Independent Administration
1. One of the reforms the Uniform Probate Code recommended was an
alternative method to probate.
2. Essentially you authorize the executor to do all of the stuff they have
to do without judicial approval with certain exceptions. You need
approval for:
a. Letters of administration, etc.
b.
Will contest issues.
c. Creditor claims issues.
3. RSMo 473.780 & subsequent sections- MO enacted this
recommendation.
d. Universal Succession
i. Has not been enacted anywhere but California.
ii. Skips administration entirely and gives title to the heirs or residuary
devisees, subject to the claims of creditors and any other devisees.
iii.
This is a reform that could be adopted sometime in the future.
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C. AN ESTATE PLANNING PROBLEM- CB 46; NOTES 7-9, 12.

1. The Clients Letter and Its Enclosures
2. Preliminary Questions
3. Additional Data on Family and Assets
a. Family Data
b.
Assets
c. Liabilities
d.
Assets & Liabilities: Summary
4. Professional Responsibility
a. The lawyer is primarily responsible to his client. That responsibility normally
ends when the client dies.

II.

b.

Attorney Malpractice Test- Modified Balancing Test- MO Supreme Court

adopted in 1995
i. The existence of a specific intent by the client that the purpose of the
attorneys services was to benefit the plaintiffs.
ii. The foreseeability of the harm to the plaintiffs as a result of the
attorneys negligence.
iii.
The degree of certainty that the plaintiffs will suffer injury from the
attorney misconduct.
iv. The closeness of the connection between the attorneys conduct and the
injury.
v. The policy of preventing future harm, AND
vi. The burden on the profession of recognizing liability under the
circumstances.

c.

Obligation to update clients when the law regarding wills and estate planning
issues changes?
i. If you have no continuing relationship with the client, there is likely not
a duty.
ii. If you do have a continuing relationship with the client, you probably do
have a duty.
iii.
One way many firms deals with the problem is by sending newsletters to
their clients with updates in the law.

INTESTACY: AN ESTATE PLAN BY DEFAULT

A. THE BASIC SCHEME
1. Introduction
a. Missouri Intestacy Succession [RSMo 474.010]
i. Is there a surviving spouse?
1. If there is a surviving spouse, and no surviving issue, then the
surviving spouse takes all.
2. If there is a surviving spouse and surviving issue (all of whom also
are issue of the surviving spouse), then the surviving spouse takes the
first $20,000 plus one-half of the balance.
9

3. If there is a surviving spouse and surviving issue (one or more of

whom are not issue of the surviving spouse), then the surviving
spouse takes one-half.
ii.

b.

The part not distributable to the surviving spouse, or if none, all of the
estate shall descent in the following order:
1. To children, or their descendents, in equal parts.
2. If none of the above, to parents, siblings, and their descendents, in
equal parts.
3. If none of the above, to grandparents, uncles & aunts, and their
descendents, in equal parts (This means uncles & aunts in the
lineage, not their spouses).
4. If none of the above, to great-grandparents, and their descendents, in
equal parts.
5. And so on to the nearest lineal ancestors and their children, and their
descendents, in equal parts; provided that collateral relatives (persons
neither lineal descendents, not lineal ancestors) must be related at
least as closely as the ninth degree (civil law) in order to take.
6. Kindred of the spouse (although he/she did not survive) as if the
spouse had survived D (If there is more than one predeceased spouse,
then to the kindred of each predeceased spouse, in equal shares).
7. Escheat (to the state education fund).

Presumption of Death
i. Death certificate is prima facie evidence of the fact of death and the
immediate cause of death.
1. RSMo 472.290(1); State v. Fakes, 51 S.W.3d 24 (Mo. App. 2001).
ii. Presumption of death (rebuttable)
1. Common law: disappearance for 7 years.
2. Statutory- RSMo 473.697- Any of the following circumstances:
a. Absence from last known domicile in state for 5 years.
b. Resident of state has gone from the state and has not returned
for 5 years.
c. Resident of state conceals or conducts self so as not to be
heard from for 5 years.
3. This does not cover non-residents.
4. This is the biggest exception.
5. You can start probate of that persons estate when the 5 years have
elapsed.
iii.

Probate of Absent Persons Estate [RSMo 473.697 et. seq.]

1. Letters of administration may be obtained only after 5 years absence.
RSMo 473.697.
2. Newspaper notice of application for letter must be published for 4
consecutive weeks. RSMo 473.703.
3. Hearing on presumed death held not less than 2 weeks after last
publication of newspaper notice. Id.

10

4. Once probate court makes finding of presumed death, newspaper

notice of such finding must be published for 4 consecutive weeks.
RSMo 473.703.
a. Notice gives 12 weeks of putative decedent to respond or for
him or other person to produce evidence that putative
decedent is alive or has been heard from in less than 5 years.
Id.
5. If not evidence that putative decedent is alive is produced by the end
of 12 week period, letters of administration will be issues. RSMo
473.703.
6. Distributees must post bond equal to value of distributed property.
RSMo 473.713.
a. This enables putative decedent to recover against the bonds if
the property cannot be recovered.
7. Probate of absent persons estate is terminated and letters of
administration are revoked if satisfactory proof is received during
probate that absent person is alive. RSMo 473.710.
a. Putative decedent can recover property already distributed to
distributees. Id.
2. Share of Surviving Spouse
a. Are common law spouses entitled to inheritance?
i. In Missouri, they are not.
ii. In states that recognize common law marriage, the surviving spouse will
take the inheritance.
iii.
(Sometimes we have to worry about common law marriages that were
created elsewhere and moved here).
b.

What if H & W were legally separated when H died?

i. W would still take.
ii. Only divorce cuts off the surviving spouse share.

c.

Same-Sex Partnerships
i. Vermont is the only state that has recognized these rights.
ii. It is too soon to know if other states will end up following Vermont.

d.

Simultaneous Death
i. Sometimes there is a question about the timing of the spouses death.
Most common when spouses die in a common car or plane accident.
ii. The issue is not limited to husband and wife; this comes up anytime the
decedent gives the other person any interest in their will. When both of
them die, the property has to go to someone else.
iii.
This is important where the first to die gives property to the second. The
question is who is first and who is second.
iv.

Purposes of the Uniform Simultaneous Death Act [RSMo chap. 471]

1. Create a rebuttable presumption about the order of death.
2. Avoid double probate.
11

3. Assure that property descents through testators lien rather than

through the beneficiarys line.
4. Cause devolution of estate to be more likely in accord with probable
intent of decedent.
v.

vi.

Presumptions Under Uniform Simultaneous Death Act [RSMo

471.010, .020, .040]
1. Decedent survives heir or distributee.
2. Decedent insured survived insurance beneficiary.
3. Each joint tenant survives with respect to one-half of the joint
property.
When drafting a will you need to deal with the question of what you
want to happen when the first person predeceases or both spouses die
simultaneously.
1. Can specify in the will how long the other person needs to survive in
order to take under the will.
2. MO has adopted the 120 hour survival statute.

3. Shares of Descendants
a. SEE ABOVE.
b.
Negative Disinheritance.
4. Shares of Ancestors & Collaterals
a. Table of Consanguinity- CB 92
i. This table shows the degrees of relationship.
ii. In MO we only go to the 9th degree.
b.
c.

Half-Bloods
See problems in Handout diagrams.

B. TRANSFERS TO CHILDREN
1. Meaning of Children
a. Posthumous Children
i. Born after the death of the putative father.
ii.

Posthumous Child Rule

1. Posthumous child or descendent is heir as if born before the death of
the deceased [RSMo 474.050] (Rule does not apply to collaterals.
2. Must be born within 300 days of deceaseds death [RSMo
210.822(1)]. Thereafter, paternity must be established affirmatively.
3. Rebuttable presumption that baby is deceased husbands child. [Id.]
a. Exceptions: Husband could not be childs father. E.g.,
deceased was sterile or out of the country.
b. Presumption also can be rebutted by medical evidence.
c. Presumption does not apply to unmarried putative father,
unless couple attempted to marry (see id.).
12

d. Missouri requires a standard of clear & convincing evidence

to rebut this presumption.
4. Age of parents is not relevant.
5. Premature baby problems
a. Age of the baby does not matter as long as the baby is born
within 300 days of the death of the putative father.
b. If the baby is born in less time than that, the presumption still
stands but the presumption can be rebutted.
iii.

iv.
v.

Medical technology makes posthumously conceived child possible.

1. Artificial insemination from frozen sperm or ovum.
2. Frozen embryo.
3. Surrogate mother.
Posthumous child rule could be interpreted as requiring conception and
implantation to occur before decedent parents death.
Use of genetic material after decedents death does not create parenthood
by decedent.
1. Hecht case.
2. Uniform Status of Children of Assisted Conception Act 4- Not
enacted in Missouri.

vi.

Basic rule- If the husband has consented to artificial insemination, the

husband is considered the father of the child.

vii.

Paternity- RSMo 474.060(2)

1. Illegitimate child cannot inherit from father, only from mother.
2. Can inherit from father if:
a. Parents marry or attempt to marry before or after birth.
RSMo 210.822(3) adds requirement or acknowledgement of
paternity for marriage after birth (probably only has to be an
oral acknowledgement).
b. Paternity is established by adjudication before death of father.
c. Paternity is established after death of father by clear and
convincing evidence.
d. Written acknowledgement of paternity is filed with Bureau of
Vital Records (added by RSMo 210.822(3)).

b. Adopted Children
i.

Adopted Children- RSMo 474.060(1)

1. Parent-child relationship is established [RSMo 210.819(3)].
2. Adopted person is child of adopted parent(s).
a. Relationship with natural parents is cut off.
3. Adoption by step-parent cuts off relationship with natural parent of
same sex.
4. Relationships with relatives of cut-off natural parents are also cut off.

ii.

MO Adoption Statute- Adult Adoption

1. No bar in Missouri against adopting an adult.
13

2. The question of whether it will hold up for probate purposes and

other legal purposes is another question.
iii.

Equitable Adoption
1. Elements
a. Adoptive parents take adoptee into home. Oral agreement
between the natural parents and the adoptive parents is
implied by conduct. Mere legal custodian does not have the
capacity to consent.
b. Surrender of custody of adoptee to adoptive parents.
c. Performance by adoptee by living with adoptive parents.
d. Performance by adoptive parents by taking adoptee into their
home, and by treating and recognizing adoptee as an adopted
child.
e. Failure by adoptive parents to formalize the adoption.
2. Courts hold adoptive parents are estopped to deny adoption; adoptee
is treated as heir of adoptive parents.
3. Adoptive parents cannot inherit from equitable adoptee.
a. Unclean hands- This is what quite a few courts say.
b. Are we always going to say no or are we going to look at the
circumstances? There are so few cases it is difficult to say.

c. Nonmarital Children
i. Neutral term for what used to be called illegitimate children.
ii. At common law such a child had no civil existenceThis has been
changed.
iii.
All states allow a child born out of wedlock to inherit from the mother.
RSMo 474.062
iv. Can inherit from the father if the paternity is established. See above
Paternity section.
v. LOOK FOR SLIDE!!
2. Advancements
a. Inter vivos transfer of property to heir.
b. At common law, presumed to be a prepayment of heirs intestate share.
i. Rebutted by evidence that it was intended as an absolute gift.
ii. Calculation of interest- Advancement + Estate = Hotchpot; heir gets
intestate share of hotchpot minus the advancement.
c. By statute, presumption is reversed; prepayment is presumed to be an absolute
gift, absent a contemporaneous writing to contrary [RSMo 474.090].
d. Law of advancements does not apply to distributions under wills (but see
law of satisfaction).
3. Managing a Minors Property
a. Transfers to Minors
i.
This is a structured way to make gifts to minors.
ii. It is almost more relevant to the law of trust, rather than the law of
probate.
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iii. Uniform Transfers to Minors Act

1. Sets up a custodianship that is similar to a trust.
2. This is how you can do a transfer to minors these days.
iv. Inter vivos or testamentary trusts
v. Testamentary guardianships- RSMo c. 475.
vi. CustodianshipsUniform Transfers to Minor Act- RSMo c. 404.
1. Allows transfer of any type of property.
2. Donee must be minor on date of gift (under 21).
3. Gift must be in form described by Act [RSMo 404.047]
4. Custodian trust is formed
a. Magic language: RSMo 404.049
b.
Custodian powers & liabilities: RSMo 404.051 (Duty of
care as trustee).
vii.
viii.
ix.
x.

Gift can be used only for expenses for minors benefit.

Custodian has discretion whether to make expenditure.
Balance of gift is to be paid to minor upon reaching the age of 21.
Gift is irrevocable.

b. Guardian for Minor Children

i. This is a very personal choice and circumstances can change regarding
who the guardian is going to be.
ii. When circumstances change, you just have to change the will to change
the guardian designated.
C. BARS TO SUCCESSION
1. Unworthy Heirs
a. Intentional killers of decedent.
b.
Spouse who divorces or abandons [RSMo 474.140].
i. In some states, a spouse who fails to support.
c. Aliens (non-citizen or non-citizen living here without the benefit of a green
card) no longer barred in any state.
i. But are barred from owning agricultural land in some states, including
MO. Some questions about the constitutionality of these provisions.
ii. This was challenged in 1995. The Court held that the challenge might be
valid because it denied the right to devise land to relatives/friends in
other countries.
2. Release of Expectancy
a. Release is a giving up of expectancy prior to the decedents death.
b.
Typically accompanies a gift from parent to child.
c. Bars releasor from sharing in the estate.
d.
Causes termination of heirship, not mere reduction of intestate share (unlike an
advancement).
e. Requires fair consideration (unlike an advancement).
f.

Three justifications for a release of expectancy

15

i. Contract
ii. Equitable estoppel (should not be able to take your portion now and ask
for it again later).
iii. Liquidated advancement
3. Transfer of Expectancy
a.
Transfer of expectancy prior to decedents death.
b.
Requires fair consideration. Cannot be result of overreaching against expectant
heir/devisee (i.e., by a creditor).
c.
Notice to prospective decedent/testator not required.
4. Disclaimer
a. Disclaimer is a giving up of an inheritance or devise after the decedents death.
i. At common law, heir/devisee cannot be required to accept.
ii. Any donative transfer, including inheritance & bequest by will, can be
disclaimed. [RSMo 469.010].
b.
Can be used to make post-mortem adjustments in decedents estate plan. To
produce tax advantages, to redistribute the estate, or to defeat creditors.
c. Disclaimant treated as predeceasing decedent. [RSMo 469.010].
d.
Disclaimer must be made in writing within 9 months of decedents death.
[RSMo 469.020(1)].
III.

WILLS, CAPACITY, & CONTESTS

A. MENTAL CAPACITY
1. Who can write a will?
a. RSMo, chap. 474 states who can write a will. [RSMo 474.310].
b.
Possible that some minors under statute may write a will. [RSMo 474.310;
emancipated minor].
2. Test of Mental Capacity
a. Testator must be of sound mind and memory.
i. Must not be a minor (must be over 17 years old). [RSMo 474.310].
ii. Plus certain emancipated minor [Id.] (beginning in 1999).
1. By adjudication, marriage or active military service.
b.
No minimum level of intelligence is required (except that level required to
obtain mental capacity).
c.
Testator must know and understand the significance of:
i. The nature and extent of his property.
ii. The persons who are the natural objects of his bounty.
iii.
The disposition he is making in the will.
iv. How those three elements relate so as to make an orderly plan for the
disposition of his property.
3. Insane Delusion
a. False belief.
b.
No rational basis.
c. Persistence in the belief in the face of contrary evidence.
16

d.

Must affect the disposition of the testators property.

B. UNDUE INFLUENCE
1. Susceptibility: Testator is susceptible to domination or excessive influence by another.
2. Opportunity: Person alleged to have exercised influence had the opportunity to exercise
it.
3. Disposition: Such person had a propensity to influence testators drafting of the will for
personal benefit.
4. Unnatural will: Provisions of the will appear unnatural and the result of undue
influence.
5. Ways to deal with unnatural distributions of assets (Protecting the will against contests)
a. Do not disinherit your natural bounty. Give them something substantial.
b.
Write a letter to natural bounty from decedent explaining the unnatural
distribution.
c. No Contest Clause- Only O.K. if you give something to the family; if there is a
contest and that person wins, they will not get anything under the will; gives an
economic disincentive to challenge the will.
d.
Probably not a good idea to have a lawyer (especially you as the attorney
making out the will [asking the question is leading, and undue influence])
e. ASK NO LEADING QUESTIONS
f.
Lawyer cannot be an attesting witness on a will he has drafted (conflict of
interest, lawyer has duty to defend the will)
6. Typical Sources of Undue Influence (where source is a beneficiary)
a. Favored child.
b.
Second spouse (re children of the first marriage).
c. Unmarried cohabitant or sexual partner.
d.
Lawyer.
e. Significant age difference in love relationship.
C. FRAUD
1. Elements
a. Misrepresentation of fact.
b.
Fact is material; relevant to testators estate plan.
c. Misrepresentation intended to affect testators disposition.
d.
Misrepresentation has that effect.
2. Forms of Fraud
a. Fraud that induces will. Example, CB 213.
b.
Fraud that prevent revocation of a will. Example, CB 213.
c. Fraud that induces the revocation of a will. Example, CB 215.
d.
Wrongdoer prevents making of the will (or a new will).
3. Remedy- Constructive trust in favor of the person adversely affected.
IV.

WILLS: FORMALITIES & FORMS

17

A. EXECUTION OF WILLS
1. Requirements
a. Will be in writing.
b.
Be signed by testator.
c. Be attested to by 2 or more witnesses (only variation between states is how
many witnesses- MO requires 2); Best practice- Have them all together and sign
at the same time.
2. Sources of Requirements
a. Statute of Frauds (1677); Wills Act (1837).
b.
RSMo 474.320.

3. Reasons for Will Requirements

a. Formal writing assures that a will is intended (ritual reason).
b.
Improve reliability of the evidence of the disposition.
c. Helps protect testator from undue influence and imposition by emphasizing the
importance of the act.
d.
Standardization of testation routinizes execution and reduces costs.
4. Attested Wills
a. Variations in Attestation
i. Relation of testator and witness:
1. Signing in presence of witnesses.
2. Acknowledgement of signature to witnesses.
ii. Witnesses knowledge of will contents.
iii.
Place of attestation (two separate tests)
1. Line of sight test: Testator must be capable of seeing witnesses.
2. Conscious presence test: Testator must be aware of attestation act.
(MO Rule)
iv. Signature or mark; proxy signature; 3rd party assistance
1. See below.
v. Location of testator & witness signatures
1. Normal location- the bottom of the document.
2. What if sign it somewhere else? That is fine. It matters that it is
intended to be the signature that the statute requires. The signature
can be anywhere.
3. Purposes of attestation:
a. Ritualistic, Protection, (Something else, see Book)
b. Bottom line- Always supervise your clients signing of the will and always have
the attesting witnesses there while it is done. Then immediately execute a selfproving will affidavit.
c. Interested Witnesses
i. States disagree whether signature of interested attesting witness is valid.
18

ii.
iii.

1. Interested witness is beneficiary under the will.

2. Named executor is not an interested witness.
Witness disability cannot be cured by disclaimer later.
In Missouri:
1. Attestation by an interested witness is valid.
2. Named executor is not an interested witness (this can be the lawyer).
3. Bequest to interested witness is purged down to intestate share,
unless will is also attested to by 2 other disinterested witnesses.
[RSMo 474.330(1)-(2)].

d. Establishing Prima Facie Validity of Will

i. Testimony of attesting witnesses
1. Testify that testator affixed signature in their presence, and that
testator appeared to have mental capacity and that he/she did not
appear to be subject to duress or undue influence [See RSMo
474.320].
2. Two attesting witnesses must testify, if alive, competent to testify,
and otherwise available [RSMo 474.053(1)].
a. If any witness is dead, surviving witness must testify and
signatures of testator and dead witness must be verified.
[RSMo 473.053(2)].
b.
If all witnesses are dead or cannot be found, all signatures
must be verified.
ii.

Self proving will affidavit [RSMo 474.337]

1. Affixed to the will at the bottom. Self proves the wills validity.
2. It is possible to do this later. Will need a notary to do this (easier to
do when they are all together the first time, instead of waiting until
later).

iii.

This just gets the will into probate. It does not act as an exclusive
presumption that the testator was of sound mind.
1. Will contests can still be fired.
2. Once you get to court you can deal with the substantive issues.

e. Recommended Method of Executing a Will- Self-Proving Wills

i. Is notarized certificate executed by testator and 2 attesting witnesses
[RSMo 474.337].
1. Certifies that the signatures are theirs, they signed in each others
presence, and testator appeared to be of age of majority and to have
mental capacity.
2. May be executed any time between will execution and death of
testator.
ii. Eliminates need for testimony of attesting witnesses to prove prima facie
validity of the will.
f. Safeguarding the Will
i. In safe deposit box
1. Considered most probable location.
19

ii.

iii.

2. Accessible only by testator. Possible problem is testator is joint

owner with a beneficiary or disinherited person.
At home
1. Risk of theft, fire, or accidental destruction.
2. Risk that survivors cannot find the will.
3. Too easy for testator to make informal alterations.
At lawyers office
1. Makes sense only if testator has ongoing professional relationship
with lawyer.
2. Otherwise, lawyer may not know testator died; survivors may not
know who lawyer is.
3. Risk that lawyer will retire and papers cannot be located.

g. Mistake
i. Two Types of Mistake
1. Mistakes in the inducement
a. Circumstances that the testator believes exist that do not that
may affect the will.
b.
These mistakes can sometimes be corrected as mistakes in
fact (but usually not).
2. Mistakes in execution
a. Wrong names of people, wrong identification of property,
typographical errors, omissions.
b.
Could result from misinformation from the testator.
c. Example- Signing the wrong will.
ii.

Mistake in Execution
1. Misidentification of property, wrong names of legatees,
typographical errors & omissions.
2. Correctable:
a. Misdescriptions where there is only one item or person who
fits the general description
i. Can use extrinsic evidence to resolve ambiguity.
ii. Cannot count on this being an available option. Most
times cannot change will unless in a state with
substantial compliance doctrine, and then it is maybe.
3. Not Correctable:
a. Mistakes involving actual testamentary intent.
b.
Mistakes of fact (and thus uncorrectable), unless there is
proof on the face of the will that:
i. Testator was acting under mistake of fact AND
ii. What testator would have done but for the mistake.

h. Doctrine of Substantial Compliance

i. In Re Will of Ranney Case- CB 252.
ii. This would not happen in Missouri (Missouri has no substantial
compliance doctrine)
5.

Holographic Wills
20

a.
b.
c.

d.

Written in testators own handwriting, and signed by testator. Must indicate

testamentary intent.
Need not be attested to by witnesses. Handwriting itself proves testamentary
intent, absence of undue influence, and absence of forgery.
Half of the states recognize holographic wills (generally in the south and west).
Not MO (no exception in RSMo 474.320). BUT MO WILL PROBATE
VALID HOLOGRAPHIC WILL FROM A STATE WHERE IT WAS
EXECUTED Uniform execution of wills ActSee below
Handwritten will, signed by 2 witnesses, is not holographic. It satisfies the usual
requirements of the Statute of Wills.

e.

Partially Holographic Wills

i. Partially handwritten partially printed/typewritten will, not signed by 2
attesting witnesses.
ii. Some states hold valid partially holographic wills, provided all material
provisions are in the testators handwriting.
1. E.g., devises/bequests & distributees, testators signature.
2. Those states disagree whether statement of testamentary intent must
also be in handwriting.
iii.
Form wills present a problem because statement of testamentary intent is
part of the boiler-plate printed form text.
iv. Some states (but not MO) have short form will statutes.

f.

Conditional Wills
i. Wills are presumed to be nonconditional, even when conditional
language is used (because it would presume conditional will, then
testator may die intestate).
1. Conditional language is assumed to be precatory.
2. Presumption is rebuttable by extrinsic evidence on purpose of
conditional language (i.e. merely motivational or truly conditional).
ii. If intended to be conditional at the time of will execution, later change of
mind cannot make will absolute.

g.

Noncupative Wills
i. Oral Will. Obviously violates the Statute of Frauds & the Statute of
Wills.
ii. Typically permitted where testator is in extremis, such as during
testators last illness, by military personnel in theater of war or by
mariners at sea.
iii.
Must be uttered before witnesses, who must reduce it to writing within a
short time.
iv. Recognized in some states.
v.

MO Noncupative Wills [RSMo 474.340]. Recognized only if testator

is in imminent peril of death
1. Must be declared before 2 disinterested witnesses.
2. Witnesses must reduce it to writing within 30 days of utterance.
3. Must be submitted to probate within 6 months of testators death.
4. Limited to disposing of $500 worth of personalty.
21

5. Cannot revoke or alter a prior written will; can revoke a prior

nuncupative will.
6.

Uniform Execution of Wills Act [RSMo 474.360]

a. Will is valid in Missouri if executed in compliance with:
i. Laws of MO,
ii. Laws of states where will were executed (as of time of execution)
iii.
Laws of state where testator was domiciled, had an abode, or was a
national:
1. At time of will execution.
2. At time of death.
b. That means a holographic will executed in another state could be probated in
MO. Would also be provided for under the Full Faith & Credit Clause, but this
Act takes care of it.

B. REVOCATION OF WILLS
1. Revocation [RSMo 474.400]
a. Two methods of will revocation
i. By a subsequent testamentary writing.
1. Whether revocation is by express language or implied by inconsistent
provision in later will.
ii. By a physical act destroying or mutilating the will (by or at the direction
or and in the presence of the testator)
1. E.g., by burning, canceling, tearing, obliterating.
2. Extent of mutilation and nature of presence are problems.
b. Wills cannot be revoked orally. [RSMo 474.340(3)].
c. Lost will is presumed revoked. Rebuttable by evidence of:
i. Destruction without testators intent AND
ii. Contents of the will.
2. Effect of Revocation [RSMo 474.410(1)]
a. Revocation by physical act or subsequent writing is permanent, and revoked will
cannot be revived.
i. Revocation of first will by second will remains effective even if second
will is revoked.
ii. Unless testators subsequent declaration or circumstances show contrary
intent.
b. Some states allow revival only by reexecution or republication.
c. Revocation of codicil revives inconsistent portions or underlying will (is MO
law contrary???).
d. Revocation of underlying will revokes all codicils.
22

3. Lost Wills
a. Lost will is presumed intentionally destroyed or revoked. Presumption is
rebuttable by evidence of unintended or accidental loss.
b. Lost will can be probated if there is evidence accurately establishing its
contents. Such as, an unsigned copy accompanied by verification that the
original copy was executed.
4. Partial Revocation [RSMo 474.410]
a. Some partial revocations are possible only by subsequent testamentary writings.
i. Reason: Partial revocation causes new gift to another, which requires
testamentary formality.
1. Missouri agrees [Oliver, 504 S.W.2d 627 (1974)].
2. Nonetheless, some states permit partial revocation by crossing out.
Missouri does not allow this (see above case reference).
ii. But partial revocation which only increases residuary legacy or
creates partial intestacy is permitted.
b. Partial revocation by physical mutilation invites fraud.
i. Nonetheless, RSMo 474.400 expressly allows partial revocations by
physical mutilation.
5. Dependent Relative Revocation
a. Rationale: Testator destroys or revokes first will in belief that second will if
effective; if testator had known second will was ineffective, he would not have
revoked the first will.
b.
Doctrine provides that such revocation is conditional or contingent on the
making of an effective second will.
c. Courts presume testator would prefer first will over intestacy.
d.
Presumption of rationale is rebuttable; when rebutted by evidence of
unambiguous revocation, first will remains revoked.
e. Doctrine is applied either:
i. When a mistake of factual premise is recited in revoking instrument OR
ii. Where there is an alternative plan of disposition which fails (situation in
the Carter case- CB 286).
iii.
In MO 251 SW2d 487
iv. MO Rule 474.410when a will is revoked it is not revived unless it is
re-executed, or republished unless the circumstances (contemporaneous
evidence) suggest that the testator intended to revive an earlier will
6. Revival
a. First Will: Revivable? [Assume earlier will, later will, codicil]
i. Later will is revoked by subsequent testamentary instrument:
1. Earlier will is revivable by revocation of later will only if testator
intends to revive earlier will (or circumstances allow such an
inference). Contemporaneous or subsequent declaration of intent to
revive needed.
ii. Earlier will is revoked by physical destruction or by later testamentary
instrument.
23

v.

b.

1. Revocation is permanent, unless revocation was conditional on

executing an effective later will.
Doctrine of dependent relative revocation provides that subsequent
revocation of later will is not effective if coupled with intent to revive
earlier will which proves to be ineffective.
1. Unless intent of testator (or circumstances suggest) at time of
subsequent revocation that earlier will should not be revived.

Will first, divorce second. RSMo 474.420- Automatic revocation of will

executed before a divorce.
i. Only applies to will; not pension plans, insurance plans, etc.
ii. In 1995 parallel provision that treats divorced spouses as civilly dead for
purposes of any non-probate transfers (this includes life insurance, etc.).

C. COMPONENTS OF A WILL
1. Integration of Wills
a. All papers present at time will is executed, and intended to be part of will, are
considered part of the will.
b.
Factual issue is whether disputed paper is part of will.
c. Evidence of integration:
i. Pages are physically fastened together.
ii. Consecutive pagination.
iii.
Language carrying over from page to page.
iv. Testators initialing and dating each page.
v. Internal coherence.
vi. No evidence of dismantling the will.
vii. No font changes.
viii.
Documents incorporated by reference are integrated.
2. Republication of Will by Codicil
a. Codicil is an amendment to existing valid will.
b.
Will is presumed republished & takes the date of codicil if codicil expressly
refers to will. This is draw down rule. MO recognizes this rule.
c. Hence, codicil can revive a revoked will.
d.
Such republished will takes codicils later date. Unless earlier date is necessary
to avoid defeating testamentary intent.
e. But, under the republication rule, codicil cannot make valid an invalidly
executed will. Will is not republished.
f.
However, void will can be made effective by being incorporated by reference
into later codicil.
3. Incorporation By Reference
a. Some states allow any document to be incorporated by reference if:
i. Document is identified in will.
ii. It exists at time will is executed, AND
iii.
Testator intends to incorporate it as part of the will.
iv. Also in Missouri (by case decision).
b.
Procedure:
24

i.
ii.
iii.
iv.
v.
c.

Document must be prepared before or at will execution.

Document should be dated, and mentioned in will.
Addresses should be identified in will.
Location of document should be specified in will.
Contends of document should be described in will.

Incorporation of personal property list [RSMo 474.333] (does not require

existence at the time of execution of will, but does require reference).
i. List can dispose of tangible personal effects.
1. Not intangible personalty, trade & business property.
2. Not those specifically disposed of in will.
3. Not property subject to certificates of title (e.g. cars)
ii. Can be prepared before, at, or after will execution.
iii.
List must be in existence at testators death.
iv. Prerequisites
1. Is referred to in will, AND is:
a. Written and signed in testators handwriting
b.
Dated AND
c. Describes items and legatees with reasonable certainty.

4. Acts of Independent Significance

a. Involves dispositions of property identified generically and/or to persons
identified by class.
b.
Extrinsic evidence can be used to identify that property and those beneficiaries.
c. Changes of specific items of property and of entry and exit of persons from the
class after will is executed do not work an ademption of the legacy.
i. Recognized in MO
ii. E.g., legacy of car- Testator owns Dodge when will is executed, but
sells Dodge and buys Olds later. Legatee gets Olds.
d.
Change in property must be made for non-testamentary reasons.
D. CONTRACTS RELATING TO WILLS
1. Contracts to Make a Will
a. Not considered testamentary.
b.
Usual prerequisites of contract law.
i. Proof of terms by clear and convincing evidence.
ii. Consideration.
c. If purpose is to devise realty, then must be in writing (Statute of Frauds).
Subject to part performance doctrine.
d.
Before 1981, oral contracts were valid in Missouri. Except contracts to devise
realty.
e. Beginning in 1981, Missouri requires all contracts to be in writing. [RSMo
474.155].
f.
Alternative forms of writing:
i. Provisions of a will stating the material terms of the contract.
ii. Express reference to a will to the contract + extrinsic evidence proving
the contracts terms OR
iii.
Contract in writing, signed by the decedent.
25

2. Contracts Not to Revoke a Will- Joint & Mutual Wills

a. Joint Will:
i. One instrument executed by 2 or more testators as the will of both [all]
of them.
ii. Probated each time one of the testators dies.
b.
Mutual Wills:
i. Separate wills executed by each testator which contain a smaller,
common or reciprocal provisions.
c. Joint will evidenced by We (plural) language. Often by husband and wife.
d.
Sometimes they are made pursuant to a contract and share a common dispositive
plan.
e. Revocable absent a contract not to revoke.
f.
No presumption that they are made pursuant to a contract not to revoke.
g.
Can second spouse elect against joint will executed by decedent & first spouse
pursuant to contract?
i. Missouri allows such elections, unless second spouse knew of will
contract before marriage.
h.

V.

Missouri recognizes joint & mutual wills. MO has also enforced a contract not
to make a will (but there has to be a contract, without a contract there is nothing
that prevents the revocation of the will).

WILL SUBSTITUTES: NON-PROBATE TRANSFERS

A. CONTRACTS WITH PAYABLE-ON-DEATH PROVISIONS
Types of Non-Probate transfers:
a. Life Insurance
b. pension accounts
c. bank, brokerage and mutual fund accounts with beneficiary designations
d. joint accounts
e. revocable inter vivos trusts
f. joint tenancies and tenancies by the entireties
g. revocable deeds
1.
2. Life Insurance
a. Form of payable-on-death (POD) contract.
b.
Unenforceable at common law because of testamentary purpose.
c. Enforceable today in all states; not an invalid testamentary disposition [RSMo
461.009].
d.
In Missouri, beneficiary must survive insured by 120 hours [RSMo 461.042].
i. Contract can change this time period. It is a default rule.
ii. Typically a default set of beneficiaries.
e. Beneficiary designated by insurance form.
3. Change of Beneficiary
26

a.
b.
c.
d.

At common law, beneficiary change for life insurance, bank accounts and other
POD contracts can be made only by change of beneficiary form, not by will.
But some states allow such changes to be made by contemporaneous or
subsequent will.
Missouri Non-Probate Transfers Law requires use of a change of beneficiary
form. RSMo 461.033(4)- Unless the original beneficiary designation
authorizes a change by will.
If the insured is divorced from his/her spouse, does that terminate the
beneficiary designation to that spouse?
i. Used to be no. That rule only applied to will and nothing else.
ii. Now, have the same provision in the Uniform Non-Probate Transfers
Law that does apply to life insurance contracts. [RSMo 461.061].

B. JOINT BANK ACCOUNTS

1. Proceeds of joint bank account paid to survivor [RSMo 362.470 (banks); RSMo
369.174 (savings and loans].
2. But, survivorship right subject to type of joint bank accounts:
a. Conventional: Both joint owners use account and have survivorship.
b.
Convenience: Second owner has only management authority.
c. POD: Second owner takes balance only on first owners death; no right to
withdraw during life of first owner.
3. Type of account determined by the intent of the parties.
4. POD account beneficiary designation overrides any contrary will provision. [RSMo
362.471(5)].
a. Such designations can be changed only by a change notice to the bank (unless
original designation authorizes changes by will) [RSMo 461.033(4)].
Effective 1989. Could be changed by will before 1989 [old RSMo 461.017].
b.
States divided whether donee owner can withdraw funds before death of donor
owner.
C. JOINT TENANCIES
1. Joint tenancy cannot be devised by any joint owner except the last survivor.
a. Because it passes to survivor(s).
b.
Unless it is severed inter vivos into a tenancy in common. (by voluntary or
involuntary severance).
2. Severance of a Joint Tenancy
a. Voluntary or involuntary severance:
i. Tenancy by the entireties- Not possible.
ii. Joint tenancy- By one joint owner (by conveyance or encumbrance).
iii.
Tenancy in common- Already severed.
b.
Severance by Divorce
i. Tenancy by the entireties:
1. UPC 2-804(b)(2): Converted to tenancy in common. Bank
accounts: UPC 6-211(b)- Own in proportion to net contribution to
account.
2. Common law: Converted to joint tenancy (severable).
ii. Joint tenancy:
1. UPC 2-804(b)(2): Converted to tenancy in common.
27

2. Common law: Unaffected by divorce.

D. MISCELLANEOUS
1. Testamentary Deeds
a. Inter vivos deed not revocable.
b.
Deed purporting to be conditional or revocable invalid at common law.
c. Deed to take effect on death of grantor is invalid testamentary disposition at
common law.
d.
Today, in Missouri, deeds to take effect on death of grantor are valid and
enforceable. Provided the deed is recorded before the grantors death. [RSMo
461.025(1)].
2. Gifts
a.
b.
c.

Elements: donative intent, delivery, acceptance. (Delivery: actual or

constructive)
Gifts inter vivos: irrevocable ab initio.
Gifts causa mortis: made in contemplation of death.
i. If contemplated death ensues, gift is perfected.
ii. If donee does not so die, gift becomes revocable.

3. Testamentary Pour-Over Trusts

a. An inter vivos trust into which a will adds assets; administered as a single entity
with combined assets.
i. At common law before 1960s, its validity under the Statute of Wills was
questioned.
ii. Since 1960s, Missouri and other states treated trust amendments,
including asset additions, as acts of independent significance.
b.
Uniform Testamentary Additions to Trust Act [MO enacted in 1983- RSMo
456.432]
i. Trust must be created before or after will creation.
ii. Trust must be identified in the will.
iii.
Trust must be in writing.
iv. Trust may be amended or revoked after will execution, delivery of trust
instrument, or death of testator.
v. Oral revocation or amendment is O.K. (as long as it does not involve
realty).
vi. Revocation or termination of trust causes will pour-over to lapse.
4. Missouri Pour-Over Trusts [RSMo 456.232]
a. Creation:
i. Trust must be in writing, and identified in will.
ii. Trust can be created before or after date of will creation. (1962-1980
case law allowed later creation).
iii.
Trust may be unfunded at creation. It is sufficient for trust corpus to be
created by the pour-over from the will.
b.
Modification or Revocation
i. Trust may be modified or revoked after will execution, in writing or
orally.
28

ii.
iii.

1. At common law, later modifications or revocation violated Statute of

Wills; trust involving realty had to be in writing under Statute of
Frauds.
Revocation causes lapse of devise/legacy to trust.
Divorce causes lapsing of trust for divorced spouse and spouses
relatives. [RSMo 461.001, .051].

5. Durable Power of Attorney

a. Has to do with making medical decisions when you are no longer competent to
make them yourself.
b.
A spouse always has the authority to make those decisions.
c. Related to probate- One of things to talk to your client about when setting up a
will.
d.
Part of estate planning- What do you do if you are not capable of making
decisions in the last part of your life?
e. Something to put on the checklist to talk to clients about.
VI.

CONSTRUCTION OF WILLS
A. ADMISSION OF EXTRINSIC EVIDENCE
1. Interpretation of Wills- Plain Meaning Rule
a. Language in will interpreted according to:
i. Ordinary words: accepted conventional definitions.
ii. Legal terms: accepted legal meaning.
b.
Cannot be varied by introduction of extrinsic evidence.
c. Personal usage exception: Extrinsic evidence can be introduced to show testator
habitually used a particular word or phrase to have a nonordinary meaning.
d.

RSMo 474.430- Courts will give effect to the intent of the testator (this does
not mean the plain meaning rule will not be applied in Missouri).

2. Ambiguities
a. Patent ambiguity: an uncertainty appearing on the face of the will.
i. Extrinsic evidence can be introduced to resolve ambiguity (but not
testators oral declaration).
ii. But nonambiguous words cannot be rendered ambiguous by introduction
of extrinsic evidence.
iii.
Missouri adopts this approach.
b.
Latent ambiguity: seemingly unambiguous language when applied to facts are
rendered ambiguous.
i. E.g., 2 or more persons or things answer the description in the will.
ii. E.g., no person or thing fits description in will, but 2 or more persons or
things partially meet description.
iii.
E.g., testators actual use of unusual meaning of language.
iv. Extrinsic evidence can be introduced to resolve ambiguity.
v. Missouri adopts this approach.
29

c.

Summary of Ambiguities
i. No ambiguity on face of will or its application: Patent ambiguity rule
forbids the use of extrinsic evidence to create ambiguity.
ii. Ambiguity on face of will: Patent ambiguity rule allows use of extrinsic
evidence to resolve the ambiguity.
iii.
Ambiguity in application of wills language: Latent ambiguity rule
allows use of extrinsic evidence to resolve ambiguity.

3. Correcting Mistakes
a. Bequest to Animals
i. Cannot make bequests to animals themselves.
ii. Can give to a trust for the benefit and care of the animal (for the animals
life). Then specify who gets the money when the animal dies.
iii.
MO Statute- Drafted in the age of the Rule against Perpetuities
1. Maximum period for trust for animals- 21 years.
2. RAP abolished; the legislature will likely not change the length.
b.

Scriveners Error
i. Extrinsic evidence cannot be introduced to establish scriveners error
absent a patent ambiguity.
ii. Reasons:
1. Presumably testator reads will before execution. Error is only in
the minds of the potential beneficiaries.
2. Contrary rule would invite too many will contests.
iv. Moral: Testator should always read will before execution in part to catch
any scriveners errors.

B. DEATH OF BENEFICIARY BEFORE DEATH OF TESTATOR

1. Survival Statutes [RSMo 474.455]
a. Devisee must survive testator by 120 hours to take under will.
i. Otherwise devisee is treated as predeceasing.
ii. Wills survival provisions preempts statute.
b.
Same policy is incorporated re:
i. Intestate heirs- RSMo 474.015.
ii. Taking under anti-lapse statute- RSMo 474.460.
iii.
Stock, bonds, insurance, pension plans & other nonprobate transfersRSMo 461.042.
c. No analogous statute for joint tenancies- RSMo 461.042(3).
2. Anti-Lapse Statue
a. At common law, bequest to predeceasing beneficiary lapses and passes under
residuary clause or intestacy.
b.
Anti-lapse statutes provide for substitute beneficiaries.
i. Typically, descendent of beneficiary takes.
ii. Subject to preemption by will clause providing for same.
c. Types of anti-lapse statutes
i. Predeceasing beneficiary must be testators child or descendent.
30

ii.

d.
e.

Predeceasing beneficiary must be testators child, descendent, sibling or

descendent of sibling.
iii.
All beneficiaries, regardless of relationship with testator.
RSMo 474.460: Predeceasing beneficiary must be testators child, descendent
or relative.
Failed bequest becomes part of residuary clause [RSMo 474.465]. Residuary
beneficiaries take as a classSurvivors take.

3. Operation of Anti-Lapse Statues

a. If intended beneficiary, who predeceased is:
i. Type 1: Testator child or descendent.
ii. Type 2: Testator child, descendent, sibling or siblings descendent.
iii.
Type 3: Any person.
iv. Missouri: Testator child, descendent or relative [RSMo 474.460]
b.
Then devise/bequest goes to intended beneficiarys child or descendent.
c. Otherwise, devise/bequest passes under residuary clause (or by intestacy).
4. Class Gifts
a. A gift to a closed or open group of persons specified by some group designation.
b.
Is there a gift to a class? What to look for.
i. Class gift terminology- e.g., to my nieces, not to Diane & Sue
ii. Common factors among named beneficiaries- e.g., same degree of
kinship to testator.
iii.
Purpose of gift (e.g., to keep stock in the family).
c. How is the gift to be divided? (Usually equally).
i. Class gifts probably can be done in unequal shares (no case law to
support; must draft it carefully).
d.
At what point in time do we define the class members?
i. Affects entry of after-born class members. In MO gifts to children that
are born after the will is executed.
ii. When will is executed? Or when testator dies? Usually when the
testator dies.
5. Anti-Lapse Statutes & Class Gifts [RSMo 474.460]
a. At common law, shares of predeceased class members go to surviving class
members.
b.
Most states, including Missouri, apply anti-lapse statute to class gifts.
i. Shares of predeceased.
ii. Only if predeceased class member has no descendents does share pass to
surviving class members.
c. In Missouri the anti-lapse statute applies to the class gifts situation.
i. This is by case decision.
ii. If the particular predeceased class member does not have descendents,
that persons share lapses and goes to the other class members.
6. Class Gift Problems
a. Gift to A and children of B
i. Majority Rule: Individual gift to A, class gift to children of B.
ii. Minority Rule: Constitute one class.
31

b.

iii.
Expressed intention of who is to be a member of the class prevails.
Does class designation include person dead at will execution? Courts take 3
positions:
i. Anti-lapse statute applies only to lapse gifts, not void gifts (i.e., only to
persons dying between will execution and testators death).
ii. Person dead at will execution not intended to be within the class (i.e.,
same result).
iii.
Anti-lapse statute is intended to equalize distribution between testators
relatives (i.e., such dead persons included in the class).

C. CHANGES IN PROPERTY AFTER EXECUTION OF WILL: SPECIFIC & GENERAL DEVISES

COMPARED
1. Ademption
a. Occurs when specified item no longer forms part of estate at testators death. By
consumption, loss, destruction, substantial change, sale, or other alienation
subsequent to will execution.
b.
Specified gift cannot pass, because it no longer exists; no substitute property
passes in its place. Court will not trace assets derived from sale or conversion of
specified asset (unless change is nominal).
c. Such a gift is adeemed by extinction Regardless of motive or reason for asset
no longer being in the estate.
d.
Ademption occurs only to specific legacies, not to general legacies or to
demonstrative legacies.
i. Specific legacy is a gift of a particular asset.
ii. General legacy is not a gift of a particular asset, but is a conferral of a
general benefit (e.g., a sum of money).
iii.
Demonstrative legacy is a conferral of a general benefit to be funded
from a particular source (e.g., a sum of money from a particular account)
1. If the source is sufficient, that source must be used.
2. If the source is insufficient, other assets must be sold to make up the
balance.
e.

Missouri recognizes specific devises and bequests with regard to ademption.

2. Stock Splits & Dividends, Mergers

a. In a majority of states, stock split is treated as change in form, not substantive
change; no ademption; stock split inures to benefit of legatee [RSMo 474.463].
b.
Stock dividend is a distribution of profits; is treated like cash dividend; as new
asset, estate, not legatee, gets them. In a minority of states (MO is a minority
state; UPC also adopts the minority rule), stock dividend is treated as a
capitalization of accumulated surplus, which insures to existing shareholders; as
part of original investment, legatee gets them. [RSMo 474.463].
c. New shares issued to replace old ones after merger, consolidation, or
reorganization insures to the benefit of legatee; represents same investment.
[RSMo 474.463].
d.
RSMo 474.463: Legatee of stock gets same proportionate interest in corporation
as number of shares specified in will represented at the time of will execution.
32

3. More On Specific & General Devises

a. Abatement [RSMo 473.620]
i. If there is not enough property to pay exemptions & allowances, claims,
taxes, or legacies, etc., assets will be sold in the following order:
1. Property not disposed of by the will (intestate property).
2. Residuary devises & legacies.
3. General legacies.
4. Specific devises & legacies.
ii. Devises of same category of legacies abate proportionately.
iii.
No priority is made between realty & personalty in each group (i.e.,
residuary, specific, etc.)
1. But see RSMo 473.460, which requires abatement of personalty
first and realty second to pay obligations (i.e., realty). Mean all
personalty through all categories, then realty second for all
categories? Or personalty then realty for each category separately?
2. Most people follow regular abatement statute [RSMo 473.620] and
just do not follow this one [RSMo 473.460].
3. This is a default rule.
b. Exoneration
i. At common law, devisee took property free from mortgage; estate (i.e.,
legatees) paid balance of security interest.
1. Also contract to sell causes equitable conversion which works an
ademption; devisee must gorge title, but legatees get purchase price.
ii. Most states have changed the rule: Devisee takes subject to security
interest (and pays it in due course).
1. General directive in will to pay debts does not alter rule.
2. Will directive to pay that security interest preempts the rule.
3. Also, under contract of sale, devisee gets purchase price.
iii.

RSMo 474.450: Devisee takes subject to mortgage created before will

execution, but free from mortgage created after will execution;
exoneration applies in the latter situation.
1. Follow UPC non-exoneration rule.

iv.

RSMo 474.440: Devisee takes subject to contract.

1. Statute does not specify who gets the purchase price.

b. Satisfaction
i. At common law, any inter vivos gift to child is presumed to be in
satisfaction of the legacy.
1. Is analog to intestate advancement.
2. Presumption is rebuttable.
3. Substitute special gifts are not treated as satisfaction.
4. Doctrine applies only to gifts to testators child. Theory is to prevent
inter vivos gifts from skewing estate distribution to those children.
ii.

Most states have reversed the rule; inter vivos gifts (to any person) is
presumed to be in addition to the legacy.
33

1. Unless satisfaction is specified in will or contemporaneous writing or

donee acknowledges satisfaction in writing. [RSMo 474.425].
2. RSMo 474.425 applies to gift in satisfaction to any person.
VII. RESTRICTIONS ON THE POWER OF DISPOSITION: PROTECTION OF THE SPOUSE &
CHILDREN
A. RIGHTS OF THE SURVIVING SPOUSE
1. Introduction to Marital Property System
2. Rights of Surviving Spouse to Support
a. Social Security
b.
Private Pension Plans
c.

Exemptions & Allowances

i. Type Types- Secures homestead and typical family personalty, and 1year living allowance to family (Homestead, Personal Property & Living
Allowance)All of these come off the top before the rest of the
testators assets are probated.
1. Exempt from all unsecured claims of creditors.
2. Taken ahead of testate or intestate distributions.
3. Surviving spouse takes all; if none, then surviving unmarried
children share equally.

d.

Homestead Allowance
i. Intended to secure family home to surviving spouse and surviving
unmarried minor children.
1. Most states have a monetary limit, which inflation has rendered
inconsequential.
ii. RSMo 474.290: Homestead allowance to of value of the estate, not
to exceed $15,000.
1. Surviving spouse or minor children may select from what it takes
(doesnt have to be the house).
2. May consist of realty or personalty.
3. Offset against intestate or testate share (if you get a lot of money out
the estates, then the amount is offset).???

e.

Exempt Property (Personal Property Set-Aside)

i. Certain personal property distributed to surviving spouse or surviving
unmarried minor children.
ii. RSMo 474.250: Grants absolutely specified personalty to surviving
spouse or minor children:
1. Family bible, books, 1 car or pickup truck, family clothing,
household and family furniture, appliances, utensils and implements,
musical and amusement instruments.
iii.

Note, in Missouri, property within household (acquired during the

marriage) is presumed to be held by tenancy by the entireties.
34

1. This is by case law, not by statute.

2. This importance is not that it changes what actually happens it does
affect where you plug various items in the calculation of the estate.
Important to place things in the right pigeon hole.
3. Therefore in Missouri the only applicable items are items that were
not acquired during the marriage.
f.

Family Maintenance Allowance

i. Provides living allowance for family during probate.
ii. RSMo 474.260: 1 year support allowance for surviving spouse or
surviving unmarried children
1. Amount of allowance should take into account previous standard of
living, condition of estate, and income & other assets available to
surviving spouse and surviving children.

g.

Dower & Curtesy

i. Dower: At common law, wife was entitled to life estate in 1/3 of
husbands realty which he owned at any time during the marriage.
1. If inheritable by their issue.
2. Husband could not convey realty free of dower without wifes cosignature.
3. Hence, inheriting son could not cut off wifes support.
ii. Curtesy: At common law, husband was entitled to a life interest in all his
wifes realty.
1. Provided they had issue.
2. Hence, husband could maintain his legal control over wifes realty
after her death.
iii.
Dower & curtesy abolished in most states; replaced by surviving spouse
elective share [RSMo 474.110].

3. Rights of Surviving Spouse to a Share of Decedents Property

a. The Elective Share & Its Rationale
i. Gives the surviving spouse right of election either (1) to take under
decedents will or (2) to renounce the will and take a statutory share of
the decedents estate.
ii. RSMo 474.160: Elective share is:
1. If there are no lineal descendents, the hotchpot.
2. If there are lineal descendents, 1/3 the hotchpot.
iii.
Hotchpot: Elective share is a fraction of probatable assets and of all
nonprobate assets received by surviving spouse.
iv. RSMo 474.163(2): Hotchpot includes inter vivos and testamentary
trust benefits, property received under power of appointment, insurance
benefits, pension plan and annuity contract benefits, joint accounts, joint
tenancies, gifts, etc.
v. Offset: Portion of elective share payable by estate = balance of hotchpot
fraction not covered by nonprobate assets received.
vi. 447.220Spouse can agree not to elect against the will:
1. agreement is written
2. full disclosure of consequences of waiver
35

3. fair consideration under the circumstances

ii. Usually part of ante-nuptial or separation agreements
b.

Computation of Elective Share (more elaborate version of this with the family
protection problem)
i. Calculate the probate estate.
ii. Calculate the nonprobate assets received by the spouse.
iii.
Add (1) & (2); this is the hotchpot.
iv. Calculate or 1/3 share (depending on whether there are lineal
descendents); this is the elective share.
v. Subtract nonprobate assets received by spouse.
vi. This is the net elective share payable by the estate.
vii.
viii.
ix.
x.
xi.
xii.

xiii.

Surviving spouse is also entitled to exempt personal property and family

maintenance allowance; they are not offset by the elective share, but
come off the top.
Surviving spouse also is entitled to the homestead exemption, but it is
offset against the elective share.
Elective share is subject to claims of creditors; it is computed after
exemptions and allowances and claims of creditors are subtracted from
the decedents gross assets.
Distributions under will are abated to pay elective share.
Can elect only after non-claim statute has run (dont know before then
what the net value of the probate estate is).
RSMo 474.200- Right of election person to surviving spouse
1. Elective share can be elected by a guardian if the spouse is under
guardianship, etc.
2. RSMo 474.230- Spouse still gets exemptions if they elect to take
under will.
RSMo 474.180- Time for making a election- Tends days after the
expiration of the time limited for contesting the will of decedent OR 90
days after the settling of a will contest (by litigation).

c.
d.

Gift in Fraud of Marital Rights

MISSOURI USES SUBJECTIVE TEST
i. Any gift in fraud of marital rights is treated as a testamentary disposition
(and is added to the hotchpot).
ii. Any transfer of realty without joinder or express written consent of
spouse is a transfer in fraud. [RSMo 474.150(2)]. So all realty
transfers by one married spouse should be joined by the other spouse.
iii.
Doctrine applies to gifts of personalty and transfers without adequate
consideration.
iv. If estate cannot pay elective share, gift can be recovered from donee or
grantee.
v. Such gifts are presumed to be fraud of marital rights, unless grantee
proves otherwise.

e.

When the surviving spouse elects against the will, we do not use the usual
abatement scheme. Notes 58.
36

f.

Waiver- Agreement Not to Elect

i. Spouse can agree not to elect against will.
ii. RSMo 474.220:
1. Agreement is written.
2. Full disclosure of consequences of waiver.
3. Fair consideration under circumstances.
iii.
Usually part of antenuptial and separation agreements.

4. Spouses Omitted from Premarital Will- Omitted Spouse Share [RSMo 474.235].
a. If spouse is omitted from will executed before marriage, surviving spouse is
entitled to intestate share unless:
i. Omission was intentional OR
ii. Testator provided for surviving spouse by a non-testamentary transfer or
disposition AND
iii.
Intention to omit must be discerned in context of future marriage
(contemplation of marriage exception). May be shown by testators
statements, amount of non-testamentary disposition or other evidence.
iv. Moral: Always write a new will after marrying.
v. Subject to claims of creditors.
vi. In addition to exemptions and allowances.
B. RIGHTS OF ISSUE OMITTED FROM THE WILL
1. Pretermitted Child Share [RSMo 474.240].
a. Child born or adopted after will execution who are omitted from will receive an
intestate share unless:
i. Omission was intentionally expressed on face of will OR
ii. Will devises substantially all to omitted childs other parent and there
were children living at time of will execution OR
iii.
Testator provided for omitted child outside of the will.
b.
Protects child from unintentional disinheritances. But preserves right of parent
to expressly disinherit children.
c. In addition to exemptions & allowances (if child qualifies).
d.
Missouri now rejects pretermitted child share for omitted children who were
alive when will was executed.
e. Moral: Mention all living children in will; put afterborn child clause in will.

VIII. TRUSTS: CREATION, TYPES & CHARACTERISTICS

A. INTRODUCTION
1. Background- Origin of Trusts
a. Statute of Uses 1535: Executed use to legal title in feoffee to uses.
i. Intended to destroy ability to avoid feudal dues.
ii. Prevented employment of use for testamentary & charitable
conveyances.
b.
Responses to Statute:
37

i.
ii.
iii.

Statute of Wills 1540

Use on a use doctrine.
Enforcement of active uses as trust. Statutes executes only passive uses
(no management obligations).

2. The Parties to a Trust

a. The Settlor- Person who creates the trust.
b.
The Trustee- Person with the fiduciary duty to carry out the trust terms and
manages the trust. Has legal title.
c. The Beneficiaries- Persons who have beneficial interest and equitable title.
3. A Trust Compared with a Legal Life Estate
B. CREATION OF A TRUST
1. Elements:
a. Intention of settlor to establish a trust.
b.
Delivery of trust corpus to trustee
i. Trust corpus & trustee must be identified.
ii. Usual delivery & transfer of title rules apply.
1. Two Aspects of Delivery: Pass out of hands of settlor and into hands
of trustee.
2. The critical factor is that the settlor no longer has control over the
trust corpus. But it is best if both of these aspects happen.
iii.
Acceptance of trust obligation by trustee.
1. Trust obligations cannot be imposed on anyone.
2. Hence, trustee can disclaim.
3. Acceptance must be express, or inferred from circumstances.
c. If trustee disclaims, or settlor fails to name trustee, court will appoint a trustee;
the trust will not fail.
i. Provided settlor transfers trust corpus out of his legal control (not out of
physical control).
2. Statute of Frauds
a. Trust has to be in writing when the trust corpus consists of realty.
b.
When the trust corpus does not involve realty, an oral trust is sufficient.
c. Transfer by a trust beneficiary must always be in writing regardless of what the
trust corpus is.
d.
Oral trust of land is invalid; 3 alternative results:
i. Trustee retains land in fee.
ii. Trustee holds in constructive or resulting trust for the settlor.
iii.
Trustee holds in constructive trust for beneficiares.
e. Writing can be contemporaneous or subsequent to attempted creation of oral
trust.
i. Subsequent only applies to writings of acknowledgement by trustee.
ii. Writings by settlor must be contemporaneous to attempted creation of
oral trust.
f.
Note: Purchase money resulting trust may be imposed under appropriate facts.
38

3. Establishing a Trust with Settlor as Trustee- Elements

a. Settlors intent to establish a trust.
i. By a writing or oral declaration (witnessed)
ii. Writing required for trust in realty.
b.
No delivery to third party required
i. Because settlor is trustee & already has possession.
c. Acceptance is irrelevant.
d.
One person cannot wear all three hats at once, unless there is another trustee or
another beneficiary
4. Trust Corpus
a. Can be realty or personalty, tangible or intangible.
b.
Must be a property interest recognized to have present existence.
i. E.g., future interests, nonparticipating oil & gas royalties, license
royalties.
ii. But not mere expectancies (e.g., future stock profits).
5. Types of Trusts
a. Resulting Trust
i. Arises in either of two situations:
1. Where express trust fails (or makes incomplete disposition) for any
reason.
2. Where one person pays purchase price of property (purchaser) and
causes title to be taken by another person (titleholder)
a. Provided titleholder is not a natural object of the purchasers
bounty.
b.
Titleholder is treated as a trustee; purchaser is settlor.
ii. Trustee must reconvey to settlor, since no fiduciary relationship with a
beneficiary exists (quickly, unless there is a time limit imposed).
iii.
Has same obligations as express trustee to manage property for benefit of
settlor.
b. Constructive Trust
i. Arises when there are:
1. Fiduciary or confidential relationship.
2. Promise (express or implied).
3. Transfer of property in reliance.
4. Unjust enrichment of transferee.
ii. Constructive trust arises by operation of law because titleholder in good
conscience cannot retain the beneficial interest; is regarded as a trustee to
avoid unjust enrichment.
iii.
No affirmative obligation to manage property for the benefit of
transferor, but only is responsible for waste.
c. Semi-Secret Testamentary Trusts
i. Semi-secret trust: Will states existence of trust, but not its terms.
1. Rule: Unenforceable as violation of Statute of Frauds.
2. Not fair to disinherit devisees in favor of persons not mentioned in
will (violates Statute of Wills).
39

ii.

iv.
v.

3. Resulting trust is imposed in favor of devisees.

Secret trust: Will makes legacy in fee, but, by secret agreement, it is in
fact subject to a trust.
1. Rule: Enforceable as constructive trust for beneficiaries.
2. Otherwise, trustee would gain unjust enrichment.
3. Devisees not disadvantaged, because devise to trustee is absolute on
face of will.
Dont know what MO would do in this situations. No case law on the
subject.
Commentators agree that both should be treated the same way, but dont
agree on what way that is.

2. Trust Beneficiaries
a. Trust beneficiary must be adequately defined.
i. Must be identified individuals or define and ascertainable class (e.g.
brothers and sisters).
ii. Trust cannot be given unfettered discretion to select beneficiaries (settlor
is supposed to do that).
b. Trust beneficiary must have legal existence.
i. Must be a human being or legally recognized organization.
ii. Cannot be an animal (absent statute to the contrary).
3. Summary of Requirements to Form Trust
a. Intention to create trust. Includes statement of trust terms.
b.
Delivery of trust corpus to trustee. If settlor is trustee, declaration of trust.
c. Trust corpus must exist when trust is created. Must be ascertainable.
d.
Beneficiaries must be identified or be ascertainable. Exception: charitable trusts
may benefit indefinite class of beneficiaries.
B. DISCRETIONARY TRUSTS
1. Mandatory Trust: Trustee must distribute all trust income.
2. Discretionary Trust: Trustee may exercise discretion in determining whether and what
portion of income & principal to distribute.
a. Range of discretion can be defined by trust instrument.
b.
Or discretion can be substantially unlimited.
3. Beneficiary cannot compel trustee to exercise discretion in any particular way.
a. Unless trustee is too parsimonious (in light of size of income & principal).
b.
Not required to pay creditors who supplied beneficiarys necessaries.
4. Range of Discretion
a. Extent of trustees obligation under a discretionary trust.
i. To ascertain facts and circumstances relevant to the trust purpose and the
range of discretion defined by the trust instrument. This includes a duty
of inquiry.
ii. To exercise the discretion reasonably in light of the trust purpose and the
financial resources of the trust.
1. The courts dont like parsimonious trustees.
2. Cannot favor remaindermen over life interest or vice versa. Have to
look out for both.
40

b.

Remedies for breach of trust:

i. Liability of trust for payments which should have been made.
ii. Personal liability of trustee for actions outside range of discretion.

C. CREDITORS RIGHTS: SPENDTHRIFT TRUSTS

1. Spendthrift trust: Trust under which beneficiary is barred from alienating his life estate,
encumbering or anticipating his future right to income or terminating the trust.
2. Purpose is to prevent beneficiary from squandering trust income or principal.
3. Creditors cannot reach beneficiarys interest in the trust.
a. Except as the income is paid out from time to time.
b.
Income is reachable for payment of alimony & child support.
c. Not part of beneficiarys bankruptcy estate.
4. Settlor cannot create a spendthrift trust for self. That would permit defrauding
investors.
5. Missouri recognizes spendthrift trusts by case law.
Exculpatory ClausesRSMo 456.10-1008.1
UTC bars exculpatory clauses drafted by the trustee and makes them unenforceable to the extent that
they:
1. relieve the trustee of liability(FIND THIS SHIT)
D. MODIFICATION & TERMINATION OF TRUSTS
1. Modification of Trusts
a. Absent express powers, trustee has no authority to invade principal or to
distribute income contrary to trust terms.
b.
Modifications to trust can be made, in the absence of express powers, if:
i. All beneficiaries consent. Including all significant contingent
beneficiaries.
ii. Settlor consents (if alive).
iii.
Trustees consent not required.
iv. Provided that material purpose of trust will not be frustrated.
c. Courts can modify trust to preserve it, if trust corpus is threatened by unforeseen
circumstances.
2. Termination of Trusts
a. Trust can be terminated if beneficiaries (& settlor) consent. (Trustees consent is
not required- U.S. Rule).
b.
Trust can be terminated if:
i. Trust purposes have been accomplished OR
ii. Trust purposes become impossible or illegal. (RSMo 4-456.- 410.1)
c. If material purpose remains unfulfilled, trustee can refuse to terminate (even if
beneficiaries consent). E.g., spendthrift or support trust.
d.
Settlors consent is required for premature termination when:
i. Settlor retains a power of revocation, reversion, or other reversionary
interest,
ii. A material provision of the trust remains unfulfilled, OR
iii.
Settlor is also trustee.
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e.

Settlor can override trustees objection:

i. By settlor alone, if settlor retains power to revoke
ii. By settlor & beneficiaries, if:
1. Settlor retains reversionary interest,
2. Material purpose of the trust remains unfulfilled OR
3. Settlor is trustee.

f.

Beneficiaries cant have the trustee changed, unless trustee has breached the
trust.
Because settlor has chosen the trustee, settlor may retain the power to remove or
change the trustee, or grant that power in the trust writing.
Settlor, co-trustee, or a beneficiary may request a court to remove a trustee or the
court may do so on it own motion:
If the trustee has committed a serious breach of trust
If co-trustees are unable to cooperate and that leads to impairment of trust
administration
If the trustee is unfit unwilling or persistently fails to administer the trust
effectively
If there ahs been a substantial change of circumstances, or
All qualified beneficiaries request removal

g.
h.
i.
ii.
iii.
iv.
v.

Removal must serve the interests of the beneficiaries, and removal would not be inconsistent with a
material purpose of the trust
456.7-706.1
E. REVOCABLE TRUSTS
1. Retention of right to revoke doesnt make trust void.
2. But settlor must give up some practical incidents of title. Otherwise, the trust is a sham,
and void ab initio.
3. Powers which a settlor may retain:
a. Right to receive income for life.
b.
Right to change the beneficiary.
c. Right to retain proceeds from sale of trust corpus.
d.
Right to amend or revoke the trust.
e. Designation as trustee/right to manage trust corpus.
f.
Settlor/trustee discretion to pay income to beneficiary.
4. Theory says scope of retained powers determines ab initio whether the trust is valid
(from the beginning). But courts are influenced by settlor/trustees subsequent
behavior: whether he/she treats the trust as real or as a sham.
5. Creditors of settlor can reach trust assets only if trust is void as a sham.
6. Creditors of beneficiary can reach trust income or principal only when they are payable
to the beneficiary. Cannot require trustee to exercise discretion in favor of the creditors.
7. Revocation must be done according to procedure specified by trust instrument, if it
prescribes one.
8. Written revocation must be delivered to trustee; oral revocation must be uttered in
trustees presence (or if trustee is settlor, then utter the revocation before a witness).
9. Writing required for revocation of trusts of realty (Statutes of Frauds).
DIVORCE OR ANNUMLENT APPLIES TO TRUSTS IN MO
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IX.

BUILDING FLEXIBILITY INTO TRUSTS: POWERS OF APPOINTMENT

A. INTRODUCTION
1. Definition: Created by donor to enable donee to determine at a later time who will take
designated property, how much that person will take, and when that person will take.
a. General power: Exercisable in favor of donee (or others), his estate, his
creditors, or his estates creditors.
b.
Special power: Cannot be exercised in favor of donee.
2. Power can be created expressly or impliedly.
3. Subject matter of general power does not become part of donees assets unless & until
donee appoints himself. Subject matter of a special power is never part of donees
assets.
4. Power is personal to donee; exercisable by no one else.
5. Parties
a. Takers in default- Have a remainder interest in the trust. Take if the donee fails
to exercise the power.
b.
Donor- Creates the power of appointment.
c. Donee- Holds the power to choose who takes.
d.
Objects- Class of people specified in the power of appointment who are eligible
to take.
e. Appointees- Persons among the objects who the donee selects to take.
B. CREATION OF A POWER OF APPOINTMENT
1. Intent to Create a Power
2. Powers to Consume
3. Rule of Repugnancy
a. Rule of repugnancy bars the creation of a limitation over the following the grant
of a fee simple.
i. Example- To A with the power to consume, then to B.
b.
Thus, rule of repugnancy prevents creation of a power in the form of a limitation
over following grant of a fee simple.
i. Example: To A & his heirs, but if A dies without issue, then to those
persons B shall appoint.
ii. Yet, most American states recognize executory devises, which take the
same form. Example: To A & her heirs, but if A dies without issue, then
to B.
c. However, the rule allows the grant of a life estate, with the power to consume,
followed by a limitation over.
i. Example: To A for life with the power to consume, then to B.
d.
Missouri recognizes the rule of repugnancy . Limitations over following the
grant of a fee simple are void.
C. RELEASE OF A POWER OF APPOINTMENT
1. Donee of testamentary power cannot contract away discretion to appoint; such contracts
are unenforceable.

43

2. Such donee can release right to appoint, thereby accelerating any alternative of default
remaindermen. Remaindermans interest is treated as vested, subject to defeasance; it is
not a contingent remainder.
D. EXERCISE OF A POWER OF APPOINTMENT
1. Exercise by Residuary Clause
a. Majority Rule: POA must be exercised expressly (or impliedly); a general
residuary clause ordinarily does not operate to exercise either general or special
powers of appointment.
i. UPC 2-610 (1980) requires either that a general or special power be
exercised expressly, or that the will make a disposition of the appointive
property. A general residuary clause alone does not exercise it.
ii. MO adopted this provision of the UPC. RSMo 456.235.
b.
Minority Rule: General power is exercised by general residuary clause; special
power is not.
c. Courts disagree whether residuary clause must refer to particular power, or
whether a generic reference is sufficient.
d.
UPC 2-608 replaces former 2-610 and provides that residuary clause will
exercise power of appointment if:
i. It is a general power and the instrument creating the power does not
provide for disposition in default of appointment OR
ii. It is a general or special power and testators will expressly disposes of
the property subject to the power.
2. Lapse
a. At common law, appointment by will of an appointee who predeceased
donee/testator causes a lapse.
b.
Anti-lapse statute: States are divided whether anti-lapse statute should apply to
general powers of appointment.
i. Issues arises because most anti-lapse statutes apply to devises and
bequests.
ii. Most commentators argue that anti-lapse statute should not apply to
powers of appointment under special powers, since that would allow
nonobjects to take.
c. RSMo 461.055(7)- Anti-lapse provision applies to non-probate transfers
except transfer pursuant to exercise or non-exercise of power of appointment.
i. Rule in MO is that there is no anti-lapse provision dealing with powers
of appointment under statute. Also dont have one under case law. If
you want anti-lapse effect, you have to express that in the power.
3. Limitations on Exercise of a Power
a. General power- Generally, a donee of a general power of appointment can:
i. Appoint an appointee in fee simple OR
ii. Appoint in further trust OR
iii.
Create a new power of appointment.
iv. (Ultimate appointee must still be in the original class of objects. Can the
person who selects among the objects be outside of the original class of
objects? Unsure.)
44

b.
c.

Special power- Generally, a donee of a special power cannot appoint in further

trust, unless the creating instrument so authorizes.
Special power can be exclusive or nonexclusive. Special power is presumed to
be exclusive.

4. Fraud on a Special Power

a. Selection among members of a class. Donee of a special power cannot appoint a
nonobject; such as attempt is void. Definition of who falls within a class
designation is determined by the usual class gifts rules.
b.
Appointment of an object for purposes of circumventing the limitation on a
special power is a fraud on the power, and is partially void to the extent it is
motivated by the fraudulent purpose.
i. But where the partial invalid appointment is the result of a nonfraudulent
motive, such as a misunderstanding of the scope of objects, the portion
of the appointment to the appropriate object is valid.
E. FAILURE TO EXERCISE A POWER OF APPOINTMENT
1. General power. In the absence of an express gift in default, the property reverts to the
donors estate.
2. Special power. In the absence of an express gift in default, the property goes to all the
objects of the special power in equal shares.
a. The class of objects must be small, and there must be no express gift in default.
This is implied gift in default theory.
b.
Alternative theory: Imperative special power- Creating instrument manifests an
intention that objects should benefit even in default of appointment.
X.

CONSTRUCTION OF TRUSTS: FUTURE INTERESTS

A. RULES OF WILL CONSTRUCTION APPLYING TO TRUSTS
1. Will rules applying to trusts
a. Class gift rules or construction- meaning of children, issue, heirs, etc.
b.
Inclusion of adopted & Nonmarital children- cf. RSMo 474.040, .060, .435.
2. Will rules not applying to trusts
a. Anti-lapse statute.
b.
120-hour survival statute
i. By their own terms, they apply only to intestacies, devises, &
bequestsSee RSMo 474.015, .455, .460.
ii. Anti-lapse & 120-hour survival provisions of Non-Probate Transfers
Law expressly do not apply to trustsSee RSMo 461.055(7)
(definition of nonprobate transfer).
B. GIFTS TO CHILDREN OR ISSUE ADOPTED & ILLEGITIMATE CHILDREN
1. Children means testators/settlors immediate children (first degree).
2. Issue means descendents, not ascendants or collaterals. Usual intestacy rules apply
(per stirpes or per capita).
3. RSMo 474.435 applies intestacy rules concerning adopted & illegitimate children to
class gifts (in wills & trusts).
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4. RSMo 453.090 includes adopted children in class gifts to heirs of the body
5. Nonmarital Children
a. Can inherit from mother.
b.
Can inherit from father if paternity is established before death; or clear and
convincing evidence after death; or where parents purport to (or actually do)
establish a marriage.
c. RSMo 474.435- Applies to testamentary truss.
d.
Nothing in statutes that applies these rules to inter vivos trusts.
C. GIFTS TO HEIRS
1. Gift over on Death Without Issue
a. T devises to B, but if B dies without surviving issue, then to C.
b.
What does dying without issue mean?
i. Definite failure of issue: No issue surviving at time prior possessory
estate ends (i.e., when T dies).
ii. Indefinite failure of issue: Failure of issue at any time, both before or
after time prior possessory estate ends (i.e., when T dies).
c. RSMo 442.480 requires definite failure of issue.
d.
Results:
i. B dies after T- B takes free of limitations (rule of repugnancy).
ii. B dies before T without issue- C takes (definite failure of issue).
iii.
B dies before T with issue- Reverts to Ts estate (unless anti-lapse statute
applies). C cant take under terms of devise
2. Rule of Convenience
a. Class closes first time any class member is entitled to possession of his/her
share.
b.
If there are no class members alive at time of gift ordinarily ought to vest, then
class remains open until such time it is impossible to add new class members.
c. Rule of convenience applies both to present possessory interests and to future
interests in the same way.
d.
Rule applies only to gifts of principal, not to gifts of income.
3. Rule of Early Vesting- To A for life, then to Bs heirs.
a. Issue: Are Bs heirs determined when testator dies, A dies or B dies?
i. Cant be when testator dies: Rule of convenience requires class to remain
open until some member of the class is entitled to take.
ii. So long as A remains alive, Rule of Early Vesting requires that the class
close and vesting occur when the ancestor of the class dies (i.e., when B
dies).
1. Otherwise, if the vesting is deferred to As death, Bs heirs who
predecease A would be divested.
2. That is contrary to the testators probable intent; instead, testator is
likely to want normal intestacy scheme to be applied (i.e., Bs heirs
as of Bs death).
iii.
Missouri follows the Rule of Early Vesting.
b.
Rule of Early Vesting has been reversed by UPC 2-711.
i. And by a minority of states.
46

ii.

This avoids barring inheritance by Bs heirs born between Bs death and

As death.

4. Rules of Construction
a. Doctrine of Worthier Title
i. Convey to A for life, remainder to Os heirs (when O is the settlor).
ii. This creates a life estate in A and a reversion in O rather than a
remainder in Os heirs (unless grant provides otherwise).
iii.
Abolished in many states: creates remainder in Os heirs.
iv. No clear Missouri precedent.
b.

Rule in Shelleys Case

i. To A for life, remainder to As heirs.
ii. This creates a fee simple absolute in A. (A gets the remainder, not his
heirs, which merges with As life estates to give A all the equitable
interest in the trust).
iii.
Abolished in most states, including MO: A gets life estate, As heirs get
remainder.

c.

Rule in Wilds Case

i. To A and then to As children.
ii. Creates a tenancy in common between A and As children.
iii.
Majority of states have accepted this; no MO cases.

D. INCREASE IN CLASS MEMBERSHIP: THE CLASS CLOSING RULE

1. Inter vivos gift to A for life, then to As children (not a Rule in Wilds case- That does
not apply when you specify that A gets a life estate).
2. Do we close the class when A dies (end of the prior life estate)? If so, then no problems
because A cannot have more children.
3. Rule of convenience would give the same result- When any members of the class can
take is when A dies.
4. A gives $10,000 to the children of B.
5. Rule of convenience- Close when A dies; rule of early vesting- close when B dies.
6. What if the situation was reversed- What if B is still alive when A dies?
a. What if B is still alive when A dies, but does not have any kids yet?
b. 1 year after Bs death, A has one child. Should we close the class then?
c. Exception to the rule of convenience- If there is no one who can take when the
prior possessory estate ends, then the class does not close until no one can
be added to the class (until B dies in this example).
7. Missouri Rules
a. MO has adopted the rule of convenience. Class closes when the first member
can take.
b. Exception (if no one in the class when prior possessory estate ends). MO
follows this too.
8. Giving of Gifts to Open Classes
a. Example: A makes testamentary gift To children of B.
47

i.

When A dies, B is still alive and capable of having more children (or
adopting them).
b. Issue: When A dies, if gift distributed immediately to Bs then living children, or
do we wait until B dies?
c. Default Rule: Rule of convenience closes a class at first moment when any
member of class is entitled to possession of his/her share.
i. Potential members of class not yet born at that moment do not share in
gift.
ii. Actually, potential members already conceived, but not yet born, also
share in gift.
d. These problems only arise with gifts of principal.
e. If they were gifts of income, income is distributed annually, so could revisit the
distributions annually to make changes according to class changes.
9.

XI.

Summary of Rule of Convenience

a. If B has children when testator dies, the class closes when the eldest reaches 21
(Main rule).
i. But if B has no children when testator dies, the class remains open for as
long as B is capable of having children, regardless of whether any of
them reach or exceed 21 (exception to the rule.)
1. To follow main rule in this circumstance would always mean that
only the eldest of Bs children would take; probably that would not
be testators intent.
ii. However, if B has no children when testator dies, when all children born
later reach 21, the class closes even if B is capable of and has more
children thereafter.
b. What if give $500 to each child of B
i. Until B dies, dont know how many kids B will have, so estate doesnt
know how much money to hold back to fulfill the bequests.
ii. When gift of a specific sum to people in a class where each is not getting
a fractional share of a pot but rater a separate little pot, and dont know
how many people (open class), then close the class when the testator dies
(so estate can be closed).

CHARITABLE TRUSTS
A. NATURE OF CHARITABLE PURPOSE
1. Charitable Trust: Has a charitable purpose which benefits an uncertain or indefinite
class or number of persons, rather than specifically designated purposes.
a. Involves act dictated by kindness, good will or disposition to do good.
b. Purposes include: relieving poverty, advancing education, religion or science,
promoting health, supporting government or municipal purposes, supporting
purposes beneficial to the community. Detailed list of purposes- See Notes.
2. Charitable trust can have perpetual duration.
a. Not subject to the Rule against Perpetuities.
48

b. Can accumulate income indefinitely.

3. Differences Between Charitable Trusts and Conventional Trusts
a. Duration:
i. Charitable: Indefinite OR Perpetual duration.
ii. Conventional: Maximum period specified by the Rule against
Perpetuities.
b. Designation of Beneficiaries
i. Charitable
1. Indefinite class permissible.
2. Cannot be limited to objects of the settlors bounty.
ii. Conventional: Beneficiaries must be reasonably ascertainable ab initio.
B. MODIFICATION OF CHARITABLE TRUSTS- Cy Pres Doctrine
1. Allows reform of charitable trust purpose where original purpose has become
impossible or very difficult to fulfill or perform.
a. Purpose of cy pres is to prevent failure & lapsing of valid charitable trust by
reforming it to authorize analogous purposes.
b. Prevents reversion of trust corpus.
2. Not available
a. To accomplish a more desirable or better use of trust income.
b. To ease difficulties of trust administration.
3. Examples of cy pres doctrine
a. Insufficient funds to accomplish original purpose.
b. Funds surplus to needs of original purpose.
c. Termination/dissolution of recipient program or entity.
d. Refusal of beneficiary to accept funds.
e. Illegality or impossibility of original purpose.
i. Problem of gender or racial based scholarships.
C. SUPERVISION OF CHARITABLE TRUSTS
1. Common law: Since there are no beneficiaries, Attorney General could enforce
charitable trust.
a. Members of public had no standing.
b. But designated beneficiaries could enforce trust.
2. Today: Same as common law rule.
3. Heirs or estate of settlor can bring suit to terminate charitable trust for failure of
purpose.
4. In some states, charitable trusts must be registered and file annual financial reports.
a. Uniform Supervision of Trustees for Charitable Purposes (Not enacted in
Missouri).
XII.

TRUST ADMINISTRATION: THE FIDUCIARY OBLIGATION

A. DUTIES OF THE TRUSTEE
49

1. Duty of Loyalty
a. Must act in the best interest of the estate, trust, etc.
b. Must not engage in self-dealing; buying from or selling to the trust.
i. Must avoid situations or transactions where he could profit from his
fiduciary position.
ii. Must avoid situations or transactions where his personal and fiduciary
interest conflict.
iii.
No further inquiry rule provides that the trustee is strictly liable for
losses, whether or not the conflict was the cause for the loss.
c. Must not enter into transactions for less than fair market value.
d. Exceptions to the no further inquiry rule
i. If the transaction is authorized by the trust instrument, there is no
liability unless there is unfairness.
ii. If the beneficiaries all consent after full disclosure and the transaction is
fair to the trust.
iii.
If the court authorizes the sale- full disclosure and fair deal.
e. Exceptions to the Duty of Loyalty
i. If the transaction is authorized by the trust instrument, then there is no
liability unless there is unfairness.
ii. If the beneficiaries all consent after full disclosure and the transaction is
fair to the trust.
iii.
If the court authorizes the sale after full disclosure and the transaction is
fair to the trust.
f. Co-Trustees
i. Co-trustees must act as a collective whole; unanimity is required; a
single co-trustee does not have power to act alone. (Co-trustee is not
liable if they did not participate; if liable if he knew and sat on his
hands).
ii. Discretionary functions cannot be delegated by one co-trustee to another.
1. Ministerial functions can be delegated.
2. Nondelegable functions include: Purchase & sale of assets, selection
of investments, allocation or receipts & disbursements between
income & principal, discretionary payments of income & principal to
beneficiaries.
iii.
Uniform Fiduciaries Act [RSMo 456.540] alters unanimity rule,
allowing majority decisions (where there are three or more co-trustees).
1. MO has adopted this rule.
2. This is a default rule- The trust instrument can adopt another rule.
3. The trust instrument can also state what things can be delegated to a
single trustee.
2. Duties Relating to the Care of the Trust Property- Duty to Earmark & Not to
Commingle
a. Reason for rules: Funds & property are harder to trace; subject to seizure by
trustees personal creditors (who do not have notice).
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b. Traditional view: Strict liability for any loss if trustee fails to earmark or
commingles, even though loss does not result from those breaches.
c. Modern view: Liability only if loss results from failure to earmark or from
commingling.
d. Exception to the duty to earmark: Investment in bearer bonds.
3. Duty Not to Delegate
a. Trustee must act as a prudent person would with respect to trustees own
property.
b. Trustee cannot delegate the entire administration of the trust to a third party.
i. Trustee is liable for any loss occurring during the improper delegation,
not just those resulting from the delegates negligence.
c. Ministerial functions can de delegated, provided:
i. Delegate is selected with prudence.
ii. Those functions are supervised by trustee.
d. Trustee cannot delegate to a non-trustee those functions which trustee
reasonably can be expected to perform personally.
i. Strictly liable for any losses occurring during the period of delegation,
not just those resulting from the negligence of the delegate.
ii. Exception: Hiring attorney, accountant, stock broker, real estate agent,
etc.; ministerial functions also can be delegated
2. Trustee cannot perform those functions personally.
3. But must supervise and independently assess their advice.
i. Investment in mutual funds not an improper delegation.
d.

Uniform Fiduciaries Act [RSMo 456.520.3(24)] alters delegation rule, by

allowing trustee to follow professional advice without independent
investigation.

4. Duty of Impartiality- Allocation of Income & Principal

a. Trustee has a fiduciary duty to both income (life) beneficiaries and
remaindermen. The trust must produce both a reasonable income and must
preserve the trust corpus.
i. Missouri agrees. RSMo 469.403.2 requires a trustee to act with
impartiality between all beneficiaries.
b. Trustee must maintain assets to retain their capital value. Trustee should not
maintain income stream if it reasonably causes loss of capital asset value.
c. Trustee cannot hold property which produces no income, unless so authorized by
the trust instrument. Trustee cannot hold undeveloped land, gold, art, foreign
currencies, collections or other nonproductive property.
d. Trustee has an obligation to sell such assets within a reasonable time.
e. Income: Cash dividends.
f. Principal: Stock dividends & stock splits [RSMo 469.429(2)], substitute stock,
capital gains.
g. See generally RSMo 469.405 et seq. for allocations.
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h. Receipts from depletable assets must be apportioned between income &

principal (generally 90% principal, 10% income).
i. Such as, natural resources receipts, patent & copyright royalties- see
RSMo 469.439.2, .441(3)-(4).
ii. Various state apportionment statutes have been enacted.
2. Duty to Inform and Account to Beneficiaries
a. Report periodically to beneficiaries. (MO by statute, annually).
b. Notify trust beneficiaries of non-routine matters affecting trust assets.
B. POWERS OF THE TRUSTEE
1. Trustee Management Powers
a. At common law, trustee has no inherent powers; all powers must be conferred
by the trust instrument. But trustee has by implication those powers necessary
to carry out trust purposes.
b. In many states, statutes confer on a trustee a standard set of management and
investment powers.
2. Dealings with Third Parties
a. At common law, third parties had obligation to determine whether trustee was
acting within his/her authority.
i. Must third party inquire whether seller/buyers is a trustee?
ii. Third party gets good title from trust only if a bona fide purchaser
without notice.
iii.
Third party selling to trustee has obligation to assure that property is
properly placed in trust.
b. Uniform Trustees Power Act 7 provides that a third party need not inquire
whether trustee is acting within authority or to assure that property sold to
trustee is placed in trust. RSMo 456.560, 456.250.
C. INVESTMENT OF TRUST FUNDS
1. Prudent Investor Standard
a. Fiduciary shall exercise the judgment and care under the circumstances then
prevailing, which persons of prudence, discretion and intelligence exercise in
the management of 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 of their capital.
b. But see RSMo 456.500(1) which requires trustee to act as persons of ordinary
prudence would act in the management of the affairs of others.
c. Trustee must:
i. Manage trust property & keep it in repair.
ii. Sell property which is declining in value or is yielding inadequate
income.
iii.
Diversity investments.
iv. Account periodically to beneficiaries.
v. Notify beneficiaries of non-routine matters affecting trust assets.
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2. Trustee Investment Discretion

a. The prudent investor standard requires exercise of reasonable skill in the
management of the overall portfolio.
i. In the past, the focus has been on the individual items in the investment
portfolio. Liability was imposed if retaining an individual asset fell
outside the range of trustee discretion.
ii. Restatement 3d, Trusts 227 altered the focus to the overall portfolio.
1. It requires an overall investment strategy, which incorporates risk and
income objectives reasonably suited to trust purposes.
2. It imposes a duty to diversify investments.
3. It requires incurring only reasonable investment management
expenses.
b. Typical Rule- Trust must be diversified unless the trust instrument provides
otherwise.
3. Liability of Trustee
a. Losses resulting from improper individual investments.
b. Losses and gains from improper sale of assets.
c. Losses from improper management of assets.
i. Gains cannot offset losses (improvement of overall portfolio no defense).
Restatement 3d, Trusts 227 would change the focus to overall
investment performance.
ii. No liability for losses resulting from inaccurate judgment exercised in
good faith; trustee is not an insurer.
d. Investment Standards:
i. Trustee can take risks appropriate for investing funds of others, not for
investing personal funds.
ii. Preservation of capital is more important than appreciation of value or
income production.
iii.
Diversification of investments reduces risk to capital.
iv. Not limited to particular class of safe investments.
v. May retain settlors assets if still desirable
vi. Should not invest in non-income producing assets.
D. LIABILITY OF THE TRUSTEE TO THIRD PARTIES- Contract & Tort Liability
1. Trustee is liable personally for contract breaches & torts committed as part of trust
administration. (To same extent as if the trustee held the property free of trust.)
2. If contract was validly entered into, or trustee is not personally at fault for torts, trustee
is entitled to indemnification from trust estate.
a. Contract & tort plaintiffs must sue trustee personally; if trustees assets are
insufficient, they can enforce the trustees right to indemnification.
b. But if tort liability is imposed solely because of trustees status as property
titleholder (no active participation), then trustees liability is limited to extent of
trust assets.
3. Uniform Probate Code [RSMo 456.480] alters rule, making trustee not personally
liable, unless he failed to reveal his fiduciary capacity & identifying trust in contract, or
unless personally at fault for torts; trustee is sued in representative capacity.
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