Decedents Estates & Trusts Outline Fall 2014 Chapter 1: Introduction Section A.

The Power to transmit Property at Death: Justifications and Limitations 1. The Right to Inherit and the Right to Convey Wills, and testaments, rights of inheritance and successions, are all creatures of the civil or municipal laws and are in all respects regulated by them. Hodel v. Irving. Brief Fact Summary. Appellees filed suit alleging that the escheat provision of the Indian Land Consolidation Act resulted in a taking of their property without just compensation which was in violation of the Fifth Amendment. Issue. Whether the original version of the escheat provision of the Indian Land Consolidation Act of 1983 effected a taking of appellees decedents property without just compensation. Rule. The States, and where appropriate, the United States, has broad authority to adjust the rules governing the descent and devise of property without implicating the guarantees of the Just Compensation Clause. Holding. Yes; Since the escheatable rights are not de minimis, nor does the availability of inter vivos transfer obviate the need for descent and devise, a total abrogation of these rights cannot be upheld. The regulation virtually amounts to the abrogation of the right to pass on a certain type of property-a small undivided interest-to ones heirs. 2. The Policy of Passing Wealth at Death Support for inheritance o Least objectionable way of dealing with property on the owners death o A natural & proper expression & reinforcement of family ties o Expresses and begets affection 3. The Problem of the Dead Hand 10.1 Donors Intention Determines the Meaning of a Donative Document and is Given Effect to the Maximum Extent Allowed by Law. The controlling consideration in determining the meaning of a donative document is the donors intention. The donors intention is given effect to the maximum extent allowed by law. The main function of the law in this field is to facilitate rather than regulate. Does this by establishing rules under which sufficiently reliable determinations can be made regarding the content of the donors intention. Shapira v. Union National Bank Brief Fact Summary. Action was brought by Plaintiff for a declaratory judgment and the construction of the will of his father, David Shapira, testator. Issue. Whether a condition upon inheritance, which is based on marriage, is unconstitutional, contrary to public policy, and unenforceable because of its unreasonableness? Synopsis of Rule of Law. A gift conditioned upon the beneficiary marrying within a particular religious class or faith is reasonable. Held. No.Upholding and enforcing the provisions of the decedents will conditioning the bequests to his sons upon their marrying Jewish girls does not offend the Constitution of Ohio or the United States. A will or trust provision is ordinarily invalid if it is intended or tends to encourage disruption of a family relationship. Exception: it is meant to provide in the case of divorce.

Cy Pres equitable doctrine as near as possible to do as near as possible what the testator wanted. (Judge Posner) Religious restrictions are generally upheld so long as they do not unreasonably restrict the right to marry. Incentive Trust - conditional gifts, that so long as they do not violate public policy, courts generally will enforce them; can be broken down into three types: o Encourage to pursue an education o Encourage moral values - to contribute to charitable causes/discourage substance abuse/promote traditional family values o Encourage a productive career Destruction of Property at Death -

Section B. Transfer of the Decedents Estate 1. Probate and Nonprobate Property Probate Property - property that passes through probate under the decedents will or by intestacy. Nonprobate Property - property that passes outside of probate under an instrument other than a will. o Joint tenancy property (real and personal); o Life insurance, pension plan; o Contracts with payable-on-death (POD) provisions; o Interests in trust. Testamentary Trust - created under the decedents will - passes through probate. Inter Vivos Trust - created during the decedents lifetime - does not pass through probate. 2. Administration of Probate Estates a. The Functions of Probate i. Provides evidence of transfer of title to the new owners ii. It protects creditors by providing a procedure for payment of debts; and iii. It distributes the decedents property to those intended after the decedents creditors are paid. b. Probate Terminology and History Personal representative - person responsible for the winding up of the decedents affairs. This person is a fiduciary. Probate Court - the court that supervises the administration of the probate estate. Executor - person named by the decedent to administer the affairs of the estate. Administrator - a person named by the court to administer the affairs of the estate. Dying testate: goes by will o Devise - refers to land (real property) given to a devisee o Bequeath - refers to personalty (personal property) to a legatee Dying intestate: governed by statute o Descends to heirs - real property o Distributed to next-of-kin - personal property Curtesy or Dower rights - rights to take a share of some of the decedent spouses property c. The Summary of Probate Procedure

i. Opening probate Primary or domiciliary jurisdiction - the jurisdiction where decedent was domiciled at death; will should be probated or letter of administration should be sought. Ancillary administration - for real property located in another jurisdiction; meant to prove title to real property in the situs states recording system & subject those assets to probate for the protection of local creditors. Letters testamentary (executor) or letters of administration (administrator) - authorized person to act on behalf of the estate. In common form - ex parte proceeding in which no notice or process was issued to any person. The will was proved by the oath of the executor and admitted to probate at once, letter testamentary were granted, and the executor began administration of the estate. In solemn form - notice is given to interested parties by citation, due execution of the will was proved by the testimony of the attesting witnesses and administration of the estate involved greater court participation. Caveat - compels probate of the will in solemn form. ii. Formal versus Informal probate [Uniform Probate Code (UPC)] Formal probate - 3-401 notice probate; litigated judicial determination after notice to interested parties. Becomes a final judgment if not appealed. Informal probate - 3-715 common form probate; the personal representative administers the estate without going back into court. o 3-301 sets forth the requirements for informal probate. iii. Barring creditors of the decedent - The S. Ct. has held that the Due Process Clause requires that known or reasonably ascertainable creditors receive actual notice before a short-term statute running from the commencement of probate proceedings bars them. One-year statute of limitations is constitutional even w/out notice to creditors. Nonclaim statutes - every state has a statute requiring creditors to file claims within a specified time period; claims filed thereafter are barred. Two types: o They bar claims not filed w/in a relatively short period after probate proceedings are begun (2 to 6 months [4 under the UPC]); or o Whether or not probate proceedings are commenced, they bar claims not filed w/in a longer period after the decedents death (1 to 5 years [1 under the UPC]). iv. Closing the Probate Judicial approval is required to relieve the personal representative from liability unless some statute of limitations runs upon a cause of action against the representative. The representative is not discharged from fiduciary responsibility until the court grants discharge. d. The Costs of Probate The administrative costs of probate = probate court fees, commission of the personal rep., attorneys fee, and, sometimes, appraisers & GAL fees.

e. Is Probate Necessary? Probate can be avoided if the property owner during life transfers all his property into a joint tenancy or an inter vivos trust, or makes arrangement for other forms of Nonprobate transfer. Can be avoided if the size of the estate is small, requires affidavit of decedents successor. Nonprobate property transfer on debt deed, inter vivos gifts, trust, POD contracts f. Universal Succession 3-312 to 3-322 (Louisiana) The heirs or the residuary devisees step into the shoes of the decedent at the decedents death, taking the decedents title and assuming all the decedents liabilities and the obligation of paying legacies according to the decedents will. Section D. Professional Responsibility 1. Duties to Intended Beneficiaries Simpson v. Calivas Brief Fact Summary. Plaintiff appeals from a directed verdict, grant of summary judgment, and dismissal of his claims based on negligence and breach of contract against the lawyer who drafted his fathers will. Issue. (1) whether the trial court erred in ruling that un NH law a drafting attorney owes no duty to the intended beneficiary; (2) whether the trial court erred in ruling that the findings of the probate court on testator intent collaterally estopped the plaintiff from bringing a malpractice action. Synopsis of Rule of Law. A duty runs from a drafting attorney to an intended beneficiary, but in general, the scope of such a duty is limited to those in privity of contract with each other, and as such, an identified beneficiary has third party beneficiary status. Holding. (1) Yes, the trial court erred by dismissing the plaintiffs writ: there is a duty of reasonable care, with an emphasis on the foreseeability of injury to the intended beneficiary. Where a client has contracted with an attorney to draft a will and the client has identified to whom he wishes his estate to pass, that identified beneficiary may enforce the terms of the contract a s a third-party beneficiary. (2) Collateral estoppel is only applicable if the finding in the first proceeding was essential to the judgment of that court. The task of the probate court is limited to determining the intent of the testator as expressed in the language of the will. Even an explicit finding of actual intent by a probate court cannot be the basis for collateral estoppel. 2. Conflict of Interest A v. B Brief Fact Summary. Hill Wallack, a new mid-size New Jersey law firm represented a respondent, B, a husband and his wife, W for estate planning services. The respondent had a child by another woman who was also represented by the same firm. The respondent sued Hill Wallack to prevent them from disclosure. Issue. Whether a firm that represents a husband and wife may disclose to the wife their knowledge that the husband fathered another child by another one of their clients. Synopsis of Rule of Law. A firm that represents a husband and wife may only disclose to the wife the fact that the husband had fathered another child but may not disclose the identity of the other woman or the child. Held. Yes. Where a firm represents a husband and wife and another woman who has a child by the husband, the firm may disclose to the wife that another child exists, however the firm may not disclose the identity of the other woman or the child.

Chapter 2: Intestacy: An Estate Plan by Default Section A. The Basic Scheme 1. Introduction Die with a will = testate Dies without a will = intestate Purely a creature of statute: Meant to balance what the state believes the decedent would have wanted against public policy (making sure descendants are taken care of). Advantages: designate guardians for minor children, identify a trustworthy individual/trust company to administer the estate, reduce probate costs, achieve tax savings Ways to transfer without a will: joint-tenancy, payable-on-death designations, pension plans, revocable trusts The law of the state where the decedent was domiciled at death governs the disposition of personal property/the law of the state where the decedents real property is located governs the disposition of real property. SECTION 2-101. Intestate Estate. (Page 73) (a) Any part of a decedents estate not effectively disposed of by will passes by intestate succession to the decedents heirs as prescribed in this *code+, except as modified by the decedents will. (b) A decedent by will may expressly exclude or limit the right of an individual or class to succeed to property of the decedent passing by intestate succession. If that individual or a member of that class survives the decedent, the share of the decedents intestate estate to which that individual or class would have succeeded passes as if that individual or each member of that class had disclaimed his [or her] intestate share. SECTION 2-102. Share of Spouse. The intestate share of a decedents surviving spouse is: (1) the entire intestate estate if: (A) no descendant or parent of the decedent survives the decedent; or (B) all of the decedents surviving descendants are also descendants of the surviving spouse (children together) and there is no other descendant of the surviving spouse who survives the decedent (step child to surviving spouse); (2) the first [$300,000], plus three-fourths of any balance of the intestate estate, if no descendant of the decedent survives the decedent, but a parent of the decedent survives the decedent; (3) the first [$225,000], plus one-half of any balance of the intestate estate, if all of the decedents surviving descendants are also descendants of the surviving spouse and the surviving spouse has one or more surviving descendants who are not descendants of the decedent (step child to decedent); (4) the first [$150,000], plus one-half of any balance of the intestate estate, if one or more of the decedents surviving descendants are not descendants of the surviving spouse (step children to surviving spouse). SECTION 2-103. Share of Heirs Other Than Surviving Spouse. (a) Any part of the intestate estate not passing to a decedents surviving spouse under Section 2-102, or the entire intestate estate if there is no surviving spouse, passes in the following order to the individuals who survive the decedent: (1) to the decedents descendants by representation; (children or grandchildren) (2) if there is no surviving descendant, to the decedents parents equally if both survive, or to the surviving parent if only one survives;

(3) if there is no surviving descendant or parent, to the descendants of the decedents parents (siblings) or either of them by representation; (4) if there is no surviving descendant, parent, or descendant of a parent, but the decedent is survived on both the paternal and maternal sides by one or more grandparents or descendants of grandparents (aunts/uncles): (A) half to the decedents paternal grandparents equally if both survive, to the surviving paternal grandparent if only one survives, or to the descendants of the decedents paternal grandparents or either of them if both are deceased, the descendants taking by representation; and (B) half to the decedents maternal grandparents equally if both survive, to the surviving maternal grandparent if only one survives, or to the descendants of the decedents maternal grandparents or either of them if both are deceased, the descendants taking by representation; (5) if there is no surviving descendant, parent, or descendant of a parent, but the decedent is survived by one or more grandparents or descendants of grandparents (aunts/uncles) on the paternal but not the maternal side, or on the maternal but not the paternal side, to the decedents relatives on the side with one or more surviving members in the manner described in paragraph (4). (b) If there is no taker under subsection (a), but the decedent has: (1) one deceased spouse (died during the marriage) who has one or more descendants who survive the decedent (step child), the estate or part thereof passes to that spouses descendants by representation; or (2) more than one deceased spouse who has one or more descendants who survive the decedent, an equal share of the estate or part thereof passes to each set of descendants by representation. SECTION 2-105. No Taker. If there is no taker under the provisions of this [article], the intestate estate passes to the state. Under all intestate succession statutes, parents of the decedent are not heirs if the decedent leaves a child. Note: The Meaning of Heirs and the Transfer of an Expectancy No living person has heirs; heirs apparent with a mere expectancy. Expectancy can be destroyed by a will - if with a will, then devisee or legatee or beneficiary An expectancy cannot be transferred at law A transfer of an expectancy, for an adequate consideration, may be enforceable in equity as a contract if the court views it as fair under all the circumstances.

2.

Share of Surviving Spouse In designing an intestacy statute, the primary policy is to carry out the probable intent of the average intestate decedent. Secondary policy is family protection, preserving the economic health of the family after a death. In most states, the surviving spouse usually receives at least a one-half share of the decedents estate, an increase from the one-quarter or one-third of the estate that was typical on a half century ago. Elective share spouse may be able to demand a greater share if left less that the statutory minimum.

Note: Same-Sex Marriage, Domestic Partners, and Intestate Succession An important issue in the states that recognize intestacy rights for domestic partners is the criteria for qualifying as a domestic partner. Proposed amendment to UPC - 2-102B. Provide an intestate shre for committed partners. Uniform Simultaneous Death Act (USDA) if there is no sufficient evidence of the order of deaths, the beneficiary is deemed to have predeceased the donor. UPC 2-104, 2-702: Claimant must establish survivorship by 120 hours (5 days) by clear and convincing evidence - Meant to address the no sufficient evidence problem. Even addresses contemporaneous deaths when they do not arise from a common disaster. KS 58-709: Clear and convincing evidence that beneficiary survived donor by 120 hours. EXCEPTION if the estate would escheat to the State, then 58-709 does not apply. Jamus v. Tarasewicz Brief Fact Summary. Plaintiff, insureds mother, appeals from a declaratory judgment wherein the trial court found there was sufficient evidence to conclude that the primary beneficiary under the insureds life insurance policy, survived the insured, and therefore was entitled to the proceeds of the life insurance policy. Synopsis of Rule of Law. Survivorship is a fact that must be proven by a preponderance of the evidence by the partys whose claim depends on survivorship. Issue. Whether the trial courts finding that Theresa Janus survived Stanley Janus was against the manifest weight of the evidence? Held. No. Affirmed.The record clearly established that the treating physicians diagnoses of death with respect to Stanley and Theresa Janus were made in accordance with the usual and customary standards of medical practice. It was not necessary to determine by how long Theresa survived Stanley. After viewing the record in its entirety, the trial courts finding of sufficient evidence of Theresas survivorship was not against the manifest weight of the evidence. 3. Shares of Descendants In all US jx, after the spouses share is set aside, children and descendants of deceased children take the remainder of the decedents property to the exclusion of everyone else. When one child has died before the decedent, leaving children, all states provide that the childs descendants shall represent the dead child and divide the childs share among themselves. Three ways for children to represent for deceased parents o Strict Per Stirpes Vertical equality each line of descent treated equally. Property flows strictly down the lines from the decedent. o Modern Per Stirpes Each line of descent treated equally beginning at first generation with a living taker. Dont divide the estate until you get to a line with living people. o Per Capita at each generation (1990 UPC) Horizontal equality each taker at each generation treated equally (equally near, equally dear).

Note: Negative Disinheritance an express statement in a will that someone is not to inherit. At Common Law it had no effect. To achieve this, have a will and give it all away. Under the UPC, can now disinherit. 2-101(b) = negative will - The barred heir is treated as if he disclaimed his intestate share, which means he is treated as having predeceased the intestate. 4. Shares of Ancestors and Collaterals Collateral kindred - All persons who are related by blood to the decedent but who are not descendants or ancestors. o First-line collaterals descendants of your parents (siblings) o Second-line collaterals descendants of your grandparents (aunts/uncles) UPC cut-off If no one in the 1st line collaterals - then - either (1) parentelic - line closest to decedent or (2) degree of relationship - steps away from decedent. KS cut-off

If the decedent is not survived by a spouse, descendant, or parent, in all jxs intestate property passes to brothers/sisters and their descendants (nieces/nephews) who take by representation. Laughing heirs - persons so distantly related to the decedent as to suffer no sense of bereavement, laughing all the way to the bank. KS does not really allow for laughing heirs b/c cut off is at 6th degree of relationship.

Note: Half-bloods - a relative of the half-blood is treated the same as a relative of the whole-blood in all US jxs. Section B. Transfers to Children 1. Meaning of Children a. Adopted Children Hall v. Vallandingham Not the case in KS, 59-2118: An adoption shall not terminate the right of the child to inherit from or through the birth parent. Brief Fact Summary. Four children appeal from a judgment wherein it was determined they were not entitled to inherit from their natural uncle, by taking the share their deceased father would have received intestate, due to the fact they were adopted by the man their mother married after their fathers death. Synopsis of Rule of Law. Family Law Art. Section:5-308 plainly mandates that adoption be considered rebirth into a completely different relationship, and once a child is adopted, the rights of both the natural parents and relatives are terminated. Issue. Whether the trial court erred in denying the appellants the rights to inherit through their natural paternal uncle, due to the fact appellants were adopted as minors by their stepfather after the death of their natural father? Held. No. Judgment affirmed.The court held that because Est. & Trusts Art. Section:1-207(a) eliminates the adopted childs right to inherit from the natural parent, it also abrogated the right to inherit through the natural parent by way of representation. The right of inheritance was removed by the Maryland Legislature in 1963 when it declared: Upon entry of a decree of adoption, the adopted child shall lose all rights of inheritance from its parents and from their natural collateral or lineal relatives. 2.5. Parent and Child Relationship (Page 100) For purposes of intestate succession by from, or through, an individual: (1) An individual is the child of his or her genetic parents, whether or not they are married to each other, except as otherwise provided in paragraph (2) or (5) or as other facts and circumstances warrant a different result. (2) An adopted individual is a child of his or her adoptive parent or parents. (A) If the adoption removes the child from the families of both of the genetic parents, the child is not a child of either genetic parent. (B) If the adoption is by a relative of either genetic parent, or by the spouse or surviving spouse of such a relative, the individual remains a child of both genetic parents. (C) If the adoption is by a stepparent, the adopted stepchild is not only a child of the adoptive stepparent but is also a child of the genetic parent who is married to the stepparent. The adopted stepchild is also a child of the other genetic parent for the purposes of inheritance from and through that parent, but not for purposes of inheritance from or through the child. (Like UPC 2-114(b)). (3) A stepchild who is not adopted by his or her stepparent is not the stepparents child. (4) A foster child is not a child of his or her foster parent or parents.

(5) A parent who has refused to acknowledge of has abandoned his or her child or a person whose parental rights have been terminated, is barred from inheriting from or through the child. (1) Adult Adoptions. The adoption of an adult may be useful in preventing a will contest by denying standing to the potential contestants. The only person who has standing to challenge the validity of a will are those who would take if the will were denied probate. To gain standing, the decedents collateral relatives must first overturn the adoption. (2) Adoption and the interpretation of wills and trusts. In most states today, a minor adopted by A is presumptively included in a gift by T to the children, issue, descendants, or heirs of A. The presumption yields to a contrary expression of intent by the donor. Minary v. Citizens Fidelity Bank & Trust Co. Facts. Mother died leaving a will leaving income for her husband and three sons. Upon the death of the final beneficiary, the trust was to be distributed to her surviving heirs and if none, to the church. Her son Alfred adopted his wife so that she might inherit under the provisions of his mothers will. Rule. An adult person may be adopted in the same manner as provided by law for the adoption of a child and with the same legal effect. When one rule of law does violence to another it becomes inevitable that one must then give way to the other. It is of paramount importance that a man be permitted to pass on his property at his death to those who represent the natural objects of his bounty. Issue. Whether the adopted wife of Alfred is entitled to inherit under Amelias will as a surviving heir of Amelia? Held. No. Adoption of an adult for the purpose of bringing that person under the provisions of a preexisting testamentary instrument when he clearly was not intended to be so covered should not be permitted and we do not view this as doing any great violence to the intent and purpose of our adoption laws. Note: Doris Duke & Adoptive Parents Remorse ONeal & Wilkes Brief Fact Summary. Appellant claims she is entitled to inherit from decedent as his virtually adopted daughter, and appeals from a judgment not withstanding the verdict, that was granted on the ground that appellants paternal aunt had no legal authority to enter into an adoption contract with decedent. Synopsis of Rule of Law. A legal custodian does not have the right to consent to the adoption of a child, as this right is specifically retained by a childs parent or guardian. Issue. Whether the court correctly determined that Page was without authority to contract for ONeals adoption? Held. Yes. Judgment affirmed.Page had no authority to enter in to the adoption contract with Cook, and therefore the contract was invalid. The obligation to care and provide for appellant undertaken by Campbell, and later Page, was not a legal obligation, but rather a familial obligation resulting in a custodial relationship that is characterized as something less than that of a legal custodian. This relationship carried no authority to contract for appellants adoption. Georgia Code defines legal custodian as a person to whom legal custody has been given by court order, and who has the right to physical custody of the child, and has the right to determine the nature of the care and treatment of the child, as well as to provide that care. Dissent. Equitable or virtual adoption (in contract theory) should have been used to consider that done which ought to have been done. Full performance of the child should be sufficient to overcome an objection that the agreement was unenforceable or else fraud. And the child was unable to act to insure

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the validity of the contract when the contract was made. The child is not just the third party beneficiary but a party thereto. We should not focus only on intent of adoptive/natural parents. Class issue implicated here. Equitable adoption doctrine - a type of adoption recognized without a court order where the actions or promises by the parent create a contract for adoption between the parent and the child. Adoption by estoppel - If the parent is found to have acted in such a way as to create an equitable adoption, the parent cannot refuse or deny the adoption and an action to enforce can be brought to stop the parent or another from denying an adoption. The issue of equitable adoptions and adoptions by estoppel usually arise when the adoptive parent dies without a will and the child presents a claim to a part of the estate as an heir. Also, if the parent dies with a will but does not mention the adopted child, the child may still have a claim to a part of the estate because most states will not allow a child to be disinherited without an explicit statement that the child should get nothing. In these cases, the child will have to establish that a contract for adoption was formed through some actions or promises by the parent, and that the child was adopted without the legal procedures. b. Posthumous children - For purposes of inheritance or of determining property rights, it is to a childs advantage to be treated as in being from the time of conception rather than from the time of birth, the child will be so treated if born alive. Courts have established a rebuttable presumption that the normal period of gestation is 280 days. If the child claims that conception dated more than 280 days before birth, the burden of proof is usually upon the child. There is a rebuttable presumption that a child born 300 days (UPA) after the death of a womans husband is a child of that husband. c. Non-marital children - All states have alleviated this unsympathetic treatment of nonmarital children and now permit inheritance from the mother but vary as to from father. U.S.S.C. held cannot have total disinheritance from father because not rationally related. Instead can have valid paternity test requirements. Most states permit paternity to be established by evidence of subsequent marriage, acknowledgement by father, adjudication during life of father, clear and convincing proof after his death. Authorities split as to if parents can inherit from child born out of wedlock. d. Reproductive Technology & New Forms of Parentage - The posthumously conceived child differs from the posthumous child in that the former is both born and conceived after the death of one or both of the childs genetic parents, therefore, by definition, this is a nonmarital child even though the childs parents might have been married prior to the childs conception.

Woodward v. Commissioner of Social Security Brief Fact Summary. Warren Woodward decided to put his semen in a holding bank so his wife could be artificially inseminated decided to After learning that he his sickness may later cause him to be sterile,. After he died three years later, appellant, his wife, Lauren Woodward, wife became pregnant and bore children as a result of the insemination. The wife filed an application to receive her husbands social security benefits on behalf of her children. Synopsis of Rule of Law. To determine whether posthumously conceived genetic children may enjoy inheritance rights under an intestacy statue, the court balances (1) the best interests of children, (2) the States interest in the orderly administration of estates, and (3) the reproductive rights of the genetic

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parent. Under intestacy law, a nonmarital child must obtain a judicial determination of paternity as a prerequisite to succeeding to a portion of the fathers estate if there is no acknowledge of paternity by the father. Posthumous genetic children may enjoy the inheritance rights of issue under intestacy law in limited circumstances where, (1) the surviving parent or the childs other legal representative demonstrates a genetic relationship between the child and the decedent, (2) the survivor or representative must establish that the decedent affirmatively consented to posthumous conception and to the support of any resulting child, (3) the proper time limitations are met,and (4) notice is given to all parties. Issue. Whether posthumous children who are the result of artificial insemination may receive social security benefits if their genes can be traced to the alleged father. Held. No. Posthumous conceived genetic children may not receive inheritance rights under an intestacy statue where the reproductive rights of the genetic parent are greatly infringed. It is within the best interests of children to be supported by their natural parents and the legislature has expressed this intent in creating intestacy statutes. Furthermore, the state conduct paternity suits in an orderly fashion by placing time constraints on the period in which parents may file for benefits. However in situations in which an individual chooses to medically preserve his gametes for use by his spouse, a number of years can pass before they are used. In that period of time other changed circumstances can intervene to change the individuals mind. Therefore before a posthumous child may receive inheritance rights under statutory law, the decedent must have affirmatively consented to conception and to the support of any resulting child. Note: Surrogate Motherhood and Married Couples - Under the UPC, inheritance rights turn on whether a parent-child relationship exists. Child born to a surrogate - in the absence of a court order to the contrary, the surrogate does not have a parent-child relationship with the child unless the surrogate is the childs genetic mother and no one else has a parent-child relationship with the child. Intended parent - a person who entered into an agreement with the surrogate stating that the person would be the parent of the child, has a parent-child relationship with the child if the person functioned as a parent of the child within two years of the childs birth. Note: Assisted Reproduction and Same-Sex Couples - There can be a parent child relationship with another person if the other person either consented in writing to assisted reproduction by the birth mother with the intent to be the other parent of the child or functional as a parent of the child within two years of the childs birth. 2. Advancements - Only applies in intestacy. If a child wishes to share in the intestate distribution of the deceased parents estate the child must permit the administrator to include in the determination od the distributive shares the value of any property that the decedent, while living, gave the child by way of an advancement. Policy o A parent would want equal distribution of assets among their children and that true equality can be reached only if lifetime gifts by the parent are taken into account in determining the amount of the equal shares. Rule o When a parent makes an advancement to the child and the child predeceased the parent, the amount of the advancement is deducted from the shares of the childs descendants if other children of the parent survive. o If a gift is treated as an advancement, it is accounted for in distributing the decedents estate by bringing in into the hotchpot.

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Add amount of advancement to the full estate. Then divide that number by the number of takers. Then subtract the advancement amount to the person who received it. Example: 10 + 50 = 60/3 , everyone gets 20 but one person already got advanced 10, so they only get 10. Example: 40 + 50 = 90/3 30, everyone gets 30, one person already got 40 so they are out (no need to give extra back, we know that T wanted to give that person at least 40), two people left cannot each take 30 because pot is only 50, so they split and take 25. To avoid the application of the doctrine, the child has the burden of establishing that the transfer was intended as an absolute gift that was not to be counted against the childs share of the estate. Many states have reversed the presumption of an advancement because of proof of intent problems. In these states, a lifetime gift is presumed not to be an advancement unless it is shown to have been intended as such Uniform Probate Code Provisions o Section 1-120 Assisted Reproduction o Section 2-121 Gestational Carrier o Section 2-109 Advancements

SECTION 2-109. Advancements. (a) If an individual dies intestate as to all or a portion of his [or her] estate, property the decedent gave during the decedents lifetime to an individual who, at the decedents death, is an heir is treated as an advancement against the heirs intestate share only if (i) the decedent declared in a contemporaneous writing or the heir acknowledged in writing that the gift is an advancement, or (ii) the decedents contemporaneous writing or the heirs written acknowledgment otherwise indicates that the gift is to be taken into account in computing the division and distribution of the decedents intestate estate. (b) For purposes of subsection (a), property advanced is valued as of the time the heir came into possession or enjoyment of the property or as of the time of the decedents death, whichever first occurs. (c) If the recipient of the property fails to survive the decedent, the property is not taken into account in computing the division and distribution of the decedents intestate estate, unless the decedents contemporaneous writing provides otherwise. Section C. Bars to Succession 1. Homicide In re Estate of Mahoney Brief Fact Summary. Appellant was convicted of manslaughter for the death of her husband, and appeals from a decree, wherein the probate court determined appellant was not entitled to a share of her deceased husbands estate. Synopsis of Rule of Law. Legal title passes to the slayer but equity holds him to be a constructive trustee for the heirs or next of kin of the decedent. Issue. Whether a widow convicted of manslaughter in connection with the death of her husband can inherit from his estate? Held. Yes. Decree reversed and cause remanded.The judgment issued by the probate court decreed the estate directly to the parents of the decedent and failed to decree it to the appellant, as constructive trustee, which was in direct contravention of the statutes of descent and distribution. Discussion. The principle that one shouldnt be able to profit thru their wrong must not be extended to every case in which a killer acquires property from his victim as a result of the killing.

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Only in Wisconsin can someone expressly opt out of the slayer rules. Slayer Statutes and other litigation: o Nonprobate transfers? UPC 2-803 - provides that a wrongful acquisition of property must be treated in accordance with the equitable principle that a killer cannot profit from his wrong. o If killer cant take, then who? UPC 2-803 the killer is treated as having predeceased the victim and provides that the killer is treated as having disclaimed the property. Jxs are split on who may take: CA, Rhode Island and Virginia extend the bar by statute to the killers descendants. o Is a criminal conviction required? A final criminal conviction of a felonious and intentional killing is conclusive, and acquittal is not dispositive. In absence of a conviction, upon application of an interested person, the court must determine whether, under the preponderance of the evidence standard (not the criminal law beyond a reasonable doubt standard) the individual would be found criminally accountable for the killing. If so, the individual is barred. Note: The Chinese System & Other Conduct-Based Restrictions on Inheritance Ca/Penn/Ill/Oregon/Maryland have statutes that deny inheritance from children or elderly relative who were abused by their heir China, punishes bad behavior and rewards good behavior. Chinese approach encompasses a broad range of misconduct, and it permits court to reduce or eliminate a wrongdoers share. It also rewards good behavior even by worthy nonrelatives at the expense of the decedents family members who did not support the decedent. o Time and labor intensive inquiry o Court evaluate on a case by case basis o Flexible behavior based model o Increase in number of complexity of inheritance disputes o American system does not penalize unworthy heirs o Considers blended and extended family members 2. Disclaimer - when an heir or devisee declines to take the property given them by decedent. Sometimes an heir or devisee will decline to take the property, a refusal that is called a disclaimer. Disclaimers allow for post mortem estate planning. At common law, the heirs renunciation was treated as if title passed to the heir and then from the heir to the next intestate successor. The reason for this rule was feudal obligations. A gift, either inter vivos or by will, requires acceptance by the donee. To eliminate the difference between disclaiming and devise, almost all states have enacted disclaimer legislation that provides that the disclaimant is treated as having died before the descendent or before the time of distribution. o Thus the property does not pass to the disclaimant and therefore makes no transfer of it. o This fiction allows the decedents family to undertake post-mortem estate planning. Saving estate taxes o Most common reasons = reduce taxes keep property from creditors. o Disclaimed property is treated as passing directly to others, bypassing the disclaimant. o If treated at common law, heirs disclaimed share would be treated as a taxable gift. The different conceptions of how title passed at death produced unexpectedly different tax results. o

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Avoiding Creditors o So long as disclaimer was made prior to filing of bankruptcy, the federal courts respect the relation back under the state disclaimer law. But if petition filed before disclaimer, courts hold disclaimer ineffective under federal law. Time o Most state disclaimer statutes require that a disclaimer be made within nine months of the creation of the interest being disclaimed (because of IRS code) (UPC does not have time limit). Uniform Probate Code Section 2-803 effect of homicide Section 2-801 disclaimer Drye v. United States Brief Fact Summary. Appellant seeks to have the court find that when he disclaimed the inheritance from his mothers estate it was effective to pass the inheritance on to his daughter free from the federal tax lien. Synopsis of Rule of Law. Where one has the power to channel an estates assets, it warrants the conclusion that they hold property or a property right that is subject to governments liens. Issue. Whether appellants disclaimer was effective to pass the property to his daughter free from the federal tax lien? Held. The control rein appellant held under state law rendered the inheritance property or rights to property belonging to him within the meaning of federal law, and thus is subject to the federal tax liens. Discussion. The disclaiming heir inevitably exercises dominion over the property, as they determine who will and will not receive the property. Note: Disclaimers to Qualify for Medicaid Troy v. Hart Brief Fact Summary. Appellant appeals from a judgment wherein the court declined to allow a Medicaid recipient to rescind a disclaimer he made in respect to an inheritance he was to receive from his deceased sisters estate. Synopsis of Rule of Law. Where a recipient renounces an inheritance that would cause him to be financially disqualified from receiving benefits, the renunciation should incur the same penalty of disqualification that acceptance would have brought about, and should render the recipient liable for any payments incorrectly paid by the state in consequence. Issue. Whether the court erred in holding that the Medicaid recipient could disclaim his inheritance? Held. No. Judgment affirmed.Lettichs disclaimer is valid. The effect of Lettichs disclaimer was to transfer his intestate interest in Alta Maes estate to his surviving sisters. Accepting the inheritance would have made him financially ineligible for Medicaid. Lettichs failure to disclose the inheritance he was to receive from his sisters estate, resulted in the improper payment of Medicaid benefits by the State on behalf of Lettich after the expiration of the grace period, inasmuch as the inheritance would have caused the program to reassess Lettichs eligibility in light of his changed financial circumstances.

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Chapter 3. Wills: Capacity and Contests Section A. MENTAL CAPACITY 1. The Test of Mental Capacity a. Requirements of mental capacity (to be competent to make a will) 1. T must be an adult age 18 or older 2. Must be capable of knowing and understanding in a general way a. the nature and extent of his or her property and b. the natural objects of his or her bounty and c. the disposition that he or she is making of that property and d. relating these elements to one another and forming an orderly desire regarding the disposition of the property. 3. The test is one of capability and not actual knowledge In re Estate of Washburn (S.C. New Hampshire, 1997) (Minority rule to put burden of proof/persuasion on the proponents of the will to show testamentary capacity) Facts: Respondent, (Barbara) the principal beneficiary of 1992 will, appeals an order which held that the testatrix lacked the testamentary capacity necessary to execute the will. Washburn executed three wills: #1 - October 1986 left $1,000 to several named people and provided rest of estate go to her sister or default to her niece Catherine (petitioner). #2 - March 1992, left $1000 to certain people, $5000 to her caretaker (Barbara) and residue to her sister (Margaret). #3 - April 1992, left $5000 to her niece (Catherine) and another person and provided that Barbara receive the residue, which included home and personal estate. Niece challenged testamentary capacity of the testatrix to execute the will. Issue. Whether testatrix was mentally capable enough to execute her will in April 1992. Rule. Every person is presumed to be sane until there is some evidence shown to rebut this presumption. Holding. This presumption was rebutted here where: Court heard lay and expert (medical) testimony that found that testatrix was suffering from Alzheimers disease at the time of the April 1992 execution. Also lay evidence corroborated expert evidence of confusion, forgetfulness and lack of competency at time in question. Testators intentions fluctuated. Second and third wills executed several weeks apart and were vastly different. After presumption was rebutted, respondent has to prove capacity by the preponderance of the evidence standard (+50%) (burden of persuasion). Respondent was unable to do this (only evidence respondent had was house in exchange for her services). Wilson v. Lane (S.C. of Georgia, 2005) (Majority rule is that once the proponent adduces prima facie evidence of due execution, the party contesting the will (challenger) on the grounds of lack of capacity has the burden of persuasion. (Proponents prefer this.) Facts. Executrix offered will for probate and Wilson challenged Greers testamentary capacity. The will in question distributed Greers property equally to 17 beneficiaries, 16 of whom were blood relatives. The only non-blood relative was Lane, who spent most of her time caring for Greer before her death in 2000. Propounders established a presumption that Greer possessed testamentary capacity

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Drafting attorney testified that in his opinion, at time will was signed, Greer was mentally competent and she carefully selected every beneficiary named in will. Other witnesses testified she had a clear mind at the time the will was signed. Caveators, however, never presented any evidence whatsoever showing that Greer was incapable of forming a decided and rational desire as to the disposition of her property. Law does not withhold from aged, weak-minded, the capricious, to make a will. Only evidence they gave: Eccentric, aged, peculiar Had irrational fear of flooding in her house Had trouble bathing and dressing herself Unnecessarily called fire department for non-existent fire Guardianship petition filed several months after made will Issue. Whether Greer lacked testamentary capacity at the time she executed her will? Rule. A person is mentally capable to make a will if has sufficient intellect to enable her to have a decided and rational desire as to the disposition of her property. Holding. No evidence to show that Greer lacked testamentary capacity. All that is required to sustain the will is proof that Greer was capable of forming a certain rational desire with respect to the disposition of her assets. Dissent. (1) The issue is not for the court to decide is she lacked testamentary capacity; the issue is whether the evidence supported the jurys finding and whether the JNOV was proper. (2) In this case, the evidence can support the jurys finding and thus JNOV was improper. RULE: A court must allow the issue of testamentary capacity to go to a jury when there is a genuine conflict in the evidence regarding the testators state of mind. Must look at the totality of the evidence. Arguments For/Against Testamentary Capacity Requirement? 1. Upset what T intended to do 2. Overriding Ts decisions 3. Law of undue influence can take care of fraud 4. Expectation jeopardized by an irrational thinker 5. Protects T, will with thought will be the one upheld ii. Professional Responsibility 1. A lawyer may not draft a will for a person the lawyer believes to be incompetent, but the lawyer may rely on her own judgment of the clients capacity. iii. Ante Mortem Probate Some states permit the probate of a will during the testators life. During life they institute and adversary proceeding to declare the validity of a will and the T capacity and freedom from undue influence of the person executing the will. All beneficiaries and heirs apparent must be made parties to the action. Prophylactic against later will contests. Note: Capacity Thresholds The legal capacity standards for making a will are lower than for: o Making in irrevocable lifetime gift, enter into a contract, conveying property, and marriage o Policy: protection from economic loss and impoverishment is a less important consideration for someone who is dead. Note: Why Require Mental Capacity? The requirement of mental capacity assures a sane person that the disposition he desires will be carried out even if he later becomes insane and makes another will. i.

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Protects a senile or incompetent testator from exploitation by others Protects the decedents family, i.e. expectation of inheritance tends to preserve the family as a unit INSANE DELUSION a. About 1. A person may have sufficient mental capacity generally to execute a will but be suffering from an insane delusion so as to cause a will to fail for lack of testamentary capacity nonetheless. Most litigation based on causation. 2. A delusion (legal concept) is a false concept of reality. An insane delusion which bears on testamentary capacity is one which the testator adheres against all evidence and reason to the contrary. a. An insane delusion is a belief not susceptible to correction by presenting the testator with evidence indicating the falsity of the belief. b. Difference between insane delusion and mistake = susceptibility to correction c. The insane delusion must affect the dispositions made. i. So need causation as to these certain provisions. d. Insane delusion requires courts to invalidate wills or their provisions, which were affected by the delusion. e. Minority: i. Some courts have held that if there is any factual basis at all for the testators delusion, it is not deemed insane. Causation presumed here. f. Majority: i. a delusion is insane even if there is some factual basis for it if a rational person in the testators situation could not have drawn the conclusion reached by the testator.

In re Strittmater (Crt. Of Appeals, N.J. 1947) Facts. Appellants challenge probate on ground that the testatrix was insane. Only medical witness was Doctor to Strittmater. In doctors opinion, Strittmater suffered from split personality. The deceased was never married and lived with her parents until their death. Numerous memoranda and comments written by decedent on the margins of books constitute chief evidence of her mental condition. Trial Court found this as proof of her morbid aversion to men and feminism to a neurotic extreme. October 31, 1944 she executed her last will, leaving everything to the N.J. branch of the National Womens Party. Her only relatives were her cousins, which she saw very little the last few years of her life. Issue. Whether Miss Strittmaters will is the product of her insanity. Rule. Holding. Probate should be set aside because judge thinks her paranoic condition, especially her insane delusions about the male, lead her (underlying causation) to her to leave her estate to the National Womens Party. Policy. To what extent are notions of capacity and insane delusion based on social constructions of what is normal! Breeden v. Stone (S.C. Colorado 2000) Facts: In 1996 P died in his home from self-inflicted gunshot wound two days after he was involved in a highly publicized hit-and-run accident that killed the driver of the other vehicle. Police found a hand-written document that said, I want everything I have to go to Sydney Stone. Decedent previously executed a

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formal will in 1991 leaving his stuff to other people than Stone. Holographic will based on lack of testamentary capacity. T.C. found man used alcohol and cocaine for several years before his death and on that day. Had incredible mood swings. Worried about government threats against him. Called friends over to ask to be taken to emergency room because thought was covered in bugs. Other witnesses said his hand writing was good and he told friends that he did not want to leave his stuff to his family. Knew what kind of stuff he had and mentioned it in the will. Had omitted father and sister from wills in the past. Issue. Whether Breeden lacked the testamentary capacity to validate the holographic will. Rule. These tests are NOT mutually exclusive; a sound mind includes the presence of the Cunningham factors and the absence of insane delusions that materially affect the will. Insane Delusion test: An insane delusion is a persistent belief, which has no existence in fact and is adhered too against all evidence. A party asserting that a T was suffering from an insane delusion must meet the burden of showing that the T suffered from such delusion. Before a will can be invalidated because of a lack of testamentary capacity due to an insane delusion, the insane delusion must materially affect the disposition of the will. Cunningham Sound Mind Test (Page 175) [general capacity] This usually applies when objectors argue that the testator lacked general testamentary capacity. T understands the nature of their act T knows the extent of their property T understands the proposed testamentary disposition T knows the natural objects of their bounty The will represents Ts wishes Holding. Trial court correctly applied the two exclusive tests for testamentary capacity to find the testator was of sound mind at the time he executed the holographic will. Once a proponent of a will has offered prima facie proof that the will was duly executed, any contestant then assumes the burden of proving a lack of testamentary capacity, including a lack of sound mind, by a preponderance of the evidence standard. Sound mind includes presence of Cunningham factors and lack of I/D. Not enough evidence to overrule Prima Facie case. No causation, would have done this otherwise, hated family, never contacted them, disapproved of them. Note: Dean Mans Statutes Minority of states: Prohibit testimony by an interested party of a decedents oral statement in support of a claim against the decedents estate. Uniform Probate Code: 2-501 who may make a will. Section B. UNDUE INFLUENCE 1. Definition a. It is only when the will of the person who becomes a testator is coerced into doing that which he or she does not desire to do, that it is undue influence. i. Can occur with or without a confidential relationship. ii. Proof may be inferential or circumstantial. iii. Applies to inter-vivos transfers as well. b. Rule 1. If part of the will is the product of undue influence, those portions of the will that are the product of such influence may be stricken and the remainder of the will allowed to stand, if the invalid portions of the will can be separated without defeating the testators intent or destroying the testamentary scheme. 19

Restatement (Third) of Property: Wills and Other Donative Transfers (2003) 8.3 Undue Influence, Duress, or Fraud (a) A donative transfer is invalid to the extent that it was procured by undue influence, duress, or fraud. (b) A donative transfer is procured by undue influence if the wrongdoer exerted such influence over the donor that it overcame the donors free will and caused the donor to make a donative transfer that the donor would not otherwise have made. Factors: (1) was the donor susceptible to undue influence; (2) the alleged wrongdoer had an opportunity to exert undue influence; (3) the alleged wrongdoer had a motive/disposition to exert undue influence; and (4) there was a result appearing to be the effect of the undue influence. Presumption: Confidential relationship fiduciary, reliant, dominant-subservient; AND Suspicious Circumstances What is undue influence? Where capacity involves an assessment of the testators status, an undue influence case involves an assessment of conduct.

Estate of Lakatosh (Pa. Sup. 1994) Facts. Roger befriended the decedent who was in her 70s living alone with only occasional visits from others. Roger visited her at least once a day and lived 3 miles from her. Roger assisted Rose around the house and ran errands for her. A few months after they met Roger suggested Rose give him power of attorney, she also executed a new will and gave him $268,000 who was not present at the execution. The lawyer who drafted the will was Rogers second cousin to whom Roger had referred Rose. He also caused $72,000 to be transferred to Patricia Fox who was Rogers friend but not known by Roger personally. Decedent was living in squalor and filth and had fallen behind on payments of bills, she revoked Rogers power of attorney but then dies shortly after. Issue. With whom does the burden of proving/disproving undue influence lie? Rule. When proponent of will proves that the formalities of execution have been followed, a contestant who claims that there has been undue influence has the burden of proof (persuasion). The burden of proof may be shifted so as to require the proponent to disprove undue influence. The contestant must prove by clear and convincing evidence: 1) confidential relationship and suspicious circumstance here; 2) the person enjoying the relationship received the bulk of estate; and 3) decedent intellect weakened. Holding. The court shifted the burden on Roger to rebut the presumption of undue influence, which Roger had to prove by clear and convincing evidence. He did not meet this burden and trial ct. affirmed. Note: Presumptions, Burden Shifting, and Undue Influence To trigger the presumption of undue influence, the contestant must establish the existence of a confidential relationship between the influencer and the testator plus, one or more additional suspicious circumstances. o Confidential relationship. Fiduciary, reliant, or dominant-subservient, AND o Suspicious Circumstances. i.e. influencer procured the will, the influencer received the bulk of the estate, etc. o Burden Shifting. If the presumption is triggered, the burden shifts back to the proponent to rebut the presumption. To rebut, the grantee must prove by clear, satisfactory, and convincing evidence

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that the grantee acted in good faith throughout the transaction and the grantor acted freely, intelligently, and voluntarily. Note: Care Custodian By statute, California invalidates any donative transfer to a care custodian (protective, public, sectarian, mental health, private assistance, advocacy agency, health services, social services to elders or dependent adults, (preexisting personal friends-Bernard v. Foley)) of the donor. To validate the transfer, the custodian must satisfy an exception Independent lawyer who signed statutory certificate of independent review In re Will of Moses (Miss. S. C. 1969) Facts: Moses married three times, each of her husbands died. After death of third husband, Moses had lover named Holland. Holland was also her attorney, and the relationship continued for several years until Moses died at 57. Before death, had heart problems, cancer, and became an alcoholic. Three years before her death made a will devising almost all of her property to Holland drafted by lawyer Dan Shell, who had no connection with Holland, who did not tell Holland of the will. Moses sister attacked the will on UI grounds Issue. Whether Moses will was the result of undue influence when she had the independent advice and counsel of one entirely devoted to her interests? Rule. When there is a confidential/fiduciary relationship, it gibes rise to a presumption of undue influence that can be overcome only by evidence that, in making the will, the testator had acted upon the independent advice and counsel of one entirely devoted to her interest. Holding: UI found. Court said Holland did not meet the burden to overcome the presumption because attorney did not discuss with her who her legal heirs may be or her preference to give to a nonrelative to the exclusion of her blood relatives. Attorney simply acted as a scrivener. Evidence finds Holland was a confidential fiduciary, and he attended to her daily. Aging woman, seriously ill, disfigured by surgery, hopelessly addicted to alcohol was bemused by Holland and wanted him to marry her. This gave rise to a presumption of UI, which could be overcome only by evidence that in making the will Moses acted upon the independent advice and counsel of one entirely devoted to her interest. Holland gave evidence that Moses had independent advice and counsel devoted entirely to her interests. In re Kaufmanns Will (N.Y. App. Division 1964) Facts. Kaufman, 34, millionaire by inheritance, seeking independent life moved to New York met Weiss, 39, a man without material assets and employed him as his financial consultant after a year of knowing him, and had all his records moved to New York. Around same time Weiss moved in with Kaufman, bought townhouse and made part of it office for Weiss, they both lived there. Weiss ran the home while Kaufman painted. In social life they appeared as a couple. Kaufman gave Weiss complete trust, Weiss had a law degree but did not practice. Weiss took charge of all bank accounts. They lived together until Kaufman died unexpectedly in 1959. Starting in 1951 Kaufman made wills in successive years, each increasing Weisss share. In 1958 executed a will which left all his property to Weiss, which had a letter to his family written in 1951 but passed along with each will. The letter was a coming out of the closet letter. In 1952 gave Weiss power over remains and funeral arrangements, and power to consent. Upon Kaufmans death, Kaufmans brother sued to have will set aside for UI. Issue. Whether the instrument offered for probate was the free, untrammeled and intelligent expression of the wishes and intentions of testator. Rule. A will is invalid where the evidence shows that the testator did not freely and voluntarily create his/her will because another individual exerted undue influence over his mind.

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Holding. No, UI, testator was pliable and easily taken advantage of, long history of dominance and subservience between them. Testator relied exclusively upon Weiss knowledge and judgment. UI tainted all wills. What To Do About UI With Clients Independent review certificate Ask and record why clients giving to unusual person Change presumption for people who live together Should not consider sex/intimacy as part of confidential relationship Make intellectually weakened a prong of the test When making a statement of reason for disinheritance, client should be cautioned against Testamentary libel provoke will challenges. Lipper v. Weslow (Minority Burden Order)(Texas App. 1963) Facts: Sophie Block leaves estate to children she had with second husband but not to the grandchildren she had with first husband (child died), even though they could take in intestacy by representation. Issue. Whether there is any evidence of undue influence on a will that is written by a lawyer who is also a beneficiary of the will. Rule. Will contestants must prove that the will as written resulted from the D substituting his mind and will for that of testator. Holding: No. Test Applied: Whether such control was exercised over the mind of the testatrix as to overcome her free agency and free will and to substitute the will of another so as to cause the testatrix to do what she would not have others done but for such control. The court here, applied a different order of burden. They put the burden on the challenger/contestant of the will to prove UI. No evidence/proof of UI supplied. She was able to articulate her feelings, the children lived next door, had keys to house. Son did not like brother, she was in good state of mind. Strong will. Good physical condition. * In most states the presumption of undue influence arising from a confidential relationship and suspicious circumstances would be enough to uphold a jury verdict of UI unless rebutted. Note: No Contest Clause If you contest will you will receive nothing, or a token amount. In order for this to work, have to give something to person in will in the first place. o Choice of taking smaller provision in the will, or challenging the will for the chance at more if the will is invalidated, but at taking nothing if the will is upheld. o Courts pulled in opposite directions (Majority enforce, unless probable cause) (Minority, Indiana and Florida no enforce)(California enforces unless contestant alleges forgery or subsequent revocation by a later will or codicil, or the challenge is to a provision benefiting the drafter of the will or any witness thereto) Discourages unmeritorious litigation Discourages family quarrels Discourages defamation of the Ts reputation Inhibit lawsuit that would prove lack of capacity or UI Nullify safeguards built around the T disposition of property Note: Bequests To Attorneys

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Undue Influence Majority: Presumption of UI arises when an attorney-drafter receives a legacy, except when related to testator. Presumption can be rebutted only by clear and convincing evidence provided by attorney. New York, attorney named in will, must submit an affidavit explaining the facts and circumstances of the gift, and if the surrogate is not satisfied with the explanation, hearing is held to determine whether the attorneys bequest was the result of UI. California, legislature enacted a statute invalidating any donative transfer to a lawyer who drafts the instrument unless the lawyer is related by blood or marriage to the testator. o Exception: Gift to a nonrelated lawyer-drafter if the client consults an independent lawyer who attaches to the instrument a Certificate of Independent Review which state that the reviewing lawyer concludes the gift is not due to UI, fraud, or duress. Unethical Conduct Fiduciary Appointments Planning For and Avoiding a Will Contest a. Contest grounds. Most common grounds, undue influence & capacity b. Warning Signs c. Strategies i. A letter to the lawyer ii. Video discussion iii. Family meeting iv. Professional examination v. Extra precautions at the will execution vi. No-contest clause vii. Intervivos trust/gift viii. Write a check Letter to the lawyer Video discussion Family meeting Professional examination Extra precautions at the will execution No-contest clauses Inter vivos trust/gifts

Section C. Fraud - a provision procured by fraud is invalid, remainder stands unless the fraud permeates the entire will or the portions are inseparable from the rest of the will. Fraud occurs where the testator is deceived by a deliberate misrepresentation and does that which he would not have done had the misrepresentation not been made. o Misrepresentation made with (1) intent to deceive the testator; and (2) the purpose of influencing the testamentary disposition. Fraud by inducement - occurs when a misrepresentation causes the testator to execute or revoke a will to refrain from executing or revoking a will, or to include particular provisions in the wrongdoers favor.

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A fraudulently procured inheritance or bequest is invalid only if the testator would not have left the inheritance or made the bequest had the testator known the true facts. Fraud in the execution - occurs when a person intentionally misrepresents the character or contents of the instrument signed by the testator, which does not in fact carry out the testators intent.

Puckett v. Krida Facts. Two in-home nurses were hired to provide care for Nancy Hooper after her return home from the hospital due to Alzheimers. Her condition improved under their care, but they persuaded her that her relatives were wasting her money and wanted to put her in a nursing home. This was not true. Mrs. Hooper wrote a will leaving the bulk of her estate to the defendants as a result. Issue. Whether the s committed fraud and undue influence to become the beneficiaries under Mrs. Hoopers will. Rule. Since frauds are generally secret, they have to be tracked by footprints, marks and signs made by the perpetrators and discovered in the light of the attending facts and circumstances. Holding. Yes, affirmed. The s status as nurses equaled a fiduciary/confidential relationship with Hooper and Kirda even had a power of attorney, making even greater fiduciary obligations. Section D. Duress - when undue influence becomes overly coercive, it is duress. A donative transfer is procured by duress if the wrongdoer threatened to perform or did perform a wrongful act that coerced the donor into making a donative transfer that the donor would not otherwise have made. The law invalidates transfers compelled by duress. Latham v. Father Divine Facts. Mary Sheldon Lyons first cousins contested her will that left her estate to Father Divine and his religious order. Lyon had expressed a desire to revoke this will and replace it with one that would include her cousins. This new will was drafted but in order to keep her from executing it, the cult engaged in false representations, undue influence and physical force. Lyon was killed by a surgery performed by a doctor hired by the s. Issue. Whether, based on the facts alleged in their complaint, s would be entitled to a judicial declaration? Rule. Where a devisee or legatee under a will already executed prevents the testator by fraud, duress or undue influence from revoking the will and executing a new will in favor of another or from making a codicil, so that the testator dies leaving the original wil n force, the devisee or legatee holds the property thus acquired upon a constructive trust for the intended devisee or legatee. Holding. Reversed the lower court and created a constructive trust. This trust does not change the will, rather it acts upon the gift itself, requiring the receivers to turn over the gift to those intended to be benefited by the testator. A constructive trust (an equitable remedy) is sometimes called a fraud-rectifying trust. May be imposed where no fraud is involved if the court things that unjust enrichment would result if the person retained the property.

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Chapter 4. Wills: Formalities and Forms Section A. Execution of Wills 1. ATTESTED WILLS - An attested will is a will that is witnessed. a. The Function of Formalities Baron, gifts, Bargains, and Form Ultimate objective is to make sure courts favor giving effect to an intentional exercise of owners power to determine his own successors in ownership. With that objective in mind, courts design formalities focused only on form, to show people what they must legally do to make their transfer effective. They should not be ends themselves, enthroning formality over frustration of intent. In giving, people are fundamentally unreliable and deceitful. Lindgren, The Fall of Formalism People are not stupid, yet for 100s of years the law of wills has treated them as if they were which leads to a level of formalism unmatched in American law. People need extraordinary protection form themselves. Efficiency to court system if people comply with requirements. Protects against fraud and serves to ensure evidence about what someone wanted. Evidentiary function, uniform way to show intent, helps distinguish a draft from a will. Gulliver, Classification of Gratuitous Transfers 1. Ritual Function or Cautionary Function Finality of Intent to Transfer Courts need to be convinced that the statements of the transferor were deliberately intended to effectuate a transfer. Avoid carelessness, drafts. Ritual Function Requires the performance of some ceremonial for the purpose of impressing the transferor with the significance of his statements and thus justifying the court in reaching the conclusion. 2. Evidentiary Function Issues of validity of transfer is almost always raised after person is dead so we need satisfactory evidence for the court to consider the transferors intent. Oral testimony could be inaccurate based on lapse of memory, misinterpretation, statements of others, personal interests. Forgery and perjury very possible. 3. Protective Function Prophylactic purpose of safeguarding the testator at the time the will is drafted from UI or other forms of imposition. Little concern in modern day (prime of life in presence of attorney), but in olden days, used to be drafted on deathbed when weak against improper influence and decrepit physical condition. Both witnesses can talk about what they saw together, against UI. 4. Channeling Function Easier to determine whether a coin is a quarter if they are all the same. It is easier to determine a persons wishes at death if those wishes are recorded in standardized form. Arguments Against Formalities Form over intent, which can be thwarted. Other formalities may be more reliable evidence transfers.

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Basic Requirements For An Attested Will (Page 227) In Writing No need to be on paper Typed or handwritten that can be read (no air movements) Signed by the Testator (Evidence of Finality) Flexible full name at end of document will almost always work. A mark, cross, abbreviation, or nickname can be sufficient. OK, if print name in cursive and print it out and then have witnesses sign the hard copy. UPC/Ca does not require signature at end of document (subscription) A few states require subscription. In general T must sign or acknowledge the will before the witnesses attest but if sign as part of single or continuous transaction, the exact order of signing is not critical. In New York, a witness must sign within 30 days. Under UPC the witness must sign within a reasonable time, even after the Ts death. Attested By Witnesses Some Court Have: Extended physical presence Line of Sight T does not actually have to see the witnesses sign but must be able to see them were the testator to look. Conscious Presence Witness is in the presence of the T, through site, hearing, or general consciousness events, comprehends that the witness is in the act of signing. b. Writing, Signature, and Attestation: Strict Compliance In Re Groffman (England 1969) Facts: Goffman made will leaving to widow and her daughter from first marriage and with Goffmans daughters from his first marriage. Challenged because Goffman and both witnesses were not present together when Goffman acknowledged his signature. Issue. Whether a will is valid if it is witnessed by two people in front of the testator if the witnesses were not together? Holding: No. Will invalid because supposed to either acknowledge in front of both or sign the will before both. Refused to admit will to probate because have to apply Rest. And bound to pronounce against his will because both witnesses were not together. Rule: signed by T near end, such signature shall be made or acknowledged by the T in the presence of two or more witnesses present at the same time and such shall attest and subscribe the will in the presence of the T, but no form of attestation is necessary. Stevens v. Casdorph (W.Virg. App. 1998) Issue. Whether a will is valid where the witnesses do not see the testator sign the will or acknowledge the will, nor does the testator see the witnesses sign the will or acknowledge their signature, even though the execution takes place a one location and the two witnesses are informed that the testator is attempting to execute his will. Facts: Mr. Miller took will to local bank, seated in wheelchair, banker took will away from him to have signed by two people separately.

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Rule. A will is not valid where the two subscribing witnesses do not see the testator sign the will or acknowledge his signature, nor does the testator see the witnesses sign their names or acknowledge their signatures on the will. Holding: Will not validly executed. Fails to meet statute, which requires that witness be present at the same time. Also fails to meet narrow Wade substantial compliance exception to the statute because neither witness signed in front of T or each other. The exception allowed if both witnesses subscribe their signatures in front of T or each other. In Wade, all 3 were together when the second witness signed. Wade more narrow exception still within spirit of statute, can testify, protects T, etc. Dissent. The majority elevates form over substance. Courts should adhere to the underlying purpose of the statue only to prevent substitution or fraud. Here, strict adherence to formality defeats the purpose of the statue. The Court in Wade held that a narrow rigid construction of the statute should not be allowed to stand in the way of justice. Attestation Clause: An attestation clause recites that the will was duly executed. Not required but gives rise to a presumption of due execution - MALPRACTICE not to include! Note: The Meaning of Presence in Will Execution Line of sight test - presence of the testator is satisfied only if the testator is capable of seeing the witnesses in the act of signing. Conscious presence test - the witness is in the presence of the testator if the testator, through sight, hearing or general consciousness of events, comprehends that the witness is in the act of signing. Note: The Meaning of signature in Will Execution All states & UPC requires that testator to sign the will. Purpose - is to provide evidence of finality, distinguishing a will from mere drafts or notes, and to provide evidence of genuineness. Signature by mark, with assistance or by another. Includes a mark, the name being written near the mark and witnessed, or any other symbol or methodology executed or adopted by a party with intention to authenticate a writing or record, regardless of being witnessed. Order of signing. Testator must sign or acknowledge the will before the witnesses attest, but if they all sign as part of a single (continuous) transaction, the exact order is not critical. Subscription and addition after signature. Signing at the end (foot) of the document. Additions to the will after signing, not valid. Delayed attestation. Within a reasonable time - could even be after testators death in some states. Note: The Meaning of Writing and Video or Electronic Wills A reasonably permanent record of the markings that make up the will. A recording of a will is not considered a writing, however, a video of an execution ceremony may be. UPC takes no real position, may be sufficient to be admitted under the harmless error rule - reform doctrine that allows a defectively executed document to be admitted to probate if there is clear and convincing evidence that it was intended to be a will. Estate of Morea (New York, 1996) Facts: Morea had 3 witnesses, 1 friend, 1 son: both took under will and got nothing or more under intestacy. 3rd got nothing.

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Issue. Whether the bequest by T to Ts friend is void under statute in light of fact that he was one of 3 attesting witnesses and that Ts son was also an attesting witness who takes less under the will than he would under intestate succession. Holding: No. Here, O.K. because only requires 2 witnesses and at least 2 have nothing to gain by the admission of the will to probate. Removes possibility that attesting witness who receives a disposition under the will might give false testimony in support of the will to protect their legacy. Rule: Two attesting witnesses to the will who receive no beneficial disposition or appointment thereunder. Interested Witnesses and Purging Statutes: No interested witnesses could testify in court, so not allowed to sign. Purging statute allowed a will attested by an interested witness to be admitted to probate but voided any bequest to interested witnesses. Majority: of states have purging statutes. Most purge only the benefit the witness would receive under the will that is in excess of what the witness would have received in intestacy Only apply to a witness who is necessary for the wills validity. If witnessed by a sufficient number of disinterested witnesses, its alright. Interested witnesses and the UPC: Minority: a will is valid even if witnessed by an interested party and does not forfeit even if greater than that which would have been received under intestacy. Want to make sure rare and innocent use of a member of the testators family on a home-drawn will is not penalized. Does not increase fraud and UI. Can still challenge this. Influencer usually careful not to sign anyways. Ca: middle ground, a bequest to a witness, triggers a rebuttable presumption that the bequest was procured by duress, menace, fraud, or UI. If fail: share reduced to what would get in intestacy. Note: Recommended Method of Executing a Will Under the usual conflict of laws rules, the law of the decedents domicile at death determines the validity of the will insofar as it disposes of personal property The law of the state where real property is located determines the validity of a disposition of real property. Almost all states have statutes recognizing as valid a will executed with the formalities required, not only by the state where the testator was domiciled at death but alternatively by the state where the will was executed or the state where the testator was domiciled when the will was executed. SEE PAGE 243 FOR PROCEDURE MAKING THE INSTRUMENT VALID IN ALL 50 STATES Note: Safeguarding a Will

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2.

CURING DEFECTS (In The Execution of Attested Wills) a. Excusing Execution of Defects by AD Hoc Exception Under traditional rule of strict compliance with the Wills Act, almost any mistake in execution invalidates the will. To avoid this harsh result, some courts occasionally excused or corrected an obvious execution defect and some do not. In re Pavlikos Estate (S.C. Penn 1959) Facts: Husband and wife accidentally signed each others identical wills. Brother of wife offered the writing for probate as the will of Pavlinko but probate was refused. Rule. A will is not valid if the will specifically purports to be the will of one person but is signed by his or her spouse. Issue. Whether a will is valid if it is signed by a person other than the individual that is referenced to in the will as being the creator of the will. Holding: In order to decide in favor of the residuary legatee, almost the entire will would have to be rewritten. The language is unambiguous, clear, and unmistakable. Cant make Wills Acts exceptions or else it will become meaningless. Dissent. The Pavlinkos wills were identical. They left each other their property and had the same residual legatee. The attorney knew the language the Pavlinkos spoke in and versed with them in this language. The intent of the testator must be determined by looking at the four corners of the will signed. Because the couple both left their residuary estate to the same person, the will should be admitted for probate. In addition, the residuary clause can stand on its own so the whole will should not be submitted for probate. In re Snide (N.Y. App. 1981) Facts: Wife and Husband intended to execute mutual wills at a common execution ceremony, each executed by mistake, the will intended for the other. Except for names of the donors and beneficiaries on the wills, they were in all other respects identical. Guardian ad litem of youngest child refuses to consent on behalf of youngest child. Rule. Where identical mutual wills are simultaneously executed with statutory finality, one of them may be admitted to probate even though both parties mistakenly signed the others will. Issue. Whether a will can be admitted to probate it does not have the testators signature if the testator mistakenly signed anothers will where he and another intended to execute mutual wills at the same will execution ceremony. Holding: Will should be admitted and reformed to substitute the name Hervey, where Rose appeared and vice versa. Case of genuine mistake. Wills were identical. Undisputed surrounding circumstances, it would perverse not to accept it, the intent was very clear. Mindful of the evils the formalities of will execution are designed to avoid, namely fraud and mistake but the full illumination of what happened is dependent on proof outside of the will itself. Both wills were executed with statutory formality, including the sate attesting witnesses, at a contemporaneous execution ceremony. No danger of fraud. No formalism without the corresponding benefit. Rule confined to specific facts here. Dissent. In most cases, relief has been denied in cases involving mutual wills that are mistakenly signed by the wrong testator. Relief was only granted in a few cases where the court believed that great frustration would occur if the obvious mistake was not corrected. Switched wills (ways to correct) option 1: probate the will that the decedent intended to sign but did not. OR option 2: probate the will offered actually signed by decedent and then reform its terms to make sense.

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b. Curative Doctrines: Substantial Compliance and Harmless Error Substantial Compliance - Courts deem a defectively executed will as being in accord with the statutory formalities if the defectively executed will nonetheless fulfills the purposes of those formalities by clear and convincing evidence. Harmless Error Rule - (dispensing power) - the court may excuse noncompliance with statutory formalities if there is clear and convincing evidence that the decedent intended the document to be his will.

In re Will of Ranney (S.C. N.J. 1991) Facts: To make wills easier to prove in probate, lawyers often add a self-proving affidavit in addition to the Ts and As signing the will. To do this, there is a one and two-step process. Lawyer here, did the two-step process but omitted attestation clause and instead used affidavit designed for two-step self proving will, thus when A signed, he did not attest to the execution of the will but rather affidavit swearing they had previously signed their names as As during a stage in the execution ceremony that never actually occurred. Language of two-step but was a one-step, As never signed the wills. So, will did not meet attestation requirements for a will. Rule. A statute that allows a signed affidavit by attesting witnesses to be submitted along with the will requires that the witnesses have first signed the actual will. If a will is not formally executed in compliance with statutory requirements, then that will may still be admitted to probate if its substantially complies with those requirements. Issue. (1) If a statue allows for an affidavit to be submitted along with a duly executed will, may the will be probated if the will itself is not signed by the witnesses. (2) Whether a will if not formally executed in compliance with a statute may be probated if it substantially complies with the statutory requirements? Holding: No, Signatures on the subsequently executed proving affidavit do not literally satisfy the will signature requirement. Yes, Will can, however, be admitted to probate if it substantially complies with these requirements. Inquire as to if noncompliance express decedents testamentary intent (by clear and convincing evidence) and does its form serve purposes of the Wills Acts. This will does comport with Act formalities by clear and convincing evidence of witness testifying: Uncoerced intent of T Evidentiary Function reliable Prevent fraud and UI Channeling function uniformity Ritual = seriousness 2-503 Harmless Error Defined - The court excuses noncompliance with statutory formalities if there is clear and convincing evidence that the decedent intended the document to be his will. In re Estate of Hall (Montana 2002) Facts: Wife and husband signed the will and Ross, the attorney notarized it, no one else was in the office to attest. After husband died, wife went to informally probate the will but daughter objected and wanted formal probate of the original will. Did not comply with Act because requires attestation, not notarization. Rule. A document that is not properly witnessed by two people who see the testator sign the will and also sign themselves may be probated if the proponent of the document establishes by clear and convincing evidence that the decedent intended that document to be his will.

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Issue. Whether a proponent establishes by clear and convincing evidence that a decedent intended a second will to be his will where he the deceased revokes all prior wills in his second will and told his wife to revoke his first will. Holding: Although does not comply with Act because not properly attested, the document may still be treated as if it had been executed under certain circumstances, if with clear and convincing evidence the T intended the document to be his will. Joint will should be admitted into probate because there is clear and convincing evidence that T intended this to be his will: Joint will revoked previous wills Husband told wife to destroy old one (wifes testimony) Intended will with scribbles to be his will (Wifes testimony) Attorney attested that T wanted this to stand as his will. Note: Substantial Compliance versus Harmless Error Substantial Compliances - whether the purposes of formalities were served VS. Harmless Error whether the decedent intended the document/writing to constitute the decedents will. Uniform Probate Code - 2-503 (Harmless Error) Harmless Error Rule but only for attestation errors (cannot correct scriveners errors) 3. NOTARIZED WILLS Notary Serves Will Formalities: Evidentiary Notary seal = prof and validity because there is a duty upon the notary to verify the identification of the person signing. Cautionary (Ceremonial) Channeling Protective Almost always held up the Harmless Error Rule 4. HOLOGRAPHIC WILLS - a will written by the testators hand and signed by the testator; attesting witnesses are not required. Requires: Handwritten and Signed Signed anywhere but if not at end goes against it being testamentary intent. You can even write it on a tractor fender. Jurisdictions: Ca and half states allow handwritten wills. Many UPC and non-UPC states allow this. Pro Large handwriting sample = increased Only accounts for 6% of litigation assurance of maker of document, more so than Low Cost just a signature. Increased overall Quantity On death bed can still declare desires Conveyance of property should be applauded Better for non-tech non education people Con May be off-hand casual statements Absent ritual value No will intention Inartful or contradictory

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Breeds litigation Lose evidence, no witness function

Likely to be a secret

Kimmels Estate (Penn 1924) Facts. Harry A. Kimmel wrote a letter to his sons discussing the affairs of his life and disposing of a certain amount of property in the case that a particular event occurred. Kimmel died the same day that he wrote the letter. Kimmels heirs at law appeal a decision by the register of wills court admitting the letter to probate. Rule. A document that is a formal will is testamentary in character and may be admitted to probate if the attenuating circumstances before and at the time of the testators death, along with the wording of the will, express the intent to make a gift of property at death. Issue. (1) Whether a letter is testamentary in character even though it is not in the form of a formal will, if its purpose is to make a gift at death. (2)Whether a holographic will may be admitted to probate if the signature on the document is not the testators specific name? Holding. Yes. The form of a document is only one element in determining the testamentary character of document. A document is testamentary in character where it expresses intent make a gift at death. Here, (1) the testator disposed of property on the condition of an even occurring, (2) the event that occured was the testators death, (3) the testator was sick at the time of writing the letter, and (4) the testator sent the letter to his beneficiaries and instructed them to preserve the letter. Yes. A holographic will may be probated where the testator writes a name or word other than his specific name if the evidence shows that in light of the nature of the document, the testator intended the writing to be his signature. Here, the evidence showed that the testator wrote several letters and signed them with the word, Father. If a testator writes her will by and on a typed/preprinted form but fails to have the form properly attested, the instrument fails as a formal will. Whether the instrument can be probated as a holograph depends on how much of the instrument is in the testators handwriting. Estate of Gonzalez FACTS. T wanted to prepare a will before a trip to FL. T filled in the blanks of a pre-printed will form and indicated that he planned to leave equal share to 3 of his five children (Kerry, Tara, and Kristin). T showed completed form to B and BW; BW saw T sign the completed form as well as the blank form he intended to use to write it more neatly. BW, nor anyone else, signed the first form as a witness. B, BW and M signed the blank form, thinking it would eventually be the final copy. T died in Aug 2001 before completing the 2nd form ISSUE. Whether Ts will qualifies as a holographic will RULE. In order for a document not qualifying as a formal will to be admitted to probate, it must qualify as a holographic will per the statute, which is one where the signature and the material provisions are in the handwriting of the testator. HOLDING. Yes, affirmed. Court takes first approach, ruling that the printed portions of a will form can be incorporated into a holographic will where the TC finds testamentary intent, considering all of the evidence in the case.

Note: Signature and Handwriting in Holographic Wills

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To be valid, a holographic will must be written by the testators hand and signed by the testator. Interpretative problems: (a) the nature of the requirement that the testator sign the holograph and (b) how much of the holograph must be in the testators handwriting. a) Generally, may be signed anywhere on the document, BUT if not at the end, there may be doubt if the decedent intended his name to be a signature. b) Extent of the testators handwriting - Three categories of statutes: 1) First generation statutes: entirely written, signed, and dated. 2) Second generation statutes: (1969 UPC): material provisions *includes signature+ 3) Third generation statutes (1990 UPC): material portions and extrinsic evidence allowed. c) codicil - a testamentary instrument that amends a prior will but does not replace it. In re Estate of Kuralt (Montana, 2000) Facts: CBS anchor, secret 30-year affair, wrote mistress letter assuring her that he would see to it that she would inherit his property in Montana. Anchor was close to her and provided her with financial support. Anchor knew her kids. T executed holographic will stating Montana stuff to Patricia. Subsequently executed a formal will which did not mention any real property owned by T. Beneficiaries were wife and children. In 1997 deeded 20-acre parcel to Patricia disguised as a sale, then Patricia sent another thing saying would receive the remaining 90 acres and that was supposed to happen in September but anchor died in July. In June wrote letter in hospital saying Patricia is to inherit the house. Patricia wanted to probate this letter as a valid holographic codicil to Kuralts formal will. Rule. When a second will does not make a complete disposition of the testators estate, the second will is a codicil the first will. A letter expresses testamentary intent where the evidence shows the testator believed that he was close to death at the time of writing the letter and the facts show that intent to convey a specific item of property to a particular beneficiary. Issue. (1) Whether a letter indicating that the testator will take actions to ensure that a beneficiary will inherit property expresses present testamentary intent or a future intent to make a will? (2) Whether a document that does not dispose of the testators entire estate is a codicil? Holding: Letter expressed present T intent to transfer the Montana property to Patricia supported by substantial evidence. (Montana can look to intent or extrinsic evidence to establish it). Letter expressed present T intent to transfer property to her. Holo was codicil to 1994 formal will. Holo met requirements.

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Section B. REVOCATION AND REVIVAL 1. Revocation By Writing or Physical Act A will is ambulatory, meaning it is subject to modification or revocation during the testators lifetime. May be done in one of two ways: a. By a subsequent writing executed with testamentary formalities i. Revocation by Inconsistency - treats a subsequent will that does not expressly revoke the prior will, but makes a complete disposition of the testators estate presumptively replacing the prior will and revoking it by inconsistency. ii. Codicil - A testamentary instrument that supplements rather than replaces an earlier will and supersedes the will to the extent of inconsistency between them. Some states say that subsequent instrument only revokes an instrument partially. b. By a physical act i. Destroy ii. Obliteration iii. Burning Harrison v. Bird (Alabama, 1993) Facts. A lawyer tore up Daisy Virginia Speers will at her request. The beneficiary in her will attempted to probate the will. The Circuit court affirmed the trial courts decision not to probate the will. Rule. If there is evidence that a will was in a testators possession before death and not found among her personal effects at death, a rebuttable presumption arises that the testator revoked her will. If a testator destroys her will death, a presumption arises that she revoked the will and all duplicates even though a duplicate may exist with another person. The proponent of the will must rebut the presumption by a preponderance of the evidence. Issue. Whether a presumption arises that a testator revoked her will if (1) she had possession of the will before death, and (2) the will was not found among her personal effects at her death, even though a duplicate of the will exists. Held. Yes. A presumption arises that the testator revoked her will if she destroyed it before her death and it was not found among her personal effects at her death. This presumption may only be rebutted by clear and convincing evidence. Furthermore, a presumption arises that she revoked her will and all duplicates even though a duplicate exists that is not in her possession. c. Presumption of revocation - split - some require by a preponderance of the evidence standard, while other courts require rebuttal by clear and convincing evidence. Note: Probate of Lost Wills Where there is not statute to the contrary, a lost, destroyed (with or without the testators consent) can be admitted into probate if its contents are proved. (copies) Thompson v. Royall (Virginia, 1934) Facts. Lou Bown Kroll attempted to revoke a will and codicil by directing another person to revoke the will by writing on a separate sheet of paper. Kroll signed the documents attempting to revoke the will and codicil. The trial court admitted the documents to probate and Krolls heirs at law appeal the verdict. Issue. Whether a will or codicil is revoked where the testator directs another to write words on a sheet of paper attached to the will or codicil, if the words do not physically come into contact with the words creating the will.

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Whether a will or codicil is revoked where the testator directs another to write words on a sheet of paper that is attached to the will or codicil, but signs the document herself. Rule: To revoke a will other than by creating another duly executed will, the first will must be destroyed by a cutting, tearing, burning, obliterating, or destroying the will. If it is revoked by words that do not quality themselves as a validly executed will, those words must physically come into contact with the words of the will. Held: No. A will or codicil is not revoked where the testator attaches a paper to a will writing this will null and void because it was not executed the way a will is required to be executed. No. The will was not revoked because the words this will null and void did physically come into contact with the words of the original will, even though the testator wrote words on a separate paper attached to the will that declared the will null and void. Furthermore, the words themselves did not constitute a validly executed will. Partial revocation by physical act - allowed by UPC and many states, others, a will cannot be revoked in party by an act of revocation; it can be revoked in part only by a subsequent instrument. Reasons: (1) cancelling a gift to one, give to another - this has not been attested; (2) opportunity for fraud - could have been done by person receiving the gift.

2. Dependent Relative Revocation and Revival (DRR) - [doctrine of presumptive intent NOT actual intent] a. If T purports to revoke his will upon a mistaken assumption of law or fact, the revocation is ineffective if T would not have revoked had he known the truth. DRR applies only where: i. There is an alternative plan of disposition that fails or ii. Where the mistake is recited in the terms of the revoking instrument, or possibly, is established by clear and convincing evidence La Croix v. Senecal (Connecticut 1953) Brief Fact Summary. Celestine Dupre executed a codicil to her will but only change a minor detail. She clarified the name of her nephew in the codicil. The codicil was invalid because it did not have the proper number of witnesses and the court considers whether the codicil revoked the first will. Rule: Where intention to revoke is conditional and where the condition is not fulfilled, the revocation is not effective. Issue. Whether a testator executes a codicil that revokes a prior will, only upon the condition that the codicil is valid where the only change the codicil makes to the will is to clarify the name of a beneficiary to the testator. Holding: Yes, DRR should apply because T canceled her will with the present intention of making a new one, but the new one failed, it will be presumed that the T preferred the old will to intestacy, and the old one will be admitted to probate in absence of evidence overcoming the presumption. (T only wanted to change nephews name to avoid future confusion of his i.d.) Estate of Alburn (Wisconsin, 19963) Brief Fact Summary. Ottilie L. Alburn executed two wills in her lifetime and destroyed the second will. Neither of the wills made any provisions to certain next-of-kin. Alburns niece, a beneficiary under her first will filed for probate and Alburns heirs at law appealed the decision. Synopsis of Rule of Law. Where the testator expresses an intent on reinstating a former will and there is no explanatory evidence, the testator will be deemed to have revoked his later will under the mistaken belief that he was reinstating his first will.

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Issue. Whether where a testator intends to reinstate his first will by revoking the second will if , (1) she makes a statement to another that she wants her first will to stand, and (2) she takes no steps following the destruction of the second will to make a new will, (3) there is no evidence disproving the facts showing intent on reviving the first will. Held. Yes. The evidence is sufficient to support a finding that a testator wants her first will to stand after revoking the second will where she (1) told her sister-in-law that she wanted her first will to stand , (2) took no steps to make another will after revoking the second will, and (3) there was no evidence negating the facts showing she intended to revive her first will. Furthermore, there was no evidence that any acts occurred subsequent to the revocation of the second will that suggested that the testator wanted to die intestate. Note: Revival English common law - (few states follow this) Will #1 is not revoked unless will #2 remains in effect until the testators death. Ex. write #1 will - write #2 will which is valid - die - will #2 kicks in - will #1 revoked. Majority - will #2 legally revokes will #1 at the time will #2 is executed. BUT: Majority (of this group) - upon revocation of will #2, will #1 is revived if the testator so intends. Minority - a revoked will cannot be revived unless re-executed with testamentary formalities or republished by being referred to in a later duly executed testamentary writing. 3. Revocation by Operation of Law: Change in Family Circumstances a. Divorce: Majority: statutes provide that a divorce revokes any provision in the decedents will for the divorced spouse. Usually applies only to wills. Minority: revocation occurs only if divorce is accompanied by a property settlement. Usually applies only to wills. b. Marriage: Majority: statutes give the spouse his intestate share unless it appears from the will that the omission was intentional or the spouse is provided for in the will/will substitute w/ the intent that the transfer be in lieu of a testamentary provision. c. Birth of Children: Majority - pretermitted child statutes that gives a child born after the execution of the parents will, and not mentioned in the will, a share in the parents estate. This equated to a revocation of the parents will to the extent of the childs share.

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Section C. COMPONENTS OF A WILL It is possible for documents and acts lacking testamentary formalities to have the effect of determining who takes what property belonging to the testator. 1. Integration of Wills a. All papers present at the time of execution, intended to be part of the will, are integrated into the will. 1. Papers connected with staple or ribbon and are numbered 2. Sufficient connection of language carrying over from page to page to show an internal coherence of the provisions. 3. Attorneys should have client sign and number each page. 2. Republication by Codicil a. Publication of a will is the Ts statement to the witnesses, by words or by action, that a document is the Ts will. Under republication, a will is treated as re-executed as of the date of the codicil. Treated as if it was executed when it most recent codicil was executed. b. Republication must be consistent with the Ts intent, only where updating the will carries out the Ts intent. c. Can cure execution errors made in the first will. d. Applies only to a prior validly executed will 3. Incorporation by Reference a. A writing (1) in existence when a will is executed (2) may be incorporated by reference if the language of the will manifests this intent, and (3) describes the writing sufficiently to permit its identification. Clark v. Greenhalge Brief Fact Summary. Helen Nesmith executed a will and made reference to a document outside of the will that would give guidance on how to distribute her estate. The executor, also a beneficiary under the will, refused to distribute a painting in accordance with a notebook that listed how Nesmith wanted to distribute certain pieces of personal property at her death. The probate judge found that the notebook was incorporated by reference into the will. Synopsis of Rule of Law. A document may be incorporated into a will by reference if the will makes reference to the document, the document was in existence at the time that the will was created, and is the document is sufficiently identifiable in the will. Issue. Whether a document may be incorporated by reference into a will if the will refers to the document even though it may not be in the same form as stated in the will, but serves the same function as the document stated in the will, and was in existence at the time the codicils to the will were created. Held: Yes. A notebook that gives the executor guidance in distributing the testators estate may be incorporated by reference to a will that includes the language of a memorandum that serves as a guide to the executor on the distribution of her estate. The language in the will, a memorandum does not preclude the existence of more than one memorandum. It also does not preclude the existence of a document in the form of a notebook from being included in the will. The fact that it was not labeled as such does not mean that it was not intended by the testator to be an instruction as to how to distribute her property at death. Since the testator retained the right to amend and alter her will after execution, the notebook is sufficiently described since it guides the executor in distributing her estate at death and the notebook was in existence at death.

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4.

Acts of Independent Significance (nontestementary acts) a. If the beneficiary or property designations are identified by acts or events that have a lifetime motive and significance apart from their effect on the will, the gift will be upheld under the doctrine of acts of independent significance.

Section D. Contracts Relating to Wills 1. Contracts to Make a Will If, after a contract becomes binding, a party dies leaving a will not complying with the contract, the will is probated but the contract beneficiary is entitled to a remedy for the broken contract. Constructive trust Specific performance Damages Injunctive/declaratory relief The remedy takes the form of either the transfer of the promised property or the payment of the value of the property that was promised by the contract. 2. Contracts not to Revoke a Will Most courts hold that the mere execution of a joint or mutual will does not give rise to a presumption of contract 1. Joint will - one instrument executed by two persons as the will of both. 2. Mutual Will - the separate will of two or more persons that contain similar or reciprocal (mirror-image) provisions. 3. Joint & Mutual will - a joint will in which the respective testators make similar or reciprocal provisions.

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Chapter 5. Construction of Wills Section A. Mistaken or Ambiguous Language in Wills 1. Traditional Approach: No Extrinsic Evidence, No Reformation a. No Extrinsic Evidence Rule/Plain Meaning Rule Extrinsic evidence may be admitted to resolve some ambiguities, but the plain meaning of the words of the will cannot be disturbed by evidence that another meaning was intended. No extrinsic evidence and no reformation. Criticized as being misdirected and saying words have only one meaning - the meaning of the interpreter, not the testator. Mahoney v. Grainger (Mass. 1933) Brief Fact Summary. Sullivan executed a will that disposed her real and personal property to her heirs at law. Extrinsic evidence revealed that she informed her attorney that she wanted to leave her property to her twenty-five cousins, equally. The trial judge ruled that Sullivans only heir at law was her aunt and not her twenty-five cousins. Synopsis of Rule of Law. Extrinsic evidence is not admissible when the beneficiary of a will can be identified on the face of the will. Issue. Whether extrinsic evidence that a testator intended to dispose property to beneficiaries not named in the will may be admitted when a beneficiary can be ascertained from the face of the will? Held. No. The words used in the will, heirs at law living at the time of my decease undoubtedly refer to the testators aunt and not her cousins. The testator only heir at law was her aunt. Extrinsic evidence would only be admissible to help to determine the meaning of testamentary language that its not clear in its application to the facts. Only where language is not clear in its application to the facts that evidence may be introduced as to the circumstances under which the T used that language in order to throw light upon the situation. Where, as here, no doubt exists as to the property bequeathed or the identity of the beneficiary, there is no room for extrinsic evidence, the will must stand as written. Note: Plain Meaning, Ambiguity, and Extrinsic Evidence Plain Meaning - the words of the will cannot be disturbed by evidence that another meaning was intended. Patent Ambiguity - The ambiguity appears on the face of the will. On face, susceptible to one or two constructions or suggests multiple meanings. The kind of thing a proofreader should have seen and brought to the testator. E.E. not admissible to clarify this, even if will fails, goes to intestacy. Latent Ambiguity - Manifests itself only when the terms of the will are applied to the Ts property or beneficiaries. Only see the ambiguity when you try to administer the will. Generally allows e.e. to clarify. Equivocation = clearly describes ONE person or thing and TWO exist. [Admission of e.e. began here.] Personal Usage Exception - If the T always referred to a person in an idiosyncratic manner, the evidence is admissible to show the T meant someone other than person with the legal name of the legatee. Or, NO thing fits the description exactly but TWO or more persons or things partially fit.

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2. Slouching Toward Reformation: Correcting Mistakes Without the Power to Reform Wills The Cause and Effects of Will Defects Effect: Lack of Volition Undue Influence, Duress (relief granted) Lack of Capacity, Insane Delusion (relief granted) Effect: Mistaken Terms Fraud (relief granted) Mistake (no relief)

Cause: Intentional Wrongdoing Cause: Innocent Acts

a. No Reformation Reformation is an equitable remedy that, if applied to a will, would correct a mistaken term in the will to reflect what the testator intended the will to say. Because the only means for ascertaining the intent of the testator are the words written and the acts done by him. This however, is at odds with other practices in wills like, UI, T capacity, duress/fraud. Mistakes that are granted relief - DRR = mistaken revocation of a will, Divorce & pretermitted child = changes the testators will regarding those persons. The trend towards admission of EE to conform to actual intent of the T. Arnheiter v. Arnheiter (New Jersey 1956) Brief Fact Summary. Burnette K. Guterl made a disposition of her home. She correctly identified the street, city, and state where it was located as well as her one-half interest in the property. However she did incorrectly identified the street number. Synopsis of Rule of Law. Where a description of a thing or person consists of several particulars and all of them do not fit any one person or thing, less essential particulars may be rejected provided the remainder of the description clearly fits. However the court does not have power to correct or reform a will. Issue. Whether a testators description of her property in a will is sufficient where she names the street, city and state where her house is located but does not identify the correct street number? Held. Yes. Here the testators disposition is valid because even though the street number was not correct, she owned one-half of one piece of property on the street. Because she only devised one-half of the property, which was what she owned, the property is sufficiently identified. Ignored a erroneous/ material term (apartment number), so rest of will still makes sense. (Gets around reformation). Difference between reformation and mere erroneous description does not vititate? Reformation corrects the mistaken term to reflect testators intent Erroneous description ignores the mistaken term because other parts of the description are sufficient to correctly reflect the testators intent. Estate of Gibbs - This case is a REALLY BIG stretch! Details of I.D., like middle initial, and street addresses increased susceptibility to mistake, so shouldnt be accorded sanctity as to otherwise frustrate clear intent. Once the Court threw out all the details (like the middle initial), then all of a sudden "Robert Krause" became ambiguous, which allowed the Court to look at extrinsic evidence. It was clear that the $$$ was intended to go to Robert Krause, not Robert J. Krause, so the Court decided to overlook the mistake.

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3.

Openly Reforming Wills for Mistake

Erickson v. Erickson (Conn. 1998) Brief Fact Summary. Ronald K. Erickson and the defendant, Dorothy Erickson, executed two wills two days before their wedding. Extrinsic evidence revealed that Ericksons attorney assured him his will was valid. The trial court admitted the will to probate and the appellant, Alicia Erickson, Erickons daughter, appealed the decision on grounds that Ericksons subsequent marriage revoked the will. Synopsis of Rule of Law. 1) Under statutory law, if a testator writes a will and later marries, the act of marriage revokes the testators will unless the will includes a provision concerning the contingency of marriage. 2) Extrinsic evidence is admissible to prove the testators intent when the writer of the will made a mistake as to the testators intent drafting the will. 3) There must be clear and convincing evidence that the writers error induced the testator to execute a will that he intended to be valid despite his subsequent marriage. Issue. Whether extrinsic evidence is admissible if it reveals a scriveners error led the testator to believe that his will was valid? Held. Yes. The extrinsic evidence here showed by clear and convincing evidence that the attorney made an implied assertion that the testators will would be valid without the contingency of marriage. A couple of weeks before the testator died, the testator and his lawyer retrieved and reviewed the will. The lawyer assured the testator that the will he executed approximately eight years prior was valid and that his entire estate would pass to his wife. The testator relied on his lawyer and did nothing to change his invalid will. T.C. should have looked at evidence of a mistake by the scrivener that could have proven contingency of marriage. Erickson overturned Connecticut Junior Republic based on: 1) If ee is allowed to prove that a will was executed due to fraud, duress, or undue influence, then there is no policy reason that it should not be allowed where reliance is based on an innocent error by the scrivener; 2) innocent misrepresentation is treated as equal to fraud in terms of its legal consequences, therefore, the statute of wills does not compel enforcement of testamentary dispositions that a testator never intended to make; and 3) the signing of a will creates a strong but rebuttable presumption that the will accurately represents the testators intentions; and this application of ee is limited to the narrowness of the exception that the case would warrant - to permit the opponent of a will to introduce ee of the error of a scrivener and to require proof of such an extrinsic error to be established by clear and convincing evidence AND proof of the error must be established by clear and convincing evidence. Policy Disadvantages of UPC Approach Want to write what mean Family members/heirs challenging unambiguous wills Scriveners error likely to be attorney testimony which is reliable Advantages of UPC Still c c evidence standard Gives access to poor/uneducated

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Section B. DEATH OF BENEFICIARY BEFORE DEATH OF TESTATOR Specific bequest one thing General bequest something fungible Demonstrative bequest a gift that comes from a specific (designated) source Residuary bequest everything left Class bequest to a group of people 1. Lapse If a devisee does not survive the T, the devise lapses = fails. All gifts made by will are subject to a requirement that the devisee survive the T, unless the T specifies otherwise. Most states have anti-lapse statutes, and in certain circumstances, substitute another beneficiary for the predeceased devisee. Lapse at Common Law a. Specific or General Devise If these lapse, the devise falls into the residue b. Residuary Devise If this lapses, the heirs of the testator take by intestacy No Residue-of-a-Residue Rule - If only a share of the residue lapses, like when have two residuary devisees, the lapsed residuary share passes by intestacy to the Ts heirs rather than to the remaining residuary devisees. c. Class Gift - If devise is to a class of persons, and one member of the class predeceases the T, the surviving members of the class divide the gift. d. Void Devise - Where a devisee is already dead at the time the will is executed, or the devisee is a dog or cat or some other ineligible taker, the devise is void.

Estate of Russell (Ca, 1968) Brief Fact Summary. Russell executed a will disposing of all her real and personal property to a close friend and her dog. The trial court held that the gift to the dog was precatory in nature and that the testator intended that her close friend care for the dog. Another beneficiary in the will appealed the decision. Synopsis of Rule of Law. The anti-lapse statute applies to void gifts as well as beneficiaries who predecease the testator. Extrinsic evidence is admissible to prove the testators intent if in light of the circumstances surrounding the creation of the will, the language in the will is susceptible to two or more meanings. Issue. Whether a gift lapses under the anti-lapse statute if the gift is void? Whether extrinsic evidence is admissible because the language of a will could reasonably signify two or more meanings? Held.A gift lapses under an anti-lapse statute if the gift is void. Testamentary gifts to animals are void. The gift to the dog lapses under the anti-lapse statute. Extrinsic evidence is not admissible to prove the testators intent because the language of the will does is not reasonably susceptible to one or more meaning. Here the testator left her property to an person and to her dog. The language did not state that the testator was making a gift to a person for the benefit of the dog. The will on its face makes a gift to the dog. The language is not precatory in nature. Extrinsic evidence is not admissible to prove the testators intent. 2. Anti-Lapse Statutes - Substitutes another beneficiary for a dead beneficiary if the requirements are met.

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Unless T states otherwise, give the predeceased devisees gift to the devisees descendants. Policy for certain predeceasing devisees, the testator would prefer a substitute gift to the devisees descendants rather than for the gift to lapse. a. Presumed intent, T would prefer sub gift to the devisees descendants rather than for the gift to lapse. Applies to a lapsed devise only if the devisee bears the particular relationship to the testator specified in the statute. Designed to implement presumed intent, they state default rules that yield to a contrary expression of the testators actual intent. Words of survivorship - if he survives me, or my surviving children, o [Majority] - an express requirement of survivorship, such as this states an intent that the antilapse statute not apply and that the deceased devisees descendant not be substituted. o [UPC 2-603 (minority)] are not, in the absence of additional evidence, a sufficient indication of an intent contrary to the application (applies) of this section. UPC 2-605 grandparent or lineal descendant of grandparent, before will executed, before T, or treated as predeceasing Issue of dead beneficiary KSA 59-615 spouse or lineal descendent within 6th degree Before T Issue of dead beneficiary

Gift in will to: Beneficiarys death: Gift passes to: If gift lapses:

1. Does will say what to do? 2. Antilapse statute a. Covered beneficiary b. Qualifying survivors 3. Common law default rules Ruotolo v. Tietjen Facts: T executed a will leaving the residue of his estate to Hazel Brennan. Hazel pre-deceased T. CTs antilapse statute says that when a devisee predeceases T and no provision is made in the will for such contingency, the devise will go to that person(s)s issue. Rule. Issue. Whether TC erred by not applying the anti-lapse statute. Holding. Yes, Statute was passed to prevent operation of the rule of lapse; it is remedial nature and should be liberally construed. If T had intended for the bequest to lapse, T could have explicitly provided so. The result of TCs ruling is not only that Hazels share lapses, but that it would go to the intestate estate, which would mean asking the court to presume that the T intended intestacy as to the remainder of Hazels share. Thus, the phrase does not constitute a provision for the contingency of the death of Hazel If T wants to avoid application of antilapse statute, the T must either unequivocally express that intent or simply provide alternative bequests. T did neither of those so the protections of the statute apply. Maj: Applies to class gifts; to a single generation class such as to children or siblings. Maj: if he survives me precludes application of anti-lapse statute.

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3. Class gifts - If a class member predeceases the testator, the surviving members of the class divide the total gift, including the deceased members share. Dawson v. Yucus (Ill. 1968) Brief Fact Summary. Nelle G. Stewart devised her interest in her late husbands farm house to two nephews living on her husbands side of the family. The trial court held the gift was not a class gift. A number of the beneficiarys children appealed the decision. Synopsis of Rule of Law. Naming an individual beneficiary in a will prevents the gift from being a class gift unless the remaining provision in the will as applied to the facts show that the testator intended to make a class gift. Issue. Whether a disposition is a class gift where the testator names two beneficiaries and gives them separate gifts, but the remainder of the will shows the testator desired to gift her property to her husbands side of the house. Held. No. The testators gift did not constitute a class gift because , even though the testator wrote that she desired that her farm lands go to back to her husbands side of the house, she then specified two individuals from her husbands side and gave each of them specified gifts. The testator only mentioned two members from a class. She did not make a gift to a class. Furthermore, the evidence showed the that the testator knew how to make a gift of survivorship because she created a gift of survivorship of her residue estate in the ninth clause of her will. To individuals, they are not a class so lapses and goes to residuary legatees. Note: Application of Antilapse Statutes to Class Gifts Majority - If there is a single generation class, i.e. children, siblings, etc., antilapse statute applies Minority - where the statutes are unclear, courts reason that the antilapse statutes are designed to carry the testators intent and the average testator would prefer for the deceased beneficiarys share to go to the beneficiarys descendants rather than the surviving members of the class. OTHERS, states antilapse statutes do not apply to dispositions to class members who die before execution of the will, here it is assumed that the testator did not have the dead class member in mind and did not want him to take. Section C. CHANGES IN PROPERTY AFTER EXECUTION OF WILL 1. Ademption By Extinction - Specific devises of real and personal property are subject to the doctrine of ademption by extinction. Disposition of a specific item of the testators property. Does not apply to general, demonstrative, or residuary devises. General; confers a general benefit and not a particular asset (fungible) Demonstrative; hybrid, general devise yet payable from a specific source. Residuary; remainder a. Intent Theory (UPC 2-606)- If specifically devised item is not in the testators estate, the bene may nonetheless be entitled to the replacement for, or cash value of, the original item, depending on whether the beneficiary can show that this is what the testator would have wanted. Intent theory intent of T is paramount in determining whether an ademption has occurred. Modified intention theory (this court applies) identity rule will not be applied to cases where specifically devised property is removed from the estate through an act that is involuntary as to the testator. b. Identity theory of ademption, if specifically bequeathed property was not found in the estate at the time of death, the bequests was adeemed (the gift fails). (KS)

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2.

3.

4.

5.

Exceptions: 1. Give the devisee any unpaid amount of a condemnation award, insurance proceeds, etc., after the property is destroyed. 2. classify the devise as general or demonstrative rather than specific. 3. classify the inter vivos disposition as a mere change in form, not substance. c. presumptions and burdens - UPC abandons the identity theory and adopts the intent theory. Presumption is for ademption; burden on beneficiary to prove that the testator didnt intend the gift to be adeemed. Stock splits and the Problem of Increase - Considered a change in form, not substance. a. Stock Split - Absent a contrary showing of intent, a devisee of stock is entitled to additional shares received by the testator as a result of a stock split. b. Dividends - treated the same as stock split: beneficiary gets them along with the other shares. Satisfaction of General Pecuniary Bequests (ademption by satisfaction) a. Doctrine of Satisfaction - applies when the testator makes a transfer to a devisee after executing the will that is similar in nature to that which is devised by the will. There is a rebuttable presumption that the gift is in satisfaction of the devise made by the will. Pertains mostly to gifts given to children. UPC, like advancement, not satisfaction unless there is a writing. Exoneration of Liens - when a will makes a specific devise of land, subject to a mortgage to secure a note on which the testator is personally liable, it is presumed, absent contrary language in the will, that the testator wanted the debt, like other debts, to be paid out of the residuary estate. * Many states have reversed, as this may lead to a depletion of the residuary estate. Abatement - when there is not enough in the estate to cover all of the devises. Abated in this order: a. residuary devises are reduced first; b. general devises are reduced; c. specific and demonstrative devises are reduced pro rata.

i.

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Chapter 6. Nonprobate Transfers and Planning for Incapacity Section A. An Introductions to Will Substitutes 1. WILL SUBSTITUTES a. Pure Will Substitutes closely resemble wills i. Life Insurance - beneficiary = devisee in a will; functionally indistinguishable from a will ii. Pension Accounts iii. Bank, Brokerage, and Mutual Fund Accounts iv. Revocable Inter Vivos Trust, most flexible of all, can be created however you want. b. Imperfect Will substitutes - be ause the crowned has a present interest now. (primarily joint tenancies; a death certificate rather than a probate decree suffices to transfer title.) 2. The Hidden Causes of the Nonprobate Revolution Differs in three main ways: 1. most are asset-specific: each deals with a single type of property, i.e. life insurance proceeds, bank balance, mutual fund shares, etc. 2. avoids probate; uses a financial intermediary 3. the formal requirements of the Wills Act do not govern will substitutes and are not complied with. Section B. WILL SUBSTITUES AND WILLS ACT REQUIREMENTS Effect - passing property at death outside probate Acts like will because: a. can revoke and amend til death b. can change bene before death c. no gift given until death 1. Revocable inter vivos trusts Trust - an arrangement whereby a trustee manages property in a fiduciary capacity for one or more beneficiaries. Trustee - legal title person to whom legal title is conveyed. Responsible for management, has a fiduciary duty to the been and settlor. Can also be a beneficiary. Can not be the only beneficiary, then no trust, because legal and equitable title have merged and would then own a duty to himself. Beneficiary - equitable title, can enforce the terms of the trust documents. Settlor, grantor, trustor - creator of the trust, can brith either/both the trustee or beneficiary. Inter vivos - created during the lifetime of the trustor (revocable or irrevocable) Deed of Trust - used to create the trust; settlor transfers the property to be held in trust to the trustee. At death, the trust property is distributed/held in further trust. Declaration of Trust - settlor declares (just says it, does not require a writing) himself trustee for benefit of himself during his life, with remainder passing to others at his death. Settlor retains power to revoke & the right to the income, controls the management of the trust property. Testamentary - created by will of the trustor (always irrevocable) cannot make changes to the trust. Farkas v. Williams Brief Fact Summary. The deceased, Albert B. Farkas, created purchased stock and held it in the form of a trust for a beneficiary, who was entitled to the stock in the event of Farkass death. He executed trust declarations at the time of the purchase of each stock. After Farkas died, the circuit court held that the declarations were invalid testamentary dispositions.

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Synopsis of Rule of Law. An intervivos trust where the settlor does not retain all of the powers of normal ownership of stock and where the settlor has a fiduciary duty to the beneficiary as the trustee of the trust is valid and not a failed testamentary disposition where the beneficiary takes the trust property upon the settlors death, and the trust is executed in a formal manner. Issue. Whether a document is a valid intervivos trust that leaves a testamentary gift to a beneficiary where during the settlors lifetime, if he retained the rights to change the beneficiary and vote, sell, redeem, or exchange the stock, if the settlor is also the trustee. Held. Yes. A document is a valid intervivos trust where the settlor relinquishes some of the powers that are incident to stock ownership and the beneficiary has a claim against the settlor as a trustee if he does not fulfill his duties to the beneficiary in regards to the trust property, and the trust is formal. Here the deceased applied for four separate applications for stock and directed that it be issued to him as a trustee for the beneficiary. The acts were executed in a formal manner. Linthicum v. Rudi There was no duty to the bene until death, revocable trust is a will sub because it is testamentary. The interest of a beneficiary in a revocable trust is contingent and unenforceable during the settlors lifetime. 2. Payable on Death Contracts and Other Nonprobate Transfers

In re Estate of Atkinson (Ohio, 1961) No interest has passed so it is testamentary so it must comply with the wills act like Linthicum. The modern approach allows for TOD transfers, allowable in KS also. Non testamentary, does not need to comply with the Wills Act. Estate of Hillowitz Upholds a payable at death contract, contract law, unquestionably valid. P.O.D., interest has not passed but K law applies. Note: A Transfer on Death (TOD) Deed for Real Property? This does not create a current interest in the beneficiary and is not a completed gift for property or tax purposes. Is revocable at any time, but if recorded and not revoked, the beneficiary obtains title at the owners death without going through probate.

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Section C. WILL SUBSTITUES AND THE SUBSIDIARY LAWS OF WILLS 1. Introduction Will subs need not be executed in compliance with the statutory formalities required for a will, such an arrangement is, to the extent appropriate, subject to substantive restrictions on testation and to rules of construction and other rules applicable to testamentary dispositions. a. Serve same function of wills. Shifts right to possession or enjoyment to the done at the donors death. Like a non-probate will. Aid in determining and giving effect to the donors intention or probable intention and hence should apply. 2. Revocable Trusts In Re Estate of Pilafas (Ariz. App. 1992) Does the presumption of revocation apply to a trust? Unlike will, trust = present transfer of property, cant be taken from bene except in accordance with trust instrument, by own act, or court decree. Trust language says can only revoke through an instrument in writing delivered to the trustee during his lifetime. No evidence offered for common law presumption that is once had and dont have = revocation. This does not apply to inter vivos trusts. State Street Bank and Trust Co v. Reiser Brief Fact Summary. Wilfred A. Dunnebrier created an intervivos trust and reserved the power to amend or revoke the trust, and the right during his lifetime to direct the disposition of principal and income. Dunnebrier subsequently applied for and received a loan from State Street Bank for $75,000. At Dunnebriers death, the loan had not been paid and State Street Bank sought to reach the assets of the trust. Synopsis of Rule of Law. Creditors may reach a deceased debtors trust income if he created a trust during his lifetime and reserved the right to amend and revoke, or to direct disposition of principal and income. The creditors may recover an amount that is not satisfied by the estate, and not greater than that which the settlor could have used for his own benefit during his lifetime. Issue. Whether a creditor may reach the assets of a deceased settlors trust if he created a trust during his lifetime and reserved the right to amend and revoke, or direct payments to himself, even though the trust has living beneficiaries. Held. Yes. A creditor may reach the property of a settlors trust if he reserved the rights to amend and revoke, or direct payment to himself during his lifetime (majority). It violates public policy for an individual to have an estate to live on but not an estate to pay his debts with. The creditors may reach the assets of the trust to the extent that the debt is not satisfied by the estate. The creditors may not reach any amount that the settlor could not have used for his personal benefit during his lifetime. a. Creditors i. of joint tenancy cannot reach the jointly held property after the joint tenants death because decedents interest has vanished. ii. Life insurance to spouse/child usually exempt AND iii. Retire benefits and iv. U.S. savings bonds with POD bene. 3. Life Insurance a. Shift risk of premature death to an insurance company. b. Whole/Ordinary/Straight

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i. Life Insurance and savings plan ii. paid up or endowed = no further premiums owed. iii. Universal and variable: similar but more investment options and flexible. c. Term: Simple/common iv. No savings feature v. No cash surrender for term policy vi. Can convert to permanent vii. Cost less because no cash surrender and person may not die within stated years, so can buy more d. Settlement Options viii. Lump Sum, annuity, interest for years and principal, periodic payments of interest and principal Cook v. Equitable Life Assurance Society Brief Fact Summary. Douglas Cook named the appellant, Doris Cook, the beneficiary of his life insurance policy. When he divorced, he executed a will leaving his insurance policy benefits to his new wife. However Cook failed to notify the insurance holder that he wanted to change the beneficiary of his policy. Synopsis of Rule of Law. Beneficiaries of a life insurance policy may not be changed by a will if the policy contract provides a specific method for changing beneficiaries. Issue. Whether a testator may change the beneficiary of his life insurance policy through a will even though it does not comply with the prescribed method in the insurance policy. Held. No. A testator must comply with the rules of the insurance policy to effect a change of beneficiary. Strict compliance with insurance policy requirements is necessary to change a beneficiary under the policy. The insurer, the insured, and beneficiary should be able to rely on the certainty that policy provisions relating to the naming and changing of beneficiaries will control. Equity aids the vigilant, not those who slumber on their rights, had time to change benes and did not. Note: Superwill Revokes all will subs 4. Pensions and Retirement a. Can have death bene b. Defined Benefit i. Annuity on retirement paid by employer, that is equal to a percentage of the employees salary. 1. Die soon = lose Note: Defined Contribution Plan ii. Employer/ee makes contribution to a specific pension account for the employee iii. Can withdraw on account iv. Usually a lump sum payout Egelhoff v. Egelhoff (USSC 2001) Brief Fact Summary. David A. Egelhoff named the petitioner, his wife, Donna Rae Egelhoff, the beneficiary of his life insurance policy and pension plan that he received while working at Boeing. Both the life insurance policy and the pension plan were governed by the federal Employment Retirement Income Security Act, (ERISA). Later the couple divorced and Egelhoffs children from a prior marriage claimed that a state law revoked the petitioners interest to the insurance policy and pension plan.

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Synopsis of Rule of Law. ERISA shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan covered by ERISA. A state law relates to an ERISA plan if it has a connection with or reference to such a plan. Issue. Whether ERISA preempts a state statute that revokes the payment of a non probate asset to a former spouse? Held. Yes. The federal Employee Retirement Income Security act preempts a state statute, which revokes the payment of a non probate asset to a former spouse because the statute interferes with the statutes goal to administer a nationally uniform plan. The ERISA statute commands that a plan shall, specify the basis on which payments are made to and from the plan. If administrators are forced to act in accordance with the state statute, they will have to comply with the varying statutes of all 50 states and wait on litigation before processing a payment. This delay conflicts with the legislatures goal of minimizing the administrative and financial burdens placed on beneficiaries. Dissent. The state law imposes a mere administrative burden on the ERISA statute at the expense of other substantive state goals. This Court has held that the fact that state law poses some burden on the administration of ERISA plans does not necessarily require pre-emption. ERISAs ultimate goal is to protect employee benefits and the state law seeks to transfer an employees pension in the manner they wanted to receive them. In this case the Court permits a divorced wife to receive a windfall at the expense of the testators children. The logic of this Court would also extend to state cases involving slayer statues that prohibit a husband who kills a wife from receiving benefits as a result of a wrongful death. Note: Multiple-Party Bank and Brokerage Accounts Joint account a and b own, use, and survivor takes POD a owns account but signs a form that allows bank to pay balance to B. B is not entitled to funds until As death. Agency account. A owns account, B can use it now but is not entitled to the reminder at As death. Savings account (Totten) trust a savings account as trustee for B. A can use account, but goes to B at As death.

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Section D. Pour-Over Wills and Revocable Trusts in Modern Estate Planning 1. Introduction The will pours over to the residuary of the estate into the trust. The settlor designates the trustee of her revocable trust as the beneficiary of all her will substitutes and names the trustee as the beneficiary under her will. UPC Sec. 2-511 Testamentary additions to trusts (a) a will may validly devise property to the trustee of a trust ...to be established... at the testators devise to the trustee. 2. Norman Dacey and Avoiding Probate Note: The Marketing of Living Trusts and Unauthorized Practice of Law 3. Consequences During Life of Settlor a. Property management by fiduciary - A third party trustee may be selected to manage a funded revocable trust, with duties under modern law that run only to the settlor. b. Keeping title clear - A revocable trust is useful in keeping separate property that a husband or wife or both do not want to be commingled with their other assets. c. Income and gift taxes - Assets in a revocable trust are treated as still owned by the settlor. When the revocable trust is created, it is not treated as a completed gift to the beneficiaries. d. Dealing with incompetency - A revocable trust continues during the settlors incapacity and can provide for disposition or continued management of the trust property at the settlors death. Settlor can be a co-trustee, with the trust instrument providing that either co-trustee alone may act with respect to the trust property. [Should include a way to determine the settlors competence.+ Consequences at Death of Settlor: Avoidance of Probate a. Costs - Property transferred during life to a revocable trust avoids probate because legal title to the property passes to the trustee. b. Delays - Income and principal can be disbursed to the beneficiaries more quickly. c. Creditors - In many states there is no short-term statute of limitations period for revocable trusts; the limitations period is the normal one applicable to the particular claim. *Probate may have an advantage here. d. Publicity - A will is public record; an inter vivos trust is not e. Ancillary probate - out-of-state real property can be transferred to a revocable inter vivos trust during the settlors life, eliminated ancillary probate. f. Avoiding restrictions protecting family members - In many states the spouses elective share extends to revocable trusts, but trusts may be created in jx that do not recognize the spouses right to reach the trust or beyond the reach of a child born out of wedlock that would otherwise be protected by pretermission statutes. g. Avoiding restrictions on testamentary trusts (created by a will) - test. Trusts require the probate court supervise administration even after the estate is closed, can be time consuming and expensive. h. Choosing the law of another jurisdiction to govern i. Lack of certainty in the law j. Avoiding will contests k. Estate taxation l. Controlling surviving spouses disposition

4.

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5.

m. Perceived complexity Pour-Over Wills a. Incorporation by reference b. Independent significance - a will may dispose of property by referring to some act that has significance apart from disposing of probate assets. Assets pour over into the inter vivos trust, like the assets transferred to the trust during life, are subject to the terms of the inter vivos trust

Clymer v. Mayo Issue: Whether the trust created by Clara Mayo was valid when she named her ex-husband as the principal beneficiary under the trust? Whether her ex-husbands interest in the trust was revoked as a result of the divorce? Rule: divorce revokes an ex-spouses interests under the testators will per statute. Holding: 1. The trust is valid, as the UTATA validates unfounded trusts that ad intended to be funded by a pour over will. 2. legislative intent shows that a divorced spouse should not take under a revocable trust executed under these circumstances. In the absence of an expressed contrary intent, that statute implies an intent of the part of a testator to revoke will provisions favoring a former spouse. Section E. Joint Tenancies in Realty 1) gives the joint tenants equal interests upon creation; requires the agreement of all tenants to take most important actions. This is an imperfect will substitute because it cannot be revoked. 2) A joint tenant cannot devise her share by will, must sever the joint tenancy and convert into a tenancy in common. 3) A creditor of a joint tenant generally must seize the joint tenants interest, if at all, during the joint tenants life.

Section F. Planning for Incapacity 1. The durable power of attorney - continues throughout the incapacity of the principal until the principal dies, may be terminated by the principal, if competent, at any time, and the attorney-infact owes the principal the fiduciary duties of loyalty, care, obedience. Different from a trustee: A durable power ceases when the principal dies; a trustee can be given authority to take action after the settlors death. If an agent dies, the power terminates unless the principal names a successor agent; if the trustee dies, a successor trustee is appointed by a court. Attorney-in-fact does not hold title to property and traditional agency law strictly construes express powers and sparingly implies other powers; the trustee has title to the trust assets & generally has all the powers of the outright owner. Third parties more readily deal with trustees that with agents, including an attorney-in-fact. In re Estate of Kurrelmeyer 2. Directives Regarding Health Care and Disposition of the Body a. Advance Directives: Living Wills, Health Care Proxies, and Hybrids 1) Instructional directives (living wills) - specify either generally or by way of a hypothetical how one wants to be treated in end-of-life situations or in the event of incompetence;

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2) proxy directives (health care proxy or durable power of attorney for health care) designates an agent to make health care decisions for the patient; 3) hybrid or combined directives - incorporates both of the first two approaches, directing treatment preferences and designating an agent to make substituted decisions. When making health care decisions for an incompetent patient, an agent for health care decisions is held to a substituted judgment standard of what the patient has chosen or would have chosen in that situation - best interests of the patient may also be added. Who makes decisions: spouse, adult child, parents, siblings, in that order.

Bush v. Shivo Brief Fact Summary. Theresa Schiavo lived in a vegetative state for over ten years due to a cardiac arrest. After about eight years, her husband, the respondent, Michael Schiavo, petitioned the guardianship court to authorize the termination of the life-prolonging procedures. Synopsis of Rule of Law. When a final judgment is issued in a court of law, and all post-judgment procedures are followed, the Legislature does not have the authority to pass a law that allows the executive branch to interfere with a final judicial determination in a case. Furthermore, a statute may not delegate legislative power to the Governor. Issue. Whether a statute granting the governor of a State the power to issue a one time stay to prevent the withholding of nutrition and hydration from a patient is unconstitutional? Held. Yes. The Legislature enacted the law giving the Governor the power to reinsert a feeding tube which a court had given another person the power to remove. This act is a violation of the separation of the powers of the executive, judicial, and legislative branches. Furthermore, the statute delegates legislative power to the Governor because it does not set forth criteria for lifting the stay, it does not say how long the stay should be issued, and it gives the Governor absolute discretion to decide when to issue the stay and went to lift it. Note: Euthanasia and Assisted Suicide b. Disposition of the Body 1) Postmortem remains 2) Organ donations Note: Elder Law

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Chapter 7. Restrictions on the Power of Disposition: Protection of the Spouse and Children Section A. Rights of the surviving Spouse 1. Introduction to Marital Property Systems Separate Property - originated in English common law - husband and wife own separately all property each acquires (stresses autonomy). Elective (forced) Share - enforceable against all of the decedent spouses property. Community Property - originated in Continental Europe - husband and wife own all acquisitions from earnings after marriage in equal, undivided shares (stresses economic partnership). The death of one spouse dissolves the community, and has testamentary power over his/her half of the community; the surviving spouse owns their half. Marital Property Systems

Community Property All property acquired during the marriage is community property, unless both spouses agree to separate ownership. Sharing of acquisitions as equals in marital economic partnership.

Separate Property No automatic sharing of earnings; whatever individual earns is his/hers. Protection against disinheritance provided through elective share. Individual autonomy

2.

Rights of Surviving Spouse to Support a. Social Security - the surviving spouse may receive the workers full monthly benefits, or may take their own benefit, whichever is greater; no power to transfer their right to benefits to any other person; may receive a former spouses benefits if not divorced before 10 years of marriage. B. Employee Pension Plans - ERISA requires that the spouse of an employee have survivorship rights if the employee predeceases the spouse. Pre-empts any state law that attempts to applies to that which ERISA governs. c. Homestead - designed to secure the family home to the surviving spouse and minor children, free of the claims of the decedents creditors. Designed to keep the surviving spouse from selling the home to pay the debts of the decedent; does not generally apply to the mortgage. (UPC limits to $22,500K. KSA59-6a215 Homestead allowance or $50K) d. Personal Property Set-Aside - entitle surviving spouse, and sometimes minor children, to receive tangible personal property of the decedent up to a certain value (UPC = $15K). e. Family Allowance - an allowance for maintenance and support of the surviving spouse (and dependent children) in addition to whatever other interests pass to the surviving spouse. May run for a fixed period, continue while the will is being contested of for the entire period of administration. (UPC = reasonable allowance; KSA = $50K) f. Dower and Curtesy - (only 4 states still refer to these doctrines) dower: entitles the widow to a life estate in one-third of her husbands qualifying land and attaches the moment the husband acquires title to land or upon marriage, whichever is later. An inchoate right, and the husband cannot sell the land free and clear of the wifes dower interest. No purchaser (bona fide or not) can cut off wifes interest. curtesy: husband had a support interest in his wifes lands. Like dower except (1) the

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husband did not acquire curtesy unless children were born of the marriage, and (2) the husband was given a life estate in the entire parcel, not just one-third. 3. Rights of Surviving Spouse to a Share of Decedents Property a. The Elective Share and Its Rationale - the spouse can take under the decedents will or the spouse can renounce the will and take a fractional share of the decedents estate. POLICY: (1) partnership theory - the surviving spouse contributed to the decedents acquisition of wealth and deserves to have a portion of it. (2) support theory - to provide the surviving spouse with adequate support. What percentage and of what property? The typical elective share is 1/3 of all of the decedent spouses probate property plus certain Nonprobate transfers. Is the election personal to the surviving spouse? No. Can the elective share be satisfied with a life interest in property held in trust? Only two states limit the surviving spouse to a life estate. Uniform Probate Code, Article II, Part 2 Note: The Estate Tax Marital Deduction and the Dependency of Women In 1982 the federal estate tax marital deduction was changed: Interspousal transfer will not be taxed at all, provided the donor spouse gives the donee spouse at least a life estate in the property. b. Same-Sex Marriage and Domestic Partners c. SKIP d. Property Subject to the Elective Share Intestate share Generally if spouse dies w/children of the marriage, the surviving spouse takes (sometimes all). Looking at all property that would pass through the probate estate. Based on legislatures best guess of what the decedent would have wanted. Can elect to renounce against intestacy and take a forced share. Elective share typically about 1/3 of the estate to the surviving spouse. (Smaller share of a bigger pie. Includes the probate estate & property that normally passes outside of probate 1. Judicial responses get a share of the estate of the deceased; does not include third-party created trusts, only those created by the deceased spouse. Sullivan v. Burkin Brief Fact Summary. Ernest G. Sullivan executed a will and created an intervivos trust of all of his real property. He specifically failed to make a provision to the appellant, his wife Mary Sullivan, or his grandson, Mark Sullivan in the trust or the will. The appellant sought a determination that the trust property be included as a part of his estate. Synopsis of Rule of Law. A trust with a remainder interest is not an invalid testamentary disposition just because the settlor during his lifetime, retained broad power to modify or revoke the trust, receive income, and invade the principal. The fact that the settlor is also the trustee does not invalidate the trust. Issue. Whether an intervivos trust with a remainder interest is an invalid testamentary disposition if the settlor retained broad power to modify or revoke the trust, receive income and invade principal during his lifetime? Held. An intervivos trust is not an invalid testamentary disposition because the settlor retains broad power over the trust during his lifetime. A surviving spouse has no right to an intervivos trust even if it is established to defeat the wifes election. A husband has the right to sell any property during her life without the knowledge of his wife. A wife may have special interests that should be recognized but the issue is best determined by the Legislature. 55

Bongaards v. Millen Brief Fact Summary. Jean Bongaards mother created a trust and made her the life tenant. When Bongaards died, her husband petitioned the court that the trust property be included in his wifes estate. Synopsis of Rule of Law. A surviving spouse may include the property of a trust within their deceased spouses estate if the trust was created by third party for the benefit of the deceased spouse. Issue. Whether a surviving spouse may invade a deceased spouses trust and take their elective share, if the trust was established by a third party? Held. No, a surviving spouse may not invade a deceased spouses trust and take their elective share if the trust was created by a third party. A third party has no obligation to support someone elses property. Property owned by a third party has never been a part of someone elses spouses elective share estate. Illusory Transfer test - focuses on the degree of control that the transferor retains. If they retain enough, then deem the transfer illusory, still valid trust/transfer, but since it is illusory it will be included in the estate for purposes of the estate. Intent to defraud test if setting up some nonprobate system that looks like the intent is to defraud the surviving spouse, then it goes back to the estate for purposes of calculation. Sometimes looks to subjective intent, i.e. timing , how much you have otherwise disinherited the spouse, etc. Present donative intent test looks at whether the settlor intend to make a gift now? Factors similar to those weighed in the intent-to-defraud test appear to be used in applying this test. In most states, a revocable trust created by the decedent spouse is included in determining the surviving spouses elective share, a position endorsed by the UPC. 2. Statutory Schemes 3. Uniform Probate Code 2-202, 2-203 Must the Surviving Spouse Accept a Life Estate? Waiver

e. f. Reece v. Elliott Section B. Rights of Descendants Omitted from the Will 1. Protection from Intentional Omission

a. The Domestic Approach b. A Look Abroad: Family Maintenanc Statutes 2. Protection from Unintentional Omission Gray v. Gray Uniform Probate Code 2-302 Note: Anna Nicole Smith and Blanket Disinheritance of Children Kidwell v. Rhew

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Chapter 8. TRUSTS: Introduction and Creation a. Introduction i. Introduction 1. Trust a. Functionally speaking, a trust, is an arrangement whereby a trustee manages property as a fiduciary for one or more beneficiaries. The trustee holds legal title to the trust property and, usually, can sell the property and replace it with property the trustee thinks is more desirable. The beneficiaries hold equitable title, and usually, are entitled to payments from the trust income and sometimes from the trust corpus as well. 2. History a. Originally medieval use. 3. Purposes a. Range from a simple estate plan to provide for surviving spouse and children in accordance with their respective needs, to commercial enterprises such as mutual funds, pensions, and various structured finance transactions. Other uses for trusts include situations where there are many beneficiaries or owners and it is desirable to avoid fragmented management of the property. The crucial point is that the trust provides managerial intermediation. The trust separates the benefits of ownership from the burdens of ownership. b. Focus on private trusts that are created gratuitously for the benefit of individual beneficiaries. Private trusts can be used to effect countless forms of gratuitous wealth transfer: i. Revocable Trust ii. Testamentary Marital Trust iii. Trusts For Incompetent Persons iv. Trusts for Minors v. Discretionary Trusts ii. Sources of Law 1. The evolution of modern American trust law has been influenced heavily by a handful of nonjudicial authorities. a. First and Second Restatements of Trusts i. Codifies prevailing common law rules b. Uniform Law Commission i. Uniform Trustee Powers Act 2. Lately, have increasingly become statutory. a. CA 3. Uniform Probate Code 4. Uniform Statutory Rule Against Perpetuities 5. Finally, Uniform Trust Code a. Default rules, can be overridden, except for Section 105(b) iii. Parties To A Trust (One person can be all three) 1. Settlor a. Person who creates the trust is the settlor or trustor or grantor b. Created During Life i. Inter vivos trust 1. Can be created by either declaration (declares, SoF requires writing) of trust or a deed of trust (transfers property) c. Created by Will i. Testamentary trust 2. Trustee a. Can have one or several. 57

b. Can be an individual or a corporation, or third party or both. i. Individual: 1. Cheaper 2. usually has sense of what settlor wants 3. less experienced 4. Can delegate to someone who knows more ii. Corporation 1. Experienced 2. Expensive 3. Recovery in case of breach more likely, with deep pockets c. Court will appoint a trustee if there is none. A trust will not fail for want of trustee. d. Must have active duties to perform, if dry, trust fails and benes acquire legal title to the trust property. e. Holds legal title to the trust property. f. Entitled to reasonable compensation (default), can be annual g. Trustees can do 3 main things i. Investment ii. Administration iii. Distribution h. Can have a trust protector (person who is given specific powers, (i.e., order distributions, replace the trustee, modify the trust due to changed circumstances) and a directed trust - (responsible for administration but must follow direction of a third party.) 3. Beneficiary(s) a. Have equitable of beneficial interest. i. Equitable future interests ii. Present interest in income b. Have a claim against trustee for breach of trust c. Can recover unless it comes into hands of bona fide purchaser for value Note: A Trust Compared with a Legal Life Estate A legal life tenant has possession and control of the property, whereas a trustee, not the life beneficiary, has legal title to the trust property. Trustees usually have more broad powers to act pro mptly to benefit the trust and its beneficiaries. Trustee can transact in relation to the trust property. Trust usually always preferred. iv. Valid Trust 1. Must owe equitable duties to someone other than herself. v. Third-Party Rights: Asset Partitioning 1. What is the resulting effect on the right of third parties with respect to the trust property? a. A personal creditor has no recourse against the trust property. b. A person who transacts with the trustee in regard to trust property has recourse against the trust property but not against the trustees personal property. c. Modern law of trusts, in effect, splits the trustee into two distinct legal persons: (1) a natural person contracting on behalf of himself, and (2) an artificial person acting on behalf of the beneficiaries. vi. The Beneficiaries Rights: The Fiduciary Obligation 1. What are the rights of the beneficiary with respect to the trust property against the trustee? a. It is the beneficiary, not the trustee, who bears the consequences of the trustees good or bad decisions. To safeguard the bene against mismanagement or misappropriation by the trustee, the trustee is held to a fiduciary standard of conduct. These include: 58

i. Loyalty 1. Administer trust solely in the interest of the beneficiary, no selfdealing. ii. Prudence 1. Trustee held to an objective standard of care in managing the trust property. iii. Impartiality (Between Classes of Benes) iv. Duty Not To Commingle v. Duty To Inform and Account b. A trustee who breaches her fiduciary duty may be denied compensation, subjected to personal liability, and removed as trustee. The law does not impose upon a person the office of trustee unless the person accepts. i. Once person accepts, at CL can only be released from office by consent of benes or by court order. ii. UTC modifies this rule by allowing resignation by a trustee with 30 days notice to all interested parties.

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b. Creation Of A Trust 1. Intent to Create A Trust a. No particular form of words is necessary to create a trust. The sole question is whether the grantor manifested an intention to create a trust relationship. (UTC section 402(a)(2)). Focus on function, rather than form. b. Examples: i. For the use and Benefit of another person . . . ii. Lux v. Lux: Philomena: Shall be maintained for the benefit of said grandchildren and shall not be sold until the youngest of said grandchildren has reached 21 years of age. Jimenez v. Lee (S.C. Oregon 1976) Facts: Suit brought by P against father to compel him to account for assets which she alleges were held by defendant as trustee for her. Claim based upon theory that a trust arose in her favor when two separate gifts were made for her benefit. First gift made in 1945 shortly after Ps birth, when her parental grandmother purchased $1,999 savings bond, registered in her name or mother or father. Supposed to be used for Ps educational needs. In 1960 D cashed these and invested them under name of Custodian of P. Second gift 1956 in amount of $500 was made by one of Ds clients. The $1,500 deposited by the donor was in name of D and his 3 children. In 1960 also, closed account and invested $1,000 in bank as well, under custodian title. D claims neither were trust for benefit of P, but held them as gift under the gift to minors act. P claims that gifts to her education created trusts which survived Ds investments in Commercial Bank stock. Holding: Words, in trust not necessary to create a trust. It is enough if the settlor intended to vest the beneficial ownership to a third person. Here, this was clearly shown. Ds own testimony establishes this because settlor said, going to supply bond to help with Ps educational needs. So, P still has power over bonds, which are now invested. Furthermore, D violated duty to bene when acted in self-interest and not for the sole interest of the bene. So, P can create an equitable lien on the bank accounts. D is liable to P the amount/percentage hers that accrued to P had there been no breach. But, D can discount any educational expenses already made but must be proven made for trust purposes. Trustee should maintain records of his transactions so complete and accurate that the can show by them his faithfulness to his trust. Remand for actual accounting, trustees burden to prove that the expenditures were made for trust purposes. Also, all doubts are against the trustee who maintains an inadequate accounting system. c. Precatory Language i. Unenforceable moral obligation or trust? ii. Language like: wish, hope, recommend iii. Colton v. Colton Intended to create an enforceable trust, even though language very precatory. 2. Necessity of Trust Property a. Under traditional law, a trust cannot exist without trust property often called the res. The question is whether a court will call the particular claim property. Unthank v. Rippstein (S.C. of Texas 1964) Facts: 3 days before his death Craft penned a lengthy personal letter to Rippstein. A portion of the letter which bound his estate to make $200.00 monthly payments to Rippstein. Craft first tried to bring action saying that writing was a holographic codicil to the will of Craft. Court held writing was not a testamentary instrument. Holding: 60

Rippstein arguments are resourceful but in our opinion there is not sufficient certainty in the language of the marginal notation upon the basis of which a court of equity can declare a trust to exist which is subject to enforcement in such manner. Uncertain here as to intent. Craft did not expressly declare that all of his property would be all he owned at such time would be corpus of res. At most he expressed intention to make monthly payments to D accompanied by an ineffectual attempt to bind himself. T.C. affirmed. Brainard v. Commissioner (7th Cir. 1937) Where there is no res at the time of the declaration of trust, settlor must manifest anew his intent to create a trust when the res comes into being. During such intervening time, Settlor must be considered as the sole owner of the profits and they were properly taxed to him as part of his income. 3. Necessity of Trust Beneficiaries a. A trust must have one or more ascertainable beneficiaries because there must be someone to whom the trustee owes a fiduciary duty, someone who can call the trustee to account. The underlying policy represented is that a private trust must be for the benefit of the beneficiaries. b. There are several exceptions: i. Charitable Trust ii. Beneficiaries can be unborn or unascertained when the trust is created But if at time trust becomes effective, the beneficiaries are too indefinite, the attempted trust will fail for want of ascertainable beneficiaries. Clark v. Campbell (S.C. N.H. 1926) Facts: Ps = people who would take in residue. Made will, saying that trustees know me best, so I give all my physical stuff to them to give to who they know I would want my stuff to go to and the proceeds sold and goes to the residue of my estate. Arguments: Groups is ascertainable because has to be limited to those that trustee knows and is friends with the testator Not a trust at all, just discretionary power , just outright gift to the trustees, and then they can act in their discretion. Holding: No ascertainable beneficiaries, friends not a defined class. The bequest for the benefit of the testators friends must fail for want of certainty of the beneficiaries. Rule: CL there cannot be a valid bequest to an indefinite person, must be a person or class of people indicated in the will capable of coming into court and claiming the benefit of the bequest. Need someone to compel performance. Incapable of taking effect because of the indefiteness of the cestui que trust, the done will hold the property in trust for the next taker under the will, or for the next of kin. Friends unlike relations has no accepted statutory or other controlling limitations. The only implied limitation of the class is that fixed by the boundaries of the familiarity of the Trustees must hold title to the property enumerated to be disposed of the residue. Testators trustees with his friendships. No sufficient criterion is furnished to govern the selection of the individuals from the class. This is contrary to testators intent because all of these things go to the residuary, which is not want testator wanted. Marilyn Monroe Will a. Give all stuff to Lee Strasberg . . . (Pg. 582) Problems with this: i. Problem if she intended to create a trust ii. May have ascertainable beneficiary problem too Validity Test: 61

a. If the class of beneficiaries is described such that some person might reasonably be said to answer the description, the power is valid. b. An appointment is invalid if it cannot be determined whether the appointee answers the description. In re Searights Estate (Ninth Dist. 1950) Brief Fact Summary. In his will, George P. Searight left his dog Trixie to Florence Hand of Wooster, Ohio. Searight directed his executor to place $1,000 in a savings and loan association for Hand to use 75 cents per day for the care of Trixie. The court determines the validity of the gift of the dog and the effect of the rule against perpetuities on the gift. Synopsis of Rule of Law. A valid honorary trust may exist where the donor gives another a dog for the purpose of caring for the dog. A bequest does not violate the rule against perpetuities where the donor sets a portion of a limited amount of money to be used every day that amounts to a time that does not exceed the limit under the rule. Rule Against Perpituities: No interest is good unless it must vest, if at all, not later than 21 years after some life in being at the creation of the interst. Issue. (1) Whether a gift of a dog is the proper subject of an honorary trust. (2) Whether the testamentary bequest of the dog for the purpose of providing care every day at 75 cents per day until $1,000 is exhausted, violates the rule against perpetuities Held. A gift of a dog is a proper honorary trust because the donor expressed a desire that the beneficiary care for the dog and the beneficiary is willing to carry out the testators wishes. Is binding on the conscious of the trustee. The testamentary bequest does not violate the rule against perpetuities because the testator granted the beneficiary $1000 to be used at a rate of 75 cents per day as long as the dog would live. Therefore, the power would not last longer than 57 and half days which are far below the maximum amount of time granted under the rule against perpetuities.

NOTE: Trusts For Pets and Other Nonchartiable Purposes Primary exception to the rule that a trust must have an ascertainable beneficiary is for the charitable trusts (charitable purpose). The lack of ascertainable beneficiary nixes not only trusts for the benefit of a pet animal, but also any noncharitable purpose trust. Yet people continue to do so. Two solutions have evolved: i. Common law Honorary Trust 1. The transferee is not under a legal obligation to carry out the settlors stated purpose, but if the transferee declines, she is said to hold the property upon a resulting trust and the property reverts to the settlor or the settlors successors. 2. Dont offend the RAP ii. Statutory Purpose Trust 1. Most states have enacted statutes that permit a trust for a pet animal or other noncharitable purpose for a given amount of time and for the perpetual care of a grave site. 2. Enforcement provided by a person appointed by the settlor or the court. 3. CA, pet trust statute. A trust for the benefit of a pet animal alive at the settlors death is valid for the life of the animal. The trust is enforceable not only by a person designated in the trust instrument or by the court but also by any person interested in the welfare of the animal or any non profit charitable organization that has its principal activity the care of animals. 4. KSA 58a-408 Kansas statutory trust statute (enabling for the care of pets) Honorary trust Transferee is not obligated to crr out settlors purpose If transeree declines, she holds the property on resulting trust and property reverts to settlor or settlors seccessors Used in Searights Estate Statutory Purpose Trust Statutory trust for pet animal or other noncharitable purpose 62

Authorized by UTC 408-09 and UPC 2-907 Typically authorize court ot reduce excessive trust property and provide for enforcement by settlor or court appointee 4. Necessity of a Written Instrument Creation of a trust does not have to be in writing BUT a testamentary trust (created by will) and an inter vivos trust of land must be. a. Oral Trusts for Disposition at Death In re Estate of Fournier Olliffe v. Wells Secret trust . on its face appears to be an outright gift, but behind the scenes there has been some secret trust arrangement. A court will allow extrinsic evidence of whatever the promise was and will impose a constructive trust to carry out those promises Devise is absolute on the face of the will Extrinsic evidence allowed to prevent unjust enrichment Court will impose a constructive trust on promisor Semisecret trust the will indicates a trust but does not indicate a beneficiary.

Desire to create trust appears on the face of the will Terms are undisclosed No extrinsic evidence Devise unenforceable for lack of identifiable beneficiary

Constructive Trust remedy that requires the person who gets the benefit that was intended for someone else. The duty then is only to give it to the intended party. Resulting Trust when a donor transfers property under circumstances where it shows that he didnt intend to give it outright, no wrongdoing occurred, and requires that the trustee give back the property either to the settlor or the settlors heirs. b. Oral Inter Vivos Trusts of Land required for the Statute of Frauds

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Chapter 9. RIGHTS TO DISTRIBUTIONS FROM THE TRUST FUND Section A. Rights of the Beneficiary to Distributions 1. Mandatory a. The trustee must make specified distributions to an identified beneficiary, trustee has limited discretion . 2. Discretionary a. The trustee has discretion over distributions. Can be drafted in limitless ways. Settlor can postpone and delegate to the trustee the decision of to whom to make distributions, in what amounts, and when. Need to police the exercise of discretion, which is in the form of the fiduciary obligation. i. Spray Trust 1. Trustee must distribute all the income currently but has discretion to determine which beneficiaries get it and in what amounts. 2. Discretion with no standard. ii. Sprinkle Trust 1. Authorizes the trustee to accumulate income and add it to principal. Often, trustees discretion is subjected to a standard of review. iii. Support Trust 1. Subject to standard of review that authorizes the trustee only to make distributions as is necessary for the beneficiarys support and maintenance. a. Necessary for support in style to which they are accustomed. b. Duty to Investigate and Discretion to distribute c. Discretion Standards (Look to language of trust to find out) i. Simple Discretion ii. Absolute/Uncontrolled Discretion, some courts say - do not care about reasonable discretion. Marsman v. Nasca (Mass App. Crt. 1991) Facts: Sara died, 1/3 funds in will provided husband-Cappy be provided with reasonable maintenance comfort and support after her death. Paid quarterly during life, and trustee if deemed necessary sole and uncontrolled discretion, for his direct or indirect benefit from the principal for comfortable support and maintenance. Remainder to Sally. Cappy received very little from distribution less $300, only amount he asked for Farr. Cappy does not say what he needs money for and Farr never investigated it. Cappy got house, gave to new wife in will. Cappy so broke, new wife took over his payments in exchange for his house when he died. However, when Cappy wrote new deed, new wife was not taken into consideration, sold house to daughter and kept a life estate. After Cappys death, sent letter to Margaret, second wife, to vacate the premises, and Margaret sued. Issue: Does a trustee, holding a discretionary power to pay principal for the comfortable support and maintenance of a beneficiary, have a duty to inquire into the financial resources of that beneficiary so as to recognize his needs? Synopsis of Rule of Law. A trustee that holds discretionary power to pay principal for the comfortable support and maintenance of a beneficiary, has a duty to inquire into financial resources of that beneficiary to ascertain his needs. Holding: Saras will imposed a duty of inquiry on the trustee to inquire into the beneficiaries financial situation (but remand for remedy). There is a duty of inquiry into the needs of the beneficiary which must be exercised with the soundness of judgment which follows from a due appreciation of trust responsibility. Here, little consideration has been given has been given to the comfortable support of the beneficiaries, because no inquiry or of distribution under the trust. Trustee to pay such amounts as shall be deemed advisable for comfort, support, and maintenance which is interpreted to mean in accordance with the standard of living which was normal for him before he became a beneficiary of the trust. Consider various available sources of support. Where relevant to the trustees inquiry/discretion Although, duty breached, Sally and Marlette were bona fide purchasers without notice of this breach issue, so cannot take back home. Remedy typically is to impress a constructive trust (hold money, figure out what Cappy should have received, then give to second wife) on the amounts, which should have been distributed to Cappy but were not because of the error of the 64

trustee. Remand to see how much would have been paid for Cappy to have been able to hold onto the residence. $80 held in constructive trust and will be distributed to rest of state. Exculpatory clauses held effective. Upheld because there was no evidence that it had resulted from an abuse of confidence reposed by testator. Burden of proof on person challenging trustee overreaching (today, the burden would be on trustee). (Protected Farr from liability, pg. 599) only liable for willful neglect or default, Farr claims testator want such a clause. Protect from personal liability. Note: Extended Discretion If a trustee has simple discretion, the courts will not interfere with the judgment of the trustee so longs as the trustee acts reasonably and in good faith. Even when a trustee is granted the broadest of fiduciary discretion, a trustee must act honestly and in a state of mind contemplated by the settlor. The court will not allow the trustee to act in bad faith or for some purpose or motive other than to accomplish the purposes of the discretionary power. Note: Exculpatory Clauses UTC 1008(b) - An exculpatory term drafted or caused to be drafted by the trustee is invalid as an abuse of a fiduciary or confidential relationship unless the trustee proves that the exculpatory term is fair under the circumstances and that its existence and contents were adequately communicated to the settlor. Exculpatory clauses are invalid unless the attorney drafting the clause can prove that it was adequately communicated to the settlor. An exculpatory clause that purports to immunize the trustee for any such conduct (bad faith, reckless indifference, and intentional or willful neglect) will not be enforced. Note: Mandatory Arbitration Clauses

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Section B. RIGHTS OF THE BENEFICIARYS CREDITORS 1. DISCRETIONARY TRUST a. Traditionally i. Creditors have no rights, distribution at trustees discretion. But, if distribute, [no support standard] creditor can come (cut-off of income procedure) in (cant pay directly to benes expenses). Would put pressure on beneficiary to pay the creditor first, and can be done by judicial order. b. Two Kinds i. Pure 1. Trustee as absolute, sole, uncontrolled discretion over distributions to the beneficiary 2. Traditional Law: creditor of a bene of pure trust has no recourse against the benes interest in the trust. a. Because the bene has no right to compel distribution, neither do the creditors. b. Creditor may be entitled to a court order directing the trustee to pay the creditor before making any further distributions to the bene. c. Creditor cannot compel a trustee to make a discretionary distribution, the creditor can obtain an order effectively requiring that, if any distributions are to be made from the trust, the creditor shall be paid before the beneficiary. 3. Trusts can be used as a means of making property available to the beneficiary but unavailable to the beneficiarys creditors. ii. Support 1. Trustee is obligated to make distribution as necessary for the beneficiarys needs. So goes to the creditor. Standard of distribution but otherwise obligated. a. Traditional Law: the bene of a support trust cannot alientate her interest. Nor can creditors of the bene reach the benes interest, except suppliers of necessaries, who may recover through the benes right to support. Cannot demand payments and neither can creditors. Only ones that can demand payments are creditors who are support creditors. b. Limited circumstances where creditor can come in here: i. Alimony, child support, etc. iii. Discretionary Support Trust 1. Trust combines explicit statement of unfettered discretion with a distribution standard. 2. Traditional Law: treated like a pure discretionary trust, foreclosing claims by the bene creditors. Any discretion = discretionary. c. Rest. And UTC collapse the distinction between discretionary and support trusts, unifying the rules regarding creditors rights for all trusts in which the trustee has any discretion over payments irrespective of whether the trustees discretion is uncontrolled or subject to a standard or both i. UTC more protective than the common law 1. ii. UTC less protective than the common law 1. Can force distribution for alimony and child support, in both instances discretionary and not. Note: Protective Trusts Where a settlor wants the bene to have a mandatory right to regular payments but also wants the asset protection features of a discretionary trust, the settlor should consider a mandatory trust subject to a protective provision (especially in jx that does not recognize spendthrift trusts). In such a protective turst, the trustee is directed to pay an income but if benes creditors attach benes interest, benes mandatory income interest automatically changed to a discretionary interest. The trustee than has discretion to apply income for benes benefit and the creditor of bene cannot demand any part of it. 2. SPENDTHIRFT TRUSTS 66

a. A bene of a spendthrift trust cannot voluntarily alienate her interest (disabling restraint). Nor can her creditors reach her interest in the trust. Created by imposing a disabling restraint upon the beneficiaries and their creditors. In many jx, a trust is not spendthrift unless the settlor expressly inserts a spendthrift clause but some do not. Bene has no power to alienate their interest and may not be reached by creditors. So, creditors cant reach her interest either even if there are mandatory payments. i. Creditor will have to get the money from A, not as it is funnels down to A. Much harder for the creditor in the spend thrift trust to get the money. Terms of trust not even changed, and creditor is still shit out of luck. b. Policy: i. Ensure the settlors wishes are being met. ii. Let people have control over their money. Condition the terms of transfer. Consistent with the general policy considerations. iii. Only protects rich people, poor people dont have money to make a trust. Education and resources. iv. Encourages irresponsible behavior. v. Creditor will know spend thrift so wont ever see the money. Affects the donees rights. c. Broadway Natl. Bank v. Adams Scheffel v. Krueger (S.C. New Hampshire, 2001) Facts: Mother of child filed suit in superior court asserting tort/criminal claims against the D alleging that the D sexually assaulted her minor child, videotaped the act and later broadcasted the videotape over the Internet. The court entered a default judgment against the defendant and ordered him to pay $551,286.25 in damages. To satisfy the judgment against the D, the P sought an attachment of the Ds beneficial interest in the Kyle Krueger Irrevocable Trust, which was established by the Ds grandmother for the Ds benefit. The terms direst a trustee to pay all of the net income from the trust to the bene, at least quarterly or as the bene so requests. Can also pay principal at trustees sole discretion for the maintenance, support, and education of the bene. The bene may not invade the principal until he reaches the age of fifty, in 2016.The bene is prohibited from making any voluntary of involuntary transfers of his interest in the trust. Clause that sets up spend-thrift trust. Issue. Whether a trust purpose for support and maintenance may still be fulfilled where the beneficiary faces a criminal sentence for sexual assault. Whether a statute that bars creditors from claiming an interest in a beneficiarys trust makes an exception for tort creditors. Synopsis of Rule of Law. A statute that bars creditors from claiming an interest to a beneficiarys trust does not make an exception for tort creditors. Holding: The purpose of support and maintenance trust may still be fulfilled while the beneficiary is incarcerated and after he is released. The statute that bars creditors from making a claim against a beneficiarys trust interest does not make an exception for tort creditors. Where the legislature has made specific exemptions, the law must presume that no other exceptions were intended. Language of governing statute states: a creditor of a bene shall not be able to subject the benes interest to the payment of its claim. This is controlling and no exception will be found. Spendthrift statute and does not fall within our exceptions. a. Notes: i. Inadvertent creditors v. people who do not have a choice to get into a transaction with this person. Court should have overridden the legislature. Involuntary (tort) creditors v. other voluntary ones. Should tort creditors be in a different position. (Like slayer statute). ii. Why not protect people who actually earns their money. 67

iii. Settlor not retaining control after make it a trust, so settlors creditors cannot get to the trusts either. Shelley v. Shelley Facts: Ts will left his residuary estate in trust for his son, to be paid to son for life. Trustee was to distribute corpus to son after he reached age of 30 in amounts that the trustee and other names persons deemed son capable of investing properly. Trustee also given discretion to distribute corpus to Grant or his children in case of emergency where need extraordinary expenses as necessary for their support and care. And clause was inalienable by a spendthrift clause. Mandatory income provision. Holding: Is spendthrift provision enforceable (with respect to the income) (look to mandatory funds coming out)? Previously held that the spendthrift provision of a trust is not effective against the claims of the benes former wife for alimony and for support of the benes child. Cogswell. Public policy says, common law built up over this. Claims for support of his children and wives. However, court made an exception and held that Grants interest in the trust income was subject to the claims of his children and former wives. iv. Corpus? 1. Discretionary, so different analysis. Creditors cant get it because not in benes control with respect to the trust principal because there, Grants interest was discretionary. Ability to invest = cant get there through common law. a. If applying the UTC may be able to get at this here, because UTC cares about kids. s v. Support 1. Because the trust also names grants children as beneficiaries in an emergency, so they could receive payments directly from the trust as benes themselves. Kids are part of the support, kids can get it but wives cannot. 3. SELF SETTLED ASSET PROTECTION TRUSTS (Not in U.S. really) 1. Traditional Law: settlor cannot shield assets from creditors by placing them in a trust for the settlors own benefit even if the trust is discretionary, spendthrift, or both, the settlors can reach the maximum amount that under any circumstances the trustee could pay to the settlor or apply for the settlors benefit. 2. If it ever happens, we turn mandatory trust into discretionary trusts 3. Common in England because it does not enforce spendthrift trust. a. Policy i. Should not be able to protect self from own profligate. 4. Eleven states have enacted statutes that allow the settlor to establish a trust for your own benefit so that it may be shielded from creditors. 5. Self-settled spendthrift trust cannot protect you from current ceditors, undecided as to child support and alimony. a. Duress clause if the trustee is under duress to make a payment, the trustee automatically changes to someone over whom the court has no jurisdiction. 6. UTC Section 505 7. Notes: a. For the protection of the settlor. b. Why not protect folks who actually earn their money? Note: Trusts for the State-Supported Self-settled trusts. Generally, are included when assessing financial need. Trusts created by a third-party is generally not included in the financial calculation BUT if it s mandatory/support trust that pays out for a support standard, they are included. EXCEPTIONS: (1) a trust created by a parent/guardian for a 68

disabled child and the trust says that whatever is left after the child dies and there is a payback provision, it is not included in the financial eligibility calculation; (2) a supplemental/special needs trust in a way that allows the person receiving state benefits and the trust moneys are used to supplement what the state benefits do not cover.

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Section C. MODIFICATION AND TERMINATION OF TRUSTS ix. Structure (Professors Notes) 1. When To Modify a. If settlor and benes agree then yes b. If settlor dead then: look to the material purpose of the settlor i. Equitable deviation/Changed circumstances (needed) 1. But cannot a. Goes against T intent then NO 2. Administrative more OK than distributive 3. Rest. 3rd - the court may modify an administrative or distributive provision of a trust, or direct or permit the trustee to do so, so long as the modification or deviation will further the purposes of the trust. 4. UTC a. Allow modification when unanticipated circumstances and modification would benefit. Do not care about administrative or distributive. b. Permits modification is compliance with terms would be wasteful. ii. Other Modification/Termination 1. Claflin doctrine, need: a. Benes in agreement and b. Continuance of trust without modification must not be necessary to carry out material purpose of the settlor 2. In re Estate of Brown, Court went even further x. About 1. If the settlor and all the beneficiaries consent, an irrevocable trust may be modified or terminated (even if have a spendthrift clause). The trustee cannot object. xi. Traditional Rule/Claflin Doctrine 1. A trust cannot be terminated or modified prior to the time fixed for termination by petition of all the beneficiaries if termination or modification would be contrary to a material purpose of the settlor. a. In general, a trust cannot be terminated if it is a spendthrift trust, if the bene is not to receive the principal until attaining a specified age, if it is a discretionary trust, or if it is a trust for the support of the bene. 2. Leading case for this rule; Claflin v. Claflin, and preserved in the restatement of trusts. xii. Equitable Deviation Doctrine 1. The court will permit the trustee to deviate from the administrative terms of a trust when compliance would defeat or substantially impair the accomplishment of the purposes of the trust on account of changed circumstances not anticipated by the settlor. a. It is not enough to show that the deviation would be more advantageous or better for the beneficiaries than continuing compliance; deviation must be necessary to accomplish the purpose of the trust. xiii. Deviation and Changed Circumstances 1. In re Trust of Stuchell (Or. App. 1990) equitable deviation doctrine Traditional view a. Facts: i. 1947 will created a testamentary trust for his family. Upon the death of the last life beneficiary, the principal of the trust was to be distributed to Ednas children or their descendants per stirpes. Edna had four children, one of whom was mentally retarded. Moved court to approve change to trust so that money would not disqualify mentally retarded 70

kid from receiving public benefits. The money was only supposed to be used to supplement the public benefits. 1. P argues, if settlor knew this, would have done things differently. b. Holding: i. Applying the equitable deviation rule, the court denied the petition because, although more advantageous to beneficiaries, there is no statutory or common law authority for the court to approve the proposal. ii. Court follows Second R. comment, court, thinks its bound by this law. May modify only if compliance would defeat or substantially impair the accomplishment of the purposes of the trust then equitable deviation. xiv. Note 1. Courts (usually) are more lenient regarding administrative directions than distributive provisions. xv. In re Pulitzer 1. Held: a. Court authorizes sale of stock when it was tanking, court alters this because it is administrative and not distributive (terms). b. Would of understood when trust assets were tanking, he would have changed the situation. In re Riddell (Crt. Of App. Washington, 2007) Facts: George and Irene were husband and wife with one child, ralph. Georges will left the residue of his estate in trust for the benefit of his wife, and son, his daughter-in-law, and his grandchildren. George also created an additional trust for their benefit. Irene created a similar will and left the residue in trust as well. Trust contained a provision in which upon Ralph and Beverlys death, George and Irenes grandchildren (Nancy & Donald) would receive the trusts benefits until the age of 35 and then principal would distribute to grandchildren. Ralph and Beverly have two children. Donald and Nancy. Nancy suffers from schizophrenia and bipolar disorder. She is not expected to live independently for the remainder of her life. Both Ralph and Beverly are still living. Upon their death, the trusts will terminate because Nancy and Donald are both over 35. Nancy will receive her portion of trust which is about $1,335,000. Trustee Ralph petitioned T.C. to consolidate the trusts and create a special needs trust on Nancys behalf instead of distributing the principal to her. He said this trust was necessary because upon distribution 1) state would seize trust based on incredible medical bills or 2) Nancy would manage the funds poorly due to her mental illness and lack of judgment. Holding: Remand for T.C. to make decision in light of change in circumstance and purpose of trust. Applying 3rd Rest. (compliance would frustrate the settlors interest). This is why different than Sutchell, because applying a different law here. Two prong equitable deviation test: Court may modify an administrative or distributive provision of a trust. Or direct or permit the trustee to deviate from an administrative or distributive provision if Because of circumstances not anticipated by the settlor 71

Here, this was met. Grandparents though Nancy could manage money as saw fit, but obviously is not fit. The modification or deviation will further the purpose of the trust Here this was met. Court stated the primary purpose of the trust was to provide for Nancy during her lifetime: education, support, and maintenance, and medical care. Congress in 1993 permitted a creation of a special needs trust in order to allow disabled persons to continue to receive government assistance for their medical needs, while allowing extra funds for assistance the government did not provide. Policy Effect the settlors intent

In re Estate of Brown (S.C. Vermont, 1987) (petition to terminate a trust that provides for successive beneficial interests) Facts: Brown died in 1977, settling his entire estate in a trust under conditions. Trust was to pay for education of nephews and then after all are done in school, to go to brother and sister, and then principal distributed to their kids after they die. Trustee paid for kids college then started giving to parents. Parents petitioned court to distribute the remaining trust because the only purpose left was for their enjoyment etc. All benes agree here. Court accepts the class of benes are closed. Holding: An active trust may not be terminated, even with the consent of all the beneficiaries even if a material purpose of the settlor remains to be accomplished Settlors purpose would be lost if the trust was terminated. Look to language settlor used, providing for maintenance of parents for their lives (nothing more). May blow money, may give to kids instead of care for themselves these things could be inconsistent with the settlors wishes. May not be taken care of for life. Maybe settlor though they would be irresponsible, even though did not include a spend thrift provision.

xvi. G Rest. 3rd 1. Starts with Claflin, all bene agree, material purpose then allows termination if reasons for termination outweigh the material purpose of the trust. a. Would anyone want to make a trust anymore. xvii. Rest and UTC 1. are both preserving Claflin and changing some portions. 2. Spendthrift clause not presumed under a spendthrift trust a. Has now become boilerplate language 3. Under Claflin, spendthrift would be a material provision xviii. What if trust does not say by terms its irrevocable? (Trying to figure out what a settlor would mean). 1. (Majority) Presume irrevocable 2. (Minority) CA and UTC 72

a. Unless terms say cant, settlor may revoke when they want

Chapter 10.

Trust Administration: The Fiduciary Obligation

Section A. At Common Law the Trustee had no inherent power, could only do what was told by the Settlor/ Modern Trend: encourage more power 1) create a list of powers that can be given to the trustee and then settlor picks what he wants; 2) by statute grant Trustees broad powers, then it becomes incumbent of the Settlor to opt-out. NOTE: Agency Costs and the Fiduciary Obligation NOTE: Powers of the Trustee Section B. The Duty of Loyalty

Hartman v. Hartle

In re Gleesons Will

In re Rothko Brief Fact Summary. Mark Rothko left numerous paintings in his will to his children. Bernard J. Reis, Theodoros Stamos, and Morton Levine were the executors of his estate. Rothkos children filed suit claiming that the executors entered into improper business transactions to sell the paintings. Synopsis of Rule of Law. Trustees have a duty of loyalty that prevents them from accepting employment from a third party who is entering into a business transaction with the trust. An executor who knows that his co executor is committing breaches of trust and not only fails to exert efforts directed towards prevention but accedes to them is legally accountable even though he was acting on the advice of counsel. If a trustee in breach of trust transfers trust property to a person who takes with notice of the breach of trust, and the transferee has disposed of the property, it is proper to charge him with appreciation damages because if it had not been for the breach of trust, the property would still have been a part of the trust estate. Issue. Whether executors fail to act unfairly in the transactions they entered into on behalf of the estate? Whether an executor who acting prudently on the advice of counsel may be liable for the co executors breach of trust? Whether an executor who is liable for making an improper transfer where he had duty to retain property but chose to sell the property, is liable for appreciation damages? Held.Yes. The executors not only held an interest that conflicted with the interests of the estate, but they acted unfairly because their interests conflicted with the interests of the estate. Reis was induced to act in the MNYs favor in conducting the transactions with the estate. As the director, secretary, and treasure of MNY, Reis was induced to favor the interests of MNY, including his own financial aggrandizement of status and financial advantage through sales of almost one million dollars for items from his own collection and his familys extensive private art collection by the Marlborough interests. Stamos was also induced to act in favor of the Marlborough interests because he was an artist under contract with Marlborough and the latter bought one of Stamoss paintings during a week when contract negotiations were pending. Stamos breached his duty not to accept employment from a company that was conducting business with the estate. Yes. Though Levine acted on the advice of counsel, he is liable for damages because he failed to exert efforts directed towards prevention but acceded to the breaches. 73

Yes. Because the paintings cannot be returned to the trust estate, the estate is entitled to appreciation damages. This case involves wrongful transfers that should make the estate whole. The damage award is not punitive. NOTE: Co-Trustees Section C. The Duty of Prudence Imposes on the trustee an objective standard of care: to satisfy, the trustee shall exercise reasonable care, skill, and caution. The Prudent Man Rule and the History of Trust-Investment Law To make such investments and only such investments as a prudent man would make of his own property having in view the preservation of the estate and the amount and regularity of the income to be derived.

1.

NOTE: Problems with the Prudent Man Rule 2. The Prudent Investor Rule and Modern Trust-Investment Law a. The Prudent Investor Rule Adopted by the Restatement Uniform Prudent Investor Act (1994) Explicitly codified the prudent man rule b. The Rule Explained and Examined

A. Diversification a fiduciary must diversify the investments of participants and beneficiaries to minimize risk of loss unless doing so is clearly imprudent. This allows for some risky investments without losing all of the funds. Gets rid of the idea that some investments are inherently too risky to take. B. Sensitivity to the Risk/Return Curve in Place of the Ban on Speculation C. Delegation

c.

Risk, Return, and Diversification in Practice

In re Estate of Janes Brief Fact Summary. Rodney B. Janes created a testamentary trust consisting of Kodak stock. He named wife, Cynthia Janes, and several charitable organizations as the beneficiaries under the trust. The trustees, the petitioner, Ellison Patterson and Richard Young, failed to divest the estate of the stock that had dropped in value. Synopsis of Rule of Law. A trustee must diversity assets unless the trustee reasonably determines that it is in the interests of the beneficiaries not to diversify, taking into account the purposes and terms and provision of the governing instrument. In imposing liability upon a fiduciary on the basis of the capital lost, the court should determine the value of the stock on the date it should have been sold, and subtract from that figure the proceeds from the sale of the stock, or, if the stock is still retained by the estate, the value of the stock at the time of the accounting. The court has discretion on whether interest should be awarded. Dividends and other income attributable to the retained assets should offset any interest awarded. Issue. Whether a fiduciarys duty of investment prudence may be limited to the opinion of investment bankers and analysts who follow the companys stock, and an overall determination of the investment quality determined by (1)the capital structure of the company, (2) the competency of its management, (3) whether the company is a seasoned issuer of stock with a history of profitability, (4) whether the company has a history of paying dividends, (5) whether the company is an industry leader, and (6) the expected future direction of the companys business? Whether, under all of the facts and circumstances of this case, the fiduciary violated the prudent person standard in maintaining a concentration of the Kodak stock? Whether August 9, 1973 was a reasonable time by which the petitioner should have divested the estate of the stock? 74

Whether the proper measure of damages for breach of a duty to act prudently is lost profits or the amount that the proceeds of the stock would have yielded, up to the time of trial, had they been invested in petitioners own diversity equity fund on August 9, 1973. Held.No. A fiduciarys duty of investment prudence may not be limited to the opinion of investment bankers and analysts who follow the companys stock and other factors offered by the petitioner. The prudent person rule dictates against any absolute rule that immunizes a fiduciary from its failure to diversify based upon such factors. Also, omits other factors to be considered under the prudent investor rule like, the amount of the trust estate, the situation of the beneficiaries, the trend of prices and of the cost of living, and the prospect of inflation and deflation. Yes. The petitioner here acted imprudently by failing to divest the estate of the Kodak stock by August 9, 1973 because the petitioner jeopardize the interests of the primary income beneficiary. The Kodak stock dropped in value, decreasing the amount of income that would be available to the primary income beneficiary, the testators 72 year old widow for whom the support testamentary trusts were created. Furthermore, the petitioner failed initially to undertake a formal analysis of the estate and establish an investment plan consistent with the testators primary objectives; (2) failed to follow petitioners own internal trustee review protocol during the administration of the estate, which advised special caution and attention in cases of portfolio concentration of as little as 2%; and (3) failed to conduct more than routine reviews of the Kodak holding in this estate, without considering alternative investment choices, over a seven-year period of steady decline in the value ofthe stock. Yes. August 9, 1973 was a reasonable time by which the petitioner should have divested the estate of the stock The petitioners internal documents and correspondence, as well as the testimony of Patterson, Young and objectants experts establish that the petitioner had all the information a prudent investor would have needed to conclude that the percentage of Kodak stock in the estates stock portfolio was excessive, and should have been significantly reduced in light of the estates over-all investment portfolio and the financial requirements of Janes and the other charitable beneficiaries. No. The proper measure of damages is the value of the capital that was lost, the difference between the value of the stock at the time it should have been sold and its value when ultimately sold. In this case which involves faithless transfers as oppose to deliberate self-dealing, the proper measure of damages is not lost profits. NOTE: Calculating Damages for Imprudent Investment Wood v. U.S. Bank, N.A. NOTE: Permissive Versus Mandated Retention of Inception Assets and the Duty to Diversify NOTE: Social Investing d. Delegation

NOTE: Delegated versus Directed Trusts Section D. Impartiality and the Principal and Income Problem (KSA 58a-803) - When a trust has two or more beneficiaries: In investing, managing, and distributing the trust property, the trustee must strike a balance between the beneficiaries, giving due regard to their respective interests. DOES NOT strictly mean impartiality; must take into account any preferences that the settlor may have expressed in the governing instrument. See pg. 730 for classification. For Kansas KSA 58-9-104(a) A trustee may adjust between principal and income to the extent the trustee considers necessary if the trustee invests and manages trust assets as a prudent investor..., the terms of the trust describe the amount that may or must be distributed to a beneficiary by referring to the trusts income, and the trustee determines [that trustee is unable to treat all beneficiaries fairly]. KSA 58-9-104(b) _______. In re Matter of Heller 75

Issue: Whether the Appellate Divisions opinion and order was properly made when it affirmed the Surrogate Courts denial of summary judgment for Davis where the trustees were remainder beneficiaries? Rule: A trustee may adjust the principal and income to the extent the trustee considers advisable to enable the trustee to make appropriate present and future distributions in accordance with clause (b)(3)(A) if the trustee determines that such an adjustment would be fair and reasonable to all of the beneficiaries, so that current beneficiaries may be given such use of the trust property as is consistent with preservation of its value. Holding: No, this statutes does not prohibit from making a unitrust election, moreover, they are trustee and have a duty to all of the beneficiaries, including their sisters, even though their interests are aligned with their sisters. Section E. 1. Subrules Relating to the Trust Property Duty to Collect and Protect Trust Property - Trustee must collect the assets from the executor as quickly as possible and examine the property to make sure it is what the trustee ought to receive and redress any breach of duty that diminished the assets intended for the trust. Duty to Earmark Trust Property - to designate property as trust property rather than the trustees own because if the property is not earmarked, the trustee might later claim that the investments that proved profitable were his own and the investments that lost value were made for the trust. Failure to earmark a trust investment is that a trustee is liable only if the loss results from the failure to earmark and is not liable if the loss results from general economic conditions. Duty Not to Mingle Trust Funds with the Trustees Own - a trustee is guilty even if he does not use the trust funds for his own purposes. Commingled trust funds are difficult to trace and may be subject to the trustees personal creditors. A corporate fiduciary may hold and invest trust assets in a common trust fund, and may make joint investments from separate trusts. The trustee is only liable to the extent the commingling caused the loss. Duty to Inform and Account Duty to Inform - Trustee must inform the beneficiaries of the existence of the trust and significant developments pertaining to the administration of the trust, and to respond to requests by a beneficiary for information reasonable related to the beneficiarys interests in the trust.

2.

3.

Section F. 1.

Fletcher v. Fletcher Brief Fact Summary. Elinor J. Fletcher created several trusts for the benefit of her children. The trustees refused to let the children see all of the portions of the trust. The trustee claimed that the grantor orally instructed them to keep the terms and the dealings of the trust confidential. Synopsis of Rule of Law. The terms of a trust may regulate the amount of information which the trustee must give and the frequency with which it must be given, but the beneficiary is always entitled to such information as its reasonably necessary to enable him to enforce his rights under the trust or to prevent or redress a breach of trust. Issue. Whether the trustees had a duty to disclose the terms of the trust agreement to the beneficiaries? Held. Yes. The trustees had a duty to disclose the terms of the trust agreement to the beneficiaries, even though the terms of the trust itself did not require such a disclosure. Without access to the agreement, the beneficiaries were not able to assure the Trustees were discharging their duty to deal impartially with all the beneficiaries in regards to the trust agreement, in regards to their duty to use reasonable care and skill to make the trust property productive, or in regard to whether the trustees investment decisions made with respect to the assets revealed on Schedule A. Though the claim that the grantor did not want the beneficiaries to see the trust agreements in full was unsubstantiated, the Grantor could not prevent the beneficiaries from having access to the trust agreements. 2. Duty to Account - Protects trustee from liability to the beneficiary for breach of trust if the facts underlying the beneficiarys claim are fairly disclosed in an accounting filed with the court, proper notice is served on the beneficiary, and the beneficiary does not timely object to the accounting.

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Chapter 11 Charitable Trusts Section A. Introduction Must be for a charitable purpose Relief of poverty Advancement of education Advancement of religion Promotion of health Governmental or municipal purposes Beneficial to the community Private Trust For the benefit of an ascertainable beneficiary Claflin doctrine Deviation beneficiaries Subject to RAP Charitable Trust For the benefit of a charitable purpose with no ascertainable beneficiary Cy pres doctrine Deviation States attorney general Except from RAP and certain taxes

Purpose Modification Enforcement Other Section B.

Nature of Charitable Purposes

Shenandoah Valley National Bank v. Taylor Brief Fact Summary. Charles B. Henry created a trust for the children of an elementary school. Each child was to receive an equal share of the income of the trust every year on the last day of school before Easter and the day before Christmas. Synopsis of Rule of Law. To be sustained as a charitable trust, the dominant intent must be charitable and not merely benevolent. The dominant intent is not assessed by a specific intent declared by the trust but by the effect of the trust in application. A trust has a charitable purpose if it is for the relief of poverty, the advancement of education, the advancement of religion, the promotion of health, governmental or municipal purposes, and other purposes the accomplishment of which is beneficial to the community. A charitable purpose is not valid if it makes a financial distribution to beneficiaries who are not necessarily poor or in necessitous circumstances. Issue. Whether a trust has a valid charitable purpose where its stated purpose is to advance the education of children? Whether a trust that makes a financial gift to children that is not based on the financial need of the children but the stated trust purpose is to further each childs education? Held. No. This trust is not a charitable because the dominant intent of the trust is to bestow happiness upon children on the two holidays. Though the testator stated that the trust funds are to be used by each child to further his education, the trustee has no obligation beyond distributing the funds to each child. The child has the legal right to use the money in any way that they please. Furthermore, the trust makes a distribution to each child on the last day before Easter and Christmas. The trust fails as an educational trust.No. The trust may have been upheld as one designed to relieve poverty. However the disbursements are not made to any children who are poor or in necessitous circumstances. The trust is merely benevolent and does not serve any charitable purpose. A trust is not charitable just b/c it has a large number of beneficiaries (identifies a class of persons). A trust may be a valid charitable trust although the persons who directly benefit are limited in number (I.e. scholarships). The charitable purpose may be left at the trustees discretion. A majority of states have made changes to the Rules Against Perpetuities, in that they adopted a wait-and-see idea where in light of actual circumstances, the interest will vest or fail within the perpetuities period. Honorary trusts - the trustee has the power to apply the trust property to the settlors stated purpose. If the trustee does not do so, the trust reverts to a resulting trust to the settlor or the settlors heir/devisees. Political party - NOT charitable except where the trust is meant to promote improvements of the structure and methods of government advocated by a particular political party. 77

Note: Shaws Alphabet Trusts - no good b/c it served no educational purpose and was of no community benefit. Section C. Modification of Charitable Trusts: Cy Pres If the settlors exact charitable purpose becomes illegal, impossible, or impracticable, the court may select another charitable purpose that approximates the settlors intent. The doctrine serves to address the possibility of changed circumstances that will render the trusts original purpose obsolete. In re Neher Brief Fact Summary. Neher devised her property to the Village of Red Hook, in memorial of her husband, to be used as a hospital known as, Neher Memorial Hospital. Synopsis of Rule of Law. When compliance with a grafted direction of a charitable purpose is impracticable, the court may execute the gift cy pres through a scheme framed by the court for carrying out the trusts general charitable purpose. Issue. Whether a trust that states that property to be used as a hospital for the Red Hook Village is the particular charitable purpose of the trust where the testator also states that she directs the property to be incorporated in into the Village of Red Hook as a memorial to the memory of her beloved husband? Held. No. The trust has as general charitable purpose to use the property for the Red Hook village in dedication to her husband. The later expression is a direction as to the desires or intentions of the testator as to the manner in which the general gift is to be carried into effect. Therefore the direction that the property be used for a hospital may be ignored because compliance is impracticable since another hospital exists in the area and is serving the needs of the Village. The gift may be executed cy pres by the court for carrying out the general charitable purpose. Expansion of cy pres: Wasteful Presumption of general charitable intent - the burden is on the party opposing cy pres to show the settlor did not have a general charitable intent. San Francisco Chronicle: The Buck Trust NOTE: Cy Pres Versus Administrative Deviation Cy pres - allows for modification of the donors stated purpose ---- Administrative deviation - focuses on the donors prescribed rules of administration Philadelphia Story: The Barnes Foundation NOTE: Discriminatory Trusts If trustee of a racially restrictive trust is a govt body - administration in a racially discriminatory manor is discriminatory state action, therefore restriction is unenforceable. Applying either cy pres or deviation courts have held that the settlor would prefer the charitable trust to continue without the racial restriction. Scholarship to black students - invalid under the Equal Protection Clause unless they were justifiable to remedy present effects of past discrimination. If trustee is a private individual - usually not unconstitutional as discriminatory state action. May still have problems with federal/state law forbidding racial discrimination. Charitable trusts benefiting a specific gender is not unconstitutional but may have federal/state law problems. Courts have removed the gender restriction under the power of cy pres. Section D. Supervision of Charitable Trusts Same fiduciary duties as those of a private trust. Who enforces those duties - NOT the donor (traditional rule) unless they have expressly reserved the right to do so. The state attorney general or public officer, co-trustee, or a person who has a special interest in the enforcement of the charitable trust. UTC 405(c) & the Restatement 94allows the settlor to have standing to enforce a charitable trust 78

Carl J. Herzog Foundation, Inc. v. University of Bridgeport Brief Fact Summary. The Carl J. Herzog Foundation made a gift to the University of Bridgeport to provide scholarships to nursing students. Later the University closed its school and applied the money from the gift to its general endowment. Synopsis of Rule of Law. A suit can be maintained for the enforcement of a charitable trust by the Attorney General or other public officer, or by a co-trustee, or by a person who has a special interest in the enforcement of the charitable trust, but not by persons who have no special interest or by the settlor, unless he expressly reserves the right to do so, or by the settlors heirs, persona representatives or next of kin. Under the Uniform Management of Institutional Funds act, Section, 7, an institution may be released from donatives restriction with the donors written consent or, if the donor is dead, disabled, or otherwise unavailable, with court approval. Issue. Whether a donor has standing to enforce the terms of a charitable gift? Held. No. Since the Herzog Foundation did not expressly retain the right to enforce the terms of the gift, they have no standing to bring suit. A suit may only be maintained by the Attorney General, a public officer, a co-trustee, or a person who has a special interest in the enforcement of the rust. Furthermore, the foundation does not have standing under section 7 of the Uniform Management of Institutional Funds Act because the drafters of the act expressly provided that the donor of a completed gift would have no standing to enforce the gift. Smithers v. St. Lukes-Roosevelt Hospital Center Brief Fact Summary. R. Brinkley Smithers and the plaintiff, Adele Smithers made a gift to the defendant, St. Lukes Roosevelt Hospital Center of $10 million over time for the establishment of an alcoholism treatment center (the Gift). The trustees of the center misappropriated the funds. After Smithers death, the plaintiff brought suit to enforce the agreement between that was made between herself and Smithers, and the St. Lukes Roosevelt Hospital Center. Synopsis of Rule of Law. A donor of a gift has standing along with the Attorney General to enforce the terms of their own gifts. Issue. Whether the plaintiff has standing as a donor to enforce the charitable gift, which she and her husband donated? Held. Yes. The plaintiff is the donor of the gift and donors have standing with the Attorney General to enforce the terms of their own gifts. There is a need for coexistent standing of the donor and the Attorney General. Donors are more likely to pursue litigation and conduct the necessary research for litigation. The plaintiff provided the initial research for the Attorney Generals case; she is not a person who has not conducted appropriate investigations. The plaintiff conducted the investigations that caused the Attorney General to get involved. Since the plaintiff is not a beneficiary, there is no risk of vexatious litigation by irresponsible parties who do not have a tangible stake in the matter. Furthermore, the desire to prevent vexatious litigation by irresponsible parties who do not have a tangible stake in the matter and have not conducted appropriate investigations has no application to the plaintiff. Also, the plaintiff has a right to sue because she is the adminisratrix of the estate of her husband and both he and the plaintiff made an agreement with the defendant that the latter use the gift in a specific manner. The Sweetest Place on Earth: Hersheys Kiss Off NOTE: Standing for Persons with Special Interests A person with a special interest as a beneficiary may be able to enforce a charitable trust. The person must show that he is entitled to receive a benefit under the trust that is not available to the public at large or to an average beneficiary. Relator standing - suit by attorney general on behalf of a private party at the partys expense and subject to the attorney generals expense.

Hawaii Journal: The Bishop Estate

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Chapter 12. Power of Appointment: Building Flexibility into Trusts Section A. 1.

Terminology and Types of Power of Appointment Powers General - goes to 1) donee, 2) donees creditors, 3) donees estate, or 4) donees estates creditors Special - can not go to any of the above Timing Presently exercisable By deed - transferring during lifetime Testamentary -leave by will

People Donor - creates the power Donee - person who holds the power of appointment Objects - the people in whose favor the power can be exercised Appointee - the person who is given the property Takers in default - the people who take in the absence of an appointment

2. Relation-Back Doctrine Irwin Union Bank & Trust Co. v. Long 3. Section B. Section C. 1. 2. Tax Considerations for Powers of Appointment Creation of a Power of Appointment Exercise of a Power of Appointment Introduction Exercise by Residuary Clause in Donees Will

Beals v. State Street Bank & Trust Co. NOTE: Lapse - Appointee Dies Before Donee Dies 3. 4. Limitations on the Exercise of a Power of Appointment Fraud on a Special Power a. An appointment in favor of a person who is not an object of the power is invalid b. An appointment to an object for the purpose of circumventing the limitation of the power is a fraud on the power and is void to the extent it is motivated by such purpose. Ineffective Exercise of a Power of Appointment a. Allocation - If the donee blends both the appointive property and the donees own property in a common disposition, the blended property is allocated to the various interests in such a way as to increase the effectiveness of the disposition. EXAMPLE: Donee disposes of all assets through a residuary clause in her will, mixing appointive property with her own. Traditional law - if donee did not blend the property, allocation did not apply Restatement - even if donee did not blend the property, allocation will apply. b. Capture - only for general powers - occurs when the donee manifests an intent to assume control of the appointive property for all purposes and not merely for the limited purpose of giving effect to the expressed appointment. Traditional law - if donee did not blend the property, allocation did not apply Restatement - if the donee does not effectively exercise the power, the appointive property passes to the takers in default of appointment under the donors governing instrument. If 80

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there is no provision, or if the provision is ineffective, the appointive property passes to the donee or the donees estate.

Section D.

Release of a Power of Appointment

Seidel v. Werner Brief Fact Summary. Steven L. Werner promised his wife, the defendant, Anna G. Werner that he would exercise his power of appointment over a trust in favor of her in his will. Werner made this promise as a part of his divorce and the defendant paid consideration. Synopsis of Rule of Law. Under statutory law, the donee of a power of appointment which is not presently exercisable cannot contract to make an appointment. A promise to exercise a power of appointment in favor of another in the future may be deemed a release of that power if the parties intended such a release. Issue. Whether an agreement to exercise a power of appointment over a trust is valid? Whether an agreement to exercise a power of appointment at a later time constitutes a release of that power? Held.No. Such an agreement is void because the defendant had not exercised his right to the power of appointment at the time the contract was made. The agreement to exercise a power of appointment at a later time is not a release of that power because the defendant did not agree to release a power. The defendant agreed that he would exercise the power in the future. Furthermore, it is not a release of a power because a release of the power would not give the other party as much of a portion of the principal as the agreement to exercise that power in the future. Section E. Failure to Exercise a Power of Appointment 1. Failure to Exercise a General Power 2. Failure to Exercise a Special Power Loring v. Marshall

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Chapter 14. The Rule Against Perpetuities and Trust Duration Section A. Introduction must vest if at all Section B. 1. The Orthodox Rule Against Perpetuities

Summary of the Rule a. The Rule and its Policies b. The Perpetuities Period: Why Lives in Being? c. The Rule is One of Logical Proof d. When the Lives in Being Are Ascertained e. The Rule and Trust Duration 2. The Fantastical Characters a. The Fertile Octogenarian NOTE: The Presumption of Fertility NOTE: The Precocious Toddler b. The Unborn Widow NOTE: ALTERNATIVE CONTINGENCIES c. The Slothful Executor d. The Magic Gravel Pit and Other Marvels Perpetuities Reform

Section C.

1. Self-Help: Saving Clauses NOTE: Attorney Liability for Violating the Rule The Reformation (or Cy Pres) Doctrine The Wait and See Doctrine a. Wait and See for the Common Law Perpetuities Period b. The Uniform Statutory Rule Against Perpetuities Uniform Statutory Rule Against Perpetuities NOTE: USRAP and the Generation-Skipping Transfer (GST) Tax 4. Abolition of the Rule Against Perpetuities 2. 3.

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