TRUSTS & ESTATES FALL 2012

INTRODUCTORY MATTERS AND INTESTATE SUCCESSION

I.

II.

Policy and Problems with Passing Wealth at Death

a. Reasons testamentary freedom is good
i. Creates incentive to save and earn
ii. Maximizes future wealth
iii. Supports families
iv. Encourages children to be loyal
b. Reasons no testamentary freedom would be good
i. Prevents wealth from accumulating in the hands of the elite
ii. Fiscal stimulus spend today
iii. Charitable giving
iv. Avoids dead hand control
v. Makes children work harder
c. The primary restrictions on the freedom of testation are the estate tax and the gift tax.
i. Theyre substitutes; get you in life or at death.
ii. The donor/estate pays, not the donee/inheritor.
iii. Both have a threshold beneath which it does not apply: $13K/year (gift) and $5M (estate).
d. Ways to manipulate the tax system
i. Manipulate values argue over how much is something worth
ii. Manipulate ownership who owns something; who has control; &c.
e. Testamentary freedom
i. Restatement (Third) of Wills 10.1 / Donors Intent
1. 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.
2. Theres no general reasonableness inquiry.
ii. A will or trust provision is ordinarily invalid if it is intended or tends to encourage
disruption of a family relation.
1. Like conditioning a bequest on not getting remarried.
2. There may be a reasonableness inquiry with respect to conditions in donative
instruments relating to getting married.
3. Shapira v. Union National Bank (will conditioning a bequest on son marrying a Jewish
woman within 7 years upheld).
4. National Academy of Sciences v. Cambridge Trust. (irrevocable trust provision
conditioning distribution upon not getting remarried upheld)
Definitions and background
a. Definitions
i. Probate the court-supervised passing of property through will or intestacy. Functions:
1. Evidence that title has been duly transferred (important to any buyers)
2. Orderly system of managing creditor claims.
a. Homestead exemption lets taker keep money in personal home and property
even if the decedent owed more to creditors than he could pay
b. Support entitlements similar to homestead exemption for spouse and kids
3. Orderly system of distributing property after creditor claims are satisfied
ii. Probate property property that passes through probate.
iii. Non-probate property property that passes outside of probate (trusts, life insurance, &c.)
iv. Testator someone who died with a will
v. Decedent a dead guy without a will; a dead guy generally
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vi. Personal representative (or executor or administrator) fiduciary who manages the dead
guys pool of assets, paying off creditors, settling title and taxes, and distributing property to
the heirs
vii. Non-claims statute statute setting forth a statute of limitation for creditor claims.
viii. Statute of descent and distribution statute setting forth who shall take when someone dies
intestate
b. Probate Types
i. No probate people settle it around the kitchen table.
1. There will be a one-year statute of limitations for creditors.
ii. Small estate administration a process by which small estates can be settled quickly.
1. Estate must be less have assets of less than $25K (ignore debt for this calculation).
2. An interested party can simply start acting as personal representative without court
approval
3. The personal representative can distribute money up to the homestead exemption
without notifying creditors.
4. Estate property can be collected by presenting affidavits.
5. Estate can be closed with an affidavit.
6. A non-claims statute will cut off creditor claims in less than a year.
iii. Informal probate more formal than small estate administration, but faster and less formal
than formal probate.
1. Available to an estate of any size.
2. Once personal representative is approved/appointed by court, there are no further
judicial proceedings.
3. Useful when there is no dispute.
4. A non-claims statute will cut off creditor claims in less than a year.
iv. Formal probate (or solemn form probate) court oversees everything; the hardest-core.
1. Available to an estate of any size.
2. Reserved for cases with disputes.
3. Any interested party can request formal probate; thats the only way to trigger it.
4. Court will supervise and approve distribution of all property, to creditors and takers
alike.
5. It gets expensive very fast and thus burns through the estate.
6. A non-claims statute will cut off creditor claims in less than a year.
c. Intestacy
i. Laws determining who gets what when someone dies without a will.
ii. These laws determine who has standing to challenge the validity of a will you need to be
an intestate taker to challenge a will, or else you dont have a personal stake in the litigation.
iii. The laws exert some soft influence when interpreting ambiguous will language.
iv. The laws do not touch non-probate property. If an intestate decedent was canny enough to,
e.g., have life insurance, the intestacy laws will not touch it.
v. When there is no one to inherit, the decedents property escheats to the state.
d. Hypotheticals Page 47
i. Green dies, leaving everything to his wife, and to his two kids if his wife dies first. Given the
assets/debts below, should it be probated?
1. Assets:
a. Car @ $15K
b. Furniture @ $20K
c. Mutual fund @ $10K
d. Joint checking @ $3K [non-probate xfer]
e. Life insurance @ $50K [non-probate xfer]
2. Debts:
a. Bills @ $80
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III.

b. Credit cards @ $850

c. Funeral bill @ $8K
d. Cemetery lot @ $600
3. No point. Furniture follows possession, and car and mutual fund can be passed with an
affidavit. Theres no need to try to cut off creditors with a fast statute of limitations;
these are institutional creditors that will be savvy enough to file claims. Theres also
plenty of money.
ii. Green died intestate in a state where spouse and kids split real and personal property equally.
Should it be probated?
1. No point; they can settle it amicably. If necessary they can sell off the furniture or car
to true up the values.
iii. Same facts as (i) but assets now include a house worth $170,000 and another lot worth
$16,000. The former is encumbered with an $85K mortgage; the latter is not. Should it be
probated?
1. Yes. Probate still necessary to pass the house title cleanly. Informal probate is probably
fine.
iv. Same as (i) but Green isnt dead and wonders if he even needs a will. Result?
1. Yes; everyone should have a will. No one knows what the future holds; things might
not have turned out so nice.
Statutes of Descent and Distribution
a. UPC 2-101 / Intestate Estate
i. (a) Any part of a decedent's estate not effectively disposed of by will passes by intestate
succession to the decedent's heirs as prescribed in this Code, except as modified by the
decedent's will.
ii. (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 decedent's 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.
iii. Notes
1. If a will only partially disposes of the estate, then the intestacy rules cover the rest.
2. A will can opt out of intestacy as to specified, would-be takers through will. This is a
negative will. This person will be treated as a dead person for intestacy purposes.
(Obviously.)
b. UPC 2-102 / Share of Spouse
i. The intestate share of a decedent's surviving spouse is:
1. (1) the entire intestate estate if:
a. (A) no descendant or parent of the decedent survives the decedent; or
b. (B) all of the decedent's surviving descendants are also descendants of the
surviving spouse and there is no other descendant of the surviving spouse who
survives the decedent;
c. Rule for no kids or parents. Also rule for no stepchildren of either spouse.
2. (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;
a. Rule for when decedent had no kids but one parent.
3. (3) the first $225,000, plus one-half of any balance of the intestate estate, if all of the
decedent's 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;
a. Rule for when surviving spouse had other kids outside marriage, but all dead
guys kids are also spouses.
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4. (4) the first $150,000, plus one-half of any balance of the intestate estate, if one or
more of the decedent's surviving descendants are not descendants of the surviving
spouse.
a. Rule for when dead guy had kids outside the marriage.
c. UPC 2-103 / Share of Non-Spouse Heirs
i. (a) Any part of the intestate estate not passing to a decedent's 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. (1) to the decedent's descendants by representation;
a. To kids.
2. (2) if there is no surviving descendant, to the decedent's parents equally if both survive,
or to the surviving parent if only one survives;
a. If no kids, to parents.
3. (3) if there is no surviving descendant or parent, to the descendants of the decedent's
parents or either of them by representation;
a. If no kids and no parents, to brothers and sisters + their kids.
4. (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:
a. (A) half to the decedent's paternal grandparents equally if both survive, to the
surviving paternal grandparent if only one survives, or to the descendants of the
decedent's paternal grandparents or either of them if both are deceased, the
descendants taking by representation; and
b. (B) half to the decedent's maternal grandparents equally if both survive, to the
surviving maternal grandparent if only one survives, or to the descendants of
the decedent's maternal grandparents or either of them if both are deceased, the
descendants taking by representation;
c. If no kids, parents, and siblings: half to one set of grandparents, half to the
other.
d. If no kids, parents, siblings, and grandparents: half to one set of
grandparents descendants, half to the other sets descendants.
5. (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 on
the paternal but not the maternal side, or on the maternal but not the paternal side, to
the decedent's relatives on the side with one or more surviving members in the manner
described in paragraph (4).
a. If no kids, parents, siblings, and one set of grandparents + descendants is
dead: to the surviving set of grandparents/their descendants, if gps are dead.
ii. (b) If there is no taker under subsection (a), but the decedent has:
1. (1) one deceased spouse who has one or more descendants who survive the decedent,
the estate or part thereof passes to that spouse's descendants by representation; or
2. (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.
a. If familys all dead, and ex-spouse is dead, to ex-spouses kids.
b. If familys all dead and multiple ex-spouses are dead, to each ex-spouses
kids.
d. UPC 2-105 / No Taker
i. If there is no taker under the provisions of this [article], the intestate estate passes to the state.
e. Intestacy Hypotheticals
i. H and W are married. H dies and is survived by W. How much does W take under the
following scenarios?
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ii. W has a child with her ex-husband X and H is survived by his father, F. H has no children.
1. Wife gets $300K + intestate estate.
iii. Same as 1, except that F has predeceased H, so that H has no parents surviving him.
1. Wife gets everything.
iv. H has a child with his ex-wife Z and H is also survived by his father, F. W has no children.
1. Wife gets $150K + estate.
v. W had a child, C with her ex-husband X, but that child is now deceased. W has a living
granddaughter G, however, who is Cs child. H is survived by his child, D, who was also a
child of W.
1. $225K + .
vi. Hs estate is worth $75,000. H had a child by his ex-wife Q. H and W then had three children
together, two of whom are now deceased. W adopted two children with her ex-husband X, and
then had her parenthood rights legally revoked prior to her marriage to H. Ws two adopted
children then each had one child, one of whom died in a car wreck prior to Ws marriage with
H, and the other of whom moved to Las Vegas and joined the circus before fathering a child of
his own with a woman who claimed to be the reincarnation of Judy Garland. H is also
survived by his mother, M.
1. Wife gets everything. (Estate is less than $150K, the minimum that goes to wife.)
f. Share of Descendants and Kindred
i. By representation there are three ways to divide up property at the generational level.
1. English per stirpes
a. Shares are mechanically divided equally at each generation, even if there are
whole generations where there are no living takers.
b. So if X has three dead kids A, B, and C, who has 1, 2, and 3 kids respectively,
then the shares of the grandkids are:
i. As 1 child gets 1/3.
ii. Bs 2 children each get 1/6.
iii. Cs 3 children each get 1/9.
iv. This seems wack because theyre all grandkids.
2. Modern per stirpes
a. Shares are mechanically divided at each generation, but only starting at the
generation with a living taker, and only counting living lines.
b. X has three dead kids, A, B, and C; A has one living child D; B has one living
child E and one dead child F, who has two living children G, H; C has one dead
child I who has one living child J.
i. There are three dead kids in the first generation, but four living lines
starting the next generation.
ii. D gets .
iii. E gets .
iv. G gets 1/8 and H gets 1/8.
v. J gets .
3. Per capita at each generation
a. This is what the UPC uses when it says by representation.
i. UPC 2-106(b) for direct descendants.
ii. UPC 2-106(c) for descendants of decedents parents/grandparents
b. The estate is divided into the number of shares equal to the number of
living lines at the first generation to have a living member.
c. Shares are pooled at each generation and each member of that generation
takes equally. Equally near, equally dear.
d. X has three dead kids, A, B, and C; A has one living child D; B has one living
child E and one dead child F, who has two living children G, H; C has one dead
child I who has one living child J.
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IV.

i. There are three dead kids in the first generation, but four living lines
starting the next generation.
ii. D and E each get ; theyre the first living generation and there are four
lines.
iii. G, H and J each get 1/6 (the other half, divided equally into three parts)
ii. Collateral kindred are relatives not directly descended from decedent.
1. First-line collateral: Decedents parents and their descendants (excluding decedents
family), i.e. decedents parents, brothers and sisters, nieces and nephews, etc.
2. Second-line collateral: Decedents grandparents and their descendants (excluding
decedents family and first-line collateral kindred), i.e. decedents aunts and uncles,
first cousins, first cousins once removed, etc.
iii. Relatives of the half-blood inherit the same share they would inherit if they were of the whole
blood. UPC 2-107.
iv. Gifts to children are usually taken literally, unless theres some reason to think the
decedent actually meant issue or descendants. Restatement 3rd Wills &c. 14.1.
v. Gifts made in trust to descendants are presumptively taken by representation (as outlined
above) rather than pure per capita (just count heads and divide evenly).
Succession Problems Regarding Children
a. Adopted Children
i. UPC 2-114 / No Parental Inheritance When Parental Rights Are Terminated
1. (a) A parent is barred from inheriting from or through a child of the parent if:
a. (1) the parent's parental rights were terminated and the parent-child
relationship was not judicially reestablished; or
b. (2) the child died before reaching 18 years of age and there is clear and
convincing evidence that immediately before the child's death the parental
rights of the parent could have been terminated on the basis of nonsupport,
abandonment, abuse, neglect, or other actions or inactions of the parent
toward the child.
2. (b) For the purpose of intestate succession from or through the deceased child, a parent
who is barred from inheriting under this section is treated as if the parent predeceased
the child.
ii. UPC 2-116 / Adopted Children Count for Intestacy
1. If a parent-child relationship exists or is established through adoption, the parent is a
parent of the child and the child is a child of the parent for the purpose of intestate
succession.
iii. UPC 2-117 / Parents Marital Status Doesnt Matter
1. Except as otherwise provided in Sections 2-114 (terminated rights), 2-119 (kids
adopted by someone else), a parent-child relationship exists between a child and the
child's genetic parents, regardless of the parents' marital status.
iv. UPC 2-118(a) / Adoptive Children in New Family
1. A parent-child relationship exists between an adoptee and the adoptees adoptive parent
or parents.
v. UPC 2-119 / Mostly Cutting off Genetic Parents from their Adopted Children
1. (a) Except as otherwise provided in (b)(e), a parent-child relationship does not
exist between an adoptee and the adoptees genetic parents.
a. Stating the general rule: adoptive children are no longer part of the natural
family.
2. (b) A parent-child relationship exists between an individual who is adopted by the
spouse of either genetic parent and:
a. (1) The genetic parent whose spouse adopted the individual; and
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b. (2) The other genetic parent, but only for the purpose of the right of the
adoptee or a descendant of the adoptee to inherit from or through the other
genetic parent
i. This solves the Hall problem and allows intestate inheritance
from/through a dead birth parent when the other birth parent remarried
and that spouse adopted the kids.
ii. Its one-way, however: birth parent cant inherit from the dead adoptive
kid, nor can his family through him.
3. (c) A parent-child relationship exists between both genetic parents and an individual
who is adopted by a relative of a genetic parentbut only for the purpose of the right
of the adoptee or a descendant of the adoptee to inherit from or through either genetic
parent.
a. For troubled families where your grandparents raise your kid.
vi. Hall v. Vallandingham (MD 1988 / pg. 97) [adopted kids cannot double inherit]
1. Earl and Elizabeth had four natural kids; Earl died, and Elizabeth married Jim, who
adopted the kids. Earls brother died intestate with no children and no parents. Can
Earls natural children, who are now Jims adopted children, inherit from Earls brother
under the intestacy laws?
2. No. When Jim adopted Earls kids, they were reborn as Jims, and the relationship
with Earl was cut off entirely. So the kids cannot inherit from the birth parent after
theyre adopted.
3. The statutes kept changing, but the last one to clearly address it had forbidden doubleinheritance like this, and the amended version just cleaned up the language some.
b. Adopted Adults
i. Adopting an adult is useful to deny standing to would-be collateral kindred takers,
because children always take before parents, sisters, brothers, etc.
ii. For wills, adopting an adult purely for inheritance purposes even if its a romantic
partner or spouse is fine, unless its an attempt to opt into a class gift.
iii. UPC 2-705(f) / Adult Adoptions and Class Gifts
1. In construing a dispositive provision of a transferor who is not the adoptive
parent, an adoptee is not considered the child of the adoptive parent unless:
a. (1) the adoption took place before the adoptee reached 18 years of age; or
b. (2) the adoptive parent was the adoptee's stepparent or foster parent; or
c. (3) the adoptive parent functioned as a parent of the adoptee before the
adoptee reached 18 years of age.
iv. Minary v. Citizens Fidelity Bank & Trust Co. (KY 1967 / pg. 103) [adult adoption/class gift]
1. Minary created a trust in her will that paid out income to her three kids until each died,
at which point it was to go to her heirs under the intestacy laws. James died without
kids; Thomas died with two kids; and Alfred died with no kids, but a few years before
he died, he adopted his wife of 25 years, Myra. Is she a valid taker in intestacy?
2. No; thats gross.
a. The courts logic was that, although the statute permitted adult adoption (as did
some recent precedents), the strong policy of honoring the decedents intent
won out. The court did not believe that Minarys intent would have been to give
to Jamess wife; if she had, the will-trust could have said so pretty clearly.
3. Probate courts have lots of toys to play with.
c. Advancement
i. An advancement is an inter vivos gift that counts against the donees intestate inheritance. The
idea was that the inter vivos gift was just prepayment.
ii. Mechanics:
1. Determine if something was an advancement. Under the UPC, it almost certainly isnt.
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2. Add the advancement (e.g. $10K) and the intestate estate (e.g. $50K) together. This is
the hotchpot.
3. Work through the inheritance mechanics (e.g. per capita by representation) and figure
out how much each person should take of this new figure. E.g., 3 kids, each gets $20K.
4. Give the other takers this amount in full ($20K). Give the advanced taker the rest
($10K; but she was advanced $10K too, so she still got $20K).
5. But the person who got the advancement can never lose money. So if her share would
be less after going through the above procedure, just cut her out and split the rest up.
Example:
a. Advancement is $40K; estate is $60K; hotchpot is $100K; three equal takers.
b. Each taker should get $33.3K. But since advancement is $40K, instead we give
the done nothing and split the $60K evenly between the other two.
iii. UPC 2-109 / Advancements
1. (a) If an individual dies intestate as to all or a portion of his estate, property the
decedent gave during the decedent's lifetime to an individual who, at the decedent's
death, is an heir is treated as an advancement against the heir's intestate share only if
a. (i) the decedent declared in a contemporaneous writing or the heir
acknowledged in writing that the gift is an advancement; or
b. (ii) the decedent's contemporaneous writing or the heir's written
acknowledgment otherwise indicates that the gift is to be taken into account in
computing the division and distribution of the decedent's intestate estate.
2. (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 decedent's
death, whichever first occurs.
3. [Adepmption] (c) If the recipient of the property fails to survive the decedent, the
property is not taken into account in computing the division /distribution of the
decedent's intestate estate, unless the decedent's contemporaneous writing provides
otherwise.
iv. UPC effectively eliminates advancements. Need a contemporaneous writing by the donor
or an acknowledgement (any time would work) by the donee.
v. And if youre canny enough to successfully advance something, youre canny enough to
write a will.
d. Guardians
i. Guardian of the person.
1. Parents are guardians; thus, an appointed one is only needed if both die.
2. Put it in your will; otherwise, the court will choose, usually a near relative, but who
knows.
3. This terminates at the age of majority.
4. This gives no rights over the childs property.
ii. Guardianship of the property.
1. Guardian does not take title the property; it remains the wards.
2. Guardian is to preserve the property and deliver it when the ward reaches 18.
3. Guardian cannot do anything with the property without a court order (e.g. change
investments).
4. Guardian can only use income to support the ward; need a court order for principal.
5. Horrifically expensive and cumbersome procedure; to be avoided at all costs.
iii. Conservatorship
1. A slightly better version of guardianship of the property.
2. They are court-appointed and court-supervised, but only by an annual accounting.
3. They get investment powers similar to that of a trustee.
4. It terminates at the age of majority.
iv. Custodianship
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1.
2.
3.
4.

A superior version of conservatorship.

The custodian holds legal title as custodian for the beneficiary.
The custodian has property management authority/fiduciary duties like a trustee.
The custodian has the discretion to spend as much of the property as the custodian
considers advisable for the use and benefit of the minor, without a court order.
5. This terminates at the age of majority.
6. Its essentially a default type of trust one in which discretion is cabined to benefiting
the kid during his minority, and one that terminates at the end.
v. Trust.
1. See the second half of the course.
e. Disclaimer
i. A disclaimer is when a would-be taker in intestacy chooses not to take.
1. The common law treated this as though the disclaimant did take, but then promptly
passed it on to the next intestate taker. Disclaimant thus incurred tax/creditor liability.
2. Even at common law, disclaiming bequests from a will was fine; just intestacy created
this problem.
3. Under the UPC, the disclaimant never takes possession; it goes directly to his kids, if
he has any (his full share). If he doesnt have kids, its passed around via intestacy rules
to his siblings, etc.
ii. Disclaimer is useful to avoid creditors and to get favorable tax treatment (your kids usually
have a lower tax rate than you).
iii. UPC 2-1106 / Disclaimer
1. (b)The following rules apply to a disclaimer of an interest in property:
a. (1) The disclaimer takes effect as of the time the instrument creating the interest
becomes irrevocable, or, if the interest arose under the law of intestate
succession, as of the time of the intestates death
b. (2) The disclaimed interest passes according to any provision in the instrument
creating the interest providing for the disposition of the interest.
c. (3) If the instrument does not contain a provision described in paragraph (2),
the following rules apply:
i. (B) If the disclaimant is an individual, the disclaimed interest passes as
if the disclaimant had died immediately before the time of the
distribution
ii. (C) If the descendants of the disclaimant would share in the disclaimed
interest by any method of representation had the disclaimant died before
the time of distribution, the disclaimed interest passes only to the
descendants of the disclaimant who survive the time of distribution.
iii. (D) If the disclaimed interest would pass to the disclaimants estate had
the disclaimant died before the time of distribution, the disclaimed
interest instead passes by representation to the descendants of the
disclaimant who survive the time of distribution. If no descendant of the
disclaimant survives the time of distribution, the disclaimed interest
passes to those personsas would succeed to the transferors intestate
estate under the intestate succession law of the transferors domicile had
the transferor died at the time of distribution.
iv. Notes
1. (b)(1) is the relation back doctrine. Regardless of when the disclaimer is made, it is
treated as though it happened at the moment the gift became irrevocable:
a. Intestate at the intestates death
b. Testate at the testators death
c. Inter vivos trust at settors death
d. Irrevocable trust whenever it becomes irrevocable
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2. (b)(2) makes (b)(3) a default rule. If the gift passes through an instrument, the
instrument can specify what happens if someone disclaims.
3. (b)(3) covers the default effects of disclaiming.
a. (B) Treats the disclaimant as though he predeceased the testator.
b. (C) If disclaimant has descendants, it goes to them and only to them its
not routed to his spouse or back up to other takers. And the kids dont take by
representation; they just get disclaimants share. Thus, its not really
predeceasing his full share passes down.
c. (D) Ensures that the disclaimed portion doesnt pass the disclaimants will.
It automatically goes through these intestacy proceedings. (Obviously, if he had
really died, it would go through his will.)
4. Disclaimant has kids they get his share
5. Disclaimant has no kids treat disclaimer like hes dead when doing intestacy
v. Under this statute, disclaimer can be made at any time. But to avoid federal tax liability, it
must be made within 9 months of the intestates death / date the gift became irrevocable.

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WILLS
I.

Formalities and Forms

a. Execution of Wills
i. The Function of Formalities
1. Ritual function. The formalities remind the writer of the will that this is serious
business, and thus make courts feel more comfortable in rigorously applying intent
test: if the testator went through all this solemn garbage, they probably meant it.
2. Evidentiary function. A will is written, so theres a document; its signed by witnesses,
so there are people to quiz about it.
3. Protective function. The formal requirements provide some protection to the bedridden
oldster, who may be literally incapable of fulfilling the formalities maybe no
witnesses are present or something or if capable, susceptible to undue influence.
4. Channeling function. By having everyone prepare their deathbed transfers the same
way, it becomes easier to for a would-be testator to effect his wishes and easier for the
world to ascertain his intent.
ii. Formalities Overview
1. The particulars differ from state to state, but each required a writing, a signature, and
witnesses.
2. The common law was extremely particular, e.g., followed rules like this:
a. Witnesses only count if they sign at the bottom (subscription).
b. A will only counts if the testator says, this is my will (publishing).
c. Witnesses must witness the signature contemporaneously, then subscribe.
(Virginia).
d. Witnesses have to sign in testators presence, but testator can sign it privately.
(Nevada).
3. An attestation clause says that the will was duly executed; its signed by the testator
and witnesses. Its required in no state, but it creates a presumption of validity, even in
common law states. It goes right below the testators real signature. (Since its
attested, he actually signs it twice.)
4. The UPC maintains the three basic requirements, but deliberately used the least
restrictive ones. Also, it included a harmless error provision which essentially
eliminates the formalities requirement.
iii. In Re Groffman (UK 1969 / pg. 228) [mindless application of formalities]
1. Held: A will signed by testator and two witnesses cannot be admitted to probate,
because the testator hadnt signed it in front of them, and had not acknowledged his
signature to the two witnesses simultaneously.
a. He had acknowledged his signature to them individually.
b. The court did not even raise the possibility of a harmless error rule.
iv. Stevens v. Casdorph (W.Va. 1998 / pg. 229) [rejecting substantial compliance]
1. Held: A will signed by testator in the presence of one bank employee cannot be
admitted to probate, because the two other bank employees who signed as witnesses
were not in the testators presence or each others presence when they signed it and
they hadnt actually seen testator sign it. This all took place in a small bank where
everyone knew the testator, who was actually a shareholder.
a. Court rejected a rule of substantial compliance even though they had created an
extremely narrow exception to the statute once before. Drew a sharp dissent.
v. UPC 2-502 / Required Formalities
1. (a) [Witnessed or Notarized Wills] Except as otherwise provided in subsection (b)
and in 2-503, 2-506, 2-513, a will must be:
a. (1) in writing;
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b. (2) signed by the testator or in the testator's name by some other individual in
the testator's conscious presence and by the testator's direction; and
c. (3) either:
i. (A) signed by at least two individuals, each of whom signed within a
reasonable time after the individual witnessed either the signing of
the will as described in paragraph (2) or the testator's
acknowledgment of that signature or acknowledgement of the will;
or
ii. (B) acknowledged by the testator before a notary public or other
individual authorized by law to take acknowledgements.
2. (b) [Holographic Wills.] A will that does not comply with subsection (a) is valid as a
holographic will, whether or not witnessed, if the signature and material portions of the
document are in the testator's handwriting.
3. (c) [Extrinsic Evidence.] Intent that a document constitute the testator's will can be
established by extrinsic evidence, including, for holographic wills, portions of the
document that are not in the testator's handwriting.
vi. UPC 2-504(a)(b) / Self-Proved Will
1. A self-proving affidavit is a notarized super-attestation clause. Useful for two reasons:
a. They can be admitted to probate even if the witnesses cannot be tracked down.
b. The affidavit can be used to impeach witnesses who are found and then lie.
2. (a) One-step. In lieu of an attestation clause, the testator and witnesses can do the
ceremony in front of a notary and sign a combined attestation/self-proving
affidavit, which is then notarized.
3. (b) Two-step. Alternatively, a signed and attested will can be taken to a notary and
a separate self-proving affidavit is signed and notarized in her presence.
4. (c) A signature affixed to a self-proving affidavit attached to a will is considered a
signature affixed to the will, if necessary to prove the will's due execution.
vii. Interested Witnesses
1. At Common Law
a. Bequests to interested witnesses were purged i.e., struck from the will and
the witness was considered competent as to the rest. (The choice was
apparently seen as either striking the whole will or striking the conflicted
request. This was probably a big innovation at the time.
b. If the devisee would have been an intestate taker, then only any excess above
their intestate share is purged.
c. If there are enough witnesses to admit the will to probate without counting the
interested witness, then he is treated as a supernumerary and the will is
admitted without purging anything.
2. UPC 2-505 / Who May Witness
a. (a) An individual generally competent to be a witness may act as a witness to a
will.
b. (b) The signing of a will by an interested witness does not invalidate the will
or any provision of it.
3. Estate of Morea (NY 1996 / pg. 239) [creatively construing a purging statute]
a. Held: A will with three witnesses, two of whom are interested, may be admitted
in full without purging any provisions.
i. Because one of the interested witnesses share was less than his intestate
share, which is fine under the statute;
ii. And because, as to the second interested witnesses, there were two
neutral witnesses, which is all New York requires.
viii. Substantial Compliance and the Harmless Error Rule
1. UPC 2-503 / Harmless Error Rule
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a. Although a document or writing added upon a document was not executed

in compliance with Section 2-502, the document or writing is treated as if it
had been executed in compliance with that section if the proponent of the
document or writing established by clear and convincing evidence that the
decedent intended the document or writing to constitute
i. (i) the decedents will
ii. (ii) a partial or complete revocation of the will
iii. (iii) an addition to or an alteration of the will
iv. (iv) a partial or complete revival of his formerly revoked will or of a
formerly revoked portion of a will.
b. This excuses all formalities on a showing that author intended it to be a will.
c. The burden of proof is quite high: clear and convincing evidence.
d. Analyze all formalities on exam despite harmless error rule.
2. A will substantially complies with the will formalities if, despite defects in the
execution, the execution nonetheless fulfilled the purposes of the formalities.
a. This was an innovation meant to soften the old insistence on strict observance.
b. Its more restrictive than the harmless error. Courts tended to treat the
formalities as purposes unto themselves, e.g. the purpose of witnesses is to
witness, so if there are no witnesses, the formalities arent observed.
3. In re Will of Ranney (NJ 1991 / pg. 253) [substantial compliance / wrong form]
a. Held: A will that was signed by no witnesses, but that had appended to it a selfproving affidavit of the 2-step variety that had been witnessed and notarized as
though it were a 1-step self-proving affidavit, may be admitted to solemn form
probate for the purposes of determining whether there has been substantial
compliance with the statute.
i. The problem was that a 2-step affidavit used the past tense and said that
the witnessed had already signed the will. These witnesses hadnt. A 1step affidavit does this all in one step. The lawyers just messed up.
ii. The upshot is that it wasnt automatically junked.
iii. But this is still a rather heavy burden; it was a trivial error, everyone
knew it was a will, and everyone knew its what Ranney wanted.
4. In re Estate of Hall (MT 2002 / pg. 259) [harmless error rule / no witnesses]
a. Held: A joint will that was not witnessed, but that had been signed by both
parties and notarized by the drafting lawyer, may be admitted into probate,
because there is clear and convincing evidence that Hall meant it to be his will.
i. Because his wife whose will it also was testified that it had been his
intent to use it as a will until a final draft was prepared.
ii. A much easier test that Ranney, where a witnessed, notarized will was
treated with extreme skepticism due to a drafting error.
ix. Holographic Wills
1. UPC 502(b)(c) / Holographic Wills
a. (b) A will that does not comply with subsection (a) is valid as a holographic
will, whether or not witnessed, if the signature and material portions of the
document are in the testator's handwriting.
b. (c) Intent that a document constitute the testator's will can be established by
extrinsic evidence, including, for holographic wills, portions of the document
that are not in the testator's handwriting. Solves the form-book will problem.
2. Kimmels Estate (Penn. 1924 / pg. 269) treated a letter as a holographic will when it
instructed how to dispose of property in case he died and was signed Father.
b. Revocation of Wills
i. UPC 2-507 / Revoking by Writing or Physical Act
1. A will or any part thereof is revoked:
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a. (1) By executing a subsequent will that revokes the previous will or part
expressly or by inconsistency;
b. (2) By performing a revocatory act on the will, if the testator performed the act
with the intent and for the purpose of revoking the will or part or if another
individual performed the act in the testators conscious presence and by the
testators direction
i. A revocatory act on the will includes burning, tearing, canceling,
obliterating or destroying the will or nay part of it.
ii. A burning, tearing, or canceling is a revocatory act on the will,
whether or not the burn, tear, or cancellation touched any of the words
on the will.
2. A missing will is presumed to have been revoked through destruction if it had been in
testators possession before her death. Rebuttable under a preponderance standard.
3. Harrison v. Bird (AL 1993 / pg. 287) [destruction / no presence / lost will]
a. Held: A valid will that was (1) stored at the drafting lawyers office; (2)
destroyed by him at his office after she told him over the phone that she wanted
to revoke it; (3) sent, in pieces, to the testator by mail; and (4) could not later be
found is was validly revoked.
i. But not because the lawyer tore it up. That was ineffectual, because it
wasnt in her presence.
ii. Its validly revoked because of the lost will presumption: if a will is
known have been in testators possession before death, but cannot be
found after death, it is presumed destroyed and revoked.
iii. Will proponent had no evidence to rebut presumption, here.
ii. UPC 2-507(b)(d) / Will Revocation Through Subsequent Will / Inconsistency
1. (b) If a subsequent will does not expressly revoke a previous will, the execution of the
subsequent will wholly revokes the previous will by inconsistency if the testator
intended the subsequent will to replace rather than supplement the previous will.
2. (c) The testator is presumed to have intended a subsequent will to replace rather than
supplement a previous will if the subsequent will makes a complete disposition of the
testators estate.
3. (d) The testator is presumed to have intended a subsequent will to supplement rather
than replace a previous will if the subsequent will does not make a complete
disposition of the testators estate.
4. Short version
a. (a) Inconsistent subsequent wills wholly revoke previous wills, even if they
dont expressly revoke it, if the testator intended to wholly revoke.
b. (b) Subsequent will makes complete disposition presume replacement /
whole revocation of old will
c. (c) Subsequent will makes partial disposition of estate presume
supplement / partial revocation of old will.
iii. Will Revocation Hypotheticals / Physical Acts
1. One day, you become angry and you shout, I hereby revoke my will. You really
mean it.
a. Not revoked. No act.
2. You live in the wilderness of some far northern UPC state. The snows are very heavy
one winter. You cant get out of the door of your cabin and you need fuel to make a
fire. You burn every combustible substance until finally the last thing left in the cabin
is your will. You burn it. The warmth is too little, however, and moments before
rescuers come to your door, you die. The rescuers discover the charred remains of your
will and want to know how to dispose of your palatial second home in Miami.
a. Not revoked. No intent to revoke.
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3. Youre 80 years old and hugely wealthy from your life as a Texas toxic tort lawyer. You
marry Anna Nicole Smiths younger sister, Brianna Nicole Smith, and she stands to
inherit everything if the will is invalidated. She burns the will without your knowledge
to try to force your estate into intestacy. Assume that Texas is a UPC state.
a. Not revoked. Not destroyed in testators presence or at his direction.
4. Same as #3, except that as you lie in the cancer ward of a hospital in Houston, gasping
for breath, you direct Brianna Nicole to burn your will so that she will inherit
everything. She agrees, sobbing into her diamond-encrusted handkerchief as she tells
you that no amount of money can heal the hole you will leave in her heart. Brianna
then walks out of the room and buys a plane ticket to the Bahamas. There, on the beach
with her boyfriend, she laughs as she watches the sun set and roasts shrimp over a
crackling fire made of your will.
a. Not revoked. Not done in testators presence.
iv. Will Revocation Hypotheticals / Subsequent Wills
1. Testator makes a new will. The new will says, I hereby revoke any and all wills I have
executed prior to this will. The new will does not make a complete disposition of the
estate.
a. New will wholly revokes old will; thats the express intent. Estate passes
through intestacy.
2. Testator makes a new will that says nothing about the old will. The new will makes a
complete disposition of the testators assets.
a. New will wholly revokes old will (presumption only; can be rebutted).
3. Same as #2, except that someone shows up in court with an indisputably authentic
letter from the decedent executed a day before his death saying that he did not intend
the new will to fully revoke the old will.
a. New will does not wholly revoke old will. Court will be in a world of pain;
hopefully they match up a little bit.
4. Testator makes a will that completely distributes his estate. Testator later signs a
document that says simply, Upon my death, I wish to give my black Volkswagen
Passat to my son Jack.
a. New will partly revokes old will just as to this car. Old will still good
otherwise. New will needs lots of help from harmless error rule.
c. Dependent Relative Revocation and Revival
i. If the testator purports to revoke his will upon a mistaken assumption of law or fact, the
revocation is ineffective if the testator would not have revoked his will had he known the
truth. This is a rebuttable presumption.
1. This could just be called ineffective revocation.
2. It is premised on an idea of inferred intent if testator knew what the law would do, or
knew the true facts, then testator wouldnt have revoked a will.
ii. UPC 2-509 / Revival of a Revoked Will
1. (a) If a subsequent will that wholly revoked a previous will is thereafter revoked by a
revocatory act under Section 2-507(a)(2), the previous will remains revoked unless it is
revived. The previous will is revived if it is evident from the circumstances of the
revocation of the subsequent will or from the testator's contemporary or subsequent
declarations that the testator intended the previous will to take effect as executed.
2. (b) If a subsequent will that partly revoked a previous will is thereafter revoked by a
revocatory act under Section 2-507(a)(2), a revoked part of the previous will is revived
unless it is evident from the circumstances of the revocation of the subsequent will or
from the testator's contemporary or subsequent declarations that the testator did not
intend the revoked part to take effect as executed.
3. (c) If a subsequent will (will 2) that revoked a previous will (will 1) in whole or in part
is thereafter revoked by another, later will (will 3), the previous will (will 1) remains
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revoked in whole or in part, unless it or its revoked part is revived. The previous will
(will 1) or its revoked part is revived to the extent it appears from the terms of the later
will (will 3)that the testator intended the previous will to take effect.
4. Short version:
a. Will 2 Revoked By Act; Effect on Will 1
i. 2-509(a) When Will 2 wholly revoked Will 1, and then Will 2 is
wholly revoked by act, Will 1 is presumed not to be revived.
Evidence of intent to revive Will 1 rebuts the presumption.
ii. 2-509(b) When Will 2 partly revoked Will 1, and Willy 2 is wholly
revoked by act, then Will 1 is presumed to be revived. Evidence of
intent not to revive Will 1 rebuts the presumption.
b. Will 2 Revoked by Will 3; Effect on Will 1
i. 2-509(c) When Will 2 wholly revoked Will 1, and Will 3 wholly
revokes Will 2, Will 1 is presumed not to be revived. This
presumption can only be defeated by the terms of Will 3.
c. Note that, in a three-will situation, analysis of wills 2 and 3 as against each
other would be analyzed under the two-will rules. Its only when the third will
comes in that the three-will rule is required.
iii. Estate of Alburn (Wisc. 1963 / pg. 300) [dependent relative revocation]
1. In 1955, Alburn wrote the Milwaukee will; in 1959, she wrote the Kankakee will. In
1960, Alburn destroyed the Kankakee will with the intent to revoke it, and told a close
friend that she wanted the Milwaukee will to be her will. Proponents of intestacy, the
Milwaukee will, and the Kankakee will file petitions. Result?
2. Kankakee will wins.
a. By law, the execution of the second will irreversibly revoked the first will; it
would have to be-written and executed with full formalities to revive it. (But
even that wouldnt be a revival; it would be a new will.)
b. But its clear that Alburn wanted to die testate; she told her friend about the
Milwaukee will, knew the Milwaukee will still existed in a lawyers office, and
didnt execute a new will.
c. Thus, the court inferred a condition in the revocation of the Kankakee will
that the Milwaukee will would be reinstated and that condition didnt happen,
so the Kankakee will was invalidly destroyed.
3. This is pretty crazy. But the alternative was no will, so maybe better than nothing,
under the law of the day.
iv. UPC 2-509 Hypotheticals
1. It wholly revokes; although its not totally inconsistent, they both dispose of whole
estate. There is thus a presumption for revival, and all the evidence points toward that
being the intent.
2. 2. It goes through intestacy to H. The 3rd will does not by its terms revive the first.
Need harmless error rule to admit the 3rd will.
d. Revocation on Divorce
i. UPC 2-301 / Pretermitted Spouse [write a will get married die with premarital will]
1. (a) If a testators surviving spouse married the testator after the testator executed his
will, the surviving spouse is entitled to receive no less than the value of the share of the
estate he would have received if the testator had died intestate as to that portion of the
testators estate, if any, that is not devised to a child of the testator who was born
before the T married the surviving spouse and is not a child of the surviving spouse.
unless:
a. (1) It appears from the will or other evidence that the will was made in
contemplation of the testators marriage to the surviving spouse;
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i. Made in contemplation = knew he was marrying the woman, wrote a

will disinheriting her.
ii. Because we cannot infer that testator just forgot to include his wife he
made the will with her in mind. Can disinherit wife up to elective share.
b. (2) The will expresses the intention that it is to be effective notwithstanding any
subsequent marriage; or
i. Just an express way to opt out.
c. (3) The testator provided for the spouse by transfer outside the will and the
intent that the transfer be in lieu of a testamentary provision is shown by the Ts
statements or is reasonably inferred from the amount of the transfer or other
evidence.
i. If there are non-probate transfers that protect the surviving spouse, and
they were intended to be instead of a probate transfer.
ii. We can infer that non-probate transfers were in lieu of a probate share if
its in the neighborhood of what her intestate share would be.
2. Notes
a. This contemplates someone writing a will, then getting married, then dying
with the premarital will. The presumption is that not editing the will was a
mistake and that the testator would have intended to provide for the
surviving spouse, had he thought about it.
b. Spouse only gets a reduced piece of her intestate share.
c. Mechanics:
i. Sum up the entire estate.
ii. Subtract all bequests given to testators kids from before marriage, if
any;
iii. Apply the intestacy scheme to this smaller estate thats what spouse
gets under a pretermitted spouse statute.
d. Double hit if testator had kids who were surviving spouses stepkids?
i. 2-301 (pretermitted spouse) reduces the size of the estate by any gifts
made to them;
ii. 2-102(4) (surviving spouse intestate share) reduces the gift to $150K
+ the estate if decedent had kids who are surviving spouses stepkids.
iii. So she takes the hit first when determining size of estate thats this
statute and then again when applying intestacy laws -- $150K + .
ii. UPC 2-804 / Revocation Upon Divorce [married write a will get divorced]
1. (b) Except as provided by the express terms of a governing instrument, a court order, or
a contract relating to the division of the marital estate, an annulment or divorce:
a. (1) Revokes any revocable disposition or appointment of property made by a
divorced individual to his former spouse in a governing instrument and any
disposition or appointmentto a relative of the divorced individuals former
spouse
b. (2) Severs [joint tenancies the spouses had held and converts them into equal
tenancies in common.]
2. (d) Provisions of a governing instrument are given effect as if the former spouse and
relatives of the former spouse disclaimed all provisions revoked by this section.
3. Notes
a. A will can opt out of this rule; just say, even if we get divorced, or
notwithstanding 2-804. But why would anyone opt out?
b. It affects the spouse the spouses relatives. This includes testators non-adopted
step-children that the spouse had with another person.
c. When probating a will, treat all gifts to spouse and relatives as though they
disclaimed.
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iii. UPC 2-803 / Revocation Upon Homicide

1. If you kill someone, you cannot inherit from them at all, including intestacy, a will, and
non-probate instruments. This is the slayer rule. Full provision is quite complicated.
iv. UPC 2-508 / No Other Revocations
1. 2803, 2804 are the only changed circumstances provisions that wholly or
partially revoke a will.
2. This overruled a common law rule by which any substantial changed circumstances
could support amending a will posthumously.
e. Will Contracts
i. Will contract disputes are governed by contract law.
1. The Statute of Frauds has a writing requirement for will contracts.
2. If, at his death, testator breaches the will contract, the aggrieved counterparty has a
claim against the estate for breach of contract. If they win, they become judgment
creditors of the estate.
3. If the will fulfills the contract, but the counterparty did not, the estate has a claim for
breach of contract against the counterparty.
a. Recall one of the executors functions is to collect the estate for distribution.
This counts.
4. Its up to testator to change his will if his counterparty breached. Otherwise, the
breacher can take, and then a suit for breach of contract will have to follow.
ii. UPC 2-514 / Will Contracts [this is a will contract formalities provision]
1. A contract to make a will or devise, or not to revoke a will or devise, or to die intestate
may be established only by
a. (i) provisions of a will stating material provisions of the contract,
b. (ii) an express reference in a will to a contract and extrinsic evidence proving
the terms of the contract, or
c. (iii) a writing signed by the decedent evidencing the contract.
2. The execution of a joint will or mutual wills does not create a presumption of a
contract not to revoke the will or wills.
a. This overturned a common law rule by which courts would read joint wills as
having an implicit contract not to revoke.
iii. Notes
1. 2-514(i) contemplates sticking the contract directly into the will.
2. 2-514(ii) contemplates referencing the contract in the will; the contract itself will
also need to be produced in order to enforce it.
3. 2-514)(iii) contemplates a will contract standing all by its lonesome; has to be signed
by testator, of course.
4. Not breadth of provision. It covers;
a. Making a will or non-probate transfer at death;
b. Not revoking a will or non-probate transfer at death; and
c. Agreeing to die intestate.
iv. Will Contract Hypotheticals
1. See the cartoon: Does Sidney have a claim?
a. No. The terms arent in the will, and there is no copy of the contract or other
document proving its terms.
2. T makes a contract with A to leave everything to A at Ts death if A will take care of T
for life. T executes a will leaving her estate to A. Subsequently, A changes her mind
and decides not to care for T. T rescinds the contract. Upon Ts death, is A entitled to
take under Ts will?
a. Yes. Its up to T to amend his will; he didnt Probate law says the distribution
must be made. However, Ts estate can bring a breach of contract claim against
A.
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II.

3. A dies of AIDS. After As death, As roommate, B, claims half of As estate. B alleges

that A promised to leave B half his estate if B cared for A for his life. B produces a
document typed by B and signed by A and one witness devising one-half of As estate
to B. A died with no other will.
a. Yes. This document can be treated as will under the harmless error rule, and its
terms include the devise to B. In fact will contract law is not required to reach
this conclusion. But provision (iii) would also make it work writing signed by
testator.
v. Special problems of joint and mutual wills
1. A joint will is a single document that two testators (usually husband and wife) both
intend to be bound by.
a. Ideally, first one dies, then everything is transferred to the other spouse.
b. Then the other dies, and it passes to their kids or whoever in accordance with
both their wishes.
c. The problem is second marriages. The surviving spouse can get remarried and
create lots of headaches under pretermitted spouse statutes and will contract
disputes.
2. Mutual wills are two separate documents with all the same provisions, just swapping in
one spouses name for another.
a. They also let a married couple come up with a coherent plan of distribution.
b. They can also breed headaches when second marriages come into play.
c. Just use trust law.
vi. Via v. Putnam (Fl. 1995 / pg. 329) [pretermitted spouse / will contracts]
1. Joann and Edgar Putnam made mutual wills; each contains a clear will contract not to
revoke the mutual wills. Joann dies, and, per the terms of her mutual will, everything
passes to Edgar. Edgar gets remarried to Rachel, does not edit his will, and then dies.
Rachel sues under both the elective share statute and to the pretermitted spouse statute.
(Under the elective share, she would take 30%, under the pretermitted spouse statute,
she would take 50%, under Florida law.) Edgars kids sue under the will contract to
become judgment creditors of the estate, which would mean they must be paid off in
full (because their judgment would be the whole will). Result?
2. Rachel wins.
a. Because the pretermitted spouse statute reflects a policy under which
pretermitted spouses are to be protected. (This not convincing, because its a
default rule.)
b. And because the elective share reflects the same policy. (This is true; its a
mandatory rule.)
c. This policy wins out over the policy of honoring will contracts; so, the kids
cannot become judgment creditors. Otherwise, wifey wouldnt get anything,
contrary to these grand policies.
3. Under UPC?
a. There is a valid will contract; its express in the wills.
b. Rachel would take nothing under the pretermitted spouse statute. She gets an
intestate share of whatever doesnt go to her stepkids; here, everything went to
her stepkids, so nothing less.
c. She could still get the UPC elective share.
Will Contests
a. Mental Capacity
i. An individual 18 or more years of age who is of sound mind may make a will. UPC 2-501.
1. UPC does not define sound mind.
2. It punted toward caselaw, specifically, the Restatement.
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ii.

iii.

iv.
v.

vi.

3. Cases are argued by analogy. Dont put too much pressure on the elements.
Compare facts to cases.
Res. (3rd) of Property: Wills &c. 8.1 / Mental Capacity
1. A person must have mental capacity in order to make or revoke a donative transfer.
2. [Revocable transfers] Testator must be capable of knowing and understanding in a
general way
a. [1] the nature and extent of his or her property
i. I.e., what she owns.
b. [2] the natural objects of his or her bounty
i. I.e., who would normally get it: her family, her intestate heirs.
c. [3] the disposition that he or she is making of that property, and
i. I.e., who gets what.
d. [4] must also be capable of relating these elements to one another and
forming an orderly desire regarding the disposition of the property.
i. How these things are all connected. A more or less coherent plan.
3. [Irrevocable transfers] If the donative transfer is in the form of an irrevocable gift,
the donor must have the mental capacity necessary to make or revoke a will and
must also be capable of understanding the effect that the gift may have on the
future financial security of the donor and of anyone who may be dependent on the
donor.
a. Two requirements:
i. Satisfy the revocable transfer test; and
ii. Understand the effect that this will have on your finances and
dependents.
b. A somewhat higher threshold; applies, I suppose, only to irrevocable trusts. Its
capacity + understanding.
Burdens of Persuasion
1. The majority position (including UPC and Restatement) is that mental capacity is
presumed, and can be rebutted by the opponent.
2. A minority position (e.g. Georgia) is that mental capacity is not presumed; it must be
proved by proponent.
Gifts to non-family caretakers raise capacity questions (practically, not doctrinally).
Capacity to make a will is lower than capacity to make a contract, where baseline the standard
is similar to the irrevocable trust standard: knowledge and understanding both required.
1. A natural person can make a contract unless mentally ill or defective. Res. (2nd)
Contracts 12.
2. Contracts are voidable if, due to mental illness or defect, if:
a. (a) he is unable to understand in a reasonable manner the nature and
consequences of the transaction, or
b. (b) he is unable to act in a reasonable manner in relation to the transaction and
the other party has reason to know of his condition.
c. Res. (2nd) Contracts 15(1).
In re Estate of Washburn (NH 1997 / pg. 159) [no capacity case]
1. Held: A testator lacked mental capacity to make will, and thus the will may not be
probated, when she:
a. Had Alzheimers, per doctor diagnosis (general way problem);
b. Was seen as confused, forgetful, and incompetent by lay witnesses (general
way problem);
c. Wrote two wills within three weeks that completely contradicted each other
(orderly plan problem);
d. Had discussions with family members about how to dispose of her property that
were inconsistent with the wills she signed (orderly plan);
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vii.

e. Didnt recognize a family member at the funeral (natural objects of her

bounty);
f. And asked for a bill at the funeral, when shed already paid (general way).
2. This case utilized a presumption by which testators are presumed to have mental
capacity. This was rebutted by the evidence above.
Wilson v. Lane (Georgia 2005 / pg. 161) [capacity despite eccentricity]
1. Held: A testator had mental capacity to make a will, which must thus be probated,
when:
a. It made bequests to 17 people, 16 of whom were family;
b. The drafting attorney testified she was mentally competent;
c. Numerous other friends and acquaintances did, too;
d. She had a wild fear of flooding and wouldnt let people run water at her house;
e. Her caretaker had filed a guardianship (of the person and of the property)
petition 4 months after the will was signed;
f. Her doctor wrote a letter to a utility company explaining that she had senile
dementia in connection with a telephone bill;
g. There was expert testimony that she had Alzheimers, but the expert only
reviewed her paper file and had never examined the testator.
2. Georgia presumes no capacity, but the proponents of the will successfully shifted it,
due to the evidence in (a)(c).
3. The evidence in (d)(f) was insufficient to show no capacity. The guardianship petition
was just paperwork in connection with some bureaucracy; the senile dementia letter
was trying to use sympathy to help with a bill; and the expert was just guessing.
4. There was a cogent dissent that argued that the evidence could go either way, but since
a jury had found no capacity, they should not disturb it.

b. Fraud
i. Types
1. Fraud in the inducement is when a misrepresentation causes the testator to make or
revoke a will; refrain from making or revoking a will; or to include particular
provisions in fraudsters favor. This is normal fraud.
2. Fraud in the execution is giving someone the wrong will to sign or destroy.
ii. Remedies
1. The remedy, where possible, is to void only the fraudulent provisions. This can be
done easily if the will provides what to do if that person dies, for example; otherwise,
theres the residuary clause and intestacy laws.
2. If the fraud permeates the entire will, the judge will refuse probate.
3. If refusing probate is unjust, a constructive trust can be applied to the fraudulent gifts.
iii. Res. (3rd) of Property: Wills &c. 8.3(d) / Fraud
1. A donative transfer is procured by fraud if the wrongdoer
a. knowingly or recklessly;
b. made a false representation to the donor;
c. about a material fact that;
d. was intended to lead the donor;
e. and did lead the donor to make a donative transfer that the donor would not
otherwise have made.
2. Mens rea as to deceit is knowledge/recklessness.
a. At common law, this was knowledge too.
b. Restatement made it easier.
3. Mens rea as to influencing donor is purpose.
4. The would not otherwise have made element makes difficult. Thats the problem; we
dont know what the donor would have done, because she didnt know the truth.
iv. Some states use a presumption:
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1. Confidential relationship + suspicious circumstances (+ actually getting a

bequest/some material benefit? = presumption of fraud. Puckett v. Krida.
v. Estate of Carson (Cal. 1920 / pg. 208) [fraud as fact-specific morass]
1. Held: Whether a fraud has been committed when someone who is secretly married
marries again, and his new spouse, unaware of his real marriage, devises stuff to him in
the will, is a question of fact for the jury.
a. Because who knows? If theyd been together 20 years, maybe she would have
still bequeathed it.
b. Upshot: these are fact-intensive inquiries; look at everything.
vi. Puckett v. Krida (Tenn. 1994 / pg. 209) [fraud by caretakers / presumption]
1. Held: When two caretakers of an aged woman deliberately encourage the belief that
her family is wasting her money and conspiring to put her in a retirement home,
bequests by the woman to these two takers must be set aside as fraudulent.
a. Because they were fiduciaries and misled her; thus, a presumption of fraud.
b. They were unable to rebut, especially since her family was not wasting her
money or conspiring to do anything at all.
c. Undue Influence
i. UPC 2-517 / Limiting In Terrorem Clauses
1. A provision in a will purporting to penalize an interested person for contesting the will
(= in terrorrem clause) or instituting other proceedings relating to the estate is
unenforceable if probable cause exists for instituting proceedings.
ii. Remedies
1. Same as fraud: set aside any specific provisions, where possible, and feed through
alternatives, through the residuary, or through intestacy.
2. If its the whole will, the court may set the whole thing aside and go through intestacy.
3. Wrongdoers (in fraud + undue influence cases) may not take through intestacy.
iii. Res. (3rd) of Property: Wills &c. 8.3(a)(c) / Fraud
1. (a) A donative transfer is invalid to the extent that it was procured by undue influence,
duress, or fraud.
2. (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.
3. (c) 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.
a. Duress is a subspecies of undue influence, i.e. overcoming the donors free will
through wrongful threats.
4. Not a lot of law here, as with fraud. Inferences and presumptions do some lots of work.
iv. Factors that are each sufficient to raise an inference (=some evidence; not a presumption) of
undue influence
1. Susceptibility of donor
2. Opportunity of wrongdoer
3. Disposition of wrongdoer (i.e., motive)
4. Result
a. Cf. unnatural disposition below. When things look weird, that alone can raise
an inference.
b. When things look weird and theres a confidential relationship, theres a
presumption.
v. Factors sufficient to raise a presumption of undue influence:
1. A confidential relationship; and
2. Suspicious circumstances.
vi. Confidential relationships exactly three types:
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1. Fiduciary. This can be decided by the judge based off preexisting legal relationships:
attorney-client, trustee-beneficiary, principal-agent, etc.
2. Reliant. This is a fact question. Its like a lesser version of dominant-subservient; not
totally in thrall, but reliant.
3. Dominant-subservient. This is a fact question. Unclear if its a subset of reliant or could
include other relationships.
vii. Suspicious circumstances include, but arent limited to:
1. Donors weakened condition
2. Wrongdoers procurement
3. Donor did not receive independent advice
4. Secrecy or haste
5. Donors attitude toward others changed
6. Discrepancy between old and subsequent wills
7. No continuity of purpose between old and subsequent wills
8. Unnatural, unjust or unfair disposition
a. This is similar to mental capacitys natural objects of [testators] bounty.
b. This allows the private biases of judges and juries to creep in.
c. This contradicts freedom of testation.
viii. In re Will of Moses (Miss. 1969 / pg. 186) [presumption; older woman/younger man]
1. Held: Fannie Mosess will must be set aside, as it was procured through the undue
influence of her lover and attorney, Clarence Holland, even though the will was
prepared by another lawyer who had no knowledge of their relationship, because the
evidence created a presumption that was not rebutted.
a. Confidential relationship.
i. Court suggests that the attorney-client relationship would be sufficient.
ii. But the addition of the romantic relationship seals it.
b. Suspicious circumstances. Not explicit, but several available:
i. Weakened condition. Alcoholic; breast cancer survivor; 57 years old.
ii. No independent advice. Her lawyer was a mere scrivener; no counsel.
iii. Unnatural disposition. Fannie Moses had a living sister who received
nothing in the will.
c. No rebuttal of presumption.
i. The only way to rebut this would be strong evidence that Fannie Moses
had independent advice of counsel.
ii. Dan Shell, who prepared the will, didnt inquire after a family or the
natural objects of her bounty; he knew she was unmarried and had no
kids, and made the will to her specifications.
iii. There was also evidence that Fannie had told a close friend (another
lawyer, Patterson) that the will was exactly like [she] wants it. But
thats not enough.
2. This is probably strongly influenced by time and place (Mississippi, 1969) and the
age/gender breakdown (older woman, younger man).
ix. In re Kauffmanns Will (NY 1964 / pg. 191) [presumption; two men]
1. Held: Kauffmanns will must be set aside, as it was procured through the undue
influence of Walter Weiss, despite a posthumous coming-out letter that revealed how
deeply Kauffmann cared about Weiss:
a. Confidential relationship.
i. Reliance (and possibly even domination) was established. Kauffmann
was rich, and Weiss was poor; Kauffmann put Weiss in charge of
managing his personal affairs and business affairs, they lived together,
they were lovers, and one time Weiss followed Kauffmann to Paris in a
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III.

fit of jealous rage and Kauffmann meekly sat by when he kicked out
Kauffmanns lover.
b. Suspicious circumstances. Several to choose from:
i. Weakened condition. For Kauffmann was a moody, delicate young man.
ii. Secrecy or haste. The will and the letter only posthumously made the
Big Reveal.
iii. Donors attitude? We dont have a lot of facts, but the letter suggests it
did.
iv. Unnatural disposition. Kauffmann devised shares in family business to
his boyfriend. Weiss denied they were dating, but no one believed them.
v. Discrepancy in wills. Weisss share just kept growing; suggests he didnt
have a clear, independent plan.
c. No rebuttal of presumption.
i. He had independent legal advice from a white-shoe firm; not enough.
ii. His letter was taken as evidence of his sickness and submission, not of
having a clear, independently-formed plan.
iii. That his various wills all included Weiss did not count as a clear plan;
rather, because Weisss share increased, it counted as the opposite.
x. Lipper v. Weslow (Texas 1963 / pg. 193) [in terrorem + disinheriting someone meanly]
1. Held: Blocks will, which disinherited her dead sons wife and kids (i.e, her grandkids),
and gave voluminous reasons why, and gave everything to two other kids, must be
admitted to probate, despite the in terrorem clause; no undue influence.
a. Confidential relationship.
i. The wills drafter and caretaker was her son.
ii. Thats two kinds! (Reliance and fiduciary.)
b. Suspicious circumstances.
i. Unnatural disposition grandma disowned her grandkids, while
favoring her kids.
ii. No independent advice her son drew up the will.
c. But thats not enough, in this state, to create a presumption; its just some
evidence.
d. Here, theres ample evidence that this was testators intended will: she had told
three disinterested witnesses that she was going to disown her grandkids, and
the reasons why matched what was in the will.
2. This case didnt use the Restatement presumption approach. But even if it had,
defendant would have been able to rebut the presumption.
Problems of Interpretation
a. Components of a Will
i. Res. (3rd) Property: Wills &c. 3.5 / Integration
1. To be treated as part of a will, a page or other writing must
a. Be present when the will is executed; and
b. Must be intended to be part of the will.
2. Its usually clear whats in a will: pages will be numbered, initialed, and attached.
3. Things that give rise to integration questions include removed staples; page in a
different font; no internal coherence to the pages.
ii. Res. (3rd) Property: Wills &c. 3.4 / Republication by Codicil
1. A will is treated as if it were executed when its most recent codicil was executed,
whether or not the codicil expressly republishes the prior will, unless the effect of so
treating it would be inconsistent with the testators intent.
2. Codicils can implicitly republish a will.
3. Codicils must be executed in conformity with formalities. (But harmless error rule
applies.)
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4. Republication questions come up when there are multiple real wills, and a codicil
attaches to an earlier one.
iii. UPC 2-510 / UPC 2-510: Incorporation by Reference
1. A writing in existence when a will is executed may be incorporated by reference if the
language of the will manifests this intent and describes the writing sufficiently to
permit its identification.
2. The existence requirement means that it cannot be amended or drafted after the
execution of the will.
3. It does not have to be present. Its not a will. Its just a writing.
iv. UPC 2-513 / Post-Execution Separate Writing Identifying Tangible Property
1. A will may refer to a written statement or list to dispose of items of tangible
personal property not otherwise specifically disposed of by the will, other than
money. To be admissible under this section as evidence of the intended disposition, the
writing must be signed by the testator.The writingmay be prepared before or
after the execution of the will; it may be altered by the testator after its
preparation.
2. This is complicated, but it amounts to this: Testator can dispose of new stuff personal
property by maintaining a special list that she the will refers to.
3. This lets her dispose of stuff she accumulates after executing the will without needing
to re-execute a new will.
4. Its not a will.
a. So execution formalities do not apply.
b. And the harmless error rule does not apply.
c. Upshot: all of these rules, including signature, are mandatory.
5. Its not incorporation through reference; its more lenient:
a. Can be written or modified afterward.
b. But, personal property only.
v. T hand writes a note in 2008, saying, After I die, I hereby leave everything to the people
indicated in my journal. The note is unsigned. After the Testators death in 2011, an entry is
found in her journal dated 2009. The entry says, In accordance with my will dated 2008, I
wish my car to go to my daughter, my house to my son and my bank account to my friend
Jane.
1. Note can be treated as a will. It fails every formality except writing: no witnesses,
no signature. Its holographic, but even those need be signed. Nonetheless, its intended
to be a will; we can tell by the formal language, and the prefatory clause (After I
die).
2. The journal entry is not integrated; no present.
3. The journal entry is not incorporated by reference; it was not in existence.
4. The journal entry can be treated a post-execution separate writing, if its signed; its
referred to by the will, and its clearly identifiable as such. But under this scheme, only
the car can actually be disposed of; its personal property, and the house and money
are not.
5. The journal entry cannot be treated as a codicil, in which case the entire will would be
republished with the terms of the journal. A codicil needs formalities, which are
missing here, but it intends to dispose of property at death, so it satisfies the harmless
error rule. But there is a bigger problem with this approach: it says in accordance
with my will, which suggests that its not intended to change or republish the will,
which of course a codicil does. Since it doesnt purport to amend the will, its not a
codicil.
6. We can maybe treat the journal entry as a will in its own right. As noted above, it fails
the execution requirements, and there are problems with the harmless error rule the
journal entry is intended neither as a will nor as an amendment to a will, but more as a
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an supplement to it. We would argue that its testamentary in nature, and intended and
designed to dispose of the estate. However, the problem of intent is probably
insurmountable: by its own language, its not intended as a will, which is the ultimate
test.
vi. Ts lawyer drafts a 20-page will in January 2008. T signs the will in February 2008. The will
says that various items of Ts personal property and his bank account should be distributed in
accordance with Schedule A, dated February 2008, which is attached hereto. Unfortunately,
Ts lawyer accidentally attached an outdated version of the schedule, dated December 2007, at
the time T actually signed the will. T later executed a codicil to the will that made no changes
to Schedule A, and then died soon thereafter.
1. The December 2007 Schedule A will not be given effect. The integration doctrine
requires something to be present, and requires the testator to intend that something to
be a part of the will; the testator did not intend this to be a part of the will. Moreover,
the flaw is readily identifiable from intrinsic evidence the dates are all wrong. The
correct Schedule A isnt integrated, either, because its not present.
2. If the February 2008 Schedule A is still around, and was actually in existence at the
time of the execution, then it can be incorporated by reference. The will provides
enough info to clearly identify it Schedule A is a common name, but the date narrows
it down to something identifiable. The fact that it wasnt present is immaterial.
3. It cannot, however, be treated as a post-execution separate writing. Although these can
be prepared at any time, they must be signed, which Schedule A is not; and even if it
were, it would be invalid to the extent that it tries to distribute money. But I emphasize
that it doesnt count at all, due to a lack of signature.
4. The codicil is a total red herring that does not affect the analysis.
vii. T signs a will in 2009. The will gives Ts car and house to her son, S, and says that all of her
remaining personal property should be distributed as directed by the list in the safe in my
office, which T had already completed at the time. T then executes another will in 2010 that
gives her car and her house to her son S and gives everything else to my daughter, D. The
2010 will made no mention of the 2009 will. T makes changes to the list in her office safe in
2011, listing the names of her friends next to various items of her personal property. In 2012, T
dies.
1. Ignoring the 2010 will for a moment, the 2009 will looks fine its signed and intended
to be a will, hence the harmless error irons out any witnessing problems. The list
scheme is proper under the post-execution separate writing rule, provided it is signed;
its not clear. If its unsigned, it would fail.
2. Enter the 2010 will. The 2010 will disposes of the entire estate, and thus presumptively
revokes the 2009 will; the presumption can be rebutted by evidence showing that the
testator intended otherwise. Unfortunately, the fact that the testator started tinkering
with the post-execution signed writing that is explicitly tied to the 2009 will provides
just the sort of evidence required: it shows that she didnt view the 2009 will as
revoked; we know because the 2010 will wasnt keyed to this list, so we must assume
shes editing it in light of the 2009 will.
3. Finally, the separate list cannot be treated as a codicil to the 2009 will; its not
intended as one. It is, instead, clearly intended as the sort of post-execution writing
that is fully in compliance with the will.
4. The court will thus have to wrestle with two wills and lists and try to come up with a
coherent scheme. It is aided by the fact that, although the 2010 will disposes of the
whole estate, its not flatly inconsistent with the 2009 will S gets the car and house in
each. The problems arise when the court has to decide how to dispose of personal
property a possible answer is to give full effect to the personal property list (a 2009
provision), and to give D the residual personal property, if any (a 2010 provision).
b. Ambiguous or Mistaken Language in Wills
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i. Reforming Wills for Mistake

1. Common Law Rules
a. No extrinsic evidence rule: While extrinsic evidence can be heard concerning
fraud, undue influence, and to resolve ambiguous language in the will, it cannot
be heard in order to alter the plain meanings of words in the will.
b. No reformation rule: Wills cannot be modified to correct mistaken terms in the
will in order to reflect what testator said.
c. Mahoney v. Grainger (testator wanted to give devises to her 25 first cousins;
lawyer wrote heirs at law, which only included her aunt; court refused to
reform, and aunt got everything).
d. The modern trend is away from these rules, which, after all, treated simple
mistakes much harsher than fraud, undue influence, mental capacity, etc.
e. Gifts to multiple beneficiaries i.e., multiple residual takers are
presumptively split evenly. Estate of Russell. Testator can opt out of this.
2. Res. (3rd) Property: Wills &c. 12.2 cmt. D / Ambiguity
a. Once an ambiguity, patent or latent, is established, direct as well as
circumstantial evidence of the donors intention may be considered in
resolving the ambiguity in accordance with the donors intention.
i. Latent vs. patent had been a distinction drawn by common law courts
before this, but it didnt serve any great purpose.
ii. So, extrinsic evidence is now generally available to resolve ambiguities.
3. UPC 2-805 / Reformation to Correct Mistake
a. The court may reform the terms of a governing instrument, even if
unambiguous, to conform the terms to the transferors intention if it is proved
by clear and convincing evidence what the transferors intent was and that the
terms of the governing instrument were affected by a mistake of fact or law,
whether in expression or inducement.
i. This applies to any donative instrument.
ii. It applies to latent or patent; thats what even if unambiguous means.
iii. A high evidentiary standard.
4. Res. (3rd) Property: Wills &c. 12.1 cmt. H / Limits of Reform Power
a. The reform power cannot reform these types of mistakes:
i. Failure to prepare and execute a document
1. = Oral will.
ii. Reflect donors post-execution change of mind
1. = Oral codicil.
iii. Compensate for post-execution changes in circumstance.
1. Totally unlike trust modification!
5. Limits Hypothetical
a. G decides to leave his estate to his niece, X. G orally communicates his intent
to X. Thereafter G dies intestate, leaving one surviving sister, A, as his sole heir
in intestacy.
i. No reform. Nothing was executed. This would be an oral will.
b. G validly executed a will that devised his estate to his sister, A. After execution,
G decided he wanted to alter the disposition in favor of As daughter, X. G
communicated this intent to X in a phone conversation, but never altered the
will.
i. No reform. This is a post-execution change of mind. It would be an oral
codicil.
c. Gs will devised his Kodak stock to his daughter, A, and the residue of his
estate to a friend. Kodak has gone bankrupt and the stock is worthless at the
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time of Gs death. Evidence is introduced to suggest that G would have left A

more if he had known that the stock would become worthless.
i. No reform. This would be reform in light of changed circumstances
the value of stock.
6. Erickson v. Erickson (CT 1998 / pg. 345) [modern reform power]
a. Connecticuts pretermitted spouse statute wholly revoked a will when someone
got married, unless the will made provision for that contingency. Two days
before marriage, Ronald Erickson had a will prepared in which he gave
everything to his wife-to-be, remainder in equal parts to their kids; the will
didnt mention the marriage, and so made no provision for the contingency. He
was then married and died eight years later, without modifying the will. Mrs.
Erickons stepdaughter Ronalds natural daughter by another marriage sued
to void the will under the pretermitted spouse statute. Result?
b. Mrs. Erickson wins, under the newly adopted reform power.
i. Extrinsic evidence is available to remedy scriveners errors lawyers
mistakes and, upon clear and convincing evidence, a will can be
reformed on conformity with the testators intent.
ii. Here, theres ample evidence that he meant to give to his wife-to-be,
and would have fixed the mistake had he known about it.
iii. Court is careful not to hold that it did provide for the contingency; thats
a matter of interrogating the text, which didnt. But the reform power
narrows the need for making stuff up like that.
c. Death of BeneficiariesLapse, Antilapse Statutes, and Class Gifts
i. Orientation
1. This section addresses the question, what happens to a gift if a beneficiary is already
dead when the will is made, dies before the testator, or is treated as though she died
(e.g., in terminated parent-child relationships and disclaimer?)?
2. All devises are made subject to a requirement that the beneficiary survive the testator,
unless testator spells out otherwise in the will.
3. When this happens, the devise lapses (fails).
4. States passed antilapse statutes that re-route lapsed gifts to the dead beneficiarys
children.
5. Antilapse statutes are based on a theory of inferred intent we just assume that, if you
left a family member money, and hes dead, youd want his kids to have it.
ii. Rules of lapse at common law
1. Specific devise or general (=money) devise devise falls into residuary clause
2. Residuary devise lapses entirely heirs take the residue by intestacy
3. Residuary devise lapses in part the valid (i.e. living) taker gets his valid portion; the
heirs take the rest through intestacy
a. This is the no-residue-of-a-residue rule.
b. Its a really dumb rule. Something about primogeniture.
4. Class gift lapses in part surviving class members divide the gift
a. Mattered whether something was residue, class gift, or specific/general devise.
5. A void devise is one to a dead or ineligible devisee, e.g. a dog. Its treated as though it
lapsed.
6. Estate of Russell (Cal. 1968 / pg. 359) [bequest to dog; no residue of a residue]
a. Held: The residuary clause of a a holographic will that left everything
[testator] own[ed] to Chester and Roxy is latently ambiguous, and thus
supports admitting extrinsic evidence to resolve the fact that Roxy is a dog.
b. Held: Because gifts to dogs are void, the gift to Roxy lapses.
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iii.

iv.

v.

vi.

c. Held: Because of the no-residue-of-a-residue rule, Roxys portion of the residue

goes to Russells niece, the lone heir-at-law/intestate taker, not Chester.
Debate over Words of Survivorship
1. UPC 1990 takes the minority position that words of survivorship (e.g., to X, if he
survives me or to my living brothers) do not opt out of an antilapse statute.
a. Thus, to X, if he survives me is read as to X for antilapse statute purposes,
and if X is dead, it will go to Xs issue.
b. The theory is that most wills automatically contain words of survivorship, but
no one who knew what they were doing would opt out of an antilapse statute on
that basis alone. Its not the real intent to dodge antilapse, in other words.
c. Use the minority position on the exam words of survivorship alone do not
deactivate the antilapse statute. Argue that words of survivorship plus
something else can still deactivate the antilapse statute.
2. The majority position is that words of survivorship do opt out of antilapse statutes.
a. Thus, the words to X, if he survives me are read literally; X must survive in
order to take, and the antilapse statute will not pass the bequest to his kids.
b. The theory is that courts should follow what wills say, not make them mean the
opposite of what they say.
3. Both sides agree that an alternative disposition works; the battleground is in whether
boilerplate like no antilapse will apply or if she survives me count.
a. E.g.: To X; but if X should not survive me, to Y.
b. Xs issue will not get the bequest by action of an antilapse statute .
UPC 2-604(a) / When Non-Residuary Gifts Lapse
1. Except as provided in [Section 2-605 of the 1969 UPC], a devise, other than a
residuary devise, that fails for any reason becomes a part of the residue.
2. This is the same as the common law rule:
a. Specific devise lapses residue
b. General devise lapses residue
UPC 2-604(b) / When Residuary Gifts Lapse
1. Except as provided in [Section 2-605 of the 1969 UPC], if the residue is devised to two
or more persons, the share of a residuary devisee that fails for any reason passes to the
other residuary devisee, or to other residuary devisees in proportion to the interest of
each in the remaining part of the estate.
2. This overturns no-residue-of-a-residue rule. If a residual gift to multiple people
lapses, its routed to the other residual takers.
a. Residual devise lapses residue
b. All residual devises lapse intestacy
UPC 2-605 (1969) / Antilapse
1. If a devisee who is a grandparent or a lineal descendant of a grandparent of the
testator is dead at the time of execution of the will, fails to survive the testator or is
treated as if he predeceased the testator, the issue of the deceased devisee who survive
the testator by 120 hours take in place of the deceased devisee. If they are all of the
same degree of kinship to the devisee they take equally, but if of unequal degree, then
those of more remote degree take by representation. One who would have been a
devisee under a class gift if he had survived the testator is treated as a devisee for
purposes of this section
2. Notes
a. Testators spouse is excluded from this: lineal descendants of grandparents
only. See page 93 for a helpful chart. As far out as aunts, uncles, first cousins,
first cousins once removed, first cousins twice removed, etc.
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b. For the covered class, a lapsed devise goes only to that persons children:
not to their spouse, not through their will, not through intestacy.
c. Donors stepchildren and adopted children count. But not the spouse!
d. Evidentiary standard to escape the antilapse statute is a preponderance of the
evidence. But see Ruotolo close calls likely go in favor of applying statute.
vii. UPC 2-603 (1990) / Antilapse (certain provisions that we are using)
1. Language of survivorship alone is not enough to opt out of the anti-lapse rule
without further evidence of the testators desire to opt out.
2. A donors stepchildren are now covered by the anti-lapse rule
viii. Ruotolo v. Tietjen (Conn. 2006 / pg. 367) [adopting minority position]
1. Held: Words of survivorship e.g., if she survives me alone do not opt out of an
antilapse statute; thus, the gift to Hazel Brennan doesnt lapse, but passes to her kids.
a. Because we dont trust that if she survives me is really intended to overcome
an antilapse statute.
b. And because the antilapse statute is a remedial statute that is supposed to be
given wide effect; benefits are resolved in favor of applying it.
c. Alternative is taking through intestacy; strong policy against intestacy.
2. No dissent. But this is the minority position!
ix. T dies. The will gives Ts house to her son, S, her car to her friend, F, and her bank account to
her cousin, C. She leaves all the rest, residue and remainder to her daughter, D. All donees
except D predecease T, and all donees, including D, have two living children at the time of Ts
death. How will the estate be distributed?
1. No alternative dispositions; not even words of survivorship. Therefore, antilapse
statute applies. D gets residue. Ss children get the house 50-50. Cs children get the
bank account 50-50 (as long as shes not further than first cousin). Fs gift lapses and,
since it is a specific gift, goes into the residue and thus to D.
x. Same as above, but D also predeceased the testator.
1. Ss kids get the house. Cs kids get the bank account. Ds children get the residue,
including the car.
xi. T leaves her house to her husband, H, her car to her friend F, and the residue in equal shares to
her son, S, her cousin, C, and her butler, B. Everyone predeceases T. Everyone has two
surviving children except for H, whose only child was S.
1. H gift lapses and passes into residue; hes a non-lineal descendant.
2. Fs gift lapses and passes into the residue; hes a non-lineal descendant.
3. Bs gift lapses and passes into the residue; hes a non-lineal descendant, and UPC
permits residue passing into residue.
4. Residue is then split into two equal pieces, to S and C; Cs dead, so it passes equally to
Cs kids, leaving:
5. 1/2 S; 1/4 each Cs kids.
xii. Same as above, except B survived T.
1. B gets 1/3 of the residue, including the H and F gifts; Ss kids get 1/3; and Cs kids get
1/3.
d. Ademption
i. Overview
1. This section addresses the question of how to handle a devise when the property is no
longer in the estate. E.g., my ring to X, and the ring is gone.
2. At common law, this was called ademption by extinction the rings extinct!
ii. Common law rules
1. Specific devises that are not in the estate at death are adeemed; they are set aside and
the specific devisee does not get anything.
2. General devises (=money) do not adeem.
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iii.

iv.

v.

vi.

3. Demonstrative devises (=money, but from a specific source, e.g. $10K to be paid from
Shell stock) do not adeem; if the source cannot pay for it, residue has to be liquidated
to cover it.
4. Residuary devises were thus at risk if the will made big general/demonstrative devises;
theyre like debt; theyre paid. Residuary claims are like equity; only whats left.
5. Moral of the story be careful when making a will.
Grand theoretical dispute
1. Ademption by extinction is founded on the identity theory the testator intended to
devise one specific thing, and if its gone, there is no replacement.
a. The old common law theory.
2. The intent theory its modern rival even specific devises do not adeem if the devisee
can show that ademption would be inconsistent with testators intent.
a. UPC and Restatement adopt an intent theory.
b. Estate of Anton (sales of specifically devised property after testator is mentally
incapacitated are against her intent; same, if shes competent, if it was done
without her knowledge and consent).
UPC 2-606 / Non-Ademption of Specific Devises
1. (a)(1)(3) If specifically devised property isnt in the testators estate at the testators
death, a specific devisee gets any balance that is unpaid at death on the sale price,
condemnation award or insurance proceeds from the property.
a. This is usually zero for a sale; buyers usually pay in full up front.
b. It might be nonzero for a condemnation or insurance, especially if the testator
died in some horrific accident that destroyed e.g. the car and diamond ring.
2. (a)(5) A specific devisee gets any property purchased as a replacement for the
specifically devised property
a. This looks like a mechanical rule, but in fact replacement is up for grabs.
b. Use common sense compare use and value. A new car is likely to be a
replacement for an old car, but a new Rolls is unlikely to replace a Civic.
3. (a)(6) If a devise is not covered by paragraphs (1)(5), the devisee gets a pecuniary
devise equal to the value as of its date of disposition of other specifically devised
property disposed of during the testators lifetime but only to the extent it is established
that ademption would be inconsistent with the testators manifested plan of
distribution or thatthe testator did not intend ademption of the devise.
a. This is the interesting provision in which the UPC adopts the intent theory.
b. Devisee gets fair market value of the devise, but only if the testator intended.
c. The devisee has the burden of proof to show no ademption; its a
preponderance standard.
d. This applies to stuff that is uninsured and involuntarily removed from the estate.
Uninsured things that are stolen or destroyed, in other words.
UPC 2-606(b), (e) / Ademption and Sales/Dispositions by Agents
1. (b) If a custodian or an agent acting under a durable power of attorney for an
incapacitated principal sells property or receives a condemnation award or insurance
payment for the property, the specific devisee gets the full purchase price,
condemnation award or insurance payment.
a. Differs from normal rules, where they get unpaid balance.
b. Reveals some distrust for agents.
c. Accords with Anton, where that the estate was short and thus had to abate.
2. (e) Acts of an agent under a durable power of attorney are presumed to be for an
incapacitated principal.
a. Accords with Anton.
b. Rebuttable.
UPC 2-607 / Ademption and Mortgaged Devises
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1. A specific devise passes subject to any mortgage interest at the date of death, without
right of exoneration, regardless of a general directive in the will to pay debts.
a. Because most testators arent rich, and if a general directive to pay my debts
included the mortgage, it would eat up the whole estate.
b. This passes mortgaged property encumbered by liens; its rebuttable.
vii. UPC 2-609 / Ademption by Satisfaction
1. Property a testator gave in his lifetime to a person is treated as a satisfaction of a devise
in whole or in part only if:
a. (i) The will provides for deduction of the gift; or
b. (ii) The testator declared in a contemporaneous writing that the gift is in
satisfaction of the devise; or
c. or (iii) The devisee acknowledged in writing that the gift is in satisfaction of the
devise.
2. This is advancements for wills, and the rules are similar: testator puts it in writing or
donee acknowledges its a satisfaction.
viii. UPC 2-605 / Ademption and Securities
1. Specifically devised securities are traced through stock splits and mergers
2. Dividends paid out before death are not part of the devise.
3. This provision recognizes the economic reality that securities can change form.
ix. Cases and Hypos
1. T makes a will giving her daughter a diamond ring. T then sells the diamond ring for
$1,000. T receives the full purchase price at the time of the sale. Three months later, T
dies. What result?
a. Daughter gets nothing; the thing was paid in full.
2. Same as #1, except that the diamond ring was stolen.
a. Daughter can argue that ademption would be inconsistent with testators
intent, and, if she wins, get fair market value. On these facts, hard to see how
she meets her burden.
3. T makes a will giving her house to A. Ts house then burns down. T buys a new house
with the insurance proceeds. The new house cost $100,000 more than the old house.
a. A probably gets whole house. If $100K is some huge proportion of the original
houses value 50%+ -- then its close. But otherwise, its probably a
replacement. $100K is not usually able to buy such a big upgrade that we think
its not different in kind.
4. T makes a will saying, I give $100,000 to my son and my house at 117 Wisteria Lane
to my daughter. After making the will, T sells her house, using a portion of the
proceeds to buy a Mercedes Benz worth $40,000 and the remainder to buy a smaller
and less expensive house located at 375 Catfish Row. T dies, leaving an estate that
consists of her house on Catfish Row, $40,000 in cash and the car.
a. The house goes to D as a replacement. The son gets the $40K, and, because
money does not adeem, either gets the car or can choose to sell the car. If that
doesnt come up to $60K, the daughter and son will have to make some side
deal to true up the value, or if the son is truly draconian, he may be able to
force a sale of the house to true it.
5. Will Bates founds Megasoft Corp., a maker of computer software, in 1975. Bates
initially receives 1,000 shares of stock. In 1979, Bates makes a will and gives 1,000
shares of Megasoft stock to the Will and Belinda Bates Foundation, a charitable
organization founded by Mr. Bates and his wife. Megasoft goes public in 1980, at
which time Mr. Bates receives another 1,000 shares. In 1990, the stock splits two for
one. At the time of his death in 2012, Mr. Bates thus owns 4,000 shares of Megasoft
stock. How many shares will the Will and Belinda Bates Foundation receive?
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6.

7.
8.

9.

a. 2,000 shares. You trace stock through its shifts in form, but you dont add in
separately purchased stock thats commingled.
Same as #1, except that at the time he made the will in 1979, Bates owned only 500
shares of Megasoft stock.
a. 1,000 shares. He didnt then own 1,000, so we treat it as a fixed number
and dont trace it through splits.
Same as #1, except that the 1979 will said, I give all of my shares of Megasoft stock
to the Will and Belinda Bates Foundation.
a. All means all; Foundation gets 4,000.
Same as #1, except that the 1979 will said, I leave $100,000 in Megasoft stock to the
W&B Bates Foundation. In 1979, Wills 1,000 shares were worth exactly $100,000.
Now they are worth $100,000,000,000,000,000,000,000,000.
a. Megasoft gets $100K. This isnt a specific devise; its demonstrative. Its $100K
to be paid out of a given source.
In re Estate of Anton (Iowa 2007 / pg. 381) [modified intent / no ademption]
a. Held: One half of the remaining balance of the sale of a duplex that was
specifically devised to Gretchen must paid to her, when the duplex was sold by
Antons agent, who had a durable power of attorney, in order to pay for Antons
medical costs, when Anton either did not have capacity, or if she did, did not
have knowledge/consent of the transacton; the duplex did not adeem.
i. This follows the modified intent theory. It was decided in the alternative.
The premise to this theory is that specific devises only adeem if the
property left with the testators consent, i.e. voluntarily, i.e., when the
testator intends.
ii. If Anton was incompetent, then the sale of her property, even if it was
for a good cause and involved no fiduciary misconduct, was done
involuntarily, against her intent, and thus does not cause ademption.
iii. If Anton was competent, well, her agent still sold it without telling her
about it. Thus, it was involuntary/against her intent; no ademption.
b. The remedy was half of the remaining balance. (Bro got the other half.) The
rest of the estate was exhausted, so thats the best that could be done.

e. Abatement
i. When the estate does not have enough assets to pay off creditors and devisees in full.
ii. UPC 3-902(a) / Default Order of Abatement
1. Abatement occurs in the following order:
a. (1) property not disposed of by will
b. (2) residuary devisees
c. (3) general devisees
d. (4) specific devisees.
2. Abatement within each classification is proportional to the amounts of property each
of the beneficiaries would have received if full distribution of the property had been
made in accordance with the terms of the will.
3. Cf. UPC 2-513 (post-execution separate writing) these arent part of will, so would
abate first under (1).
iii. UPC 3-902 / Opting Out of Default Order of Abatement
1. If the will expresses an order of abatement or if the implied purpose of the testator
would be frustrated by the order in subsection (a), then shares abate as necessary to
give effect to the testators intent.
a. This can be express: abate in this order.
b. It can also be implied under a loose testators intent.
2. Look for some coherent plan that the default order of abatement somehow shatter. One
possibility is planning for a large estate, but passing a huge portion through residue,
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and having the estate unexpectedly dwindle abating residue first is inconsistent with
testators plan to favor residual beneficiary most.
iv. T makes a will giving $100,000 to her son S, $200,000 to her daughter D, her car to her friend
F and the residue to a charity, C. At the time of her death, Ts estate consists of $100,000 in
cash, a Buick Le Sabre, and a six-pack of Mountain Dew.
1. Charity gets nothing; the estate cannot meet the specific or general devisees, so the
charity, as residuary taker, gets nothing.
2. Son gets 1/3 of the $100K and 2 cans of Mountain Dew.
3. Daughter gets 2/3 of the $100K and 4 cans of Mountain Drew.
4. Friend gets the car.

Page 34 of 75

NON-PROBATE TRANSFERS / PURE WILL SUBSTITUTES

I.

Will Substitutes and the Wills Act

a. Orientation
i. Wills are defined functionally, not formally. They have two key characteristics:
1. Revocable. The testator retains complete control over the property and terms of
the will during his life.
2. Ambulatory. Named beneficiaries do not have any present interest in a will, and
thus no standing to sue the testator concerning his use of the property or his
amendment of the will.
ii. Will substitutes are actually useful for two reasons, and for a while maybe four:
1. Avoid probate. Probate is usually not a problem, but when disputes arise, it can get
very contentious and expensive.
2. Avoid formalities. Formalities are a pain. But this is probably not on the minds of
people filling out all the paperwork.
3. Avoid taxes and creditors? Not a real reason. The theory is that because they are legally
non-probate transfers, they will not be subject to estate taxes. The federal government
sees right through this; most states do, too.
4. Avoid elective share? Not a real reason. Same theory as above; its not part of the
estate. This dodge also does not work.
iii. Why go through probate at all?
1. Real property is easier to pass through probate than through a non-probate transfer.
2. Wills dispose of the estate using a single document that lays out a coherent plan, while
will substitutes are generally asset-specific and have to be managed individually.
3. Wills can be more tailored than some will substitutes (e.g. form life insurance policy).
But obviously trusts are much more customizable.
4. Because when things fall apart (dispute over who gets what or not enough assets), it
might actually be helpful to an unbiased judge sorting through everything and ensuring
testators intent is maximized.
iv. Four pure will substitutes have these exact properties and pass property at death, but are not
treated as wills.
1. Life insurance. Policyholder can change the terms or pull the policy at any time; named
beneficiary has no rights during policyholders life.
2. Pension accounts. These differ in that they are governed by federal law ERISA. But
equally revocable and ambulatory.
3. Brokerage/mutual fund accounts.
4. Revocable trusts.
v. Joint tenancies are impure will substitutes.
1. They create real present interests in the joint tenant. Property cannot be disposed
without consent.
2. Provides strong creditor protections unlike a will, where creditors get a share,
creditors can only get the joint tenants share during his life.
3. Tenancy by the entirety, which is reserved for married couples, is even stronger
creditors cannot reach property so held even during life.
4. But they do transfer property at death without resorting to probate.
b. The Grand Debates (now largely resolved)
i. Should Wills Act formalities be applied to will substitutes?
1. Common-law approach: Yes. Things that looked testamentary, i.e. passed property
on death and were revocable/ambulatory during life, were treated as wills regardless of
the form, and voided for failure to follow formalities.
2. UPC approach: No. Formalities apply only when something is characterized as a will.
If a document calls itself something else, formalities dont apply. Trivial to escape!
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This is an ironically formal definition of a will. For all the rigid formality of probate
case-law, they defined wills themselves purely functionally.
ii. Should the subsidiary law of wills i.e. all the wills law except formalities (revocation on
divorce, elective share, abatement, etc.) be applied to will substitutes?
1. Common-law approach: Probably, but might not have come up much because they
called everything a will.
2. UPC approach: Generally yes, unless theres a really good reason.
iii. In re Estate of Atkinson (Ohio 1961 / pg. 407) [rigid common-law approach]
1. Held: Payable-on-death (P.O.D.) certificates of deposit are testamentary in nature
(lifetime owner maintained control / beneficiary had no interest), and thus subject to
Wills Act formalities, and because they were not observed, the attempted testamentary
transfer fails, and it goes into his intestate estate.
a. He had a will, but disowned his wife. His wife took the elective share and
wanted these, too.
b. Instead of applying the elective share to the certificates, the court voided the
transfer entirely. As to the wife, this does the same thing: she gets a share of
entire estate. However, as to the would-be beneficiary, he is cut off completely.
And various residual takers in the will get the benefit of that decision.
iv. Farkas v. Williams (Ill. 1955 / pg. 398) [early modern approach / goofy legal fictions]
1. Held: A declaration of trust in which the settlor maintained complete control, subject
only to a written notice requirement that ran to the trustee, and in which the beneficiary
had no present interest, is valid as a non-testamentary transfer; no formalities needed.
a. The notice requirement was not an abrogation of control in real terms. Farkas
had power use the assets as his own and cancel the trust at his pleasure. Its
pure wonderful formalism to treat this as a lack of control. A legal fiction.
b. Technically Williams was owed a fiduciary duty. However, because the thing
could be revoked at any time, an attempt to enforce the duty would be mooted
by canceling the trust. So Williams would never try and practically, the duty
didnt exist. Another legal fiction.
2. The court was struggling against precedents that said that revocable/ambulatory
transfers at death were wills and were thus subject to formalities. The trust was clearly
revocable and ambulatory, and the court thus tortured logic to carve revocable trusts
and hold the transfers to be valid.
3. Same result UPC, but without resorting to the legal fictions.
c. Modern Rules
i. Vocabulary
1. A trust is an arrangement in which one party (the trustee) holds legal title to assets for
the benefit (=equitable title) of another party (the beneficiary).
2. The settlor is the person who sets the trust terms and transfers the assets to the trustee.
3. A deed of trust makes a third party the trustee.
4. A declaration of trust makes the settler himself trustee.
ii. UPC 6-101 / Nonprobate Transfers on Death
1. A provision for a nonprobate transfer on death in an insurance policy, contract of
employment, bond, mortgage, promissory note, certificated or uncertificated security,
account agreement, custodial agreement, deposit agreement, compensation plan,
pension plan, individual retirement plan, employee benefit plan, trust, conveyance,
deed of gift, marital property agreement, or other written instrument of a similar
nature is nontestamentary.
2. Nontestamentary means:
a. No formalities or probate required;
b. Administrator of the estate gets no power over the assets.
3. Upshot:
Page 36 of 75

II.

a. If it doesnt say will, its not a will.

b. People can freely opt out of formalities and probate.
iii. UTC 603(a) / Power and Duties of Settlor over Revocable Trusts
1. While a trust is revocable, and while the settlor has capacity to revoke the trust, rights
of the beneficiaries are subject to the control of, and the duties of the trustee are owed
exclusively to, the settlor.
2. Notes
a. Revocable + capacity to revoke = settlor control / no duty to beneficiaries
b. Fiduciary duties owed to settlor. Beneficiary has no rights in terms of a
revocable trust; settlor maintains complete control. Same as a will.
iv. UTC 808(a) / Power of Settlor to Override Terms of Revocable Trust
1. While a trust is revocable, the trustee may follow a direction of the settlor that is
contrary to the terms of the trust.
a. This follows from the power to revoke.
Will Substitutes and the Subsidiary Law of Wills
a. General Rules
i. Res. (3rd) Property: Wills &c. 7.2 / Will Substitutes and the Subsidiary Law of Wills
1. Although a will substitute 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. Formalities do not apply; subsidiary law of wills applies as appropriate.
ii. As appropriate means usually always.
1. Specifically, it means when consistent with the policy underlying the subsidiary law:
a. Usually the policy is freedom of testation / honor the testators intent.
b. Dying testate is better than dying intestate.
c. Marriage is good / protect spouses & kids (this defeats testators intent)
2. It includes inter vivos trusts that are funded by pour-over wills. Clymer.
3. Known exceptions:
a. Life insurance policies. Cant be reached by creditors. (Unless its whole life
insurance and doubles as a bank account).
b. Pension plans. Preempted by ERISA. Subsidiary law of wills doesnt apply.
iii. The subsidiary law of wills comprises everything other than formalities:
1. Post-execution events
2. Ademption, abatement, lapse
3. Statutory revocation in cases involving divorce, marriage, etc.
4. Creditor claims
5. Statutory allowance/elective share
6. Revocation and amendment by later wills
7. Incapacity and undue influence
8. Construction and reformation
9. Social restrictions on freedom of disposition (e.g. reasonable restrictions on marriage).
b. Non-Probate Transfers and Creditors Rights
i. UTC and UPC both allow creditors to reach nonprobate transfers during life and when
they become irrevocable on death. Exceptions:
1. Life insurance (UPC 6-102(b) (except as otherwise provided by statute; theres
always a statutory exemption for life insurance).
2. Interests in joint tenancies.
ii. Non-probate transfers abate last. (UPC/UTC rules of abatement are default rules only.)
iii. UTC 505(a) / Creditors Rights
1. Whether or not a trust contains a spendthrift provision, the following rules apply:
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iv.

v.

vi.

vii.

a. (1) During the lifetime of the settlor, the property of a revocable trust is subject
to claims of the settlors creditors
b. (2) For an irrevocable trust, a creditor or assignee of the settlor may reach the
maximum amount that can be distributed to or for the settlors benefit.
c. (3) After the death of a settlor, and subject to the settlors right to direct the
source from which liabilities will be paid, the property of a trust that was
revocable at the settlors death is subject to the claims of the settlors creditors
and statutory allowances to a surviving spouse and children to the extent the
settlors probate estate is inadequate to satisfy those claims.
UPC 6-102(a) / Definition of Nonprobate Transfer
1. In this section, nonprobate transfer means a valid transfer effective at death, other than
a transfer of a survivorship interest in a joint tenancy of real estate to the extent that
the transferor immediately before death had power, acting alone, to prevent the transfer
by revocation or withdrawal and instead to use the property for the benefit of the
transferor or apply it to discharge claims against the transferors probate estate.
2. Notes
a. Defining nonprobate transfer functionally
i. Transfers at death
ii. Donor retains control
iii. Beneficiary has no rights
b. Excludes joint tenancy (not a pure will substitute).
UPC 6-102(b) / Liability of Nonprobate Transferees against Creditors/ Elective Share
1. Except as otherwise provided by statute, a transferee of a nonprobate transfer is
subject to liability to any probate estate of the decedent for allowed claims against
decedents probate estate and statutory allowances to the decedents spouse and
children to the extent the estate is insufficient to satisfy those claims and allowances.
The liability of a nonprobate transferee may not exceed the value of nonprobate
transfers received or controlled by that transferee.
2. Notes
a. Except as otherwise provided covers the universal rule that life insurance
policies cannot be reached by creditors.
b. The estate goes after the transferee, not the creditors / elective sharer.
c. Probate estate has to be exhausted.
d. Only liable for the size of the gift.
UPC 6-102(c) / Order of Abatement of Nonprobate Transfers
1. Nonprobate transferees are liable for the insufficiency described in subsection (b) in
the following order of priority:
a. (1) a transferee designated in the decedents will or any other governing
instrument, as provided in the instrument;
b. (2) The trustee of a trust serving as the principal nonprobate instrument in the
decedents estate plan as shown by its designation as devise of the decedents
residuary estate or by other facts or circumstances, to the extent of the value of
the nonprobate transfer received or controlled.
c. (3) Other nonprobate transferees, in proportion to the values received.
2. Notes
a. (1) Allows testator to specify an order in will/instrument. Otherwise:
b. (2) A trust that a pour-over will has funded but not the pour-over provisions.
Other assets that got into the trust by inter vivos transfers.
c. (3) Everything else, proportionally.
T dies leaving probate assets of $100,000 and an inter vivos trust with $50,000 in assets that
was revocable during Ts lifetime. Ts creditors have claims of $90,000 against the estate. Can
Ts creditors reach the trust assets?
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1. No. Trust assets abate after the entire probate estate abates. Here, the probate estate
satisfies the $90,000.
viii. Same as #1, except that the creditors have claims of $200,000, instead of $90,000.
1. Yes. After the $100K probate estate abates in full, the creditors still are not satisfied, so
they can reach the trust.
ix. State Street Bank & Trust v. Reiser (Mass. 1979 / pg. 416) [creds can reach trust]
1. Held: State Street, which made a $75,000 unsecured loan to Reiser shortly before his
death, can reach the assets of a revocable trust that was made irrevocable by his death,
because the probate estate doesnt have the money.
a. Because the trust could reach them during life; it was revocable.
b. Since its revocable, he functionally owned it. If evading creditors were this
easy, everyone would do it. (Subject to fraudulent transfer rules).
c. Revocable Trusts and the Missing Will Presumption
i. UTC does not expressly resolve whether the missing will presumption attaches, but it allows
for the possibility whenever a will doesnt make its revocation provisions exclusive.
ii. UTC 602(c) / Revocation or Amendment of Revocable Trust
1. The settlor may revoke or amend a revocable trust:
a. (1) By substantial compliance with a method provided in the terms of the trust;
or
b. (2) If the terms of the trust do not provide a method or the method
provided in the terms is not expressly made exclusive, by:
i. A later will or codicil that expressly refers to the trust or specifically
devises property that would otherwise have passed according to the
terms of the trust
ii. Any other method manifesting clear and convincing evidence of the
settlors intent.
2. Upshot:
a. Express terms of the trust apply, when it specifies how to amend/revoke.
b. If the instruments provisions are not expressly made exclusive, an openended inquiry into settlors intent is made.
iii. In re Estate and Trust of Pilafas (Ariz. 1992 / pg. 414) [no missing trust presumption]
1. Held: A trust instrument that was in possession of the settlor prior to his death, and that
was missing after his death, must be given effect; the missing will presumption does
not apply here.
a. Because the trust contained explicit terms for how to revoke it (written notice to
the trustee), and these were not obeyed.
2. Under the UPC, the inquiry would continue along these lines: is the fact that the will is
missing clear and convincing evidence that he meant to revoke it?
a. Here, there was evidence that the settlor was meticulous and fastidious with his
records, and his will was also missing.
b. That might be enough to support revoking the trust, too.
d. Life Insurance and Revocation on Divorce
i. Under the Restatement (and thus on our exam), policyholders can successfully change a
life insurance beneficiary through their will.
1. The insurance company can interplead the money and walk away.
2. A life insurance company is not liable if it pays out to the named beneficiary.
3. This devolves the litigation onto the beneficiary named in the will and the one named
in the policy and saves the insurance company money.
ii. Cook v. Equitable Life Assurance Society (Ind. 1981 / pg. 420) [holding otherwise]
1. Held: Cooks life insurance policy, which was taken out during his first marriage and
named his first wife the beneficiary, must be paid out to the first wife, even though he
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III.

later divorced, got remarried, and specified in his will that his life insurance policy
should go to his second wife.
a. Cook had 14 years to change his life insurance policy, and failed to.
b. And because theres a social good when insurance companies, policyholders
and beneficiaries can rely on the express terms of an insurance policy.
2. This mostly just protects insurance companies.
e. Multiple-Party Bank/ Brokerage Accounts
i. UPC 6-211 / Ownership of Joint Accounts During Lifetime
1. During the lifetime of all parties, sums deposited into an account belong to the parties
in proportion to the net contribution of each, unless there is clear and convincing
evidence of a different intent. As between parties married to each other, in the absence
of proof otherwise, the net contribution of each is presumed to be an equal amount.
2. Notes
a. Need clear and convincing evidence to show that the money is a gift to the
other people on the account.
b. This reverses the common law rule, which presumed that each person on
the account owned the entirety. (In some states, its a per se rule.)
c. Different treatment for married couples.
d. This states the rights of each party, but leaves remedies to the law of the state.
e. Convenience accounts are used in the principal-agent relationship. No right
of survivorship; no ownership for the agent at all. Bank likely not liable when
agent drains the account.
ii. Varela v. Bernachea (Fl. 2005 / pg. 432) [traditional rule: presumes a gift]
1. Held: Bernachea may keep one-half of the joint bank account to which she was a joint
tenant, which bank account she cleaned out in full after her lover had a heart attack and
broke up with her, even though it was completely funded by her lover, and her lover
now said he did not intend the money as a gift.
a. Because the state had a presumption that money placed into joint accounts was
a gift.
b. This right is against the bank. The remedy as between each other was half.
2. The presumption was literally the reverse of the UPC: clear and convincing evidence
was required to show that it was not a gift. Evidence here:
a. Bernachea had a debit card to the joint account she cleaned out, but no
checkbook rights. (A dumb argument; a debit card is better than a checkbook.)
b. Varela hadnt understood the import of the joint account paperwork he filled
out. (Not credited; he was a former lawyer, and the bank officer explained in
Spanish what it meant.)
c. Thats probably not even enough to rebut under a presumption standard.
Pour-Over Wills and Revocable Trusts in Modern Estate Planning
a. A pour-over will is one which contains one provision: a residuary clause devising the entire estate to a
revocable trust. Typically, the testator will name the same trustee as the beneficiary of all of the
nonprobate transfers.
i. Allows people to do all their estate planning in one document: the revocable trust instrument.
ii. Instrument is amendable without bothering with will formalities.
iii. Instrument is amendable without individually amending each nonprobate instrument.
b. A testamentary trust is one that is created by the will. It carries restrictions that normal, inter vivos
trusts do not, and hence is a bad substitute. UPC 2-511(b) ensures that trusts referenced in wills are
not treated as testamentary; rather, the will adds assets to an existing inter vivos trust.
i. A testamentary trust doesnt come into existence until the court orders it so.
ii. Its administration is subject to court administration until it closes.
c. Various common-law doctrines posed problems for pour-over wills.
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d.

e.

f.

g.

h.

i. Unless validated by statute, by incorporation by reference, or by independent significance, a

pour-over devise is invalid because the beneficial devisees are not identified in a document
executed in compliance with the statutory formalities for a valid will.
1. This is the traditional rule. Its not our law.
ii. Incorporation by reference was not a good fix, because the trust instrument (1) had to be exist
when the will was executed and (2) could not be modified afterward.
iii. An event of independent significance (namely, the creation of a trust instrument) was not good
fixes, because trusts werent legally created unless they were funded (the res requirement); so,
if the trust depended on the will for funding, it didnt exist, and this doctrine failed.
iv. The UPC fixed this by statute.
UPC 2-511(a) / Authoring Pour-Over Wills Generally
i. A will may validly devise property to the trustee of a trust established or to be established (i)
during the Ts lifetime by the T or some other person, or (ii) at the Ts death by the Ts devise
to the trustee, if the trust is identified in the Ts will and its terms are set forth in a written
instrument, other than a will, executed before, concurrently with, or after the execution of the
Ts will.
ii. Notes
1. The identification requirement is similar to incorporation by reference doctrine.
2. Before, concurrently, or after allows for creation of trust whenever + free modification.
UPC 2-511(b) / Operative Terms are those of the Trust
i. Unless the Ts will provides otherwise, property devised to a trust described in subsection (a)
is not held under a testamentary trust of the T, but it becomes a part of the trust to which it is
devised, and must be administered and disposed of in accordance with the provisions of the
governing instrument setting forth the terms of the trust, including any amendments thereto
made before or after the Ts death.
ii. Notes
1. A command to do what the will says, i.e. fund the trust, whose terms control.
2. No ex ante funding requirement.
UPC 2-510 / Incorporation by Reference
i. A writing in existence when a will is executed may be incorporated by reference if the
language of the will manifests this intent and describes the writing sufficiently to permit its
identification.
1. Must be in existence.
2. Must be testators intent to incorporate it.
UPC 2-512 / Events of Independent Significance
i. A will may dispose of property by reference to acts and events that have significance apart
from their effect upon the dispositions made by the will, whether they occur before or after the
execution of the will or before or after the testators death. The execution or revocation of
another individuals will is such an event.
ii. This one of two workarounds available under common law. Its still a live doctrine, but no
longer needed to create a pour-over will.
Grand Theory of Abatement (Wills + Nonprobate Instruments Combined)
i. First, probate transfers expressly designated by testator. (Because abatement rules are
default, and testator can specify in his will.)
ii. Second, default rules of probate:
1. UPC 3-902(a) / Default Order of Abatement
a. Abatement occurs in the following order:
i. (1) property not disposed of by will
ii. (2) residuary devisees
iii. (3) general devisees
iv. (4) specific devisees.
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2. Abatement within each classification is proportional to the amounts of property each of

the beneficiaries would have received if full distribution of the property had been made
in accordance with the terms of the will.
3. Assets poured into a trust by a pour-over will are probate transfers.
iii. Third, nonprobate transfers expressly designated by testator. (Because abatement rules are
default, but probate always goes first. UTC 505(a).)
iv. Fourth (if testator is using a pour-over will/inter vivos trust as a unified estate plan), all
nonprobate transfers to the master inter vivos trust (i.e. stuff that didnt get there through
pour-over will).
v. Fifth, all other nonprobate transfers ratably. (If the master inter vivos trust/pour-over will is
not used, then just abate all nonprobate transfers ratably. Unless one expressly says otherwise.)
i. Hypotheticals / Cases
i. At time 1, T creates a trust. Later, at time 2, T creates a will giving property to the trust. At
time 3, T dies.
1. Valid under 510 (incorp. by ref); in existence, intent satisfied. Does need funds.
2. Valid under 511 (pour-over will)
3. Valid under 512, provided it was funded. If it wasnt, invalid.
ii. At time 1, T creates a will giving property to a trust. At time 2, T creates and funds the trust the
trust. At time 3, T dies.
1. Invalid under 510 not in existence.
2. Valid under 511. Trust can be created afterward. Funding doesnt affect this analysis.
3. Valid under 512. Trust can be created afterward, if its funded. Here, its funded.
iii. At time 1, T creates a will giving property to a trust. At time 2, T creates the trust. The trust is
unfunded during Ts lifetime.
1. Invalid under 510 trust not in existence when will executed.
2. Valid under 511 trust can be created before or after; funding doesnt affect analysis.
3. Invalid under 512. Trust can be created afterward, provided its funded. Here, its not.
iv. T creates a will giving property to a trust and also creates the trust in the will.
1. Invalid under 510 theres nothing to incorporate.
2. Invalid under 511 theres no external trust to be funded.
3. Invalid under 512 its not funded during life.
4. BUT: Valid testamentary trust. Terms are in the will; will satisfied formalities. Sections
510, 511, and 512 are all superfluous.
v. Clymer v. Mayo (Mass. 1985 / pg. 445) [rev. on div. applies to trust funded by pour-over]
1. While married to James, Clara Mayo set up the following instruments:
a. Pour-over will trust is beneficiary
b. Life insurance trust is beneficiary
c. Retirement plan trust is beneficiary
d. Inter vivos trust husband is life beneficiary
2. Clara and James were then divorced; Mayo only revised her life insurance policy,
leaving the following instruments:
a. Pour-over will trust is beneficiary
b. Life insurance Mayos daughter
c. Retirement plan trust is beneficiary
d. Inter vivos trust (now ex-)husband is life beneficiary
3. Held: The revocation on divorce statute applies to this inter vivos trust that was funded
by a pour-over will.
a. Because pour-over wills are designed to opt out of probate, not the subsidiary
law of wills.

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IV.

b. The subsidiary law of wills reflects centuries of experience furthering testators

likely intent; here, that likely intent is certainly not to give her ex-husband
almost her entire estate.
Considerations for Distributing Assets through a Revocable Trust
a. Lifetime
i. Expert property management by fiduciary
ii. Keeping title clear for married peoples separate property (i.e. asset partitioning)
iii. Avoiding income and gift taxes
iv. Planning for incompetency
b. After settlors death
i. Delays and direct costs of probate. Trust administration/distribution usually cheaper/faster.
ii. Creditors and probate statutes of limitations. Probate cuts them off faster.
iii. Publicity. Trust instruments are secret.
iv. Ancillary probate. If property is in another state, might need to do two probates.
v. Avoiding restrictions protecting family members. E.g. elective share. Rarely works.
vi. Choosing the law of another jurisdiction to govern. Like corporate internal affairs doctrine.
vii. Avoiding will contests. Trust beneficiaries might not even get to see the instrument.
viii. Estate taxation. Federal tax law usually treats them the same.
ix. Controlling a surviving spouses disposition. Rarely works; elective share as good as money

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LIMITATIONS ON TESTAMENTARY FREEDOM: PROTECTION OF THE SPOUSE AND CHILDREN

I.

Rights of the Surviving Spouse

a. Marital Property Systems
i. Separate Property
1. The theory is that each spouse owns what he or she earns.
2. During life, this holds true: the earner can deal with the assets as he or she pleases.
3. At divorce or death, it breaks down due to statutory and judicial doctrines aimed at
softening harshness:
a. Divorce: equitable distribution. Court ignores separate property rules and
assigns assets however is most fair.
b. Death: elective share. The surviving spouse can choose between the disposition
in the will and a mandatory minimum amount (usually 30%.) This makes it
impossible to disinherit your wife at death.
4. Most states use separate property. Our default = separate property state.
ii. Community Property
1. The theory is that the couple owns all the earnings as a community of two.
a. Property brought into the marriage is still separate property.
b. Gifts and devises received during the marriage are separate, too.
c. But earnings is the bulk of most peoples property, so its pretty fair.
2. At death, each party can dispose of exactly half, because they already own it. Thus,
theres no disinheriting the other spouse already owns it.
3. This is more in tune with modern sensibilities, but its only the system in a minority of
states. The divorce bar in separate property states likes the complexity too much.
4. The couples can opt out of community property, but its a strong default.
b. Intentional DisinheritanceElective or Forced Share
i. Rationales
1. Partnership theory. The marriage is a team.
a. This is the community property theory (so much so that community property
states dont need an elective share).
b. Because a marriage is a team effort, the surviving spouse deserves a part of the
estate regardless of whether or not he or she directly earned it.
c. But the elective share is usually 30%; a true partnership would use 50%.
2. Support theory. The surviving spouse needs support.
a. A lesser rationale, but still important. Can conflict with the partnership theory:
i. Surviving spouse is independently wealthy. In that case, no support is
needed, so disinheriting would be fine. But under partnership theory,
surviving spouse would be owed a portion anyway.
ii. Surviving spouse is really poor / sick / incompetent / whatever. In this
case, the surviving spouse would need more than the partnership theory
would call for. Maybe even the whole thing.
b. Since the elective share is less than half, support theory is operative, too.
3. An intent-defeating provision: surviving spouses gets a portion no matter what.
4. The elective share applies to all nonprobate transfers (for our class). Sullivan v.
Burkin (applying elective share to an inter vivos trust).
a. Because otherwise it would be trivial to disinherit spouses.
ii. Property Subject to the Elective ShareThe Net or Augmented Estate
1. UPC 2-202 / Elective Share is 50%
a. The surviving spouse of a decedent who dies domiciled in this state has a right
of election, under the limitations and conditions stated in this part, to take an
elective share amount equal to 50 percent of the value of the marital-property
portion of the augmented estate
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b. This contemplates three steps:

i. Calculate size of augmented estate. See UPC 2-203(a).
ii. Calculate marital property portion. See UPC 2-203(b).
iii. Multiply it by 50%. UPC 2-202.
c. After the elective share is calculated, there are two more steps:
i. Calculate the amount satisfied. See UPC 2-209(a)(1)(2)
ii. Calculate the deficiency. But this is simple subtraction.
2. UPC 2-203(a) / Calculating Augmented Estate
a. The value of the augmented estate consists of the sum of the values of all
property, whether real or personal, movable or immovable, tangible or
intangible, wherever situated, that constitute:
i. (1) the decedent's net probate estate;
ii. (2) the decedent's nonprobate transfers to others;
iii. (3) the decedent's nonprobate transfers to the surviving spouse; and
iv. (4) the surviving spouse's property and nonprobate transfers to others.
b. For the exam, nonprobate transfers include anything thats revocable and
ambulatory, and jointly held real estate. This includes general powers of
appointment, see page 810 and UPC 2-505(1)(A).
3. UPC 2-203(b) / Calculating Marital Property Portion
a. Follow this table.
If the decedent and the spouse
were married to each other:
Less than 1 year
1 year but less than 2 years
2 years but less than 3 years
3 years but less than 4 years
4 years but less than 5 years
5 years but less than 6 years
6 years but less than 7 years
7 years but less than 8 years
8 years but less than 9 years
9 years but less than 10 years
10 years but less than 11 years
11 years but less than 12 years
12 years but less than 13 years
13 years but less than 14 years
14 years but less than 15 years
15 years or more

The
percentage is:
3%
6%
12%
18%
24%
30%
36%
42%
48%
54%
60%
68%
76%
84%
92%
100%

4. UPC 2-209(a) / Calculating the Amount Satisfied and Deficiency

a. The amount satisfied equals:
i. The full value of probate transfers to the surviving spouse; plus
ii. The full value of nonprobate transfers to the surviving spouse; plus
iii. The marital property portion of surviving spouses own property and
transfers; plus
iv. The marital property portion of the decedents nonprobate transfers to
others.
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b. Subtract the amount satisfied from the elective share. Thats what spouse
is owed.
5. UPC 2-209(c)(d) / Abatement (mandatory)
a. Once we calculate a deficiency under the elective share, the decedents probate
and nonprobate transfers to others abate ratably to pay the surviving spouse.
b. This is a special, mandatory abatement rule; everything goes proportionally.
6. Examples:

Assets
Probate Estate to Others
Nonprobate Transfers to
Others
Probate/Nonprobate Transfers
to W
W's property
TOTAL
AMOUNT SATISFIED
DEFICIENCY
*H & W married 5.5 years

Assets
Probate Estate to Others
Nonprobate Transfers to
Others
Probate/Nonprobate Transfers
to W
W's property
Total
Amount Satisfied
Deficiency
*H & W married 3.5 years

Augmented
Estate
$300

Marital
Property
Portion =
30%*
$90

Elective Share
Portion = (1/2
MPP)
$45

$100

$30

$15

$0
$200
$600

$0
$60
$180

$0
$30
$90
$60
$30

Augmented
Estate
$100

Marital
Property
Portion =
18%*
$18

Elective Share
Portion = (1/2
MPP)
$9

$100

$18

$9

$50
$400
$650

$9
$72
$117

$5
$36
$59
$122
-$64

iii. Premarital Agreements

1. UPC 2-213 / Waiver of Elective Share/Intestacy (Pre- and Post-Nuptial Agreements)
a. (a) The right of election of a surviving spouse and the rights of the surviving
spouse to homestead allowance, exempt property, and family allowance, or any
of them, may be waived, wholly or partially, before or after marriage, by a
written contract, agreement, or waiver signed by the surviving spouse.
b. (b) A surviving spouse's waiver is not enforceable if the surviving spouse
proves that:
i. (1) he did not execute the waiver voluntarily; or
ii. (2) the waiver was unconscionable when it was executed and, before
execution of the waiver, he:
1. (A) was not provided a fair and reasonable disclosure of the
property or financial obligations of the decedent;
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2. (B) did not voluntarily and expressly waive, in writing, any right
to disclosure of the property or financial obligations of the
decedent beyond the disclosure provided; and
3. (C) did not have, or reasonably could not have had, an adequate
knowledge of the property or financial obligations of the
decedent.
c. (c) An issue of unconscionability of a waiver is for decision by the court as a
matter of law.
d. (d) Unless it provides to the contrary, a waiver of all rights [waives elective
share, homestead allowance, exempt property, family allowance, and intestate
inheritance, and pre-prenuptial wills].
i. That is: it waives everything.
ii. But if testator puts the surviving spouse in the will/nonprobate transfer
after the prenup is signed, then the surviving spouse can take anyway.
iii. Its up to the spouse to actually disinherit; this is just a waiver of the
spouses right to force an inheritance. Cf. will contracts.

II.

iv. Notes
1. If it wasnt signed voluntarily, its automatically voided.
2. If it was signed voluntarily, its only void if:
a. Its unconscionable; and
b. No reasonable disclosure; and
c. No voluntary waiver of right of disclosure; and
d. No actual/constructive knowledge of the extent of the decedents property.
3. This is very favorable to prenuptial agreements. Try to validate them on exam.
v. Unconscionability has procedural and substantive aspects:
1. Procedural: no counsel, a short deadline, etc.
2. Substantive: its a ripoff
3. If the surviving spouse had independent counsel, theres almost a presumption of
validity. Because if theres counsel, it doesnt look procedurally unconscionable.
4. Merely threatening not to marry is not unconscionability.
vi. Disclosure
1. A schedule of all the property and values works; thats full disclosure.
2. But thats not necessary. Decedent must give enough information to disclose
nature, extent, and value of the property.
vii. Reece v. Elliott (Tenn. 2006 / pg. 503) [waiver upheld / disclosure]
1. Held: A prenuptial agreement that waived the elective share is valid, even though the
value of 1,687 shares of very valuable stock wasnt disclosed, because:
a. Surviving spouse (SS) reviewed the agreement with counsel;
b. SS was given a list of all the property, some of which had values;
c. The list of property was sufficient for SS to tell that the guy was rich;
d. She testified that she didnt care what the missing values were, because she
knew she wouldnt get it.
2. Important that the existence of the shares was disclosed.
Rights of the Surviving Children
a. Backdrop
i. Testators may disinherit their kids in every state except Louisiana. It invites will contests.
ii. Since its permissible, a question is raised every time a will doesnt expressly provide for a
child who was born after a will was executed: did testator really intend to disinherit him?
iii. This is the problem of the unintentionally disinherited child.
b. UPC 2-302 / Omitted Afterborn Children (ABC)
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i. (a) Except as provided in subsection (b), if a testator fails to provide in his will for any of his
children born or adopted after the execution of the will, the omitted after-born or after-adopted
child receives a share in the estate as follows:
1. (1) If the testator had no child living when he executed the will, an omitted after-born
or after-adopted child receives a share in the estate equal in value to that which the
child would have received had the testator died intestate, unless the will devised all or
substantially all of the estate to the other parent of the omitted child and that other
parent survives the testator and is entitled to take under the will.
a. An only child takes as though testator were intestate, unless:
i. The decedent left everything to his spouse, who is the kids parent.
ii. This assumes that the natural parent will care for the kid, so the kid
doesnt need his own share.
iii. The sequence of events this exception contemplates is (1) a married,
childless person (2) writes a will naming his spouse as the sole
beneficiary, (3) then has a kid, and doesnt update the will, then (4) dies.
b. So the kid only takes when theres a remarriage.
2. (2) If the testator had one or more children living when he executed the will, and the
will devised property or an interest in property to one or more of the then-living
children, an omitted after-born or after-adopted child is entitled to share in the testator's
estate as follows:
a. (A) The portion of the testator's estate in which the omitted after-born or afteradopted child is entitled to share is limited to devises made to the testator's
then-living children under the will.
b. (B) The omitted after-born or after-adopted child is entitled to receive the share
of the testator's estate, as limited in subparagraph (A), that the child would have
received had the testator included all omitted after-born and after-adopted
children with the children to whom devises were made under the will and had
given an equal share of the estate to each child.
c. (C) To the extent feasible, the interest granted an omitted after-born or afteradopted child under this section must be of the same character, whether
equitable or legal, present or future, as that devised to the testator's then-living
children under the will.
d. (D) In satisfying a share provided by this paragraph, devises to the testator's
children who were living when the will was executed abate ratably. In abating
the devises of the then-living children, the court shall preserve to the maximum
extent possible the character of the testamentary plan adopted by the testator.
c. UPC 2-302(b) / When an Omitted ABC Doesnt Take
i. But an omitted ABC does not take if:
1. (1) it appears from the will that the omission was intentional; or
2. (2) the testator provided for the omitted after-born or after-adopted child by transfer
outside the will and the intent that the transfer be in lieu of a testamentary provision is
shown by the testator's statements or is reasonably inferred from the amount of the
transfer or other evidence.
ii. How do you intentionally omit an unborn child? If I have a kid after I write this, he doesnt
take would do it. I suppose a detailed, coherent scheme that generally shows a certain
heartlessness toward family would do it.
d. UPC 2-302(c) / Omitted Children Who Were Thought to be Dead
i. (c) If at the time of execution of the will the testator fails to provide in his will for a living
child solely because he believes the child to be dead, the child is entitled to share in the estate
as if the child were an omitted after-born or after-adopted child.
e. UPC 2-302(d) / Omitted ABC Abatement
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i. In satisfying a share provided by subsection (a)(1) (no children living at execution), devises
made by the will abate under Section 3-902.
f. Notes
i. Under (a)(2), the OABCs gift should be similar in size and kind to what non-omitted
children got.
1. The pool of assets is limited to what the other kids actually got.
2. The omitted ABC gets an equal share, even if the other kids did not.
3. The omitted ABCs share should be similar in character (money if money; etc.)
4. The other childrens shares abate ratably.
ii. If those kids got nothing, the omitted ABC gets nothing. This makes sense; we generally
assume testators intent is the same as to all children.
iii. Note that this abatement rule differs from the normal abatement rule.
g. Hypotheticals
i. At the time T makes a will, she has two children living, A and B. In her will, T gives $100k in
cash to her husband, $60k in cash to A and $30k in cash to B. T later gives birth to C. T then
dies.
1. C gets $30K; A ends up with $40K and B ends up with $10K. 2-302(a)(2).
ii. Same as #1, except that T gives A a piece of land worth $60k and B $30k in cash.
1. Court is supposed to do bequests of same character. Well, here theyre flatly
dissimilar. Court will probably order the land sold and distribute the cash, 40-20-30,
as above.
iii. Same as #1, except that T told her lawyer shortly before her death, I really hate that bum C.
Im glad Im not giving him anything in my will.
1. C gets $30K. No extrinsic evidence; intent to disinherit must be in the will.
iv. Same as #1, except that T set up a 529 college savings plan for C with $25k in it. She did not
set up a similar account for A or B.
1. The default in this situation is C gets $30K. However, this might be a nonprobate gift
in lieu of a probate gift under (b)(2). Its similar in size to Bs gift, and the discrepancy
between A and B already demonstrates that testator is deliberately playing favorites.
The problem is that a college savings account isnt all that testamentary; its limited
to one specific use. The alternative, however, gives C $55K, A $40K, and B $20K. It
would seem to defeat testators intent to give A the biggest bequest, when the testator
appeared to intend he gets the smallest. I say hes cut off and limited to the college
savings plan, especially since Langbein says that paying for college is the chief means
of passing wealth through generations nowadays.
v. Same as #1, except that T gave nothing to A or B and gave everything to her husband.
1. C gets nothing. This is covered by (a)(2) if existing children dont take, then omitted
ABCs dont take. But even if C were an only child he wouldnt take the will gave
everything to Cs natural parent, which prevents C from taking under (a)(1), too.
h. Gray v. Gray (Alabama 2006 / pg. 528) [omitted ABC + revocation on divorce]
i. Held: Decedents son may not take under the pretermitted child statute, because decedents
will devised everything to the then-wife (i.e, when will was executed, they were married), who
was the sons natural parent.
1. This was so even though a revocation on divorce statute actually cut off the wife.
2. This defeats the policy rationale that its okay to cut off a kid when providing for the
wife when the wife is the kids mom and will take care of the kid.
3. But there was also a trust floating around that was executed as part of the divorce kid
might be okay.

Page 49 of 75

TRUSTS
I.

II.

Introduction
a. The Tripartite Relationship
i. Settlor-Trustee
1. Settlor transfers property to the trustee, who has legal title to them.
2. Trustee promises to manage the property for the benefit of the beneficiaries.
ii. Trustee-Beneficiary
1. The trustee administers and invests the trust property on behalf of the beneficiary, and
distributes the trust property directly to the beneficiary.
2. The beneficiary gets the right to sue for breach of fiduciary duties.
iii. Settlor-Beneficiary
1. Settlor thus gives the beneficiary the benefits of ownership (equitable title).
2. Beneficiary is relieved of the burdens of managing it.
b. Trustee Functions
i. Investment. Initial selection of securities and other assets. Continual monitoring of invests to
ensure theyre still suitable. Reinvesting and voting share when necessary.
ii. Administration. Accounting, reporting, and paying taxes. Accounting and reporting are owed
to the beneficiary; taxes to the government.
iii. Distribution. Transferring assets to the beneficiary. This can be mandatory and mechanical, or
it can require the trustee to exercise discretion.
iv. Custodial. Trustee owns the assets in his name. This differs from corporations, where the
corporation holds title. Trustee holds title.
c. Third-Party Rights and Asset Partitioning
i. Creditors of the trust can only reach trust property. They cannot reach the trustees personal
property or the beneficiarys personal property.
ii. Creditors of the trustee can only reach the trustees personal property. They cannot reach trust
property (and obviously cannot reach beneficiarys property).
The Required Elements of Trust Creation
a. Overview
i. UTC 401 / Trust Creation
1. A trust may be created by:
a. (1) Transfer of property to another person as trustee during the settlors lifetime
or by will or other disposition taking effect upon the settlors death;
b. (2) Declaration by the owner of property that the owner holds identifiable
property as trustee; or
c. (3) Exercise of a power of appointment in favor of a trustee.
2. This is like the actus reus requirements what acts a settlor does to create a trust.
3. Whether settlor also has the requisite mens rea and meets other technical elements
is addressed by UTC 402(a).
4. Trusts are revocable by default; need to be expressly made irrevocable. UTC
602(a).
5. A will can revoke a revocable trust either expressly or by disposing of property
contrary to the trust, unless a trust expressly says otherwise. UTC 602(c)(2)(A).
ii. UTC 402(a) / Elements of a Valid Trust
1. A trust is created only if:
a. The settlor has capacity to create a trust;
b. The settlor indicates an intention to create a trust
c. The trust has a definite beneficiary; but definiteness is not required if it is:
i. a charitable trust;
1. These are enforced the attorney general.
ii. a trust for the care of an animal
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1. These are enforced by privately named forcers.

iii. noncharitable trusts with designated enforcers, as indicated in 409
1. These are enforced by privately named forcers.
d. The trustee has duties to perform; and
e. The same person is not the sole trustee and sole beneficiary.
iii. Res. (3rd) Property: Wills &C. 8.1 / Capacity Reprise (with focus on trusts)
1. (a) A person must have mental capacity in order to make or revoke a donative transfer.
2. (b) [Revocable Trusts] Testator must be capable of knowing and understanding in a
general way:
a. [1] the nature and extent of his or her property
b. [2] the natural objects of his or her bounty
c. [3] the disposition that he or she is making of that property, and must also be
capable of
d. [4] relating these elements to one another and forming an orderly desire
regarding the disposition of the property.
3. (c) [Irrevocable Trusts] Same as (b), and the donor must also be capable of
understanding the effect that the gift may have on the future financial security of the
donor and of anyone who may be dependent on the donor.
iv. Trust Validity Hypotheticals
1. A transfers assets in trust to B to hold for the benefit of A.
a. Thats fine. Settlor can also be beneficiary if theres an independent trustee.
b. But you cant do this with a spendthrift trust (in UTC states, anyway).
2. A transfers trust to A to hold for the benefit of B.
a. Thats fine. Settlor can also be trustee if theres an independent beneficiary.
3. A declares himself trustee of assets to hold for the benefit of A.
a. Invalid trust. One person cannot be sole trustee and sole beneficiary. This is
outright, fee simple ownership.
4. A transfers assets in trust to B to hold for the benefit of B.
a. Invalid trust. One person cannot be sole trustee and sole beneficiary. B owns
in, fee simple; legal and equitable title merger.
5. A transfers assets in trust to B to hold for the benefit of B and C.
a. Valid trust. Because theres an independent beneficiary, legal and equitable title
do not merge. B owes fiduciary duties to someone else, namely C.
6. A declares himself trustee of assets to hold for the benefit of A and B.
a. Valid trust. Theres an independent beneficiary.
b. But you cant do this with a spendthrift trust (in UTC states, anyway).
v. Grand Theory of Trying to Validate Gifts in Court
1. Argue it was part of a will.
a. Need intent + formalities or harmless error rule.
2. Argue it was an inter vivos gift.
a. Needs to happen during lifetime.
3. Argue it was a trust.
a. Can be before or after death, but needs intent + property + definite beneficiary.
b. Intent Requirement
i. Trust creation follows intent of the settlor. A settlor doesnt have to use magic words (trust,
beneficiary) to create a trust. If the settlors intent is functionally to create a trust, a trust is
created.
ii. A trust does not fail for want of a trustee. If a trust was intended, but settlor didnt name one,
the court will appoint one. Lux v. Lux.
1. Testamentary trust usually the executor.
2. Non-testamentary trust dont know. Not sure how this would even come up. A deed
drawn up by a non-lawyer that functionally describes a trust relationship?
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3. Traditionally, testamentary trusts had to satisfy formalities.

iii. Oral trusts are fine. Jimenez v. Lee (money was transferred, and donor said its for educational
purposes).
1. The purpose of the gift will become the limitations on the trustee.
iv. Lux v. Lux (Rhode Island 1972 / pg. 557) [intent test / no magic words]
1. Held: Philomenas will creates a valid testamentary trust, despite not using those
words, because the arrangement it contemplated was that of a trust:
a. 2. [Residue goes to her grandchildren in equal parts.]
b. 3. [But any real estate in the residue] shall be maintained for the benefit of
said grandchildren and shall not be sold until the youngest of said
grandchildren has reached twenty-one years of age.
c. 4. [If sale of real estate become necessary, sell to a family member.]
2. Its actually pretty close to magic words. Maintained for the benefit of X plus
explicit strings attached = intent to make a trust.
v. Jimenez v. Lee (Oregon 1976 / pg. 558) [intent prong / custodian vs. trustee]
1. Held: Money transferred to Lee and his daughters is held in trust by Lee for the
purpose of furthering the daughters education, and not in custodianship, which is how
Lee opened the accounts.
a. Because the donors, Lee, and his daughters all acknowledged the gifts had been
made for their education (Lee had even said at one point it was held in trust).
b. Closing the original accounts and reopening them as custodian for
[daughters] is an illegal attempt to broaden his powers.
2. Custodianship is broader for two reasons:
a. He can use the assets at his absolute to discretion to generally benefit the
beneficiary (no educational requirement); and
b. Theres no duty to account.
vi. Ann Landers problem page 561
1. The wife is a co-settlor, so it cannot be revoked unilaterally, nor can the terms of the
trust be changed unilaterally.
2. Wife is also a co-trustee, and has a duty to try to stop self-dealing. Standard is
negligence, and here, she probably has actual knowledge.
3. Sue him for an accounting. Seems likely he took the assets, which would be selfdealing, and a money judgment.
c. The Res Requirement
i. Settlor must transfer a legally cognizable interest in property to the trust for it to be effective.
1. This is a common law requirement that the UTC adopted. Lots of things count:
a. Money, no matter how small an amount;
b. Contingent remainders
c. Leaseholds
d. Royalties
e. Life insurance policies
f. Stock
2. This is a little tortured. Stock counts, but my profits in a business dont. Formally,
future profits are not a legally cognizable interest. Functionally well, stock is just a
way to transfer profits in a business.
ii. Res. (3rd) Trusts 41 / The Res Requirement
1. An expectation or hope of receiving property in the future, or an interest that has
not come into existence or has ceased to exist, cannot be held in trust.
iii. Unthank v. Rippstein (Texas 1964 / pg. 569) [future monthly payments res]
1. Held: Crafts handwritten notation bind[ing his] estate to make the $200 monthly
payments provided for [on the letter where he was scribbling] does not create a trust,
because it does not transfer any trust property.
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a. The court worries about what the trust corpus would be: the entire estate, held
in trust, for these piddling little payments? The intent wasnt clear enough.
b. This is just a promise to pay money in the future, but doesnt say where the
money comes from.
c. The court had to deny this was a holographic will. Thus, the question whether
this was a trust was narrowly presented.
2. Today, this would likely work as a holographic will, which can indeed devise monthly
payments like this. The executor would hold the appropriate amount ($12,000) in a
quasi-trust capacity and dole it out over the years.
iv. Brainard v. Commissioner (7th Cir. 1937 / pg. 572) [future trading profits res]
1. Held: Brainards oral declaration that he held the expected profits from a year of
trading he was about to undertake, and that any losses he would bear personally, does
not successfully create a trust, because it doesnt transfer any existing property.
a. He wasnt transferring the actual stock; he was saying, if I make money, its in
trust.
b. It was a tax dodge his rate was higher than the beneficiaries rates would be.
2. This would seem to come out the same way under the Restatement. Its an expectation
or hope of receiving property in the future.
v. Res Hypotheticals
1. Jack orally declares himself trustee for one year of all the lumber in his lumber store,
with any profits from the lumber stores operations to go to Jill as beneficiary of the
trust.
a. Valid res: the lumber is the trust property. The profits requirement is just a limit
on what can be distributed, like principal vs. income.
2. Jack orally declares himself trustee for one year of all profits from his lumber store
operations. The profits go to Jill as beneficiary.
a. Invalid res. This is a mere expectation or hope of property, in Restatementspeak. Its also Brainard all over again. Also not a will or an inter vivos gift.
3. Jack sends Jill a signed letter saying, I hereby give you the profits from my lumber
store for the next year.
a. Invalid res; just writing it doesnt make it legally transferrable. Probably not a
will; it doesnt intend to pass stuff at death, but rather during life. Might be an
inter vivos gift, but insofar as its a gift promise, its unenforceable under
normal contract law.
4. Jack orally tells Jill that he will give her the profits from his lumber store for the next
year.
a. Invalid res. Same as #3.
5. Jack says to Jill: I give you five percent of the profits on my patented invention if
there are any such profits.
a. Valid res. Royalties are sufficiently definite theyre legally transferrable, see
pg. 569 even if they end up being zero.
d. Beneficiaries
i. UTC 402(a)(3) / Definiteness (Reprise)
1. The trust must have a definite beneficiary; but definiteness is not required if it is:
a. a charitable trust;
b. a trust for the care of an animal
c. noncharitable trusts with designated enforcers, as indicated in 409
2. Definiteness is fairly demanding. Must be at least one definite beneficiary.
a. Naming someone is helpful.
b. Naming a definite, manageable class is fine my family. We can tell to a
high degree of certainty who the members are.
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ii.

iii.

iv.
v.

vi.

vii.

viii.

c. My friends does not count. Clark v. Campbell. Would count if had identified
friends by name or given some standard that could be objectively applied.
UTC 402(c) / Power to Select From Indefinite Class
1. A power in a trustee to select a beneficiary from an indefinite class is valid. If the
power is not exercised within a reasonable time, the power fails and the property
subject to the power passes to the person who would have taken the property had the
power not been conferred.
2. This rule only applies if there is at least one definite beneficiary under 402(a)(3).
Res. (Trusts) 44 / One Beneficiary Must be Ascertainable
1. A trust is not created, or if created will not continue, unless the terms of the trust
provide a beneficiary who is ascertainable at the time or who may later become
ascertainable within the period and terms of the rule against perpetuities.
Res. (Trusts) 45 / Class of Beneficiaries
1. The members of a definite class of persons can be the beneficiaries of a trust.
2. Family, issue, descendants, even relations (may be construed narrowly). Not friends.
Clark v. Campell (NH 1926 / pg. 579) [indefinite class is invalid]
1. Held: A will devising property in trust for the benefit of settlor/testators friends is
invalid, because there is no objective way to tell who is in the class.
2. Held: A will that purports to devise property in trust to trustees devises the property in
fee simple to the erstwhile trustees, if the trust fails for some reason like definiteness.
UTC 408 / Trust for Care of an Animal
1. (a) A trust may be created to provide for the care of an animal alive during the settlors
lifetime. The trust terminates upon the death of the animal.
2. (b) A trust authorized by this section may be enforced by a person appointed in the
terms of the trust or, if no person is so appointed, by a person appointed by the court. A
person having an interest in the welfare of the animal may request the court to appoint
a person to enforce the trust or to remove a person appointed.
3. Upshot
a. Animal trusts are valid. They terminate when the animal dies.
b. They use a trust enforcer scheme, like charitable trusts. Either the
instrument or the court must name an enforcer.
c. This overturns the common-law rules by which animal trusts werent valid. The
problem is that animals cant sue; thus; trustee owed no enforceable duties.
d. The trust enforcer scheme fixes this no-enforceable-duties problem.
In re Searights Estate (Ohio 1950 / pg. 582) [animal trusts / honorary trusts]
1. Held: A devise to Florence of a dog (Trixie), coupled with a instructions that $1,000 be
deposited and used to pay Florence for the care of the dog, is a valid animal trust.
2. Not much reasoning here, other than, its harmless, so why not? No enforcer specified
UTC 409 / Noncharitable Trust Purposes Without Ascertainable Beneficiaries
1. (1) A trust may be created for a noncharitable purpose without a definite or definitely
ascertainable beneficiary or for a noncharitable but otherwise valid purpose to be
selected by the trustee. The trust may not be enforced for more than 21 years.
2. (2) A trust authorized by this section may be enforced by a person appointed in the
terms of the trust or, if no person is so appointed, by a person appointed by the court.
3. Notes
a. Same enforcer scheme as pet trusts.
b. Mostly used when an unsophisticated testator gives something for the care and
maintenance of, e.g., a cemetery. Limited utility due to 21-year period.
c. Sophisticated people will use a business organization if they want to further a
noncharitable purpose.
4. A charitable trust usually benefits some vulnerable class or some nebulous class at
large. A noncharitable trust would benefit something else, e.g. a cemetery.
Page 54 of 75

III.

e. No Writing Requirement
i. UTC 407 / Oral Trusts
1. Except as required by a statute other than this Code, a trust need not be evidenced by a
trust instrument, but the creation of an oral trust and its terms may be established
only by clear and convincing evidence.
a. Morley: Once existence of oral trust is proved by clear and convincing
evidence, court will grope around for terms.
b. Note that this is contrary to actual terms of UTC.
c. All the elements res, intent, etc., see UTC 401402(a) must still be
met; this merely goes to the writing.
ii. Will Comparison
1. Writing is the irreducible will requirement. Even with the harmless error rule, there are
no oral wills.
2. And yet oral trusts can pass property at death. The only hurdle is an evidentiary one
clear and convincing evidence required.
iii. In re Estate of Fournier (Maine 2006 / pg. 589) / [oral trust / clear & convincing evidence]
1. Held: George Fournier successfully created an oral trust over $400K on behalf of his
sister, Faustina Fogarty, on the following facts:
a. [Evidence for] He delivered $400K to Madore;
b. [Evidence for] He instructed Madore and his wife that it was to go Fogarty,
who needed the money;
c. [Evidence for] He instructed Madore and his wife that it was not to go to his
other sister, Juanita Flanagan, because she was rich;
d. [Evidence against] However, he told Flanagans daughter that the money was
for both sisters.
2. Epilogue
a. It turns out that Fournier had Madore sign a handwritten note promising to
reimburse Fogarty, Flanagan, and Curtis King (his brother) on Fourniers
death. Seems like Madore forgot.
b. With this new fact, coupled with the fact that Fourniers will divided his residue
between them, the court held that the $400K should be split equally among the
three.
c. Kings name was actually crossed out. This would have successfully modified
the will and should have successfully modified the trust. Curious.
Rights of the Beneficiary to Distributions from the Trust
a. Overview
i. Since trustees of irrevocable trusts owe their duties to the beneficiaries, the settlors interest is
not accounted for in trust litigation, unless the settlors interest and beneficiarys interest
somehow align.
1. Thus, if the trustee ignores the terms of a trust for the benefit of a beneficiary, who is to
complain? Not the settlor.
2. If the trust has present and future interests, however, the remainder beneficiary can
enforce the terms of the trust. This tension is the source of much trust litigation.
ii. Types of trusts
1. A mandatory trust strips trustees of discretion, and gives beneficiaries something like a
debt claim. The trustee must pay a fixed amount (or a variable amount as calculated by
a fixed formula) at appointed times.
2. A discretionary trust is one in which the trustee has discretion in how much to
distribute or when to make distributions. Settlors like them for two reasons:
a. Postponement. Allows the settlor to put off difficult decisions how much to
give, who to give it to, whether principal is available until after hes dead.
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b.

c.

d.

e.

b. Delegation. A discretionary trust can better respond to changed circumstances if

someone has discretion to decide how to act in light of needs/circumstances.
iii. Types of discretionary trusts
1. Spray trust. Trustee has discretion to distribute all income to a broad group, e.g. A, his
wife, his kids, in whatever amounts he determines.
2. Sprinkle trust. Trustee has discretion to add income to the principal, rather than
distribute all of it.
3. Support trust. Trustee has discretion only to make distributions as necessary for the
beneficiarys support and maintenance.
iv. Levels of discretion.
1. Simple discretion. (I.e., it doesnt sale sole, absolute, etc.) Court will not interfere
unless trustee acts reasonably and in good faith. (Objective / subjective test).
2. Absolute discretion. Courts dont enforce these literally; if a trustee actually had
absolute discretion, he would owe no duties to his fiduciaries, and would own in fee
simple.
UTC 814(a) / Trustees Discretionary Powers
i. Notwithstanding the breadth of discretion granted to a trustee in the terms of the trust,
including the use of such terms as absolute, sole, or uncontrolled, the trustee shall
exercise a discretionary power in good faith and in accordance with the terms and purposes of
the trust and the interests of the beneficiaries.
1. Same as common law rule; no absolute discretion. Court retains some equitable
powers of enforcement.
2. Good faith cannot be waived. However, negligence certainly can be.
UTC 1008(a) / Limits of Exculpatory Clauses
i. A term of a trust relieving a trustee of liability for breach of trust is unenforceable to the extent
that it:
1. (1) Relieves the trustee of liability for breach of trust committed in bad faith or with
reckless indifference to the purposes of the trust or the interests of the beneficiaries; or
2. (2) Was inserted as the result of an abuse by the trustee of a fiduciary or confidential
relationship to the settlor. See (b).
ii. Upshot
1. Not as favorable to the trustee as it could be; can waive negligence, but nothing higher.
2. Cannot waive bad faith, knowing conduct, or reckless indifference.
UTC 1008(b) / Exculpatory Clauses Inserted by Trustee-Draftsman
i. 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.
ii. This is a presumption against upholding exculpatory clauses inserted by the drafter.
Upheld on a showing of two elements by trustee:
1. Fair; and
2. Communicated to settlor.
Support trusts
i. Trustee has an affirmative duty to inquire as to beneficiarys needs.
ii. Trustee needs to pay attention when he gets notice that beneficiary does need something.
iii. Dueling inferences re: beneficiarys other sources of income
1. Res (3rd): When instrument is silent, beneficiarys other sources of income should
be considered by trustee in connection with distributions under a support trust.
2. Restatement (Second): When instrument is silent, beneficiarys other sources of
income should not be considered by trustee in connection with distributions under a
support trust.
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IV.

f. Marsman v. Nasca (Mass. 1991 / pg. 598) [support trusts / duty to inquiry / exculpatory clauses /
constructive trusts / bona fide purchasers for value]
i. Sara Marsman created a testamentary trust with discretionary and mandatory provisions for
the stated purpose of providing her husband with reasonable maintenance, comfort, and
support. The mandatory provision required trustee to pay Cappy the trust income quarterly;
the discretionary provision provided that, at the trustees absolute discretion, he could
distribute principal to support him.
ii. Held: the trustee breached his fiduciary duty by failing to make the distributions necessary to
support Cappy, on the following facts:
1. Farr knew Cappy was out of money, because Cappy told him so. Farr responded with a
small principal distribution and a letter asking for Cappy to state his reasons in detail.
Farr never followed up and Cappy never responded.
2. Farr got confirmation that Cappy was out of money when Saras daughter/Cappys
stepdaughter Sally retained Farr in connection with buying Cappys house at a cut rate
the price of the mortgage and utilities, with Cappy maintaining a legal life estsate.
iii. Held: The exculpatory clause, which provided that no trustee shall ever be liable except for
his own willful neglect or default is valid and covers this breach, since Farr was negligent at
worst; Farr is thus not personally liable. (Even though Farr drafted the instrument; under the
UTC, this would come out the other way.)
iv. Held: The appropriate remedy is a constructive trust equal to what Farr should have paid
Cappy, had he appropriately responded to Cappys needs. The house is gone, however: Sally
and her husband were bona fide purchasers for value, i.e.:
1. They paid a fair price;
2. They had no notice of the breach.
a. Query whether this is right.
3. This rule exists because otherwise no one would ever deal with trusts.
Rights of the Beneficiarys Creditors
a. Overview
i. Three basic remedies for beneficiary creditors
1. Seize beneficiarys personal assets.
a. This isnt trust law; its debtor-creditor law. Creditors can generally do this.
b. The question of whether a creditor can reach trust assets is raised when the
personal assets arent sufficient, but there is money lurking in a trust.
2. Attachment of the trust assets.
a. This is a court order to the trustee that requires the trustee to distribute trust
assets to the creditor before the beneficiary.
b. If it is a discretionary trust, the trustee will just not distribute anything and
avoid paying off creditors. (And avoid a breach of fiduciary duty lawsuit.)
c. What usually happens is the beneficiary negotiates some discounted settlement
with the creditors, who then get a piece of the debt satisfied.
d. Otherwise creditors would get nothing. Still sort of distasteful.
3. Forced distribution of the trust assets.
a. This is the holy grail; under it, creditors dont need to wait for a distribution /
negotiate a discounted settlement.
b. Its also the rarest; even at common law, it was hard to reach trust assets.
ii. Creditors rights at common law

Mandatory
distribution

Right to seize
beneficiary's
personal assets

Right to attach
distributions

Right to force trust

distributions

Yes

Yes

Yes

Page 57 of 75

Support trust
Yes
Yes
No*
Pure
discretionary
trust
Yes
Yes
No
Spendthrift trust
Yes
No
No
*Except for "suppliers of necessaries," spouses, former spouses, and children

b. Discretionary (and Protective) Trusts

i. UTC 501 / The Basic Rule of Creditors Rights
1. To the extent a beneficiarys interest is not subject to a spendthrift provision, the court
may authorize a creditor or assignee of the beneficiary to reach the beneficiarys
interest by attachment of present or future distributions to or for the benefit of the
beneficiary or other means.
2. Notes
a. Spendthrift trust no attachment or forced distribution.
b. For the benefit covers the scenario by which the trustee directly pays the
beneficiarys bills without actually distributing the assets to him. It follows
beneficial ownership, not legal ownership.
c. Other means means that the creditor can compel distribution.
d. The broad language of this rule is hugely narrowed by subsequent rules.
ii. UTC 504(b) / Creditors Rights for Discretionary Trusts / No General Right to Compel
1. Whether or not a trust contains a spendthrift provision, a creditor of a beneficiary may
not compel a distribution that is subject to the trustees discretion, even if:
a. (1) the discretion is expressed in a standard of distribution
b. (2) the trustee has abused the discretion.
2. Notes
a. This nearly aligns the UTC with the common law, but collapses the distinction
between support trusts and pure discretionary trusts. Treated the same.
b. No compelling; attachment is the general remedy for arms-length creditors.
iii. UTC 504(c) / Spouse/Child Right to Compel when Trustee Has Violated a Duty
1. To the extent a trustee has not complied with or has abused a standard of discretion:
a. (1) a distribution may be ordered to satisfy a judgment or court order against
the beneficiary for support or maintenance of the beneficiarys child, spouse or
former spouse
b. (2) the court shall direct the trustee to pay to the child, spouse, or former spouse
such amount as is equitable under the circumstances but not more than the
amount the trustee would have been required to distribute to or for the benefit
of the beneficiary had the trustee complied with the standard or not abused the
discretion.
2. Notes
a. This is essentially alimony or child support.
b. This sort of reopens the common law support/pure discretionary trust
distinction: distributions can be compelled to children, spouses, and former
spouses, when the trustee has breached/abused his discretion. But only sort
of, because while the spouse can doctrinally get a distribution from a pure
discretionary trust, practically she cannot beneficiary can only compel $0.
c. This does abolish the common law supplier of necessaries rule, however;
they still cant compel distributions.
d. The aggrieved spouse/child can only force the maximum amount that the
beneficiary himself could force, when the trustee is in breach of trust. The point
is that the spouse/child cant loot the trust if the beneficiary himself couldnt.
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e. This applies to spendthrift trusts, too. Spouses/children/former children

can get distributions from those if all conditions are met.
UTC 504(d) / Reaffirming Rights of Beneficiary
3. This section does not limit the right of a beneficiary to bring suit against a trustee for
an abuse of discretion or failure to comply with a standard of distribution.
a. This just reaffirms the basic right of a beneficiary to sue for breach of trust.
b. This whole section, after all, is about creditors rights, not beneficiaries.
c. Spendthrift Trusts
i. UTC 502 / Spendthrift Trusts
1. (a)A spendthrift provision is valid only if it restrains both voluntary and
involuntary transfer of a beneficiarys interest.
a. This is how you test the validity.
b. Why? No one is quite sure. Follows federal tax law.
c. A sort of bitter with the sweet rationale, maybe.
2. [(b) is omitted]
3. (c) A beneficiary may not transfer an interest in a trust in violation of a valid
spendthrift provision and a creditor or assignee of the beneficiary may not reach the
interest or a distribution by the trustee before its receipt by the beneficiary.
a. This is what it actually does.
b. Bars creditors from reaching assets/beneficiaries from transferring them.
4. Notes
a. Spendthrift trusts can be mandatory or discretionary.
b. These rules apply to tort creditors and contract creditors alike.
c. Its just a term that says no creditors and beneficiary cant alienate.
d. Theyre permitted as an extreme example of the freedom of testation.
i. Settlor can transfer his money it subject to whatever limits he wants.
ii. If it werent for the spendthrift provision, settlor might not transfer it at
all, and creditors would be in the same position
iii. This rationale breaks down for tort creditors, but the UTC applies it to
both tort and contract creditors.
ii. UTC 503 / Limits of Spendthrift Trusts
1. (b) A spendthrift provision is unenforceable against
a. (1) beneficiarys spouses and children
b. (2) lawyers who help to protect beneficiarys interest in the trust
c. (3) government claims
2. (c) A claimant against whom a spendthrift provision cannot be enforced may attach
present or future distributions to or for the benefit of the beneficiary.
3. Notes
a. Spendthrift trusts do not work as against these people.
b. For lawyers and the government, he only remedy is attachment.
c. Spouses and children can still compel distributions under 502(c) when the
trustee is in breach/violated the standard.
d. Creditors Rights Hypotheticals
i. A trust has $1 million in assets. One of the beneficiaries, Matt Farley, is unemployed and lives
in a van down by the river. The trust instrument requires the trustee to distribute all of the
trusts income to Matt once every quarter, with the remainder going to his sister upon Matts
death.
1. Can Matt compel a distribution of any of the assets?
a. Yes; hes beneficiary, and its mandatory.
2. Can the bank that loaned Matt the money to buy the van down by the river compel a
distribution of any of the assets?
a. Yes; this is a mandatory trust. Can get the quarterly income.
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3. Can the bank compel a distribution of the trust principal?

a. No; thats not distributable.
4. Can Matts ex-wife compel a distribution for alimony?
a. Yes; can get the mandatory quarterly income.
5. Can Matt simply spend any distribution before the creditors get it?
a. No. Trust has to pay it directly to creditor. And anyway creditor would attach it.
ii. Same as (1), except the trust instrument requires the trustee to distribute the assets to ensure
the beneficiarys comfortable support and maintenance.
1. Can the beneficiary compel a distribution of any of the assets?
a. Yes; hes beneficiary. But only to the extent that he can show that the trustee is
in breach for not distributing it.
2. Can the bank that loaned the beneficiary the money to buy the van down by the river
compel a distribution of any of the assets?
a. No; arms-length creditors like this can never compel a discretionary trust
distribution.
3. Can the bank attach any distributions that the trustee makes?
a. Yes; attachment is the general remedy for these arms-length creditors.
4. Can the beneficiarys ex-wife compel a distribution for alimony?
a. Yes, to the extent the trustee is in breach of the support standard.
5. If the ex-wife compels a distribution, can the beneficiary spend any distribution before
the ex-wife gets it?
a. No; since wife can compel, she can attach, since its a lower standard.
iii. Same as (1), except the trust instrument gives the trustee the authority to distribute assets in his
sole and uncontrolled discretion.
1. Can the beneficiary compel a distribution of any of the assets?
a. No; pure discretion. Has standing, but will fail.
2. Can the bank that loaned the beneficiary the money to buy the van down by the river
compel a distribution of any of the assets?
a. No; banks cant do that.
3. Can the bank attach any distributions that the trustee makes?
a. Yes. The UTC collapses all discretionary trusts as to arms-length creditors like
this; the bank can attach.
4. Can the beneficiarys ex-wife compel a distribution for alimony?
a. Yes, but only ineffectually: because its pure discretionary, and the trustee
himself cant compel a distribution, the ex-wife can only compel a
distribution of $0.
iv. Same facts as in the 501/504 hypotheticals (Matt Farley and the van down by the river), except
that the trust is now a spendthrift trust.
1. The distribution provision requires quarterly distribution of all income.
a. May the auto lender compel a distribution?
i. No. Arms-length creditors cant compel from a spendthrift trust, even if
it is a mandatory provision.
b. May the auto lender attach present or future distributions?
i. No. And thats the power of spendthrift trusts.
2. The distribution provision gives the trustee sole and uncontrolled discretion over
distributions.
a. May the beneficiarys ex-wife attach present or future distributions to satisfy
her alimony claims?
i. Yes. But since its pure discretionary, the trustee never has to pay up,
and the deadbeat husband can try to negotiate a discounted alimony
payment.
b. May the beneficiarys ex-wife compel distributions to satisfy alimony claims?
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i. Yes, theoretically, under 502(c)(2), but the amount compelled will be

zero (thats how much the beneficiary can compel), so, not really.
e. Creditors Rights Cases
i. Scheffel v. Krueger (N.H. 2001 / pg. 616) [spendthrift trust / tort creditors]
1. Held: Tort creditors of the beneficiary of a spendthrift trust may not reach the assets of
the trust, which has both mandatory (quarterly income) and discretionary
(maintenance, support, and education) provisions, even when the tort is also a horrific
(sexual assault of children) for which beneficiary was found guilty and imprisoned.
a. This even though its mandatory; the mandatory/discretionary distinction
doesnt matter for spendthrift purposes.
b. Court notes that the purpose of the trust support &c. is not defeated merely
because the defendant is in prison. (This was in response to a last-ditch
argument seeking to terminate the trust.)
2. This is the majority view, and the UPC view. The Restatement (3rd) tentatively
suggests that maybe tort creditors should be able to access spendthrift trust assets.
ii. Shelley v. Shelley (Oregon 1960 / pg. 618) [spendthrift trusts / alimony & child support]
1. Held: Alimony/child support creditors of the beneficiary of a spendthrift trust may
reach the income portion of the assets, since those are subject to mandatory
distribution, but not the principal, which is subject to a discretionary standard.
a. Family is different; the state shouldnt have to take care of someones family.
b. Court acknowledges that this logic sits uneasily with the spouse (much better fit
for child), but applies it anyway.
2. Held: Child support creditors only can reach the principal, too, but only because they
are also direct beneficiaries. (Children can get principal in case of emergencies that
require unusual and extraordinary expenditures; the father disappearing counts.)
f. Self-Settled Asset Protection Trusts
i. Overview
1. This is a super-spendthrift trust that lets a settlor name himself as beneficiary and cut
off creditors. Just cuts them off, with the stroke of a pen + trustee fees.
2. An example of trust laws race to the bottom; this is useful for people who expect tort
liability (doctors, lawyers, maybe criminals), but dont want to have to actually pay it.
3. These only work with pure discretionary trusts. The idea is that the settlor doesnt
really control it. But because these trustees are repeat players, they are going to pay
the settlor what he wants.
4. Theyre popular in Caribbean islands; people dont set them up in the states because no
one is quite sure theyd be upheld.
5. Alaska Statutes 34.40.110
a. Settlor may name herself as the beneficiary of a spendthrift trust and cut off
creditors right to compel and attach distributions.
b. APT may cut off rights even of creditors who had claims against the settlor
before the settlor created the APT
c. Settlor may continue to use real property and tangible personal property exempt
from creditors claims so long as trustee has discretion to discontinue the
settlors use.
d. A creditor may defeat an APT only by alleging that the conveyance to the
trustee was fraudulent, but mere intent to hinder or delay creditors is not fraud!
ii. UTC 505(a) / Creditors Rights Against Settlor
1. (1) During the lifetime of the settlor, the property of a revocable trust is subject to
claims of the settlors creditors.
2. (2) With respect to an irrevocable trust, a creditor or assignee of the settlor may
reach the maximum amount that can be distributed to or for the settlors benefit.
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V.

3. (3) After the death of the settlorthe property of a trust that was revocable at the
settlors death is subject to claims of the settlors creditors.
4. Notes
a. (1) Follows from the idea that revocable trusts are still functionally owned by
the settlor. Accord State Street Bank & Trust v. Reiser (same rule).
b. (2) Prevents creditors from generally reaching irrevocable trusts, except the
portion which can be applied for settlors benefit.
i. (Again, because he still functionally owns it.)
ii. This is the maximum amount the donee could choose to pay to
settlor. It differs from 502(c), which uses the maximum amount
the beneficiary could force him to pay.
iii. Creditors can attach whenever they can compel.
c. (3) In life, as in death, for revocable trusts.
d. No-self-settled asset protection trusts under the UTC.
iii. UTC 505(a) Hypotheticals
1. The settlor creates a trust and names First National Bank as trustee.
a. The trust is revocable and the sole beneficiary is the settlors grandson.
i. Settlors creditors can reach this; its revocable. Its functionally the
settlors personal assets.
b. The trust is irrevocable and the sole beneficiary is the settlors grandson.
i. Settlors creditors cannot reach this. Its irrevocable, and zero can be
used for settlors benefit.
c. The trust is irrevocable and the sole beneficiary is the settlor.
i. Settlors creditors can reach the trust. Depending on level of discretion,
creditors can either reach it all (pure discretion), whatever is necessary
for support (support trust), or whatever trustee is compelled to pay out
(mandatory trust).
2. The settlor creates an irrevocable trust and names First National Bank as trustee.
a. The trustee is directed to pay the settlor income every quarter during the
settlors life and then to pay the principal upon the settlors death to the settlors
grandson.
i. Settlors creditors can reach the income, which can be (actually, must
be) distributed for settlors benefit. Settlors creditors cannot reach
principal.
b. Same as (a), except that the trustee must also pay the settlor principal during
her lifetime as necessary for her comfortable support and maintenance.
i. Creditors can reach income + however much is consistent with trustees
duty to provide support. If hes rich, this could well be zero. If hes poor,
it could be a lot. But query whether poor settlors would set up a trust
like this. Grandson will try to argue that not very much is necessary.
Hell have standing as a remainder beneficiary.
c. The trustee has sole discretion to decide how much income and principal to pay
to the settlor during the settlors lifetime. Upon the settlors death, any principal
still in the trust goes to the settlors grandson.
i. Creditors can reach all income and all principal thats how much the
trustee could choose to pay on behalf of settlor.
Power of Appointment
a. Vocabulary
i. The power of appointment is the power to distribute the trust property.
1. The settlor can give this power to whomever he wants; its thus a facet of divided
trusteeship.
2. This person can be the trustee, of course. But it can also be anyone else.
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ii.

iii.
iv.
v.
vi.
vii.

viii.

ix.
x.

3. Our focus is the beneficiary who also gets a power of appointment.

The donor is the person who gives the power.
1. Usually this will be the settlor, who, after all, created the trust.
2. But because powers can be passed by further trust, the donor can also be an
intermediate donee.
The donee is the person who receives the power and actually gets to choose how to distribute
the property.
An object is someone in whose favor the power can be validly exercised.
An appointee is an object in whose favor the power is actually exercised.
The takers in default of appointment are the people who take if the power isnt exercised. By
default, it goes to the donees residuary takers.
A general power of appointment is a power that the donee can exercise in favor of himself,
his estate, his creditors, or the creditors of his estate.
1. Its functional ownership. It contemplates the settlor giving the money to trustee, and
giving the beneficiary the power to say, give me the money.
2. The holder of a general power is treated as the owner for tax purposes.
A special power of appointment is any power thats not general, i.e., any power that
cannot be exercised in favor of the donee, his estate, his creditors, or the creditors of his
estate.
1. This doesnt look like functional ownership, but crafty terms of the trust and special
power can almost give functional ownership to the beneficiary-donee.
2. The holder of a special power is not treated as the owner for tax purposes.
3. See page 810.
Fraud on the power of appointment occurs when the donee tries to exercise the power on
behalf of an improper object.
Further trust is when the donee, instead of exercising his power outright, instead puts
exercises it by imposing another trust on the property.

b. Rules
i. The settlor can gave this power to whomever he wants; its an intent test, and can be
explicit or implicit.
ii. The settlor can impose whatever conditions he wants on its exercise.
iii. The holder of a power does not hold title, legal or equitable.
1. Unless, of course, the holder is also trustee, or also beneficiary.
2. Holding alone doesnt create title.
iv. Holders of a power do not owe a fiduciary duty by virtue of holding the power.
1. Of course, if the holder of the power is a trustee, then they owe a fiduciary duty.
2. But beneficiary-donees do not owe anyone a fiduciary duty.
v. Since holders owe no duties, a fraud on the power does not give rise to liability to the
donee.
1. But if the trustee actually obeys, and distributes to a non-object, then the trustee is
liable.
2. Trustees understandably dont like powers. They have to be careful evaluating whether
an appointee is a valid object.
vi. For creditor and tax purposes, the appointee gets the property directly from the donor.
1. That is, creditor and tax law treat the donee as if he never owned it.
2. Cf. disclaimer (passes through to kids; disclaimer never owns).
vii. Creditors can reach assets over which a donee has a general power. UTC 505(b)(1).
viii. Donees who hold a general power can impose further trusts on the assets.
1. This is clear even under traditional law.
ix. Donees who hold a special power can increasingly impose further trusts on the assets, too.
1. This is contrary to traditional law.
2. Restatement has a complicated rule on this, page 822.
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c. Details on tax considerations of general vs. special power of appointment

i. General Power
1. Donee is treated as owner of appointive property and taxed accordingly (income, gift,
and estate).
ii. Special Power
1. Donee is not treated as owner of appointive property for tax purposes (income, gift,
and estate).
2. Possible to give donee something close to functional equivalent of ownership without
additional tax.
3. Used regularly in contemporary estate planning to preserve flexibility without tax cost.
4. Where RAP has been abolished, can create a dynasty trust, exempt from transfer tax, in
perpetuity.
d. Res. Wills 19.1 / Exercising the Power of Appointment
i. A power of appointment is exercised to the extent that:
1. (1) the donee manifests an intent to exercise the power in an otherwise effective
document;
2. (2) the donees expression of an intent to appoint satisfies the formal requirements of
exercise imposed by the donor and by applicable law; and
3. (3) the donees appointment constitutes a permissible exercise of the power.
ii. Notes
1. (1) Requires a writing. Cf. wills (same). Differs from normal trust law.
2. (2) Requires compliance with the term of the instrument. Theres a substantial
compliance doctrine, however.
3. (3) Allows objects to void transfers to non-objects. Trustee, of course, could be
liable for breach of trust if it actually made this transfer.
e. UPC 2-608 (1990) / Exercising the Power of Appointment by Will
i. In the absence of a requirement that a power of appointment be exercised by a reference to the
power, a general residuary clause in a will, or a will making general disposition of all of the
testators property, expresses an intention to exercise a power of appointment held by the
testator only if
1. (i) the power is a general power and the creating instrument does not contain a gift if
the power is not exercised; or
2. or (ii) the testators will manifests an intention to include the property subject to the
power.
ii. Notes
1. This addresses the question whether an unexercised power is exercised by a donees
will when he dies.
2. (i) Is basically a last resort; the power is exercised only if thats all the will would
have, and its a general power.
3. (ii) Is a catch-all intent provision. Its similar to creating a power; a will just has to
intend to exercise a power; no express requirement.
f. Irwin Union Bank & Trust v. Long (Ind. 1974 / pg. 806) [general power / traditional law]
i. Held: Longs ex-wife, an alimony creditor, may not reach the assets over which Long holds a
general power of appointment, viz. 4% of the principal a year, which Long can access by
appointing himself in writing.
1. Because Long doesnt really own the property; he owns the right to receive it.
2. A court of equity cannot compel Long to receive property. Thats like, slavery.
3. This is one of a long line of cases which maintained this formal distinction between
holding a general power and outright ownership.
4. Mindless formalism and bad law. Longs ex-wife could access the 4% under UTC
505(b)(1).
ii. This is a well-crafted instrument under the law of the time:
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VI.

1. Long has functional ownership;

2. But there is no mandatory distribution, which could be attached/compelled;
3. And the trustee doesnt have discretion, either.
4. Thus, no one could get the assets, even though he owned it.
Trust Modification and Termination
a. Overview
i. Revocable trusts are modifiable by the settlor alone. The settlor can even order the trustee to
do things contrary to the terms of the trust. And the settlor can terminate them at will.
ii. Irrevocable trusts are harder to modify and terminate, even under the UTC and Restatement
(Third). The two doctrines of modification are changed circumstances and consent.
iii. Once the settlor is dead, theres an odd dynamic in modification/termination proceedings: no
one is in court arguing not to modify the trust. The judge himself is supposed to take the
settlors point of view into consideration. Query how much he really bothers.
iv. In the United Kingdom, unanimous consent of the beneficiaries alone (and settlor, when hes
alive) is enough to modify or terminate a trust. Much charier about dead hand control. Accord
UK point of view on spendthrift trust (not allowed).
v. In the U.S., a great deal relies on how settlors intent is characterized. At the most abstract
level (benefit the beneficiary), any modification that leaves the beneficiary better off would
work. UTC and Restatement both channel litigation to this question. Stuchell; Riddell.
vi. Under the UTC, trust can be made more modifiable than provided below; those are
minimums. Settlor can even appoint a trust protector whose power includes modifying it
as he pleases.
b. Traditional U.S. Common Law Rules
i. Living settlor. Unanimous consent of settlor and all beneficiaries can modify a trust.
ii. Dead settlor / changed circumstances. Irrevocable trusts can be modified due to unforeseen
changes in circumstances only when necessary to accomplish the purposes of the trust.
Restatement (Second). This is known as equitable deviation.
iii. Dead settlor / consent. If the settlor is dead, irrevocable trusts can be modified or terminated
on the consent of the beneficiaries only when the modification/termination would not conflict
with a material purpose of the trust. Claflin. Material purposes included:
1. Spendthrift trust
2. Discretionary trust
3. Support trust
4. Postponed enjoyment.
iv. In re Trust of Stuchell (Oregon 1990 / pg. 643) [traditional equitable deviation]
1. Held: An irrevocable trust that gave an equitable life estate to the settlors kids, with a
remainder to the settlors grandkids, cannot be modified to account for the fact that one
of the grandchildren is mentally retarded, lives on government benefits, and will lose
his benefits if he gets a huge pile of money distributed.
a. Because its not necessary to accomplish settlors purposes.
b. Court infers an intent of giving money to the grandkid.
c. And modifying the trust wouldnt be necessary to give him money.
2. Morley: This is dumb. Stuchells purpose was to take care of his family; throwing
away a bunch of money to the government (by not modifying) is obviously contrary to
his purpose. Theres no other purpose here to fight about.
c. UTC 410 / Standing to Seek a Modification or Terminatin
i. A proceeding to approve or disapprove a proposed modification or termination under Sections
411 through 416 may be commenced by a trustee or beneficiary,
ii. [A proceeding to approve or disapprove a proposed modification or termination under Section
411 may also be commenced by the settlor.]
iii. Notes
1. Beneficiaries and trustees have standing to get modification/termination.
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2. Settlors generally dont; 411 only. This is unpopular and not widely adopted.
d. Changed Circumstances
i. Restatement (Third) 66 / Changed Circumstances [further trust purposes / trustee duty]
1. General power to modify trusts. The court may modify an administrative or distributive
provision of a trust, if because of circumstances not anticipated by the settlor, the
modification or deviation will further the purposes of the trust.
2. Trustees duty. If a trustee knows or should know of circumstances that justify judicial
action under Subsection (1) with respect to an administrative provision, and of the
potential of those circumstances to cause substantial harm to the trust or its
beneficiaries, the trustee has a duty to petition the court for appropriate modification.
ii. UTC 412 / Changed Circumstances [default/settlor can make it easier to modify]
1. The court may modify the administrative or dispositive terms of a trust or terminate the
trust if, because of circumstances not anticipated by the settlor, modification or
termination will further the purposes of the trust. To the extent practicable, the
modification must be made in accordance with the settlors probable intention.
2. The court may modify the administrative terms of a trust if continuation of the trust on
its existing terms would be impracticable or wasteful or impair the trusts
administration.
3. Upon termination of a trust under this section, the trustee shall distribute the trust
property in a manner consistent with the purposes of the trust.
iii. UTC and Restatement Compared
1. Both change necessary to accomplish a purpose to further a purpose of the trust.
2. The Restatement, but not the UTC, places a negligence-based duty on the trustee
to petition for changes to administrative provisions due to changed circumstances.
3. The UTC, but not the Restatement, allows administrative provisions to be
modified without reference to settlors intent.
iv. In re Riddell (Washington 2007 / pg. 645) [modern changed circumstances]
1. Held: On the same facts as Stuchell (crazy beneficiary about to inherit a remainder
interest and lose it all to the government), the trial court may modify the terms of the
trust to change the remainder interest to a special needs trust.
a. Circumstances unanticipated? Yes; Riddell didnt know his grandkid would be
crazy.
b. Testators intent? This is actually close. The trust made an outright gift of the
remainder when the kids died + the grandkids turned 35.
i. Narrow intent: Give the kids all the money once theyre old enough.
1. Here, creating a special needs trust would thwart intent it
keeps money from the grandkid.
2. Of course, without the modification, it will be snatched up by
the government.
ii. Broader intent: Take care of the kids as best as possible.
1. Modifying is obviously consistent with this intent.
e. Consent-Based Modification
i. Res. (Third) 65 / Consent-Based Termination or Modification [unanimity/ balancing]
1. (1) Except as stated in Subsection (2), if all of the beneficiaries of an irrevocable trust
consent, they can compel the termination or modification of the trust.
2. (2) If termination or modification of the trust under Subsection (1) would be
inconsistent with a material purpose of the trust, the beneficiaries cannot compel its
termination or modification except with the consent of the settlor or, after the settlors
death, with authorization of the court if it determines that the reasons for termination
or modification outweigh the material purpose.
ii. UTC 411 / Consent-Based Termination or Modification [default/settlor can make it easier]
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VII.

1. (b) A noncharitable irrevocable trust may be terminated upon consent of all of the
beneficiaries if the court concludes that continuance of the trust is not necessary to
achieve any material purpose of the trust. A noncharitable irrevocable trust may be
modified upon consent of all of the beneficiaries if the court concludes that
modification is not inconsistent with a material purpose of the trust.
2. (c) [A spendthrift provision is not presumed to be a material purpose of the trust.]
3. (d) Upon termination of a trust under subsection (b), the trustee shall distribute the trust
property as agreed by the beneficiaries.
4. (e) If not all of the beneficiaries consent to a proposed modification or termination of
the trust the modification or termination may be approved by the court if:
a. (1) if all of the beneficiaries had consented, the trust could have been modified
or terminated; and
b. (2) the interests of a beneficiary who does not consent will be adequately
protected.
iii. Restatement and UTC Compared
1. Under the Restatement, the court balances material purposes of the trust with the
beneficiaries reasons for wanting to terminate/modify. This waters down Claflin.
2. The UTC maintains the material purpose requirement. However, under the UTC,
unanimous consent is not required, provided their interests are covered. This lets the
court ignore holdouts, irrational dissenters, and remote or incapacitated dissenters.
3. The Restatement also says a spendthrift clause is not a material purpose. (Not that it
matters that much under the Restatement.)
iv. Modern material purposes?
1. Its not clear; the old common-law automatic rules no longer obtain, however.
2. Use your judgment.
v. In re Estate of Brown (Vermont 1987 / pg. 653) [traditional consent-based changes]
1. Held: Despite the unanimous consent of both the income and remainder beneficiaries, a
testamentary trust that was to (1) pay for the education of settlors grandchildren and
then (2) pay all income to the settlors kids, remainder to the grandchildren, may not be
terminated.
a. Even though all the kids were educated.
b. Because one of the material purposes of the trust was to pay ensure a steady
stream of income over the kids lifetime.
c. This is dumb; it wasnt a spendthrift trust, and thus the kid could have sold it
for a lump sum, gambled it away, etc.
2. This isnt a real material purpose under the UTC.
Trustee Removal
a. UTC 706 / Trustee Removal [default/settlor can make it easier or harder to modify]
i. (1) The settlors, a cotrustee, or a beneficiary may request the court to remove a trustee, or a
trustee may be removed by the court on its own initiative.
ii. (b) The court may remove a trustee if:
1. (1) the trustee has committed a serious breach of trust;
2. (2) lack of cooperation among cotrustees substantially impairs the administration of the
trust;
3. (3) because of unfitness, unwillingness, or persistent failure of the trustee to administer
the trust effectively, the court determines that removal of the trustee best serves the
interests of the beneficiaries; or
4. (4) there has been a substantial change of circumstances, the court finds that removal
of the trustee best serves the interests of all of the beneficiaries and is not
inconsistent with a material purpose of the trust, and a suitable cotrustee or
successor trustee is available.
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5. (4) removal is requested by all of the qualified beneficiaries, the court finds that
removal of the trustee best serves the interests of all of the beneficiaries and is not
inconsistent with a material purpose of the trust, and a suitable cotrustee or
successor trustee is available.

VIII.

b. Notes
i. Settlor always has standing here, unlike modification/termination
ii. (1) Serious breach of trust means something that would subject trustee to meaningful
personal liability.
iii. (4) Collapses changed circumstance and a consent-based provisions into one; Ive split it
out above. Both require best interests of all beneficiaries and consistency with material
purposes of trust.
1. Changed circumstance must be substantial. Higher threshold than termination.
2. Consent-based only requires consent of qualified beneficiaries.
iv. Today, when most trustees are professionals, the removal is almost never inconsistent with a
purpose of the trust; trustees are totally fungible.
v. A parent can represent the interests of a minor child, even when one is income and one is
remainder beneficiary, if their interests are substantially identical. Davis v. US Natl Bank.
c. UTC 103(13) / Qualified Beneficiary Definition
i. Qualified beneficiary means a beneficiary who, on the date the beneficiarys qualification is
determined:
1. (A) [Present interests] Is a distributee or permissible distributee of trust income or
principal;
2. (B) [First remainder interests] Would be a distributee or permissible distributee of trust
income or principal if the interests of the distributees described in subparagraph (A)
terminated on that date without causing the trust to terminate; or
3. (C) [Present takers on termination] Would be a distributee or permissible distributee of
trust income or principal of the trust terminated on that date.
ii. Notes
1. (A) covers people who can actually get payouts.
2. (B) covers the remainder beneficiaries who are next in line.
3. (C) covers those who would take if the trust terminated.
4. This cuts off remote remainder beneficiaries, like the charity that would take if
the life tenant and all his kids suddenly died.
d. Davis v. U.S. Natl Bank (Missouri 2007 / pg. 660) [removal / parent-child representations]
i. Held: The trustee of a trust with a current distributee (the parent), a remainder distributee once
removed (his child), and a remainder distributee twice removed (a college) can be removed on
consent of the parent + parents consent on behalf of the child.
1. Lafayette College is not a qualified beneficiary too remote.
2. Modification serves the best interests of all beneficiaries (cheaper/better location).
3. Modification is not contrary to a material purpose of the trust.
4. Parents and childs interests are substantially identical, such that the parent can
consent for the child.
Modification, Termination, and Trustee Removal Hypotheticals
a. S gives assets to T in trust for my son A to pay for his education. Any remaining interest after my
sons education has been provided for shall be paid to As children. S is now deceased and A has
chosen not to go to college. A desires the principal. A has no living children, and A is named as the
remainder beneficiary if there are no other takers.
i. This can be characterized as a consent-based modification or a changed-circumstances
modification, the changed circumstance being that A doesnt intend to go to college after all.
All the pressure is on how the trusts purpose is characterized. All beneficiaries have
consented, since he has no kids; the question is whether terminating it would be inconsistent
with a material purpose of the trust. One possible purpose is to provide for As education;
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IX.

another is to provide for As family. If A can demonstrate that he doesnt intend to go to

college, really for truly, then it seems the material purposes are mooted and that termination is
permissible. The court is the only one looking out for settlors interest, here, so it would
probably take some special kind of untrustworthiness on the beneficiarys part to cause the
court not to terminate here. The court is supposed to take into account all beneficiaries, but if
it finds the purpose of the trust is exhausted, then the class closes as of his decision not to go
to college.
b. Same as #1, except that the remainder was to go to a charity, C, rather than to A.
i. This charity is a qualified beneficiary: if A dies, its next up as distributee. So, without its
consent, it cannot be modified on a consent-based theory. That leaves changed circumstances,
the circumstance again being that he is not going to go to college after all. The same intent
game is played out in this scenario: is it a material provison of the trust to purchase his
college education? Well, yes, but times change, and hes not going.
c. S creates a spendthrift trust for his wife, W, to pay for her comfortable support and maintenance
during her lifetime, with the remainder to Ss children from a prior marriage, A and B, or, if A and B
both predecease W, then the remainder will go to a charity, C. W seeks an order terminating the trust
and requiring the trustee to pay her the full amount of the trust principal.
i. W loses. She doesnt have consent of the children, who are qualified beneficiaries (they
become takers if A dies). Moreover, she cannot virtually represent them as a parent because
their interests do not substantially align: A and B arent her kids, so if the entire corpus is
given to W, its possible A and B will be cut off from the trust funds entirely. Finally, theres no
unanticipated change in circumstance here (it cannot count that a beneficiary just wants the
money; thats anticipated, and thats why theres a trust limiting that right). But even if there
were, it would be inconsistent with material purposes of the trust, namely, to only provide
support to W, not the full corpus, and to hopefully provide for the children as well. The
charitys extraneous and its consent wouldnt even be required, as its too remote, since A, B,
and W are all still living.
d. S creates a trust and appoints First National Bank and Trust as trustee. S directs First National to pay
income to Ss children for life, with the remainder to go to Ss grandchildren and great-grandchildren
per stirpes. A charity, C, will take if S has no great-grandchildren surviving his grandchildren. Ss
children seek to replace First National with Fidelity, Inc., on the ground that Fidelity charges lower
fees.
i. This is a consent-based attempt to change the trustee; there are no unanticipated
circumstances of note. Ss children will need consent of all qualified beneficiaries, will need to
show that the removal is in the best interests of all beneficiariers, and that theres another
willing trustee. That last is easy; Fidelity is standing by. The qualified beneficiary question is
more interesting. The qualified beneficiaries include Ss children, grandchildren and greatgrandchildren, as all are either potential distributees or would be if Ss children all died. The
charity is not; its one step beyond the grandchildren and great-grandchildren. The express
consent of the younger kids is apparently missing. However, if they are minors, the children
can probably validly consent on their behalf, as their interests are substantially aligned a
chaper trust benefits them all. And, along those lines, a cheaper trust is also in the best
interests of all beneficiaries, including the charity, in the unlikely event it ever takes. So this
removal is fine. This is consistent with the fact that its not all that hard to change trustees
under the UTC if its cheaper, it generally works, since trustees are all fungible.
Trust AdministrationThe Fiduciary Obligation
a. Overview
i. Trustees have the power to do basically anything with property that is not expressly barred.
UTC 815. In order to protect beneficiaries, there are the standard duties of agency law:
1. Care or prudence;
2. Loyalty;
3. Obedience.
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ii. Unlike most other branches of agency law, the duty of care or prudence has not been
completely gutted, and trustees have to do a reasonably good job.
iii. Unlike other branches, trustees sort of have two principals: the settlor and the beneficiaries.
1. Doctrinally, the duty is owed purely to the beneficiaries.
2. But the settlor can exert soft pressure over the trustee, as by threatening removal.
3. And since trustees are repeat players, its in their interests to humor settlors somewhat.
iv. Will executors owe the exact same duties as trustees. E.g., Hartman v. Hartle; In re Rothko.
b. The Duty of Prudence
i. Uniform Prudent Investor Act (UPIA) 2 / Duty of Prudence
1. (a) A trustee shall invest and manage trust assets as a prudent investor would, by
considering the purposes, terms, distribution requirements, and other circumstances of
the trust. In satisfying this standard, the trustee shall exercise reasonable care, skill, and
caution.
2. (b) A trustees investment and management decisions respecting individual assets must
be evaluated not in isolation but in the context of the trust portfolio as a whole and as
part of an overall investment strategy having risk and return objectives reasonably
suited to the trust.
ii. (a) Covers the duty to manage the assets reasonably a negligence-based standard in
light of the trust instrument.
iii. (b) Bars trustees from making investments not suitable to the needs of a particular trust, and
investments that are obviously stupid.
c. The Duty of Loyalty
i. The sole benefit/no further inquiry rule. Self-dealing are forbidden. Trustee is liable for
any profits that he earned through self-dealing. No further inquiry into whether the
transaction was fair.
1. The UTC adopts this in principle, but creates many exceptions.
2. Unlike normal agency law, where agent can usually defend that the dealing was fair.
3. Self-dealing includes dealing with a spouse, parent, child, sibling, etc.; close family
members.
ii. Conflicts of interest
1. Pure self-dealing. Trustee deals with trust directly for his own account.
2. Multiple trusts. Trustee causes transactions between trusts of which he is a trustee.
3. Dealing adverse to beneficiary. Trustee deals with a beneficiary for trustees own
account.
4. Corporate opportunity doctrine. Trustee takes opportunities that rightfully belong to
the trust. Not taken all that seriously; conflicts of interest of this nature are legion at
institutional investors, and its not a problem.
iii. Conflicts can include soft problems that are not purely financial, e.g. Stamos the
struggling artist trying to curry favor with the art gallery. In re Rothko. Think creatively
about what might be a conflict.
iv. Implied consent. If a settlor knowingly places trustee/beneficiary in a position where
conflicts are inevitable, he has implicitly consented to self-dealing, and the challenged
transaction will get fairness review. This is a non-trivial bar. Rothko did not implicitly
consent to self-dealing when he named Reis, an art gallery officer, as a co-executor of his
estate, which included 798 pricy paintings.
v. UTC 802 / Exceptions to the No Further Inquiry Rule
1. Settlor-authorized conflicts (including where trustees are named as beneficiaries)
2. Informed beneficiary consent
a. This can be ex ante, with full disclosure;
b. Or ex post, when beneficiary knows about and accepts benefit of self-dealing
3. Advance judicial approval
4. Categorical exceptions (subject to fairness review):
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a. Trustee compensation
b. Trustee-advised mutual funds
c. Commingling of trust assets into common trust funds
d. Trustee self-deposit
vi. In re Gleeson (Ill. 1955 / pg. 676) [no further inquiry rule]
1. Held: Con Colbrook must disgorge all profits he received in connection with leasing
trust property to the beneficiaries, on the following facts:
a. Gleeson had leased her farm to Con Colbrook prior to her death;
b. At her death, Gleeson left Colbrook the property in trust for her children;
c. Colbrooks lease was scheduled to expire 15 days after her death;
d. Colbrook had already planted crops for the next season;
e. As trustee, Colbrook re-leased the property to himself, raising the from $6 to
$10 + a share of the crops;
f. At the expiration of his next lease, Colbrook leased the farm to someone else.
2. Because once theres self-dealing, theres no further inquiry. Whether he treated the
trust fairly (which he obviously did) was irrelevant.
vii. Hartman v. Hartle (NJ 1923 / pg. 675) [no further inquiry / trustee family members]
1. Held: Diecker must disgorge the profits she earned through buying trust property and
flipping it for a profit proportionally among her siblings (5 siblings; 1/5 to each), on
the following facts:
a. Dieckers husband was a co-executor (=trustee for duty analysis) of Geicks
will;
b. The co-executors auctioned off the house, per will instructions;
c. Another beneficiary bought it at the auction for Diecker for $3900;
d. A month later, Dieker sold it $5500.
2. Because the self-dealing includes the trustee dealing with his spouse, close family
members, etc.
d. Co-Trustee Liability
i. Co-trustees are liable for each others breaches of duty; duties to prevent breaches and
compel breaching trustee removal devolve onto co-trustees.
ii. UTC 703 / Co-trustee Authority and Liability
1. (a) Cotrustees who are unable to reach a unanimous decision may act by majority
decision.
2. (f) Except as otherwise provided in subsection (g), a trustee who does not join in an
action of another trustee is not liable for the action.
3. (g) Each trustee shall exercise reasonable care to:
a. (1) prevent a cotrustee from committing a serious breach of trust;
b. (2) compel a cotrustee to redress a serious breach of trust.
4. (h) A dissenting trustee who joins in an action at the direction of the majority of the
trustees and who notified any cotrustee of the dissent at or before the time of the action
is not liable for the action unless the action is a serious breach of trust.
iii. Notes
1. (a) Authority of co-trustees: majority rules.
2. (f) The general no-liability rule for co-trustees.
3. (g) Creating negligence-based duties for co-trustee; serious breaches of trust only
a. (1) Prevention. Send them stern letters.
b. (2) Redressing. Bring court actions to remove the violating co-trustees.
4. (h) Exempting non-serious breaches from liability, as long as the dissent is
registered in writing.
iv. In re Rothko (NY 1977 / pg. 679) [conflicts of interest / co-trustee liability]
1. Held: Reis is liable for self-dealing with trust property, on the following facts:
a. Named co-executor of Rothkos will;
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b. Is an officer of MNY, an affiliate of MAG;

c. Within three weeks of Rothkos death, disposes of 798 paintings to MNY;
d. The deal is on manifestly unfair terms.
2. Held: Stamos is liable for self-dealing with trust property, on the following facts:
a. Named co-executor of Rothkos will;
b. Is an unsuccessful artist with an existing relationship with MNY;
c. Wants to ingratiate himself to MNY;
d. Assents to the unfair deal disposing of the 798 paintings to MNY.
3. Held: Levine is liable for failure to exercise reasonable care in preventing co-trustees
from breaching their duty of loyalty, on the following facts:
a. Named co-executor of Rothkos will;
b. Knew Reis was conflicted;
c. Believed Stamos was conflicted;
d. Believed the paintings were being sold at a huge discount;
e. Was acting on advice of counsel in not acting.
4. Held: MNY is liable to the trust because it was not a bona fide purchaser for value
a. Not a fair price;
b. Had notice of the co-executors breach of trust.
e. Impartiality and the Principal and Income Problem
i. UTC 803 / Duty of Impartiality
1. In investing, managing, and distributing trust property, the trustee must strike a balance
between the beneficiaries, giving due regard to their respective interests.
ii. Notes
1. Its misleadingly named. It should be called the duty to treat beneficiaries
appropriately in light of the instrument.
2. When an instrument requires a trustee to favor one beneficiary, appropriate treatment
requires favoring that beneficiary.
3. But when an instrument allows favoring one beneficiary, should that beneficiary need
favoring (e.g. a support trust), then appropriate treatment depends on whether the
beneficiary has other sources of income, needs the money, and so forth.
iii. Arises when there are multiple beneficiaries, especially present and remainder:
1. When choosing whether to allocate money to income or to principal;
2. When trustee is granted discretion in how to treat different beneficiaries.
iv. Investments are arbitrarily divided into income assets and principal assets, in defiance of
economic reality.
1. Uniform Principal and Income Act 102 / Definitions
a. (4) Income means money or property that a fiduciary receives as current
return from a principal asset.
b. (10) Principal means property held in trust for distribution to a remainder
beneficiary when the trust terminates.
2. Income:
a. Rent payments ( 405)
b. Dividends on equity ( 401(a))
c. Coupon payments on bonds and periodic interest payments on debt obligations
( 406(a))
3. Principal:
a. Profits on sale of appreciated securities or other property ( 404(2))
b. Money received in stock repurchases ( 401(c)(2))
c. Money received on liquidation of businesses ( 401(c)(3))
d. Face value of zero-coupon bonds ( 406(b))
4. So income and remainder beneficiaries often have occasion to squabble over what the
trustee should invest in.
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v. Howard v. Howard (Oregon 2007 / pg. 726) [favoring the income beneficiary]
1. Held: The co-trustees of Leos trust (Marcene and Coy) are not required to take
Marcenes needs into account when administering the assets of a trust (i.e. choosing
whether to invest in income or principal investments), on the following facts:
a. Trust has a provision requiring income to be paid to Marcene, Coys stepmom;
b. Trust has a provision making Coy the remainder beneficiary;
c. Trust has a provision disinheriting Marcenes natural children;
d. Trust has a provision directing trustees to favor Marcene over remaindermen.
2. Coy wanted to invest in principal-producing investments; Marcene wanted to invest in
income-producing investments. Because impartiality (really, appropriateness) in light
of this instrument requires the trustees to favor Marcene, when there is a conflict,
Marcene wins. Thus, the trustees dont need to consider the fact that Marcene is rich
when choosing investments, even though this will result in an inheritance to Marcenes
kids, and a reduced inheritance to Leos natural kids.
f. The Duty to Inform and Report
i. UTC 813 / Duty to Inform and Report
1. (a) A trustee shall keep the qualified beneficiaries of the trust reasonably informed
about the administration of the trust and of the material facts necessary for them to
protect their interests.
2. (b) A trustee:
a. (1) upon request of a beneficiary, shall promptly furnish a copy of the trust
instrument; [probably mandatory]
b. (2) [omitted]
c. (3) shall notify the qualified beneficiaries of the trusts existence [mandatory]
d. (4) shall notify the qualified beneficiaries in advance of any change in the
method or rate of the trustees compensation.
3. (c) A trustee shall send to the distributees, and to other qualified or nonqualified
beneficiaries who request it, at least annually a report of the trust.
4. (d) A beneficiary may waive the right to a report or other information required to be
furnished under this section.
5. Notes
a. These are the default rules and settlor can opt out to a point, but there is an
irreducible core / mandatory minimum. See next section.
b. The duty to inform is negligence-based: reasonably informed.
c. Distributees automatically get a report; all other beneficiaries get it on request.
ii. UTC 105(b)(8)(9) / Irreducible Core of Duty to Inform and Report
1. The terms of a trust prevail over any provision of this Code except:
a. (8) the duty under Section 813(b)(2) and (3) to notify qualified beneficiaries of
an irrevocable trust who have attained 25 years of age of the existence of the
trust, of the identity of the trustee, and of their right to request trustees reports;
b. (9) the duty under Section 813(a) to respond to the request of a qualified
beneficiary of an irrevocable trust for trustees reports and other information
reasonably related to the administration of a trust.
2. Notes
a. 25 years is thought to signal some kind of maturity. Not popular in states that
adopt UTC.
b. Other information reasonably related probably includes the trust
instrument itself. But note that the instrument isnt actually listed. Also, it says
administration of trust; some room in the doctrine, there.
iii. Duty to Report Hypotheticals
1. Can a settlor prevent a beneficiary from learning of the existence of a trust?
a. Remote beneficiaries yes. Qualified no, if over 25.
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iv.

v.

vi.

vii.

2. Can a settlor prevent a beneficiary from seeing a copy of the trust instrument?
a. Probably not, but the rules dont definitively settle it. Beneficiary would argue
its reasonably related to administration of trust and thus must be disclosed.
Fletcher v. Fletcher court declined to pass on it, saying the evidence wasnt
sufficient to cleanly present it. But easy to see beneficiarys case the
irreducible core is supposed to let the ben protect himself. If he cant see the
instrument, theres a large gap in his protection.
3. Can a settlor prevent a beneficiary from requesting and receiving trustees reports?
a. No. Unlike the instrument, this is cleanly settled by 105(b)(9) trustees duty to
report, at least on request, may not be abrogated.
4. Can a beneficiary waive the right to receive a report?
a. Yes.
Fletcher v. Fletcher (Virginia 1997 / pg. 739) [duty to report / trust instrument]
1. Held: The trustee of an irrevocable trust of which James Fletcher is beneficiary must
disclose the entire instrument to James, rather than just the portion relating to his trust,
on the following facts:
a. The trust instrument was a master document that created different trusts for
different family members;
b. The instrument didnt attempt to abrogate the right to see the trust instrument;
c. Evidence that the settlor orally modified the terms of the trust wasnt sufficient.
2. Had settlor just made the trusts in discrete instruments, this problem would have been
avoided. But if its one master instrument, the entire thing must be disclosed.
UTC 1005(a) / Shorter Statute of Limitations upon Receipt of Report
1. A beneficiary may not commence a proceeding against a trustee for breach of trust
more than one year after the date the beneficiary or a representative of the beneficiary
was sent a report that adequately disclosed the existence of a potential claim for breach
of trust and informed the beneficiary of the time allowed for commencing a
proceeding.
2. Notes
a. A one-year statute of limitations that runs from when a report triggers a
claim.
b. This is an implied consent doctrine. After a year of sitting on rights,
beneficiary is held to have acquiesced to the breach of trust.
UTC 1005(b) / When a Report is Adequate
1. A report adequately discloses the existence of a potential claim for breach of trust if it
provides sufficient information so that the beneficiary or representative knows of the
potential claim or should have inquired into its existence.
2. Notes
a. Trustee has a negligence-based duty to find out and report correct facts.
Cambridge Trust Co. (constructive fraud doctrine).
b. If a trustee sends a report with representations, but negligently fails to
verify the facts, then report is inadequate and the statute doesnt run.
UTC 1005(c) / Catch-All Statute of Limitations
1. (c) If subsection (a) does not apply, a judicial proceeding by a beneficiary against a
trustee for breach of trust must be commenced within five years after the first to occur
of:
a. The removal, resignation, or death of the trustee;
b. The termination of the beneficiarys interest in the trust; or
c. The termination of the trust.
2. Notes
a. This is the non-report-based statute of limitations; when the claim is
absolutely extinguished regardless of any constructive fraud.
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b. Five years is a long time.

viii. UTC 1009 / Beneficiarys Express Consent, Release, or Ratification
1. A trustee is not liable to a beneficiary for breach of trust if the beneficiary consented to
the conduct constituting the breach, released the trustee from liability for the breach,
or ratified the transaction constituting the breach, unless:
a. The consent, release, or ratification of the beneficiary was induced by improper
conduct of the trustee; or
i. = Good faith
b. At the time of the consent, release, or ratification, the beneficiary did not know
of the beneficiarys rights or of the material facts relating to the breach.
i. = Full disclosure.
2. Notes
a. This only covers express consents, ratifications, etc. Implied consent goes
under 1005(a) only after a year.
b. Consent is ex ante.
c. Release is ex post (and probably with consideration).
d. Ratification is ex post (accepting the benefit or expressing approval of it).
ix. Natl Academy of Sciences v. Cambridge Trust (Mass. 1976 / pg. 745) [constructive fraud]
1. Held: Cambridge Trust is liable for 20-some years of payments to the National
Academy of sciences, despite the fact that the old reports contained the
misrepresentation, on a theory of constructive fraud:
a. Troland set up a trust that doled out income to his wife, remainder to Natl
Academy of Sciences;
b. The trust was to terminate if she got remarried;
c. She got secretly remarried and never told the trust;
d. The trust never made any efforts to ascertain her married status, kept paying
her, and kept implicitly reporting to National Academy that she was married;
e. Finally she died, and everyone found out.
2. Because the trust made no effort to ascertain the truth, and because the truth was
ascertainable, the misrepresentation is imputed to the truth, and National Academy
isnt hit with a statute of limitations.

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