Final Trusts Outline

TRUSTS AND ESTATES
AGENCY
Principles of Agency
Agency the fiduciary relation which results from the manifestation of consent by one
person (the principal) to another (the agent) that the other (the agent) shall act on his
(the principals) behalf and subject to his (the principals) control, and consent by the
other (the agent) so to act
I. The ability of agent to bind principal in contract is central to the principal being able
to accomplish its agenda
Creating an Agency Relationship

Requires:
(1) a manifestation of intent to create an agency relationship; and
(2) consent of the Principal and Agent
i. Parties dont have to understand that they are creating an agency relationship.
ii. A partnership is a contact of mutual agency
An agency relationship can be created by contract, but can be gratuitous.
i. Contract e.g. client signing retainer agreement with lawyer
ii. Gratuity e.g. spouses giving each other POA
Terminating an Agency Relationship

Terminable:
(1) at the will of either party; or
(2) upon the death or mental incapacity of either
Exception: Durable Power of Attorney (AGENCY)
iii. Allows an agency relationship to extend to mental disability
iv. But they are not so durable that they extend beyond the death of the principal
v. *Note - It is malpractice for a lawyer to create an inter vivos trust and not also
create a durable power of attorney for purposes of funding the trust in the
event of the settlors mental incapacity
Duties of an Agent
I. Obey lawful instructions from principal.
II. Duty to exercise care
III. Affirmative duty to provide information to principal
IV. Duty to act within scope of agency relationship
V. An agent is authorized to act, but generally has no affirmative duty to do so, unless an
explicit instruction from the principal
VI. Duty of loyalty to principal - not to compete safeguard confidential information -
not to acquire unapproved benefits from the agency.
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Powers of an Agent
I. Enter into contractual relations, and, generally, any power needed to effectuate the
agency relationship
II. Express Authority:
i. E.g. when the principal instructs the agent, in either written or oral form, as to
the extent of his authority
ii. Express authority can also arise from the principals general words and deeds
III. Apparent Authority: a third partys reasonable belief that the principal has authorized
the acts of its agent- it arises from the principals indirect or direct manifestations to a
third party and not from the representations or acts of the agent
Agent as Fiduciary
I. An agent with full discretion is a fiduciary and owes a duty of loyalty.
i. A ministerial agent (obedience to instructions or laws instead of discretion,
courts clerk) is not a fiduciary
II. A fiduciary relationship involves a duty on the part of the fiduciary to act for the
benefit of the other party to the relationship with respect to the subject matter of the
relationship
Title to Property
I. An agent does not take title to anything, and while the agency may involve
property, there is no requirement that property be the subject of the agency
II. The principal will retain title to the property, but the agent has its beneficial use.
Liability of an Agent
I. Principals Remedies
i. Equitable: anything needed to make principal whole
ii. Legal: damages, disgorgement of profits, if there is an associated contract,
rescission of the contract
II. Does the principal owe the agent anything?
iii. If in the course of acting as an agent, incur reasonable costs, duty of
indemnification
iv. Duty to be indemnified if incur tort or contract liability and it is not the agents
fault
TRUSTS
The Creation of a Trust
Trust - a fiduciary relationship with respect to property subjecting the person whom the title to
property is held to equitable duties to deal with the property for the benefit of another person
which relationship arises as a result of a manifestation of an intention to create it.
Classic Trust Formula: A to B for C for life, and then to D
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I. A is the settlor (creator) transfers property rights to a trustee
a. Can have multiple As e.g. charitable trust thousands of donors given to
charity by various individuals/entities.
II. B is the trustee the person who takes legal title to the property as trustee, owes
fiduciary duties to C(s) and D(s).
a. Can have co-trustees, successor trustees
b. Person or corporation can serve as trustee
c. A trust does not fail at its inception or thereafter for lack of a trustee because the
court will appoint a trustee to administer the trust property for the benefit of the
beneficiary
d. The trustee is a principal - a trustee is not an agent of the beneficiary
III. C is the beneficiary C is the one that gets the economic (income) benefit
a. Can have multiple Cs can have a class of beneficiaries
b. Must be ascertained or ascertainable within the period of the rule against
perpetuities
IV. D is the remaindermen who takes the property outright and free of trust
a. Remainderman can be unborn and unascertained
b. C and D can be the same person, so long as B is different, else there is a merger,
and the trust fails.
c. If there is no D, and C dies, then the trust property goes back to the settlor or the
settlors estate in a resulting trust
Utility of the Trust
I. Title division and asset segregation are what give the trust its utility
(1) Because the legal title not in the beneficiary, the beneficiarys incapacity or
death usually will not interrupt the continuity of the trusts administration
(2) Because the trust property is segregated from the trustees assets, not subject
to the claims of the trustees personal creditors
(3) Because the beneficiary holds equitable title, insulated from claims of the
trustees personal creditors
Creation of a Trust
I. Mental Capacity - mental capacity to make a will, mental capacity to create a
testamentary trust or a revocable inter vivos trust
II. Execution Formalities
a. Most jurisdictions do not require that an inter vivos trust instrument be executed
with the same formality as a will
b. UPC requires that inter vivos trusts be registered in an appropriate state court that
has jurisdiction over the trusts principal place of administration
III. The Trust Instrument
a. The fountainhead of the trustees powers is the trust instrument
b. The settlor has the right to include in the trust instrument any provision relating to
the management of property or to the duties and powers of the trustee, provided it
is not contrary to public policy or in derogation of the concept of the trust
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c. Trustees must be familiar with the provisions of the trust instrument
Types of Trusts
I. Inter vivos the trust was created during As lifetime
a. At common law, an inter vivos trust does not come into existence when the trust
document is created; it exists when the elements of the trust are established.
II. Testamentary trust created by the terms of the will arises when title to a portion
or all of the decedents probate estate is transferred from the executor or personal
representative to the testamentary trustee.
a. A will speaks at death creates no property rights until the time of death
i. So a testamentary test can not arise until after the death of the settlor
III. Resulting trust an equitable mechanism that gets the title from the trustee back into
the hands of the settlor or the settlors estate when a trust fails
a. See, e.g. Article 4th, Sample Trust provision creating Ds if none are alive or
available when the trust terminates
IV. Constructive trust a procedural equitable remedy
a. If property has been transferred as a result of mistake, fraud, duress, or undue
influence, then the party can plead that the transferee holds the property on a
constructive trust for the benefit of that party and can be ordered to transfer title to
the party. (To prevent unjust enrichment).
Trusts and the Statutes of Frauds

I. A signed writing is required when the trust involves real estate.
a. Oral trusts are permissible, but not in the context of real estate
II. Exceptions to the Statute of Frauds
a. Constructive Trusts equitable remedy
b. Purchase Money Resulting Trust equitable remedy
i. Example: If A gives B money to purchase real estate and B decides to keep
the real estate, the court may conclude that B is a trustee of a purchase
money resulting trust and holds the property for the benefit of A and is
obligated to deliver both title and possession to A
The Property Requirement

I. A trust cannot exist without property, and the property must be ascertainable.
a. If the trustee sells an item of trust property, a trust is impressed upon the proceeds
no mere change of trust property from one form to another will destroy the
relation
II. Must be a present transfer of property with an intention to do so.
III. Must be transferable to be entrustable
a. Any transferable property interest, legal or equitable, real or personal, tangible or
intangible, vested or contingent, may be the subject of a trust
i. If the trustee decides to sell the property held within the trust, a trust is
impressed upon the proceeds
b. The interest need not be full ownership of the property
IV. Interests that are not entrustable
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a. A hope or an expectancy (not to be confused with a legal or an equitable future
interest) is not property and thus may not be the subject of a trust.
b. Ones contractual rights to the personal services of another.
c. Property the settlor does not have title to.
d. People cannot be the subject of the trusts.
V. Property Requirement and Inter Vivos Trusts
a. Token Funding of Inter Vivos Trusts
i. Practice: establish inter vivos trust, token fund it with one dollar there is
a fiduciary relationship with respect to property, with the intent to add
more money/property later on.
VI. Property Requirement and Will Pour-Over Statutes
a. Pour-over will: has property of the testator pass to the trustee the trustee
becomes a legatee, receives the property in a fiduciary relationship, and
administers the funds according to the trust
i. The pour-over provision directs the executor of the decedents estate to
transfer a portion or all of the decedents estate to a trustee of a pre-
existing inter vivos trust
b. UPC essentially allows an inter vivos trust to arise without an inter vivos transfer
of property, provided the trustee is named a beneficiary of a portion of the
settlors probate estate pursuant to a pour-over provision in the settlors will
i. Clymer v. Mayo, 393 Mass. 754 (1985) (pour-over statutes)
1. Pour-over provisions in the will do not violate the statute, even
when the inter vivos trust is unfunded the statue does not
require that the trust res be more than nominal or even
existent; however, Common Law does not allow pour over
statute without the existence of a inter vivos trust
2. What matters is the existence of the trust instrument
c. Doctrine of Independent Legal Significance
i. Second Bank-State Street Trust Company v. Pinion
1. Doctrine of Independent Legal Significance
a. Permits a testator to effectively change the disposition of
his property without changing a will, if acts or events
changing the disposition have some significance beyond
avoiding/altering the requirements of the will.
b. Holding: A subsequent amendment to a trust is effective
because of the applicability of the established equitable
doctrine that subsequent acts of independent significance
do not require attestation under the statute of wills.
VII. Will Substitutes
a. In recent years, the revocable trust, the life insurance contract, and the employee
benefit plan have been transferring postmortem as much property as the will
these flexible, ambulatory, will-like devices have come to be known as will
substitutes
b. Life Insurance Beneficiary Designations
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i. Even the revocable designation of a trustee as the recipient of life
insurance proceeds, upon the future death of the insured, constitutes the
present transfer of property to the trustee
ii. The inter vivos trustee is the 3rd party beneficiary of a contract under
which there has been an inter vivos exchange of consideration between the
insured and the insurance company
iii. The trustee has an enforceable claim against the insurance company in the
even the designation remains unrevoked at the death of the insured
c. The Custodial IRA
i. Because an agency terminates at the death of the principal, many
jurisdictions have enacted statutes that provide that an IRA custodian may
honor the postmortem dispositive provisions of the beneficiary disignation
form notwithstanding the Statute of Wills
ii. In essence, these statutes extend the life of these IRA agency arrangements
beyond the death of the taxpayer-principal
VIII. Wrongful Defunding
a. If trust property is wrongfully removed from a trust through the actions of a
trustee or another, the trust ought not to be extinguished for want of trust property
b. A reasonable argument can be made that the absent trust property has merely been
transformed into another type of property, namely the personal equitable
obligation of the wrongdoer
Powers of Appointment
I. A (the settlor) may decide to bestow (donate) to X (who may be a third party, C, or A
himself) a power of appointment
II. A power of appointment is the power to direct the title-holder (B) to turn over the
property to X, thus aborting or short-circuiting the trust
a. If the power is part of a revocable inter vivos trust, the settlor can revoke it
b. If the power is part of an irrevocable inter vivos trust, or a testamentary trust,
cannot take the power back once it has been given
c. Can limit, in the trust instrument, the amount of property the holder of the power
can appoint
III. The power of appointment is a power of disposition and its terms are set forth in the
terms of the trust document
IV. The holder of the power of appointment is not a fiduciary
a. He may arbitrarily exercise the power provided he does so in accordance with the
terms of the governing instrument
b. The trustee is compelled to honor the instructions of the holder of the power,
despite the fact that the exercise of the power might not be in the best interest of
the beneficiaries
c. Trustee does not have to follow directions from the power holder that are against
the terms of the trust
V. The Parties
a. Donor the creator of the power, the settlor of the trust determines the nature
and the scope of the power and defines how it may be exercised by the power-
holder
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b. Donee the holder of the power
c. Objects persons to whom an appointment can be made (i.e. potential
appointees)
VI. Types of Powers of Appointment
a. General Inter Vivos Power of Appointment
i. Gives the powerholder (i.e. the donee) the right, while alive, to direct the
trustee to turn over the trust property to anyone in the world, including
himself or his creditors
ii. The right is the functional equivalent of ownership in the underlying trust
property
1. The right to revoke a trust is a general inter vivos power of
appointment
2. See, e.g., Article 2nd of Sample Trust
b. General Testamentary Power of Appointment
i. Gives the powerholder a right only by will to direct the trustee to turn over
the trust property at least to the powerholders estate, or to the estates
creditors
ii. See, e.g. Article 3rd of Sample Trust.
c. Limited/Special Inter Vivos Power of Appointment
i. This is a power of appointment which may be exercised during the life of
the donee in favor of anyone except the donee himself or his creditors
ii. This generally avoids tax consequences because does not give him a
property right
d. Limited/Special Testamentary Power of Appointment
i. Exercisable by the will of the holder
ii. Holder may not appoint it to her own estate or to the creditors of her
estate
VII. Exercise of Powers of Appointment in Further Trust
a. The holder of a general power of appointment may exercise the power in further
trust, so long as the governing instrument does not prohibit it (e.g. instead of
appointing the property outright and free of trust to X, appoint it to a trustee for
the benefit of X)
i. Courts are split on whether a holder of a limited/special power holder may
exercise it in further trust majority rule is that they can
ii. Minority rule says that there can be no further encumbrances
b. If the holder of a general power of appointment exercises the power in further
trust, a new trust is probably created
c. Doctrine of Capture
i. If C possesses a general power of appointment (either inter vivos or
testamentary) and exercises the power of appointment in further trust, and
the further trust fails, the property goes by resulting trust to C or Cs estate
ii. This is because C essentially functions as the settlor of the new trust
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The Rule Against Perpetuities
No interest is good unless it must vest, if at all, not later than twenty-one years after
some life in being at the creation of the interest.
Overview
I. Places a limit on how long certain types of trusts may continue
II. Attempts to prevent the creation of a fixed succession of future interests that will
cause ownership of property to shift perpetually among devisees who have no power
to alienate the property
III. Intended to forward the circulation of property
The Concept of Vesting

I. Remainder a future interest which can become a present possessory interest
only upon the expiration of a prior estate.
a. If there is a condition precedent, the interest is not vested until the condition
precedent is met, therefore the interest is contingent.
b. Can also be contingent if the holder is unknown or unascertained
c. A vested equitable remainder under a trust is a future interest that is subject to
no condition precedent except the termination of the preceding equitable estate
Vesting Hypotheticals
I. A transfers property to B in trust for Mrs. Jones for life, remainder to Mr. Jones,
who currently lives in a common law jurisdiction with Mrs. Jones
a. Mrs. Jones takes a vested, equitable life estate, Mr. Jones takes a vested,
equitable remainder his interest is not subject to any condition precedent other
than her life estate expiring.
i. Should Mr. Jones die during the lifetime of Mrs. Jones lifetime, because
he has a vested equitable interest, when Mrs. Jones dies, the trust property
will pass to Mr. Jones estate
II. A to B as trustee for the benefit of C (Mrs. Jones) then to D (Mr. Jones) if he shall
survive her
a. Mr. Jones then has a contingent remainder interest he must survive C it is a
condition precedent of survivorship
III. A to B (as trustee) to C1(A) for life, and upon As death, to C2 for life, and on her
death, the interest passes free of trust to the then living descendants of A. A had
reserved a right to revoke (had reserved a general inter vivos power of
appointment)
a. During As lifetime, what is Ds interest?
i. Contingent equitable remainder they get trust property after the life
estates (this is why it is a remainder), it is an equitable remainder because
the trustee has the legal title, it is contingent because the interest is subject
to conditions precedent (D needs to be born, D needs to survive C2, and A
does not revoke the trust)
ii. If A/C1 dies, C2 has property still a contingent equitable remainder
remainder because D get it at the end of the estate, equitable interest
because the trustee holds legal title, contingent because there are
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conditions precedent (D needs to be born, surviving C2 NOT THAT C2
HAS TO DIE)
iii. When C2 dies, Ds interest becomes a vested
iv. If there are no Ds alive when C2 dies, trust fails, property reverts back to
A or As estate
1. Reversionary interests are always vested because a resulting trust
is the equitable equivalent of a reversion and because reversions
are vested, the possibility of a remote (in time) failure of the trust
does not implicate the RAP
IV. A to B (as trustee) for C for life, then to X for life if he marries, then remainder
outright and free of trust to D
a. D has a vested remainder it does not actually matter what happens to X if X
marries, remainder goes to D, if X does not marry, X falls out of the formula, and
then D gets the property
V. A to B for C for life then to the children of X
a. At the time the property is transferred from A to B, X is alive and has a child, D
what is the nature of Ds interest?
i. D has a vested remainder, subject to partial divestment (subject to
open)
ii. X can have other children if X has other children, D gets a lesser share
iii. Xs unborn children have a contingent equitable remainder
1. They must first be born, a condition precedent to their interest in
the property held in trust becoming vested
VI. A to B for C for life, then to D (ascertained at the time property is passed), but if D
does not marry before C dies, then to X
a. What is the nature of Ds interest at the time the property passes from A to B?
i. D has a vested equitable remainder subject to complete (total)
divestment on a condition subsequent
1. D is known and ascertained at the time the property is passed, and
no condition precedent exists in order for Ds interest to become
possessory
2. Although Ds interest is vested, his failure to marry before the
death of C a condition subsequent could divest him of his
interest
ii. X has a contingent equitable remainder because Ds failure to marry
prior to the death of C constitutes a condition precedent to Xs estate
becoming possessory
VII. A to B for C for life, remainder to D (ascertained) if E marries F
a. What is Ds interest?
i. Vested (transmissible) contingent remainder
ii. If E and F are alive and capable of marrying, D can transmit his interest in
his will
VIII. If there is a power of revocation in someone other than D, then D has a contingent
equitable remainder
a. Ds interest is contingent as it is subject to the condition that the holder of the
power choose not to exercise it
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b. If A or C has a general power of appointment, Ds interest is contingent
Creation of the Interest

I. Testamentary Trust
a. Interests are created at the death of the testator.
b. In a testamentary trust, the testator can never be the life in being at the time of the
creation of the testamentary trust
II. Irrevocable Inter Vivos Trust
a. Contingent interests are created at the time the trust is funded.
b. If there are multiple fundings must consider it as two separate trusts (separate
trust per funding, separate RAP analysis per funding)
i. E.g. settlor places a Rothko painting in irrevocable IV trust, and then adds
money to irrevocable IV
1. Do RAP analysis for Rothko painting interests created at the time
Rothko was placed in trust
2. Do RAP analysis for money interests created at the time money
was placed in the trust
III. Revocable Inter Vivos Trust
a. Where settlor has reserved a right to revoke (through general inter vivos power of
appointment in himself)
b. Contingent interests do not exist where the trust is revocable the whole trust
instrument is contingent upon the settlor not revoking the trust
c. For RAP analysis the contingent interests are not deemed to come into existence
until the trust becomes irrevocable (which is generally not until the settlor dies)
IV. Unborn Widow Doctrine
a. E.g. A testamentary trust is established for the benefit of C and his widow
upon the death of the survivor of the two, the property passes outright and free of
trust to the settlors then-living issue. At the time the trust is created, C is 45
years old, has a spouse and a grown child.
b. There is a possibility that C may marry again and his second wife may be a person
who was unborn at the settlors death
i. The first wife, the child, and C could die in that order and the unborn
widow could then die more than 21 years after the death of C, her death
triggering an impermissible vesting in certain non-life-in-being issue more
than 21 years after the death of C, the last life in being
V. Class Gifts
a. In wills context, a class closes at the time of the testators death
b. A trust instrument will explain when a class closes for RAP purposes
c. All-or-Nothing Doctrine
i. Require that a class gift stand or fall as a whole
ii. A class gift does not vest as a collective until the interest of each member
has vested if it is possible that the interest of one class member can vest
too remotely, all the interests, including the interests of any lives in being,
fail
iii. Exceptions
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1. Where the gift is a specific sum to each person described by a class
designation, some members may take their gifts though the gifts of
others are void
2. Where there is a gift to a class of sub-classes, the gift to a
particular sub-class can be valid even though the gift to another
sub-class is too remote
d. Rule of Convenience
i. Unless the terms of the trust provide otherwise, a class closes at the time
of first distribution
Method of Analysis
I. Start with a statement of the rule: No interest is good unless it must vest, if at all,
not later than twenty-one years after some life in being at the creation of the
interest.
II. Is there a contingent interest out there?
i. Are there remaindermen who are neither known nor ascertained?
ii. Are there any conditions precedent which must be fulfilled prior to the
remaindermans interest becoming possessory?
iii. N.B. a general power of appointment in a beneficiary means that the beneficiarys
interest is vested, while a general power of appointment in a settlor means that the
beneficiarys interest is contingent
III. When is the contingent interest created?
i. Is this an inter vivos trust?
i. Is it revocable?
ii. Is it irrevocable?
ii. Is this a testamentary trust?
IV. Who are the worst-case lives in being?
i. The lives in being are any and all lives that were in existence at the time the trust
was created
V. When, after the death of the last life in being, does the contingent interest become a
vested interest? (count to 21) (assuming there is no Rule violations)
i. If vesting occurs more than 21 years beyond the last life in being at the creation of
the interest, the rule has been violated
Leech Hypotheticals
I. Measuring Life Concept
i. The life in being need not be connected in anyway with the property or the
persons designated to take it
ii. The measuring lives must be in being at the creation of the interest
iii. The measuring lives need not be mentioned in the instrument
iv. Any number of lives may be selected, provided they are not so numerous as
to make it impossible to ascertain their termination
v. Gestation is included in the perpetuities period if you are conceived, you
are a life in being (get 21 years & 9 months)
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vi. Worst Case Life in Being take a picture at the time the interest is created
II. Leech/Round Hypothetical # 1: Bequest to my grandchildren who shall reach
the age of 21
i. Articulate the Rule: No interest is good unless it must vest, if at all, not later
than twenty-one years after some life in being at the creation of the interest
ii. Is there a contingent interest out there?
1. A grandchild must be conceived and born (condition precedent)
2. A grandchild must reach the specified age of twenty-one (condition
precedent)
iii. When is the contingent interest created?
1. This is a bequest, or a testamentary provision, and therefore the
interests are created at the death of the settlor
iv. Who are the worst-case lives in being?
1. The children of the settlor, even though they are not mentioned in the
instrument (children are alive at the time of settlors death)
v. When, after the death of the last life in being, does the contingent interest
become a vested interest?
1. Even if we were to eliminate all existing lives in being (except for
one child of the settlor), this would still be a valid gift
a. For there to be a grandchild, the grandchild must be born
during the life of a child, who would be a life in being
b. Even if the child died immediately after the birth of the
grandchild, that grandchild will reach the age of 21 within the
specified limit, or the grandchild will die the interest will
either vest because the condition precedent has been met or
it will fail because the condition precedent has not been met
either will occur within 21 years, so there is no Rule
violation
III. Leech/Rounds Hypothetical # 2: An irrevocable inter vivos trust for the benefit
of my grandchildren who shall reach the age of 21
1. A grandchild must be conceived and born (condition precedent)
2. A grandchild must reach the specified age of 21 (condition
precedent)
1. At the time the trust is funded
1. Settlor
1. The settlor in this instance could fund the trust and then years later
have his only child. On the day the child is born, the settlor (the only
life in being) dies, leaving no remaining lives in being. The child
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could then wait beyond the vesting period until having a child (the
grandchild of the settlor)
a. The conditions precedent would have been fulfilled, but they
would have been fulfilled beyond the vesting period, and thus
constitute a Rule violation
2. The is likely a rule violation
3. Remember: If the contingent interests in D violate the RAP, that part
of the trust blows up, but other aspects of the trust may be ok (e.g.,
the life estate)
IV. Leech/Rounds Hypothetical # 3: Bequest to John Jones grandchildren who
shall reach the age of 21
1. A grandchild must be conceived and born
2. A grandchild must meet the specified age of 21
interest are created at the death of the settlor
1. John Jones
2. N.B. settlor is NOT a life in being (testamentary bequest)
1. If John Jones has no children at the time the testator dies, and he has
a child 25 years later and dies the day the child is born, and his child
has a child (John Jones grandchild) 25 years later, the rule is
violated
2. The conditions precedent to vesting will likely be fulfilled long after
the period for vesting allowed by the rule
V. Leech/Rounds Hypothetical # 4: Bequest to such of my children and more
remote issue as shall be living 21 years after the death of the last survivor of R, S,
T, U, V, W, X, Y, Z (healthy babies selected at random from across the world)
1. A potential beneficiary must be born so that they might become a
descendant of the settlor (part of his issue)
2. A potential beneficiary must be alive 21 years after the death of the
last survivor
interests are created at the death of the settlor
iv. Who are the worst case lives in being?
1. The last baby standing
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1. The interests will vest 21 years after the death of the last of the
named babies
The Rule Against Perpetuities and the C Interest

I. A Note on Discretionary Trusts
i. Discretionary power in the trustee allows the trustee to either withhold money
from C (an income beneficiary) or to invade principal in order to pay C
ii. The trustees choice to exercise discretion is a condition precedent for RAP
purposes, rendering the income beneficiarys interest contingent
1. There are no vested interests in a fully discretionary trust
2. There are no cross-contingencies in a fully discretionary trust
iii. No RAP issues if the beneficiaries were alive when the instrument was created
or took effect only RAP issues if the beneficiaries were born after
II. Warner v. Whitman
i. Trust Formula: Irrevocable IV trust: A to B for C for life, then to Cs surviving
children, from time to time, and then to D
1. Irrevocable inter vivos trust: interests are created at the time the trust is
created
2. At the time the trust is created, C has 2 children, C1 and C2
3. From time to time language: creates cross-contingencies while each
child has an interest in their own share, they also have an interest in
the other ones share, if the other one dies
4. Several years later, C has another child (C3), a non-life in being at the
time the trust was created
ii. Issue: The validity of the income beneficiarys interest under the RAP
iii. RAP Analysis
5. Articulate the Rule: No interest is good unless it must vest, if at all, not
later than twenty-one years after some life in being at the creation of
the interest
6. Is there a contingent interest out there?
a. A child wishing to enter the class must be born to C
b. A child of C has to survive the death of C
c. The children of C have to survive one another in order get their
siblings interest in the trust (cross-contingencies)
7. When is the contingent interest created?
a. Because this is an irrevocable inter vivos trust, the interests are
created at the time of the funding
8. Who are the worst case lives in being?
a. C, C1, C2
9. When, after the death of the last life in being, does the contingent
interest become a vested interest?
a. 40 years after Cs death C1 dies C2s interests vests when C1
dies (more than 21 years)
b. C2 dies 20 years later
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c. Ds interest becomes possessory 60 years after the creation of
the interest this is ok, because was vested from the start
10. How could you fix this?
a. A B C for life, and upon the death of C, the trust estate shall
be divided into as many equal trust shares as there are children
of C then living childs interest will vest immediately upon
Cs death
b. Each trustlet shall run for the benefit of one child, for the
lifetime of that child
c. Upon the death of the child, the trust principal will go the
childs executor
III. Example 1: In a testamentary trust A to B for C for life, and upon the death
of C, the income is to go to the child of C living from time to time, and when no
child of C is alive and under the age of 40, the property goes outright and free
of trust to the issue of A then living
11. Child must be born to C
12. Child must survive the death of C
13. Child of C must survive his siblings (cross-contingencies)
14. This is a testamentary trust, so the interests are created at the death of
A
15. C & Cs children
16. As in Warner v. Whitman, there might be shifting of income among
non-lives in being (among children born after the death of A) more
than 21 years after the death of A
17. Violation as to the income interest (the C interest)
18. D has a contingent equitable remainder the conditions precedent
cannot necessarily be fulfilled within 21 years after the last life in
being at the creation of the interest (as C, a life in being could die, and
C1 would not become 40, fulfilling the condition precedent, for more
than 21 years)
19. Violation as to the principal interest (D interest)
IV. Example 2: In a testamentary trust A to B for C for life, upon the death of C,
to the great-grandchildren of A then living
20. The great-grandchildren of A must be born
21. The great-grandchildren must survive C
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22. Testamentary trust interests are created at the death of A
23. C
24. When C dies, the interest of the remaindermen will either immediately
vest or fail (within the period of perpetuities), and therefore their
interest does not violate the RAP
V. Example 3: In a testamentary trust A to B for C for life, upon the death of C,
trustee shall hold the property for the life of the youngest living issue of A (baby
X), then upon the death of baby X, to baby Xs estate
25. The remainderman has to be born
26. He has to be the youngest then-living issue of A at the death of C
27. This is a testamentary trust interests are created at the death of A
28. C
29. When C dies, we immediately know who the youngest then-living
issue of A is, and therefore the interest immediately vests or fails
(within the period of perpetuities). As such, the interest does not
violate the RAP
Consequences of a Violation of the Common Law Rule

I. If an equitable contingent interest fails, it does not mean necessarily that the entire
trust fails
II. The tainted interests are constructively stricken from the instrument and the
trustee will continue to administer any remaining equitable interests that may be
in compliance with the Rule
III. As a consequence of violations, the interests that violate are deemed to have been
non-existent, and the trust will stop at the point it was supposed to go to them
The Perpetuities Saving Clause

I. A certain clause is designed to trigger a vesting within a period of the common
law RAP, no matter what
II. Most clauses operate by providing for a termination in all events 21 years after the
death of the last survivor of specified lives in being when the trust became
irrevocable, at which point the property is distributed outright and free of trust to
remaindermen specified in the saving clause
III. E.g. Leech/Rounds Hypo 4
IV. E.g. Article 6th, Sample Trust: Notwithstanding anything herein contained to the
contrary, unless sooner terminated under the provisions hereof, the trusts
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hereunder shall terminate twenty-one years after the death of the last survivor of
the Donor, his wife, and the issue of the Donor living at the date of the Donors
death
Charitable Trusts
I. Charitable trusts are generally not exempt from the Rule
II. If the interests vests in the charity within the RAP period, then the charitable trust can
last in perpetuity
i. A gift over from a non-charity to a charity certainly would not pose a RAP
problem if the charitys remainder interest had vested ab initio
ii. There is likely no RAP violation should the trust property revert to the settlor
or his or her probate estate upon a resulting trust in the event that at some
point there is no charity to shift the equitable interest to (reversionary interests
are always vested)
III. Can then allow the interest to shift between charities, so long as the trust remains for
the benefit of the public/charitable purposes can never go back into private hands
Termination, Modification & Merger

Revocability of Trusts
I. General Rule: a trust, once established, ordinarily cannot be terminated or its terms
modified in mid-course, except as provided by its terms
a. Common law assumes that all trusts are irrevocable unless otherwise clearly
indicated
b. UTC assumes the opposite that all trusts are revocable unless clearly indicated
II. Inherent in the unrestricted right to modify or amend a trust is the right to revoke it
essentially then, a right of revocation, and unrestricted right to amend a trust, and a
general power of appointment are all the same thing
III. Article 9th of the Sample Trust: The Donor reserves the right at any time or times to
amend or revoke this trust, in whole or in part, by an instrument in writing delivered
to the Trustee. If an agreement is revoked in its entirety, the revocation shall take
place upon the delivery of the instrument in writing only when consented to in writing
by the Trustee.
a. Most trusts will contain a provision such as any amendment or any partial
revocation shall take effect only when consented to in writing by the Trustee
trustee should always be part of the decision to change his duties
Merger
I. Occurs when one person possesses the entire legal interest and the entire beneficial
interest in property (one person cannot have the entire B and C interest together at
once can do this, however, if you put someone in as co-trustee)
II. If a merger has occurred, at the death of the party holding both the equitable and legal
interest, the property will pass in accordance with the terms of the persons will and
not in accordance with the terms of the instrument
a. In the case of merger, there is no more trust, and therefore all the property will
pass in accordance with the will
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III. Example 1: A to B to C for life and then to D (B, C, and D are the same person)
a. Merger occurs this is merely an inter vivos gift from A to B because B has the
entire legal and equitable interest
IV. Example 2: A to B and C as co-trustees, for B for life, and then to Bs estate
a. There is no merger
b. One person does not own the entire legal interest (B shares with C) while owning
the entire equitable interest
V. Example 3: A to B to C for 10 years (B and C are the same person) and then trust
ends (silence)
a. After the 10 year period, there is a resulting trust in A, because B/C will not retain
the equitable title after 10 years
b. A has a vested equitable reversionary interest
c. No merger
Beneficiarys Rights
I. Settlors Rights
a. Assuming that the settlor reserves no powers of appointment, no rights to amend
or revoke, no beneficial interest, and is not a trustee, the settlor is out of the
picture
II. Beneficiarys Rights
a. The beneficiarys equitable interest, no matter how ephemeral, is itself an interest
in property (either income as C, or the trust property (the principle) itself as D)
i. This is a real property interest and is legally treated like any other property
interest
ii. It may be sold or transferred
b. Right to Information and Confidentiality
i. A beneficiary has a right to full information about the concerns of the trust
at all reasonable times and may examine the trust instrument, the trust
property, accounts, vouchers, and usually the opinions of counsel
consulted by the trustee in respect to trust affairs
ii. A trustee has a duty to account to the beneficiary this duty translates into
a right in the beneficiary to all information needed to protect the
beneficiarys equitable interest
c. Right to Prompt and Efficient Administration
i. To the extent that the trustee is dilatory or inefficient in the administration
of his trust, he interferes with that property interest and is in breach of
trust
d. Rights to Remedies for Breaches of Trust
i. The beneficiary has standing to seek judicial enforcement of the terms of
the trust and to have the trust made whole for any loss occasioned by the
trustees breach of trust
ii. Does not matter whether the beneficiarys interest is vested or contingent,
or whether the beneficiary is a life beneficiary or a remainderman
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Creditors Rights in the Trust Context
I. Creditors Rights When A and C are Different

a. In this situation, the income stream is Cs property right it can be sold,
transferred, and accessed by creditors
i. Inter vivos: Because equitable interests of non-settlor trust beneficiaries
and remaindermen are property interests, these interests might be subject
to the claims of the beneficiaries creditors
ii. Postmortem: If the equitable interest of a non-settlor trust beneficiary
terminates upon the beneficiarys death, neither the interest nor the subject
property is reachable by the beneficiarys postmortem creditors
b. Spendthrift Clauses
i. Spendthrift clause terms of a trust which restrains both voluntary
and involuntary irrevocable transfers of a beneficiarys equitable or
beneficial interest
1. Seeks to prevent the creditor of C from seizing Cs income stream
2. No specific form of words is necessary to impose a direct restraint
on alienation settlor must intend to impose such a restraint
3. N.B. does not contravene the traditional rules regarding alienability
of property, because those rules concern the legal title, not the
equitable interest
4. Child support obligations and alimony can override a spendthrift
clause
ii. E.g. Broadway National Bank v. Adams
1. Approves of the use of spendthrift clauses in MA
2. N.B. Once the actual distribution leaves the hands of the trustee, it
is the property of the beneficiary (C) title has been transferred
from the trustee and is not the property of C and is subject to the
actions of Cs creditors
iii. Article 10th of Sample Trust: The interest of any beneficiary hereunder,
either as to income or principal, shall not be anticipated, alienated or in
any other manner assigned by such beneficiary and shall not be subject to
any legal process, bankruptcy proceedings, or the interference or control
of creditors or others
c. Creditors Rights in the Context of Discretionary Trusts
i. The fully discretionary trust gives the trustee the power, in accordance
with the terms and provisions of the trust instrument, to sprinkle and spray
income and invade principal if need be for the benefit of either the income
or principal beneficiaries, and the trustee may do so discriminatorily
ii. This is a powerful weapon against creditors
1. Because disbursement of the property is at the discretion of the
trustee, and given that the creditor is not a party to the trust, the
creditor does not have standing to enforce the disbursement by the
trustee
2. Fully discretionary trust affords more spendthrift protection than a
classic spendthrift trust (when A and C are different)
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iii. Example: C is the income beneficiary of a fully discretionary trust C
does not pay her tuition
1. The institution cannot extract payment from the trust
2. The school does not have standing to enforce the terms of the trust
3. C would have standing to sue the trustee for abuse of discretion for
refusing to pay
4. Issue would then be whether trustee was abusing discretion by
refusing to pay
II. Creditors Rights When A and C are the Same

a. General rule: for public policy reasons, a settlor cannot place property in trust for
the settlors own benefit and keep it and/or the equitable interest beyond the reach
of creditors
i. If the settlor retains the right during his lifetime to revoke the trust, or
retains an unrestricted right to amend it, the subject property will be
reachable by the settlors creditors, and later by the creditors of the
settlors estate, to the extent the property would be reachable were the
settlor to own the property outright and free of trust
b. A spendthrift provision in a trust established for the settlors own benefit is
unenforceable, at least as against the settlor-beneficiarys creditors
c. Ware v. Gulda
i. Fully discretionary inter vivos trust, A and C were the same, no express
reserved right of revocation, spendthrift clause
ii. The settlors former attorney is trying to get paid and is trying to attack the
trust assets as a means of payment
iii. Court allows creditors to access to public policy reasons:
1. As a matter of public policy, and notwithstanding the discretionary
nature of the trust and notwithstanding the spendthrift provision in
the trust, where a person creates for his benefit a trust for support
or a discretionary trust, his transferee or creditors can reach the
maximum amount which the trustee under the terms of the trust
could pay to him or apply for his benefit
2. Creditors are entitled only to the amount that could be paid to the
beneficiary
iv. C has a constructive general inter vivos power of appointment
1. General inter vivos power of appointment is a power to appoint to
yourself or to your creditors
2. It would then appear that this is not an irrevocable trust she can
effectively extract value from the trust by running up debt and then
simply point her creditors to the trust when they seek payment
d. Settlors Creditors Rights Postmortem
i. Reserved right of revocation or general inter vivos power of appointment
1. Current trend of the law favors allowing the settlors post-mortem
creditors, as a well as a surviving spouse, to access the principal of
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an inter vivos trust if the settlor reserved a personal power to
consume (inter vivos power of appointment) the underlying
property at the time of the settlors death
ii. Reserved General Testamentary Power of Appointment
1. If settlor established an inter vivos trust, reserving only a general
testamentary power of appointment over the underlying trust
property, the settlors postmortem creditors generally will not have
access to the underlying trust property where the settlor dies
having not exercised the power
iii. State Street Bank v. Reiser
1. A and C are the same
2. Creditors of the deceased settlor may access property held in trust
and over which the settlor had control at his death
3. We hold, therefore, that where a person places property in trust
and reserves the right to amend and revoke, or to direct disposition
of principal and income, the settlors creditors may, following the
death of the settlor, reach in satisfaction of the settlors debts to
them, to the extend not satisfied by the settlors estate, those assets
owned by the trust over which the settlor had such control at the
time of his death as would have enabled the settlor to use the trust
assets for his own benefit.
e. Domestic Asset Protection Trust
i. Trust created by legislation in certain jurisdictions
ii. If create a self-settled trust in Delaware or Alaska (Ware v. Gulda) trust,
can insulate that trust from your own creditors
iii. Races between states to attract trust business into its own jurisdictions
III. Creditors Access to C When C Has a General Inter Vivos Power of Appointment
a. The mere possession by a non-settlor donee of an unexercised general inter vivos
power of appointment at the time of the donees death, in and of itself, will not
subject the trust property to the claims of donees postmortem creditors
b. At common law: a non-settlor holder of a general power of appointment,
whether testamentary or inter vivos could not be compelled by creditors of others
to exercise it
i. But if the power is exercised, the property subject to the power may be fair
game for the holders creditors
c. Property subject to a limited/special power of appointment can never be reached
by the holders creditors, whether or not the power is exercised, except to the
extent required by rules of law relating to fraudulent conveyances
d. Uniform Trust Code Trend: Certain state statutes permit the creditors of the holder
of a non-self-settled general inter vivos power of appointment to reach the
property, even is the power is unexercised
IV. Spouse as Creditor

a. As a general rule, if a creditor can get at a trust (generally when A and C are the
same), the spouse can get at it
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i. Example: A and C are different (trust established by grandfather for
benefit of granddaughter, she is about to get divorced)
ii. Court generally cannot break this kind of trust and order the trust to be
equally divided
iii. But doesnt keep the court, for asset division purposes, for counting the
trust interest as a property right, and giving more assets to the other spouse
for allowing that person to own that interest (for computation purposes,
will put the value of the contingent equitable interests on her side of
ledger, and, in exchange, will take some of the assets that she owns
outright and putting them on his side of the ledger)
iv. Court could also issue a if as and when order to the extent that the
trustee chooses to exercise his discretion, x% will go to wife, y% will go
to husband
1. This can put an undue burden on the trustee, who has a fiduciary
duty to defend the trust
b. Purchase Money Resulting Trust
i. One of several equitable devices that a court may deploy when reordering
the economic interests of the parties to a divorce, particularly their
interests in the marital home, or when unmarried cohabitants go their
separate ways
ii. Courts may impose a trust on the property in favor of each spouse in
proportion to his or her contribution
iii. General rule: in order to benefit from the imposition of a purchase money
resulting trust, one must have contributed to the purchase price at the time
of purchase
c. Express Trust
i. If a trust is accessible to a beneficiarys creditors, it will be accessible to
the beneficiarys spouse for the spouses support (alimony), and will be
subject to property division in the event of divorce, and in certain
circumstances, the spouse will have access where the creditors will not
ii. The spouse may be entitled to pierce a spendthrift trust for alimony and
child support, even when the beneficiary is not the settlor
iii. As a matter of public policy, the beneficiary should not be permitted to
enjoy the equitable interest while neglecting to support his dependents
iv. The spouse of a beneficiary may not reach the beneficiarys contingent
equitable interest in a trust under which someone else possesses a general
inter vivos power of appointment (right of revocation) or in a fully
discretionary trust created by someone other than the beneficiary
d. Sullivan v. Burkin
i. This case involved the spousal election statute which allows a spouse to
waive the provisions of the will and to take a share of the assets of the
estate. In this instance, her husband had set up a revocable IV trust in
which he was both the settlor (A) and beneficiary (C). The husband
transferred all his assets into the trust, leaving the will with little to no
property in other words, there was no property in the estate for her to
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elect. She therefore tried to attach the property in the trust and have it
included in the estate.
ii. Woman in this case loses, but court crafts a new rule
iii. New Rule: For the future, as to any inter vivos trust created or amended
after the date of this opinion, the estate of the decedent, for the purposes of
M.G.L. ch. 191, 15, shall include the value of assets held in an inter
vivos trust created by the deceased spouse as to which the deceased
spouse alone retained the power during his or her life to direct the
disposition of those trust assets for his or her benefit, as, for example,
by the exercise of a power of appointment or by revocation of a trust
1. Trust must have been created during marriage
2. Power can be exercisable by deed or will
3. This only applies when A and C are the same
a. SJC had the opportunity to extend this rule to situations
where A and C are different, and chose not to
iv. Mechanics
1. Surviving spouse should go to the executor
2. To the extent that you cannot get satisfied from the probate estate,
can file a complaint to reach and apply (in equity), and dip into the
revocable trust in order to recover
V. Rights of Beneficiarys Creditors

a. General Rule: A beneficiarys creditors and spouse may reach that portion of the
equitable interest of the underlying trust property itself over which the beneficiary
possesses an affirmative right of consumption, such as in the case where there are
no enforceable spendthrift restrictions
Types of Trusts
I. Testamentary Trust
a. All terms of such trust are set forth in the will
b. The trust speaks at the death of the testator and is filed in the probate court
II. Inter Vivos Trust

a. This trust requires funding during the life of the settlor and can be used by the
settlor as a wealth-management device, and as a way to take care of the settlor
throughout his lifetime
b. This is a much more private document
c. The terms go into effect immediately upon the creation of the trust (upon funding)
d. If the terms of the trust simply require the trustee to pay the trusts income to the
beneficiary, the default law has been that the payment must be made directly to
the beneficiary at reasonable intervals (normally monthly or quaterly)
III. Discretionary Trusts

a. The classic discretionary chart grants the trustee broad generalized discretion in
his fiduciary capacity to pay income and distribute principal to the beneficiary
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i. Trustees discretionary authority is not unlimited must be exercised in
good faith and within limits
ii. Discretionary powers to sprinkle, spray, and accumulate income and to
invade principal are governed by standards set forth in the terms of the
trust
1. If the trust instrument grants the trustee the discretionary power to
pay income or distribute principal to the beneficiary for the
beneficiarys maintenance and support, the trustee will most likely
be under an affirmative duty to determine if the beneficiary needs
funds
iii. Courts will not second-guess a trustees exercise of discretionary authority,
unless there has been a clear abuse of discretion
iv. Trustee should document executed discretionary decisions
b. It is now common practice for settlors to bestow on trustees the authority to favor
the income beneficiary over the remainderman and vice versa and to discriminate
between and among member of the class of income beneficiaries fiduciary
dispositive power
i. Trustees have the power to make discretionary distributions of income
to the income beneficiaries
ii. Trustee has no power to invade principal for the benefit and the
current beneficiary
iii. The fiduciary dispositive power is per se non-delegable
iv. The fiduciary dispositive power must be expressly granted
c. Article Third of Sample Trust: The Trustee shall pay from the net income of the
trust estate and, if reasonably necessary in the judgment of said Trustee taking
into account funds available from other sources, from the principal thereof, to
such one or more living on the payment date of the Donors wife, his children,
and the issue of any deceased child, such amounts, and in such proportions
among such persons, as the Trustee may determine to be advisable and in their
best interests.
d. Cs Interest in a Discretionary Trust
i. C has a contingent equitable interest
1. The condition precedent to C receiving the income is the trustees
exercise of discretion in favor of C
2. C interests in discretionary trusts are never vested
ii. C has standing to go into court and complain about the activity of the
trustee
1. Courts are very hesitant to undo any action of a trustee acting in
his discretion unless there has been some clear abuse of authority
e. Evans v. Abney need state action for some sort of constitutional violation in the
trust context, which will very rarely occur
IV. Employee Benefit Plans

a. Defined Contribution Plans (401(k))
i. On condition of your employment, your employer will agree to set aside
some piece of property over time
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1. Segregated amount the employer does not contribute
ii. The funds set aside are separate from the assets of the company
1. The companys creditors cannot get access to the assets of the plan
participants
iii. Each 401(k) is effective a trustlet
1. You are the income beneficiary, and when you fill out the
beneficiary form in HR, you are designating a remainderman (D)
b. Defined Benefit Plan (Pension)
i. The treasurer of the corporation and the actuaries tell the corporation how
much has to be put into one large pot to pay for the benefits of all those
who rely on the plan
1. Go to trustee bank with defined benefit trust, pursuant to a plan
drafted by lawyers/actuaries/accountants company from time to
time will contribute enough property to the trust
2. The better the investments do, the fewer corporate assets have to
be put in the trust
3. Employees have an interest in the plan their interests are secured
by the corporate assets subject to the trust
4. Because of spendthrift provision, creditors of employees and
corporations cannot reach these funds
ii. The is not an individual plan
iii. Pension Benefit Guarantee Corporation: intended, through contributions of
the company, to ensure the viability of these plans, should the company go
under
V. ERISA Plans
a. ERISA regulates defined benefit plans and defined contribution plans
b. Certain benefit plans are considered qualified plans under ERISA
i. Entails certain tax benefits
ii. For these plans to be qualified, the plan must have a spendthrift provision
VI. The Nominee Trust

a. Refers to the use of a trust as a commercial instrument
b. Trusts Used for Commercial Purposes Generally Function Like Corporations
i. The shares of vested beneficial interests, for example, are generally
alienable like shares of corporate stock
ii. A share of beneficial interest being an item of intangible personal property,
it generally may be pledged or sold by the holder
iii. Some states require that the nominee trust instrument be recorded in the
registry of deeds
1. Many states have eliminated the recording requirement
2. N.B. Massachusetts now allows for the recording or registering of
a certificate that sets forth information about the trust in lieu of
recording or registering a copy of the trust instrument itself
iv. If the shareholders are in disagreement about something, it is the trustees
affirmative duty to bring the matter before the court
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v. Court is empowered to order the liquidation of the underlying property
and pro rata distribution of the proceeds outright and free of trust to the
shareholders
c. Example: Grandfather owns a parcel of real estate he wants to make a gift of
that real estate to his 10 grandchildren
i. Grandfather can create a nominee trust: Grandfather will deed the real
estate over the trustee, take 100% of the beneficial interest, and divide that
interest in certificates (each representing 1% of the beneficial interest)
ii. Grandfather can now distribute those certificates to his grandchildren
completely in private and at will
1. Trust interest serves the following interests: Divisibility,
transferability, efficiency, privacy
2. Trustee has full legal title and may sell the real estate this would
be incredibly difficult in the instance of 10 owners as tenants in
common
VII. The Charitable Trust

a. Creating a Charitable Trust
i. A charitable trust may be created by will, inter vivos transfer, declaration,
or the exercise of a power of appointment
ii. The settlor of a charitable trust must intend to and have the legal right to
impress a trust for charitable purposes upon the subject property
iii. No particular language has to be employed in order to manifest that
intention intent just needs to be clear
b. Beneficiaries
i. The charitable trust may not have an identified beneficiary
ii. The beneficiary must be the public at large
1. The trust property is devoted to the accomplishment of purposes
that are or are supposed to be beneficial to the community, and the
persons who are to receive these benefits need not be designated
c. Standing to Enforce
i. Attorney General has standing to enforce a charitable trust on behalf of the
public
ii. A co-trustee of a charitable trust would have the requisite standing to bring
an action against his co-trustee to remedy the co-trustees breach of trust
or to otherwise seek enforcement of the trust
d. Duration
i. A trust involving contingent interests may continue in perpetuity for a
charitable purpose but not for a private purpose or for a political purpose
ii. Any interest that is part of the corpus of the trust must vest within the Rule
Against Perpetuities
1. Charitys interest in trust property must vest within the period, but
once vested, it may continue in perpetuity despite the presence of
other contingent interests
VIII. Charitable Purposes
a. Statute of Elizabeth Preamble
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i. Some for relief of aged, impotent, and poor people, some for maintenance
of sick and maimed soldiers and mariners, schools of learning, free
schools, and scholars in universities, some for repair of bridges, ports,
havens, causeways, churches, sea-banks and highways, some for
education and preferment of orphans, some for or towards relief, stock or
maintenance for houses of correction, some for marriages of poor maids,
some for supportation, aid and help of young tradesmen, handicraftsmen
and persons decayed, and others for relief or redemption of prisoners or
captives, and for aid or ease of any poor inhabitants setting out of
soldiers and other taxes.
b. Restatement View of Charitable Purposes
i. The relief of poverty
ii. The advancement of knowledge or education
iii. The advancement of religion
iv. The promotion of health
v. Governmental or municipal purposes
vi. Other purposes that are beneficial to the community
c. For a purpose to qualify as charitable, it must go beyond merely providing
financial enrichment to the individual members of a community it must promote
the social interest of the community as a whole
IX. Cy Pres
a. In the event that circumstances make it unlawful, impossible, or impractical to
carry out the specified purpose of a charitable trust, or to the extent it is or
becomes wasteful to apply all of the property to the designated purposes, the
doctrine of cy pres may be available as an alternative to the imposition of a
resulting trust in favor of the settlor or the settlors estate
b. The concept of cy pres involves the textual search for any generalized intent on
the part of the settlor that is independent of the specific circumstances of a given
moment
c. Jackson v. Phillips (several trusts, one to end slavery, one to aid fugitive slaves,
one to help institute womens suffrage, court concludes that the womens suffrage
trust was political, not charitable)
i. When a gift is made to a trustee for a charitable purpose and which is
lawful and valid at the time of the death of the testator, and no intent is
expressed regarding specific application of the funds, and after, the
scheme of the trust becomes impracticable, or because of a change in the
law becomes illegal, a resulting trust is not created, but the trust should
be modified so as to carry out as closely as possible to carry out the
trusts purpose
ii. In this instance, the court founds general charitable intent, and, as a result,
effectively rewrote the trust and redirected the trusts assets
iii. Politics obviously play a role in finding whether something is a general or
specific charitable intent
Rights and Powers of the Trustee
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I. Trustees Rights
a. The trustee, as to the rest of the world, is the owner of the property because he has
legal title to the property
i. Trustee is able to contract with third parties
ii. Trustee will be the one sued if an accident occurs
b. Right at Law to Possession
i. In the absence of a statute, decision, or the settlors contrary intention, the
trustee, as the holder of the legal title, is entitled to the possession of the
real property
c. Right at Law to Transfer Title
i. The trustee, being the legal owner, may make conveyances of the trust
property
ii. But if the settlor did not bestow a power to convey on the trustee, any
transferee with notice of the restriction takes the property subject to the
trust, receiving no larger title than the trustee is authorized to convey
iii. Under these circumstances, the sale is voidable (or affirmable) at the
option of the beneficiary
d. Right in Equity to Exoneration and Reimbursement
i. If the trustee properly incurs a liability in the administration of the trust, he
is entitled to indemnity out of the trust estate either by:
1. Exoneration: using trust property in discharging the liability so that
the trustee will not be compelled to use his individual property in
discharging it; OR
2. Reimbursement: if the trustee used his individual property in
discharging the liability, by repaying himself out of the trust
property
e. Right in Equity to Compensation
i. The trustee is entitled in equity to reasonable compensation, even when
the instrument is silent upon the subject
f. Right to Rely on the Trust Instrument
i. A trustee should also be able to administer a trust with some dispatch and
without concern that a reasonable reliance on the terms of the trust
instrument is misplaced
ii. Trustee is always entitled to go to court to seek instructions in the case
where there is a reasonable doubt as to how to proceed (can file a
complaint for declaratory judgment at the expense of the trust)
II. Trustees Powers

a. The trustee has all powers necessary to fulfill the purposes of the trust and fulfill
his fiduciary obligations to the beneficiaries
b. A trust will grant the trustee a specific power when the power is unusual, or when
otherwise doing it would (in the absence of express authority) would constitute a
breach of trust
III. Involuntary Trusteeship

a. General Rule: one cannot be forced to serve as a trustee
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b. Exceptions
i. Absence of Successor Trustee
1. Once a trusteeship is voluntarily accepted, the law may require a
sole trustee to remain in office until a qualified successor is in
place
2. Thus, a trustee who at some point wants to resign may end up
serving a portion of the trusteeship involuntarily
ii. Deceased Trustees Personal Representative: If the trustee dies and there is
no provision for a successor, the trustees personal representatives or those
having an interest in the trustees personal estate may find themselves de
facto successor trustees until such time as qualified successors are in place
iii. Constructive Trust
iv. Purchase Money Resulting Trust
Duties of Trustee
I. The Duty to Be Generally Prudent
a. A trustee shall administer the trust as a prudent person would, by considering the
purposes, terms, distributional requirements, and other circumstances of the trust
b. In satisfying this standard, the trustee shall exercise reasonable care, skill, and
caution
II. The Duty to Act and To Carry Out the Terms of the Trust
a. While one has no duty to accept the office of trustee, a person who has done so
has a duty to act to administer the trust
b. The trustee has an over-arching duty to carry out the intentions of the settlor as
they have been communicated in the governing instrument or determined by a
court
III. The Fiduciary Duty of Loyalty

a. A trustee is under a duty to act solely in the interest of the beneficiaries as to
matters that directly and indirectly involve the trust property
b. Duty of Loyalty Not a Passive Duty
i. The duty of loyalty requires affirmative action by the trustee, who must do
all that can honestly be done for the furtherance of the interests of the trust
ii. All demands must be pressed, even to the extent of bringing suit, unless it
is evident that it is useless to do so
iii. The trustee must defend the trust, and pursue all appeals necessary
c. Voidable Transactions: A transaction affected by a conflict between the trustees
fiduciary and personal interests is voidable by the beneficiary who is affected by
the transaction the following types of transactions are likely voidable:
i. Trustee selling trust property to himself
1. The trustee cannot make any profit out of the use of the trust
property or gain any advantage, direct or indirect, by its purchase
or sale
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2. A court may set aside a trustees purchase of trust assets for his or
her own account if the beneficiaries did not give informed consent
even if the trustee acted in good faith and paid a fair price
3. The trustee is accountable even for an economic benefit that falls
into his lap innocently he is still unjustly enriched
ii. Trustee leasing trust property to self
iii. Trustee buying for himself outstanding claims against, or interests in, trust
property
iv. Trustee selling his own property to the trust
v. Trustee lending trust funds to himself
1. Nothing good can come of a trustees borrowing from the trust
estate no matter how competitive the interest rate may be and no
matter how complete the paper trail
2. Even when borrowing is duly authorized, it will always bring with
it the appearance of impropriety, as the trustee is on both sides of
the transaction
vi. Trustee lending his own funds to the trust
1. There is some social utility in allowing the trustee to lend personal
funds to the trust
2. It is recommended, however, that unless the trust instrument
specifically permits the trustee to lend funds to the trust, the trustee
should refrain from engaging in such activity
vii. Trustee employing himself to do specialized work for the trust
d. No-Further Inquiry Rule
i. The fact that the trustee engaged in an unauthorized act of self-dealing was
all that the beneficiary needed to prove in an action to void the transaction
no further proof was required
ii. While the no-further-inquiry rule may not apply to a purchase by the
trustee of a beneficiarys equitable interest, the burden is on the trustee to
demonstrate that he has taken no advantage of his position and has made
full disclosure to the beneficiary and that the transaction is fair and honest
1. Trustee has duty of fair dealing to the beneficiary
iii. Exceptions
1. When the terms of the trust or rulings of the court authorize a
transaction that involves conflicting fiduciary and personal
interests
a. In situations in which the trustee does transact business
with the trust, full disclosure is always required this is not
an arms length transaction
2. When state or federal law authorize the type of self-dealing at issue
iv. Cardozo: A trustee is held to something stricter than the morals of the
marketplace. Not honesty alone, but the punctilio of an honor the most
sensitive, is then the standard of behavior. As to this there has developed
a tradition that is unbending an inveterate. Uncompromising rigidity has
been the attitude of courts of equity when petitioned to undermine the rule
of undivided loyalty by the disintegrating erosion of particular exceptions.
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e. A trustee who develops interests adverse to the trust should resign his position as
trustee
i. A trustee who has an interest adverse to the trust that he intends to assert
must resign from the trust unless all beneficiaries give their informed
consent to his retention of the office
f. The trustee of a business should not enter into a competition business for personal
benefit
g. Dealing with the Beneficiary in Non-Trust Matters
i. Such activity is permissible, but the trustee must be scrupulously fair
1. Dealings are not forbidden per se, but they carry with them the
rebuttable presumption of undue influence
ii. The best course is for the trustee to avoid commercial and financial
dealings with the beneficiaries altogether, but if such activity must be
pursued, it should be done only after they have obtained competent
independent advice
iii. The trustee always has the burden of showing that the beneficiaries were
fully informed and thoroughly understood the matter and that no
advantage of position or influence was taken
h. Trustees Reasonable Compensation is NOT a Breach of Fiduciary Duty
i. A trustee is entitled to take a reasonable fee from the trust estate for all
fiduciary services
1. This is an inherent conflict, but it is permitted since it would be
unreasonable to expect trustees to serve without compensation
ii. Trustee is entitled to be reimbursed from the trust estate for expenses
reasonably incurred
i. Example Case: Rothko
i. The estate consists of paintings of tremendous value. The co-trustees
amended a contract (the MNY contract) executed during the life of the
settlor (and which provided for a 10% commission) to include a 50%
commission
ii. The Actors
1. Reis: As a director of MNY and a co-trustee, his amendment of the
contract from 10% commission constitutes a self-dealing
transaction
a. This is not an arms-length transaction
b. He is on both sides of the transaction
2. Stamos: Artist who wanted to make sure that MNY would
purchase his paintings
a. His interest in making sure that MNY purchased his
paintings is a competing interest with that of the trust
b. This constitutes a breach of the duty of loyalty
3. Levine
a. Joint and several liability is imposed on a non-participating
co-trustee who fails to exercise reasonable care:
i. To prevent a co-trustee from committing a serious
breach of trust; OR
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ii. To compel a co-trustee to redress a serious breach
of trust
iii. Duties of Co-Fiduciaries: A co-fiduciary
1. Cannot ratify, acquiesce to, or agree to a breach
2. Must monitor what the other trustees are doing
3. Must order the stop of the breach
4. Must take the other trustees to court if they do not stop
iv. A trustee is not responsible for a co-trustees breach of trust, unless the
trustee participated in, approved, acquiesced in, or concealed the breach,
or failed to take what steps were necessary to compel the co-trustee to
redress the breach
j. Examples
i. A bank is acting as trustee for a trust
1. Assume that the bank takes the uninvested cash of the trust and
places it into an account on the commercial side of the bank
2. This raises the red flag of loyalty because it is clearly a self-dealing
transaction the bank as trustee is conducting business with the
trust, making interest above and beyond the normal compensation
using its commercial arm
ii. A law firm offers legal services, while at the same time allowing its agents
to serve as trust officers
1. This is know as the Boston trustee and is looked upon with some
skepticism in the rest of the country
IV. The Duty Not to Delegate the Entire Trust Administration

a. Because the trustees relationship with the trust beneficiaries is a personal one, the
entire administration of the trust may not be delegated, unless prudently and on a
temporary basis to enable the trustee to take reasonable vacations, to deal with
health issues, and to serve in the military
i. If the trustee can avoid responsibility by delegating fundamental duties to
a third party, then the settlors intention in selecting a particular trustee
will be thwarted
ii. Trustee cannot delegate the entire administration of a trust to a co-trustee
iii. Trustee has a fiduciary obligation to seek whatever assistance necessary to
execute the efficient and competent administration of the trust
1. This includes seeking out lawyers, investment advisors, and
accountants
2. Trust will bear the expenses for properly consulted experts
b. Non-Delegable Functions
i. General rule trustee may not delegate to an agent the responsibility
to coordinate the trusts administration or to supervise other agents
ii. Functions that are non-delegable, no matter how intense the supervision:
Discretion as to how income and principal may be used in furtherance
of the purposes of the trust
c. Delegable Functions
i. Asset custody
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ii. Record keeping
iii. Ministerial tasks
iv. An agent may be allowed to collect dividends and rents, where a prudent
man of business would employ an agent
d. Consequences of Trustees Improper Delegation
i. The trustee becomes personally liable for the errors and omissions of the
agents
ii. The trustee may not be reimbursed from the trust estate for the costs of
employing them
e. Restatement: When a Trustee is Liable to the Beneficiary for an Act of an Agent
i. The act would have constituted a breach of trust if done by the trustee;
AND
ii. The trustee did one or more of the following:
1. Directed of permitted the act of the agent
2. Delegated to the agent the performance of acts which was under a
duty not to delegate
3. Did not use reasonable care in the selection or retention of the
agent
4. Did not exercise proper supervision over the conduct of the agent
5. Approved or acquiesced in or concealed the act of the agent
6. Neglected to take property steps to compel the agent to redress the
wrong
iii. A trustee who exercises reasonable care, skill, and caution in delegating
his duties is not liable to the beneficiaries or the trust for an improper
action of the agent to whom the performance of a particular function was
delegated
V. The Duty to Account to the Beneficiary

a. The duty to account runs to the beneficiary
i. For non-charitable trust accountable to Cs and Ds
ii. For charitable trust accountable to AG
b. Duty to Provide Information
i. Trustee needs to provide everything that is required to protect the
equitable economic interests of the beneficiaries (Cs) and the
remaindermen (Ds)
1. Many inter vivos trust instruments provide for periodic
accountings in a non-judicial setting
2. Article 15th of Sample Trust: After the trust is funded with income-
producing property, the Trustee, with respect to each separate trust
or share hereunder, shall annually render an account to the Donor,
if he so requests, during his lifetime and thereafter to the Donors
wife, if she so requests, during her lifetime, and thereafter to the
person or persons of legal competency currently entitled either
absolutely or through exercise of discretion to the income of such
trust or share
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ii. Upon creation of an irrevocable trust or upon a revocable trust becoming
irrevocable: The trustee has an affirmative duty immediately to notify the
beneficiaries of the existence of the trust, of the identity of the settlor or
settlors, of the right to request a copy of the trust instrument, and of the
right to the accountings or reports of the trustee
iii. Exception: if the trust is revocable by the settlor alone and the settlor has
the capacity to revoke it
1. During the period the settlor holds this power, the trustee may not
disclose any information pertaining to the trust to the other
beneficiaries (those who possess equitable contingent remainder
interests)
2. The trustees duty to inform runs only to the settlor, and the settlor
alone
iv. Advance Notice (UTC): The trustee may have a duty to give advance
notice to the beneficiaries of important or significant events affecting the
trust property, such as a change in the method or rate of the trustees
compensation, or an important transaction involving an asset that is
difficult to value or to replace, or a self-dealing transaction
c. Duty to Keep and Render Accounts
i. It is the trustees duty to keep written accounts that show the nature,
amount, and administration of the trust property
1. Trustee must then keep track of the income and principal on
separate schedules the two should never be blended
ii. Trustee has a duty to keep adequate records of the administration of the
trust all doubts are resolved against the trustee who does not keep
accurate records of the administration of the trust
iii. A trust provision that states that the trustee does not have to account to
anyone will not be enforced the courts consider such a provision as
being against public policy
iv. Clear showing of 7 fundamental facts
1. Income received
2. Income paid
3. Balance of income
4. Additions to principal
5. Deductions from principal
6. Principal on hand
7. Changes in investments
VI. The Duty to Make Trust Property Productive

a. Trustee has a specific duty to make the trust property productive, unless the
circumstances suggest otherwise, or the terms of the trust provide otherwise
i. Unproductive property can work a hardship on the income beneficiary
ii. Unless the terms of the trust provide otherwise, a trustee traditionally is
under a duty to the income beneficiary to sell unproductive property
within a reasonable time
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b. Inherent in the duty to make the trust property productive is the duty to invest the
trust property
i. The fiduciary duty of a trustee to maintain capital and generate income,
with its concomitant investment powers, flows from the general duty to be
prudent and the general duty to carry out the intentions of the settlor
c. Prudent Man Rule
i. All that can be required of a trustee to invest is that he shall conduct
himself faithfully and exercise a sound discretion. He is to observe how
men of prudence, discretion, and intelligence manage their own affairs,
not in regard to speculation, but in regard to the permanent disposition
of their funds, considering the probable income as well as the probable
safety of the capital to be invested
ii. Trustee needs to strike a reasonable balance between the extreme of the
non-income producing speculation that subverts the interests of the
income beneficiary and the extreme of the wasting asset that subverts the
interests of the remainderman a middle grounds that allows for a
reasonable flow of income and reasonable growth of the principal is the
goal
1. Best strategy for investing is probably a strategy that strives to
maintain the purchasing power of the principal
2. Diversification of the trust is an indicator of reasonable conduct
iii. Harvard College v. Amory
1. Facts: Testator had stock and bonds worth approximately
$228,000. The executors/trustees tried to take $50,000, and
impress a trust upon that portfolio. The remaindermen disagreed
with that plan because they viewed the investments as too risky.
2. Issue: Whether the trustee is an insurer of the value of the trust if
the value of the trust goes down, must the trustee contribute the
difference to make the trust whole?
3. There are no risk-free investments regardless of the
investment, the capital is always at risk, and if that is the case
and we still believe that the institution of the trust is of social
utility, the trustee cannot be an insurer and there has to be some
kind of safe harbor
a. The Prudent Man Rule is a rule of conduct, and not of
investment performance
d. Prudent Investor Rule (Law in MA)
i. Consensus in investment circles: investment prudence should not be
judged on the basis of each individual security in isolation, but on the
basis of the portfolio as a whole
1. The traditional trust portfolio consists of a mix of equities
(common stock) and indebtedness (bonds, promissory notes,
money market instruments)
ii. Restatement View: The trustee is under a duty to the beneficiaries to invest
and manage the funds of the trust as a prudent investor would, in light of
35
the purposes, terms, distribution requirements, and other circumstances of
the trust.
1. (a) This standard requires the exercise of reasonable care, skill, and
caution, and it is to be applied to investments not in isolation but in
the context of the trust portfolio and as a part of an overall
investment strategy, which should incorporate risk and return
objectives reasonably suitable to the trust.
2. (b) In making and implementing investment decisions, the trustee
has a duty to diversify the investments of the trust unless, under the
circumstances, it is prudent not to do so.
iii. Written Investment Policy Statement
1. A trustee, particularly a trustee of a charitable trust, is expected to
have prepared, or carefully overseen the preparation of a written
investment policy statement that articulates an investment strategy
that is both prudent and appropriate for the particular trust
2. Can be a double-edged sword
a. It can serve as documentary evidence of thoughtful
stewardship
b. Can also serve as evidence of maladministration,
particularly if the trustee has negligently failed to adhere to
its guidelines, or negligently failed to keep the guidelines
appropriately updated as circumstances change
VII. Other Duties

a. Duty to Separate Income from Principal
i. A principal accounts and an income account should always be kept
separate
1. Principal stock, the underlying real estate
2. Income dividends, rents, interest
b. Duty to Take Active Control of, Segregate, and Earmark Trust Property
i. Trustee must take reasonable steps to control all of the trust property, and
will face liability for loss that occurs because of the delay in doing so or
for the failure to do so
1. The trustee takes control of the trust property by re-registration,
through agents, or by acquiring physical possession, as appropriate
ii. It is the duty of the trustee to earmark the trust property and keep it
separate from the trustees own property and from other property not
subject to the trust
1. Legislators and courts have relaxed the prohibition against
commingling
c. Duty to Protect Trust Property
i. Trustee needs to vigilantly protect trust property against deterioration and
loss
d. Duty of Confidentiality
i. Trustee must keep all the affairs of the trust confidential
e. Duty of Impartiality
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i. Specific duty to treat all beneficiaries impartially, not favoring one
beneficiary over another, unless authorized to do so by the governing
instrument
ii. Even when so authorized, the trustees discretionary acts favoring one
beneficiary over another must be in furtherance of the intentions of the
settlor, not in furtherance of the trustees own biases and predilections
f. Duty to Defend the Trust Against Attack and Duty Not to Attack the Trust
i. The trustee must do what is necessary within the bounds of law and reason
to defend the trust, and thus may retain counsel for that purpose, and is
entitled to have the costs of such representation absorbed by the trust
ii. Trustee, as fiduciary, may not mount an attack against his own trust
g. Duty to Use Special Skills or Expertise
i. A trustee who has special skills or expertise has a duty to use those special
skills or expertise in favor of the trust
h. Duty to Administer Promptly and Efficiently
i. To the extent that the trustee is dilatory or inefficient in the administration
of his trust, he is in breach of trust in that he is interfering with the
beneficiarys property rights, the equitable interest itself being an interest
in property
ii. Therefore the trustee has a duty to see that checks arrive on time, tax
returns are filled out properly and filed when due, that investment
decisions are made and executed in a timely fashion, and that accountings
are submitted at regular intervals
i. Duty to Administer Precise, Complete, and Accurate Records
i. An incident of the trustees duty to be generally prudent and to account or
report to beneficiaries is the trustees duty to keep adequate records of the
administration of the trust
ii. Adequate means precise, complete, and accurate
VIII. Liabilities of the Trustee

a. Trustees Liabilities Generally
i. A breach of trust is a violation by the trustee of any duty that, as trustee, he
owes to the beneficiary
ii. Trustee is liable to the beneficiary for injury caused by negligent and
intentional breaches of trust
iii. Generally, mistakes as to the law and in the interpretation of the terms of
the trust are no excuse good faith does not matter if a trustee has violated
a duty
iv. Standing
1. All beneficiaries have standing to bring a petition to the court to
remedy a trustees breach of fiduciary duty
2. Where the trust is revocable (settlor can revoke), the rights of the
beneficiaries are subject to the control of, and the duties of the
trustee are owed exclusively to the settlor
3. A trustee has standing to bring a petition to remedy a co-trustees
breach of trust
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b. Trustees Internal Liability as Fiduciary to the Beneficiary
i. If the trustee committed an intentional breach or fell below the required
standard of care, it was equity that sought to place the beneficiary at least
in the position that he, she, or it would have been in had there not been a
breach of trust
ii. Equity courts generally order a trust or beneficiary made whole following
a trustees breach of trust
IX. Beneficiarys Remedies for Breach of Trust

a. Beneficiarys Remedies
i. Damages
ii. Compel the trustee to perform his fiduciary duty
iii. Enjoin the trustee from committing a breach of fiduciary duty
iv. Compel the trustee to redress a breach of fiduciary duty by paying money,
restoring property, or other means
v. Order a trustee to account
vi. Appoint a special fiduciary or receiver to take possession of and
administer the trust property
vii. Suspend the trustee
viii. Remove the trustee
ix. Reduce or deny compensation to the trustee
x. Void an act of the trustee
xi. Impose a lien or a constructive trust on the property of the trust
xii. Trace property wrongfully disposed of and recover the property or its
proceeds
xiii. Order any other appropriate relief
b. The trustee is personally liable for his own breaches of fiduciary duty
c. Trustees Defense of Failure of Beneficiary to Take Timely Action Against
Trustee
i. Acquiescence: Beneficiary stands by and leads trustee to believe that the
beneficiary has assented to a breach of trust
ii. Estoppel: A beneficiary cannot hold the trustee liable for a breach of trust
if the beneficiary consents to the breach
iii. Laches and Statute of Limitations
d. Defense that the Governing Instrument Contains Exculpatory Language
i. A provision in a trust instrument relieving the trustee of liability for
ordinary negligence is generally enforceable
ii. Unless it was inserted as a result of an abuse by the trustee
iii. As a matter of public policy, an exculpatory provision may not relieve a
trustee of liability for a breach of fiduciary duty committed in bad faith or
with reckless indifference to the purposes of the trust or the interests of the
beneficiaries
e. Defense of Consent, Release, Ratification, or Affirmance by the Beneficiary
i. Trustee is not liable to a beneficiary for breach of fiduciary duty if the
beneficiary consented to the conduct constituting the breach, released the
38
trustee from liability for the breach, or ratified or affirmed the transaction
constituting the breach
ii. Trustee cant induce consent through improper conduct
iii. Informed Consent for a self-dealing transaction in which the beneficiary
gives informed consent, the transaction must still be fair and reasonable
X. IOLTA
a. A-B-C-D (lawyer is B, client is A,C, D) Client reserves general inter-vivos power
of appointment. Lawyer is in contractual relationship with bank. Contractual
rights are the property of the fund. The IOU promise is the contractual right that
is in the trust. Deposit in to checking account in exchange for promise to repay.
i. With IOLTA lawyers set up checking accounts (IOLTA accounts) and
deposit client funds, with interest being diverted to the highest (Supreme)
Courts checking account. Court judges appropriate the funds to various
organizations.
ii. Billions of dollars shifter from clients to lawyers (legal organizations).
iii. Arguably inconsistent with the 5th Amendment Takings Clause.
ESTATES
I. Intestacy (According to the Mass UPC)

a. Intestate estate: Any part of a decedents estate not effectively disposed of by will
passes by intestate succession to the decedents heirs as prescribed in this part,
except as modified by the decedents will
b. A decedents spouse will take the entire intestate estate IF:
i. No descendant or parent of the decedent survives the decedent; or
1. If the decedent is survived by a spouse and descendants, they
usually share in designated proportions
ii. All of the decedents surviving descendants are also descendants of the
surviving spouse and there is no other descendant of the surviving spouse
who survives the decedent
c. Any part of the intestate estate not passing to the decedents surviving spouse, or
the entire intestate estate if there is not surviving spouse, passes in the following
order to the individuals designated below who survive the decedent:
i. (1) To the decedents descendants by representation
ii. (2) If there is no surviving descendant, to the decedents parents equally if
both survive, or to the surviving parent
iii. (3) If there is no surviving descendant or parent, to the descendant of the
decedents parents or either of them by representation
d. If none of the afore-mentioned people are alive:
i. In MA, use chart of consanguinity to determine who the next of kin are
property goes to these people
1. If an individual dies intestate without an heir who is entitled to take
under the jurisdictions intestacy statutes, the intestates property
reverts to the state government through the escheat process
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ii. UPC would have the property escheat to the estate
II. Will-Related Terminology

a. Probate property property that passes by will property that the decedent
(testator) legally owned (had title to) at the time of death
b. Non-probate property property that passes by a will substitute (e.g. revocable
IV trust); joint property (passes by right of survivorship); life insurance contract
payable to a third party upon the death of the insured (insured receives contractual
rights that flowered at the death of the insured); IRAs
c. Executor designated by the will to execute the terms of the estate
d. Administrator court appoints someone to deal with property, if no one is
named in the will
e. Issue includes not just children, but the lineal descendant of all generations of
the designated ancestor (i.e. grandchildren, great grandchildren)
f. Per Capita Distribution all living descendants of all generations would share
equally
g. Per Stirpes Distribution (by right of representation) by representation with the
head of the respective stocks (stirps) being the children of the decedent
i. Generally only applies when the bequest is to issue
ii. May be inferred from share and share alike
iii. Tells you who is entitled to take, in what proportions, and who is not
entitled to take (because they have a living ancestor)
h. Equally Near Equally Dear Distribution
i. New MA law uses this system
ii. Allocate as if distribution would be per stirpes
iii. Gather up the economic value
iv. Divide it by the number of people to whom a share has been allocated
i. Heirs those who are entitled to take under the laws of intestacy
i. Heirs at law those who will take under the intestacy statute
ii. Adopted children are the children of the adoptive parents for intestacy
purposes
iii. Adopted children inherit through their adoptive parents
iv. Children born out of wedlock are heirs of their biological parents (if raised
by these parents)
v. Heirs at law have standing to challenge a will
vi. N.B. new MA law: a will can be overturned if it does not (by clear and
convincing evidence) reflect the intentions of the testator standing is
much broader (standing extends basically to any disappointed party that
wants to challenge the will as not reflecting the testators intention, even if
the will is unambiguous on its face)
vii. Someones estate can never be an heir an estate only takes the rights that
the living person had while alive
j. Legatee someone who takes personal property (anything other than real
property) under a will
k. Devisee someone who takes real property under a will
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l. Disclaimer I dont want the property (dont have to receive property left to you
under the will)
m. Renunciation I took it, but now I dont want it anymore (may be tax
implications)
n. Will needs to have residue clause anything not mentioned or included in any
other section will become part of the residue clause
i. Can you write a residue clause leaving things to John Jones and his estate?
1. No estate only takes property that decedent had title to
2. John Jones never had title will is ambulatory rights are not
created until death (will speaks only at death)
3. So if John Jones predeceases the testator (dies before the will
speaks) then there is nothing for his estate to take because he took
nothing
III. How to Make a Will

a. An individual 18 or more years of age who is of sound mind may make a will
b. Execution Formalities for Wills
i. Wills are a creature of statute - each state has its own law for what counts
as a will
1. Jurisdictions vary based on how strictly they will enforce the will
requirements
ii. Trend over the years has been towards relaxing the stringencies of the
requirements excusing harmless error
iii. Self-Proving Affidavit
1. Testator and witnesses appear before notary public, testator states
that all execution formalities have been met, testator and witnesses
swear that this is true
2. This is evidence that the execution formalities were met
c. Basic Form for Ordinary Attested Will
i. Will has to be executed with testamentary intent
1. Testator must have subjectively intended that the particular words
in question constitute a will
2. Usually clear from the language of the document (I, John Smith,
declare this to be my last will and testament)
3. Testamentary Intent
a. Testator must intend to dispose of property
b. Testator must have intended the disposition to occur only at
death
c. The testator must have intended the document at issue to
dispose of the property
ii. Testator, when he signed it, had to have testamentary capacity
iii. Will must have been executed without duress, fraud, or undue
influence
iv. Will must be duly executed in accordance with the requirements of the
state
1. Will must be in writing
41
2. Testator needs to sign the instrument (or signed by someone
other than the testator so long the testator directed the other person
to sign and in the testators presence)
3. Testator has to sign in the presence of two or more witnesses
(reverse is true witnesses must sign in testators presence)
a. Any mark can count as a signature, as long as the testator
wanted it to be his signature
b. If the testator is too physically weak to sign, someone else
can sign for the testator, provided:
i. The testator directs that person to sign for him
ii. The person signs in the testators presence
iii. N.B. not all states require the proxy to sign the
document indicating that they made the signature at
the testators instruction in the testators presence,
but it is best practice to include
c. If the testator is able to sign, but needs help making the
physical mark, another person can give a physical assist
i. Physical assist helping guide testators hand
ii. The physical assist does not require a specific
request from the testator, only requires acquiescence
4. Witnesses need to sign will and attest
a. Almost every state requires two witnesses
b. Some states require that the witnesses signatures be made
within a certain period of time
c. Sometimes there is a requirement that all the people be in
the same place in the same time when they sign UPC
modifies, but it is still best practice
d. UPC allows signing by witnesses within reasonable
period, that could include signing post-mortem!
5. Some states require that the testator publish the will testator
declare to the witnesses that the document being witnessed is the
testators will
6. Some statutes require that the signature be at the bottom of the
document (at the end of the document)
a. Cannot sign too far below text (could allow for fraud).
b. The laws of most states today do not mandate a specific
place where the testator should sign
d. Holographic Will (not available in MA)
i. Will that is completely in the handwriting of the testator and signed by the
testator
ii. Obvious from the document that it is intended to be a will
e. Non-Cupative Will
i. Oral will
ii. Only allowed in of all American jurisdictions
1. Several of these minority jurisdictions impose conditions on the
non-cupative will, including that the will be made in the testators
42
last illness, made before a specific number of witnesses, probated
within a certain time
iii. Contents are proved by the testimony of the witnesses to the will
iv. Soldiers and Seamens Wills
1. A significant number of states still permit military personnel and
mariners to make wills that do not comply with the normal
requirements either by being oral or unattested
f. Who can be a witness?
i. Must be over 18 and of sound mind
ii. What if the witness is related to the testator? What if the witness if a
beneficiary under the will?
1. Some jurisdictions hold that an interested witness is completely
invalid, although having a requisite number of disinterested
witnesses will overcome the presumption of invalidity
2. Some jurisdictions say that having an interested witness is ok, but
any gift to that witness is presumptively invalid (rule in MA)
3. If attorney is also the executor (executor is generally not
considered an interested witness), can also sign as a witness,
because you are getting paid for your work, but you should have
two other people act as witnesses
g. Inclusion: Sometimes there are battles determining which pages are actually the
will of the testator
i. Practical tip: have testator initial every page to ensure no one can
substitute pages have witnesses initial if you think adding things in is
going to be a problem
ii. Practical tip: once the will is stapled or bound, do NOT remove staple or
unbind
h. Why have all these requirements?
i. Want to make sure you are honoring the testators intent
ii. Impresses upon the testator the significance of his actions he is creating
a document that disposes of all his property at death
iii. The requirements are evidentiary meeting the elements supports the
validity of the will
iv. The elements help protect the testator from undue influence especially if
you have disinterested witnesses
i. Recommendation for executing the will
i. Gather everyone together testator, 2 witnesses, attorney
ii. Have testator say to witnesses, I would like you to witness my will.
iii. Have testator sign at end of the document, and initial every page
iv. Have witnesses sign after testator
v. Notary will recite the affidavit, look at the people, make sure this is what
they want
vi. If having a client execute both a will and trust, have them sign the trust
instrument first, token fund with a dollar, and then sign the will
j. What are the effects of failing to meet these requirements?
43
i. Will is declared invalid, and property will be passed according to intestacy
statute, or could default to previous will, if there is one and it is valid
ii. Practical advice: comply with the strictest provisions of the available will
statute
IV. 7 Grounds For Attacking a Wills Validity

a. Testator Lacked Testamentary Intent
i. Measured at the time the will was signed
ii. The testator:
1. Did not intend the document to be a will; OR
2. Did not intent the document to take effect at death; OR
3. Did not intend the document to function as a will
b. Testator Lacked Testamentary Capacity
i. Measured at the time the will was signed (only needs to have capacity at
that moment)
ii. Testator must have been 18 years old
iii. Testator must have held the mental capacity to understand:
1. Did the testator know what he was doing when he signed the will?
2. Did he understand the extent and nature of his property?
3. Did he know who his family members were?
4. Did he understand the disposition he was making?
a. Can use extrinsic evidence to prove.
c. Undue Influence
i. Undue influence when the intent of the testator is overpowered by the
acts of another destroys his free agency, gets coerced to make a will that
he would not make otherwise
1. Mere suggestion is not enough need pervasive harassment
ii. Can challenge the entire will or part as the product of undue influence
iii. Elements of Undue Influence
1. Undue influence actually existed
2. The effect of that undue influence was such that it overpowered the
will and the mind of the testator
3. The effect of that undue influence produced a will or disposition
that would not have been made but for the influence
iv. Proving Undue Influence
1. Burden of proof is on the party asserting undue influence this is a
very high burden, generally shown by circumstantial evidence
2. Factors
a. Was the testator in a weak or susceptible condition that left
him open to undue influence?
b. Did the allefged influencer have the opportunity to reach
the testator and exercise the undue influence?
c. Was there an activity (such as procuring the will or
arranging for a will to be made or isolating the testator
from family and friends)?
44
d. Was there an unnatural disposition (e.g. favored one person
over another, given to another person not connected with
the family)?
d. Fraud
i. If the will was made as a result of the fraud perpetrated on the testator, that
will can be thrown out
1. Have to show that the testator was willfully deceived as to the
character and content of the instrument he was signing or willfully
deceived as to the extrinsic facts that induced him to make a
certain type of disposition or a will that he would not have
otherwise
2. Fraud in the Execution: Case where the testator was tricked into
signing a document without realizing that it was a will OR where
by slight of hand, one document was exchanged for another
3. Fraud in the Inducement: Testator had the intent to make a will, but
he is fraudulently induced into making it the gift would not have
been made if the testator knew the true facts
ii. Elements
1. False statements concerning material facts
2. Those statements have to be known to be false by the party making
the statements
3. Those statements were made with the intention of deceiving the
testator
4. Who is actually deceived
5. Which causes the testator to act in reliance upon such statements
when making a will
iii. Remedies: Denial of probate (either throw out the whole thing if the fraud
is so bad that it affects the entire documents)
e. Mistake
i. Mistake if the testator was incorrect about the facts that motivated him
to make a will, but no one deceived him as to these terms he just made a
mistake
ii. Common law: if the will is unambiguous on its face then courts would be
reluctant to admit parol evidence to interpret what the testator meant
iii. UPC: if there is clear and convincing evidence that the document (even if
the document is clear on its face) did not represent the testators intent,
anyone claiming to be aggrieved can challenge a will
iv. If there is a clear mistake e.g. there is a conditional statement in the will
that the testator believed, but after the death it was discovered not to be
true, can overturn that part of the will
f. Defective Execution
i. Will did not comply with the statutory elements
g. Will Being Offered for Probate was Revoked Before Death
h. Ambiguity in the Will
i. Patent Ambiguity Evidence on the face of the instrument that something
is not right or drafted correctly
45
1. General rule: no extrinsic evidence is allowed in
2. Court needs to resolve the ambiguity based solely on the
information contained in the document
ii. Latent Ambiguity Nothing is obviously wrong on the face of the
instrument, but when you go to administer the estate, no one matches the
description, or no one meets the description
1. Extrinsic evidence is allowed in under these circumstances
V. Will Revocation Issues

a. Revocation by a Subsequent Instrument
i. Subsequent instrument does not have to be a will can be a codicil
(amendment) to a will
ii. Subsequent instrument needs to be executed with the same formalities as
the will
iii. Can expressly revoke the will, or can revoke it by implication
1. If the will does not expressly revoke the former will, but makes a
complete disposition of all property will revoke by implication
2. Best Practice: start the document with, I hereby revoke all wills
and codicils
iv. Under MA law, if a subsequent instrument does not make a complete
disposition of property, it will be presumed as intended as a supplement to
the existing will
1. If this presumption arises and is not rebutted, the previous will (or
portions thereof) will be revoked only insofar as the provisions in
the new document contradict the terms of the earlier document
b. Revocation by Performing a Physical Act to the Will
i. Need to have intent to revoke it and need to perform a physical act that
actually revokes it
1. E.g. writes cancelled or void on every page
2. E.g. tears the document up, burns it, shreds it
ii. Can direct another person to perform the physical act, but needs to be done
at the specific direction of the testator and in the presence
c. By Operation of Law (Doctrine of Changed Circumstances)
i. Circumstances in testators life change so drastically that legislation will
substitute judgment of testator if it becomes an issue
ii. Becomes an issue with divorce and marriage subsequent to a will
1. MA Law: A change in circumstances will not revoke a will or any
part of it EXCEPT:
a. Marriage after a will
b. Divorce after making a will
c. Murder of the testator by you as beneficiary under the will
d. Revoking Part of a Will
i. E.g. what if testator just crossed out a line in the will giving a bequest to a
certain person?
1. But when he dies, how do you determine whether the testator was
actually the one to modify the will it will be unattested
46
2. Did the testator, when he made the marks, intend a total revocation
of the will, or just a revocation as to part of it
ii. Questions to Ask When Dealing with a Partial Revocation
1. Does the statute of wills authorize partial revocation by whatever
technique the testator used?
2. Has a physical revocation actually occurred?
3. What is the effect of that on the will?
iii. Even where partial revocations are allowed, if the change is one increasing
a bequest (rather than eliminating it), courts will probably not allow it,
because it increased the gift
iv. E.g. will says, I give swampacre to Bill for life, then the rest to Hilary.
Testator crosses out, so that it says, I give swampacre to Bill.
1. This is probably not be upheld increases the gift to Bill
2. The change is not attested
3. To really change the will: should make a codicil to the will,
deleting and replacing language in that section
v. E.g. testator left the residue of estate to Roger and Tim, then crosses out
Tims name from the residue clause
1. This will be allowed, even though it has the effect of increasing
Rogers share because it is taking place in the residue
e. Doctrine of Revival
i. 3 Ways a Testator Who Has Revoked a Will Can Revive It
1. Testator could completely re-execute the will on the same
instrument by signing it again and having witnesses sign it again
a. This is not a best practice can create substantial confusion
2. Testator could execute a completely new will with the desired
terms
3. Testator could write a codicil to the will he revoked, reviving it
a. Execute the codicil (ratify and republish, except as
amended herein)
b. Republish confirming everything that is in the actual will
ii. Codicils
1. Codicils are amendments to a will
a. Can expand, modify or change terms in the will
b. Needs to be executed with the same formalities as a regular
will
2. What Codicils Can Do
a. Can revoke a prior codicil
b. If the codicil fails because it was not executed properly, it
does not revoke the will, but if the entire will fails for any
reason, the codicil fails as well
c. Can revive and republish a will that was revoked
d. Can save a will that was not properly executed (codicil that
republishes the will, codicil is attested properly)
f. Dependent Relative Revocation [Conditional Revocation]
47
i. Equity concept that a court might apply to disregard a revocation if the
revocation by the testator was based upon a mistake of law or fact and
would not have occurred but for the testators mistaken belief that another
disposition of his property was valid
ii. Example: Will 1 gives the residue to Jane. Testator makes Will 2, which
leaves the residue in trust to Alex for life, and remainder to Alexs
children. Testator does not destroy Will 1. Testator later destroys Will 2
with the intent to revoke it and further intent to revive Will 1. Will 1
cannot be probated because it was revoked and not properly revived. Will
2 was revoked, but could be probated if the court finds that the revocation
of the 2nd will was conditioned and dependent upon the testators mistaken
belief that Will 1 would be revived.
1. Court will say that Will 2s revocation was conditioned upon Will
1 being revived. Because Will 1 cant be revived, we will uphold
the terms of Will 2 (assuming testator would rather have the terms
of Will 2, rather than be intestate)
iii. Example: Testator makes a will and leaves residue to Nelson and Arya.
Then makes a codicil that replaces the residue clause (revokes prior and
replaces with new, just making Nelsons name clearer, not intending to
affect Aryas rights). Aryas spouse witnessed the codicil, state has statute
that says that if the spouse of a beneficiary witnesses a will or a codicil,
the gift to that beneficiary fails, but the will or the codicil otherwise
stands.
1. Court applied equity theory, stating when testator executed the
codicil, testator made a mistake of assuming the codicil would be
valid. Court revived first will, leaving it to both Nelson and Arya
VI. Dispositive Testamentary Writings

a. Doctrine of Integration
i. If the will is on one page, there is obviously no problem of integration of
the pages of the will
ii. All pages intended as the will must be present at the time and place of
execution if they are to constitute the will
iii. Problems of proof of the pages of will can arise at the testators death
1. If the testator and the witnesses initialed each page for
identification purposes, there is not likely to be any difficulty of
proof
2. If the pages are found fastened together at the testators death, it
will be rebuttably presumed that the will was executed in this
condition and that the fastened pages were intended by the testator
as his will
3. If the pages are not fastened at the testators death, but they are
connected by language and logic, they will be rebuttably presumed
to have been present at execution and intended by the testator as
his will
b. Doctrine of Independent Legal Significance
48
i. A will may dispose of property by reference to acts and/or 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 after the
testators death. If documents sole purpose is to modify the will in some
way it has no independent legal significance.
ii. Revocable/amendable inter-vivos trusts that have property dumped into
them by a pour over provision in a will have independent legal
significance. You can modify the terms of the inter-vivos trust and the
pour-over provision of the will is still effective.
1. E.g. I will leave $500 to each employee working for me at the time
of my death hiring and firing decisions are independent of the
will
2. E.g. Safe-Deposit Box Contents May Change moving things in
and out of the safe deposit box are acts of independent legal
significance
iii. Allow you to leave property to a revocable trust, even if the trust was not
executed with the same formalities as the will
c. Doctrine of Incorporation by Reference
i. Allows testator to incorporate the terms of unattested documents or
attested documents into the will
1. Can only incorporate something that is in existence at the time the
will is executed
a. Bequest to B (as trustee) to administer pursuant to terms of
the trust
b. Then codicils to the will are independent
2. It is only where the actual terms of the trust are made part of the
will that the amendments would be out changing the terms of the
will with the amendments
3. Can incorporate terms of the statute but it would be the terms of
the statute that are in effect at the time the will is executed
4. Whatever is being incorporated by reference must be in existence
at the time the will is executed
ii. Example
1. Pour-over wills: leave property in will to trust
2. What happens if the trust was revoked before the testator dies?
a. Lapses goes by way of the intestacy statute
b. Or: Can say, If the trust does not exist at the time of my
death, I give the property to the trustees to be disposed of
under the terms of the trust.
iii. Four Requirements
1. The writing that you are trying to incorporate must exist when the
will is signed
2. The will has to manifest an intention to incorporate the unattested
writing
3. The unattested writing must be identified with reasonable certainty
49
4. At common law: the will has to specifically refer to the writing as
being in existence (UPC does away with this requirement)
a. SLIGHT erosion of this doctrine by MGL 190B 2-513
creates exemption for general personal property.
VII. Lapse & Antilapse

a. Lapse is the failure of any testamentary gift for want of a taker
b. All devises are automatically and by law conditioned on survivorship of the
testator
i. A will transfers property at the testators death, not when the will was
executed
ii. A devise to a devisee who predeceases the testator fails (lapses) the
devised property does not pass to the devisees estate, to be distributed
according to the devisees will or pass by intestate succession from the
devisee.
1. E.g. if a will gives all property to X, and X predeceases the testator
a. Cant give the property to Xs estate Xs estate can only
take the rights that X actually had
b. X didnt have any rights in the bequest at the time he died
the will speaks only at death
c. An antilapse statute may redirect the bequest directly to the legatees issue,
provided the legatee was related to the testator and provided the will contains no
alternate disposition
i. In the absence of the statute, the bequest or devise lapses (fails) the
property would pass to the residuary takers under the will, or to the
testators heirs at law if the residuary bequest itself had lapsed.
ii. Model UPC allies anti-lapse to trusts!
d. Example Will: I give all my tangible personal property, not including cash, to A. I
give all my remaining estate as a residue clause in equal shares to X and Y
i. E.g. estate contains two stuffed chairs (X&Y are grand-nieces, ages 1 and
3, have a law partner), A predeceases you. Who gets the chairs?
1. Law partner is not related to testator drops into residuary
ii. E.g. Estate contains 50 shares of IBM, A is your sister, X&Y are law
partners, not related to you in any way. X and Y predecease you.
1. Who gets the IBM stock?
2. Does not go to A because it is not tangible property, X&Y
predecease, because they are not related, goes by intestacy to the
testators heirs at law
iii. E.g. Family bible, A is brother, X&Y are classmates (not related), A
predeceases you.
1. Who gets the Bible?
2. Tangible personal property goes to As issue if there are issue,
otherwise goes to X&Y
iv. E.g. Wedding pictures, A is your spouse, X&Y are law partners, unrelated
to you and each other A and X predecease you.
1. Who gets the wedding photos?
50
a. 50% will go by intestacy, 50% will go to Y
b. Xs share cant lapse and fall into the residue because it is
the residue, so goes by intestacy
2. No anti-lapse statute that brings in the spouse
VIII. Ademption
a. Ademption is the failure of a specific testamentary gift for want of the property
designated
i. If a specifically bequeathed or devised item of property is not in the
probate estate at the time of the testators death, with certain exceptions,
the bequest or devise adeems
ii. The designated legatee or devisee is out of luck he is not entitled to
something of comparable economic value from the general assets of the
estate
iii. Analysis must start with whether there is a general or specific bequest
b. Difference between general and specific devises
i. Specific bequest or devise separates or distinguishes an item from the
rest of the property of the testator (indication that testator cares about the
specific item); can only be satisfied by the property described; identified
property provided it is in the estate at the time of death
1. If it is not in the estate at the time of death, then the devise adeems
(there is an ademption)
2. My is the keyword for indicating a specific bequest or devise
a. All my tangible personal property is a specific bequest
3. Not the uniqueness of the item itself that makes the gift specific
4. If something is not in the estate, and there is no my or existing, or
all language, could be an argument that the executor is supposed to
dip into the residue and go out and buy the thing (not ademption,
but direction to executor)
a. What if residue clause does not have enough value to
purchase something that is not in the trust estate? brings
us to abatement
ii. General bequest
1. E.g. the residue does not matter what is in the residue
2. Language stating a of something indicates general
c. Two Theories of Ademption
i. Intent theory looks to intent of testator
1. If the property is not in the estate, but there is evidence that the
testator meant to make a specific bequest, may need to find some
other way to compensate
ii. Strict identity theory (MA) is the bequest specific, and is the item in the
estate
1. If yes to both, then no ademption
d. E.g. Testator specifically devises Blackacre, sells Blackacre during his lifetime,
and then buys it back before his death
i. Has there been an ademption? depends on the theory
51
ii. Strict identity Blackacre is in the estate, end of story
e. E.g. Testator devises to X 2 strings of pearls prior to the testators death, the
testator has the pearls made into one string
i. Has there been an ademption?
1. Intent theory no ademption (look at what the testator thought
when she made the strands into 1)
2. Strict identity maybe there are still the same number of pearls
they are just organized differently
IX. Abatement
a. Abatement: the reduction or elimination of a testamentary gift to pay an
obligation of the estate or a testamentary gift of higher priority
b. In most states, the debts and expenses are paid first from intestate property if there
is partial intestacy, and if that is not sufficient, then from residuary property, and if
that is not sufficient, then from general bequests and devises, pro rata
X. Omitted Child (Pretermission)

a. MA does not have forced heirship
i. May be good practice to leave the child a nominal amount to indicate that
the testator did not forget about the child, and is intentionally leaving the
child with nothing
b. In MA, may, by will expressly exclude or limit the right of an individual to take
from intestate succession
c. Can borrow from intestacy formula, but remove certain people
XI. Class Gifts

a. When the settlor properly designates by names related beneficiaries such as
children, there is little room for ambiguity as to who qualifies as a beneficiary
what you lose with this is the flexibility that comes with designating beneficiaries
by group membership
b. A class gift exists when a testator makes a gift to a number of persons as a group,
and the size of the class may increase or decrease (children, grandchildren, issue)
i. Unless there is contrary evidence in the will, a court will not hold a
diverse, unrelated group in a will to be a class
ii. If you die prior to the testator, there is no lapse, because there is someone
else to take
iii. Class gift is conditioned upon you being in the class at the time of the
testators death
1. N.B. MA law applies the anti-lapse statute to class gifts (Round
says is fundamentally illogical)
iv. If the entire class is dead, then it is a failed bequest or devise, and there is
a lapse
c. MA 2-708: If a class gift in favor of descendants, issue, or heirs of the body does
not specify the manner in which the property is to be distributed among the class
members, the property is distributed among the class members who are living
when the interest is to take effect in possession or enjoyment, in such shares as
they would receive, under the applicable law of intestate succession, if the
52
designated ancestor had then died intestate owning the subject matter of the class
gift
d. The Class Closes at the Testators Death
e. Rule of Convenience
i. The class closes at the time of the testators death (in the wills context
under the rule of convenience)
ii. Reading the will in its entire, if it is clear this was not the testators
intention, there may have been an intent to create a trust
1. E.g. if the class gift is for the grandchildren, and there is evidence
that the testator wanted the class to stay open until children died so
all possibly grandchildren would be born
53

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Final Trusts Outline

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TRUSTS AND ESTATES

Creating an Agency Relationship

Terminating an Agency Relationship

Classic Trust Formula: A to B for C for life, and then to D

Utility of the Trust

Trusts and the Statutes of Frauds

The Property Requirement

The Concept of Vesting

Creation of the Interest

The Rule Against Perpetuities and the C Interest

Consequences of a Violation of the Common Law Rule

The Perpetuities Saving Clause

Termination, Modification & Merger

I. Creditors Rights When A and C are Different

II. Creditors Rights When A and C are the Same

IV. Spouse as Creditor

V. Rights of Beneficiarys Creditors

II. Inter Vivos Trust

III. Discretionary Trusts

IV. Employee Benefit Plans

VI. The Nominee Trust

VII. The Charitable Trust

Rights and Powers of the Trustee

II. Trustees Powers

III. Involuntary Trusteeship

III. The Fiduciary Duty of Loyalty

IV. The Duty Not to Delegate the Entire Trust Administration

V. The Duty to Account to the Beneficiary

VI. The Duty to Make Trust Property Productive

VII. Other Duties

VIII. Liabilities of the Trustee

IX. Beneficiarys Remedies for Breach of Trust

I. Intestacy (According to the Mass UPC)

II. Will-Related Terminology

III. How to Make a Will

IV. 7 Grounds For Attacking a Wills Validity

V. Will Revocation Issues

VI. Dispositive Testamentary Writings

VII. Lapse & Antilapse

X. Omitted Child (Pretermission)

XI. Class Gifts

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