Trusts & Estates Outline

Transfer of Decedent’s Estate

I. Probate & Non-Probate Property
a. Probate = property passes through decedent’s will or intestacy
b. Non-probate = property passing through instrument other than will
i. Does not involve a court proceeding (life ins., trust)
ii. Can avoid probate if estate is small
II. Probate Procedure
a. Appoint personal representative: executor (named by decedent),
administrator (appointed by court)
b. Any part can demand formal probate (SOL = 3 years)
c. Interested parties may demand supervised administration

Chapter 2: Intestacy: An Estate Plan by Default

I. UPC §2-102: The intestate share of decedent’s surviving spouse is:
a. The entire intestate estate if:
i. No descendent or parent survives decedent, or
ii. All D’s surviving descendents are also descendents of surviving
spouse and there is no other descendent of surviving spouse who
survives D
b. The first $200k, plus ¾ of any balance of intestate estate, if no descendent
of D survives D, but a parent of D survives D
c. The first $150k, plus ½ of any balance of intestate estate, if all D’s
surviving descendents are also descendents of surviving spouse and
spouse has one or more surviving descendents who are not of the D.
d. The first $100k, plus ½ of any balance of intestate estate, if one or more of
D’s surviving descendents are not descendents of surviving spouse
II. Ausness on §2-102
a. No descendents or parents = all to spouse
b. All descendents are descendents of spouse = everything to spouse
c. No issue, but parent(s) survives = $200k + ¾ to spouse
d. All issue are descendents of spouse but spouse has other issue = $150k +
½ to spouse
e. D’s issue are not issue of spouse = $100k + ½ to spouse
f. Note: Spouse’s shares is always calculated first.
g. UPC & KY are parantelic (go down first)
h. Children of spouse, if not by D, get nothing
III. §2-103 Share of Heirs Other than Surviving Spouse
a. Order = D’s descendents, then parents, then descendents of D’s parents,
then grandparents
IV. Uniform Simultaneous Death Act (§2-701, §2-104)
a. The death is deemed simultaneous unless the other survives 120 hours
V. Partial Intestacy
a. May exist if part of will is struck down

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Share of Descendents
I. 3 Basic Schemes
a. English (Strict) Per Stirpes
i. Each generational line is treated equally
ii. Division would still be made at children, even if all dead, then
grandchildren split out of that
b. Modern Per Stirpes (UPC 2-106(b))
i. If no children survive D, estate is divided equally at first
generation in which there is a living taker
ii. Each generational line treated equally; Eliminates dead generation
iii. “Equally near, equally dear.”
c. Per Capita Without Representation
i. Each taker receives equal share regardless of generation
ii. Rarely used
d. Per Capita With Representation (KY)
i. Equal shares at closest generational level, then descendents of dead
representative split according to that share.
ii. Descendents “step into” shoes of dead taker
iii. Sometimes call per stirpes – this is incorrect
e. Note: Surviving Spouse’s share will be calculated before any of these
systems are used.
f. Problems on p.73-79
II. Negative Disinheritance
a. Applies to wills, not defaults
b. Must make an express statement in will to disinherit child and leave the
money to someone else
c. UPC: Disinherit by express statement
III. Shares of Ancestors and Collaterals
a. Collateral = relative who is neither ancestor nor descendent. Common
ancestor.
b. If no issue, parents normally take under §2-102
c. Different heirs at same number: (ex: great-grandkids and niece)
i. Parentillic: To niece – go down before over
ii. Civil: They split it (only the numbers matter)
d. “Laughing Heirs” – UPC only goes to second line collaterals
(grandparents)
IV. Advancements
a. CL: Any lifetime gift to child presumed to be a prepayment of child’s
intestate share (advancement)
b. To avoid: child must show transfer was intended as absolute gift to not be
counted against child’s estate
c. Hotchpot (when it’s an advancement)
i. A receives $10k advancement, $50k left to A, B, C
ii. $50k + $10k = $60k, then $60k / 3 kids
iii. A has $10k already, so gets $10 more; B,C get $20k each
iv. Participation in the hotchpot is voluntary

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 d. When advancements exceed estate
i. If advancement = $40k, and estate = $50k
ii. A stays out and keeps $40k, B,C split $50k
V. UPC §2-109 Advancements
a. Treated as advancement only if
i. Declared/acknowledged in writing, or
ii. In writing to be taken into account for estate
b. For (a), property advanced is valued as of the time the heir came into
possession of property, or at time of D’s death, whichever occurs first
c. If recipient does not survive D, property is not taken into account unless in
writing
VI. Half-Bloods
a. UPC makes no distinction
b. KY: Half-blood gets ½, whole blood gets double that.
c. No distinction if there are only ½ bloods and no whole bloods
VII. Posthumous Children
a. KRS §381.070
VIII. Non-marital Children
a. “The child of no one”
b. Uniform Parentage Act: gives limited rights for children if paternity
shown

Bars to Succession
I. Estate of Mahoney – Homicide
a. Remanded to determine whether spouse willfully killed husband.
b. Constructive Trust imposed (Vermont Statute)
i. Equitable remedy imposed against one who inherits by
wrongdoing
ii. Used to prevent unjust enrichment, creates no fid. duty
iii. Not a trust at all; beneficiary receives no use of property
II. Murdering Heirs Statutes
a. UPC §2-803
i. Distinction between intentional and unintentional conduct
ii. Civil standard of proof; criminal conviction is determinative of
intent
iii. Treats slayer as if he predeceased D. (UPC & KY)
b. KRS §381.208
i. Requires conviction of felony; forfeits all interest
c. Constructive Trust Statutes (above)
d. Note: These are used only when there’s no statute for murdering heirs
III. Expectancy
a. The expected inheritance of heir apparent
b. Child takes this action to release expectancy back to parents
c. Consideration is required
d. Ex: X has children A, B. A has children C,D. X dies. A releases
expectancy. All goes to B, even though A has 2 kids.

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 IV. Transfer of Expectancy
a. Can only characterize it as a K to transfer to 3rd party
b. But if A (promisor) dies first and has kids, and promisee is 3rd party = not
enforceable
V. Renunciation & Disclaimer
a. A taker by either will or intestacy doesn’t want it: Decline to take property
b. Heirs of disclamer still receive same amount disclaimer would’ve
received, so you can’t increase amount to your heirs. I.e., amount is frozen
c. CL: intestate successor cannot prevent property from passing to him
d. UPC §2-801
i. Can disclaim prior to D’s death, or 9 months afterward
VI. Drye v. U.S.
a. Cannot disclaim property in order to avoid federal government as a
creditor. (Medicaid benefits)
VII. Troy v. Hart
a. If recipient renounces an inheritance that would cause him to be
financially disqualified from receiving benefits, the renunciation should
incur the same penalty that acceptance would have brought about and
should render recipient liable for any payment incorrectly paid by Gov.

Chapter 3: Wills
Mental Capacity
I. Testimental Capacity: Overview:
a. To make a will, one must be of sound mind.
b. Minority – must be over 18
c. Mental incapacity
d. Undue Influence – often happens to old people
e. Fraud or duress
f. To have standing to challenge a will, you must have a financial interest
II. Insane Delusion
a. Causes particular provision in will – or entire will – to fail for lack of
testamentary capacity
b. Legal, not psych, concept. Delusion = false concept of reality
c. Delusion is insane if rational person in T’s position could not have drawn
conclusion of T.
d. Strittmater: Probate set aside: it was her insane delusions about males that
led her to leave estate to National Women’s Party. (could differ now)
e. I.D. v. Mistake: Mistake is susceptible to correction if T is told the truth.
III. Undue Influence (no exact legal definition)
a. Basic Test:
i. 1. T was susceptible to it
ii. 2. Influencer had the disposition or motive to do it
iii. 3. Influencer had opportunity to do it
iv. 4. Disposition is result of the influence
b. Various tests are used. Other tests:
i. Confidential relationship: some trust or reliance

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 ii. Rest. §8 TEST: Suspicious Circumstances
1. Whether T received independent advice
2. Extent of weakened condition
3. T’s attitude toward others changed
4. Discrepancy between new and older will
5. Reasonable person would view as unjust, unfair
c. Burden of persuasion
i. Will proponent must show will is valid (easy)
ii. Contestant must show substantial evidence of undue influence
d. Lakatosh TEST:
i. 1. There was a confidential relationship (*in every test)
ii. 2. ∆ received bulk of estate
iii. 3. D’s intellect was weakened.
e. Lipper TEST
i. 1) Confidential relationship, 2) Motive, 3) Opportunity,
4)Causation
IV. UI & Attorneys
a. PR: L shouldn’t let T give him anything, unless related
V. Moses (not assigned)
a. Test: 1) Confidential relationship + 2) Suspicious Circumstances
VI. No Contest Clause
a. Beneficiary who contests will shall take nothing, or token amount, in lieu
of provision made for them in will
b. Majority: Enforce unless there is good cause for the contest. (UI)
c. Minority: Strict enforcement

Fraud
I. Overview
a. T deceived by misrepresentation and does that which she would not have
done but for the misrepresentation
b. Usually must have intent and purpose of misleading
c. Remaining portion of will stands unless fraud is entire will
d. Remedy: Usually constructive trust
I. Fraud in the Inducement
e. One misrepresents facts, causing T to execute will to include provisions in
wrongdoer’s favor, or refrain from executing/revoking will.
II. Fraud in the Execution
f. One misrepresents the character or contents of instrument signed by T,
which does not carry out T’s intent
g. Test: 1) Intent to deceive T, 2) For purpose of influencing T’s disposition,
3)Causation (succeeds in doing so)

Duress
I. Overview
a. When U.I. becomes overly coercive

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 b. Wrongdoer performs or threatens to perform wrongful act that coerced T
to make donative transfer she otherwise would not have made.
c. Remedy: Invalidated
II. Latham v. Father Divine
a. T planned on redoing her will, cult killed her in surgery.
b. Constructive Trust used whenever necessary to satisfy demands of justice
when someone is prevented from making a will.

Chapter 4: Wills: Formalities & Forms

I. Overview
a. Basic will formalities: 1) Writing, 2) Signed by T, 3) Attestation by Ws
b. Statutes vary on whether W must view T signing will
c. Intent may be established by extrinsic evidence
d. KRS: “Credible Ws” only – Ws inherit nothing from will
II. Stephens v. Casdorph
a. T did not properly execute will when Ws signed outside presence of T
III. Estate of Parsons
a. Ws later disclaimer of interest did not render her “disinterested” at time
of signing. Will invalid.
b. CA later adopted UPC (with no interested W provision) and dumped this.
IV. Differing Will Requirements
a. Groffman: No probate, must be 2 or more Ws at same time. (English Wills
Act)
b. KRS: Two “credible” (disinterested) witnesses required
c. UPC: Does not state that Ws must be credible or disinterested
V. Extra Benefit Rule (only some states)
a. KY: If you’re interested W, only the “extra benefit” is invalidated.
b. Ex: if you would get certain amount under intestacy, you will still receive
this, but not any “extra benefit” provided for in will
c. If W would’ve gotten more before the will, W gets what this will says
VI. Purging Statute
a. KY: “Interested” extends to close relatives of W
VII. Supernumerary Statutes
a. Have more than 1 W so that if 1 is interested, you’ll still have enough for a
valid will.
VIII. Direct v. Indirect Interested Ws
a. Ex: T leaves money to church, at which W is pastor. This is ok.
b. If nursing home, look for undue influence.
c. Compensation v. Gift: Interested W statutes are concerned only with gifts.
If 1% goes to executor, this is ok. Creditors can be Ws because T is paying
a debt, not giving a gift.

Presence (Imp!)
I. Line of Sight Test
a. W requirement to sign in presence of T satisfied only if T is capable of
seeing W sign.

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 b. T must be able to see W sign, were he to look.
II. Conscious Presence Test
a. W is in presence of T if T, through sight, sound, or general consciousness
of events, comprehends that W is in act of signing
III. UPC
a. Dispenses altogether with requirement that W sign in T’s presence
IV. Signing
a. If you’re illiterate, an X will suffice. Anything you intend to be your
signature is ok.
b. If you’re too ill, you may direct someone else to sign for you.
V. Additions to Will Before/After Subscription:
a. Determine whether it’s added before or after signature
b. If after, the addition is invalid and will is ok
c. If before, then may either
i. Claim whole will is invalid, or
ii. Ignore material below signature.
d. Normally doesn’t apply to holographic wills
e. To add to existing wills, follow all procedures (Ws, etc) after adding it.
f. KY: Ws must be in presence of T.

Executing a Will
I. Personal Property
a. The law of D’s domicile at death determines validity of will
II. Real Property
a. The law of the state where property is located determines validity of
disposition of real property.
III. Comity Statutes
a. When you execute valid will where you’re domiciled then you move to
state where will would not be validly executed.
b. Allows will to be valid now if it was valid originally
c. To be valid in all states: p. 15 of outline
IV. Safeguarding a Will
a. Self-Proved Will
i. UPC: Signed will + affidavit signed by T, W, and notary
ii. Ws not required to be present when will is probated
iii. Ausness recommends this
b. Deposit with Clerk
i. L shouldn’t keep will – looks like solicitation
V. Mistake in Execution
a. Pavlinko’s Estate: Husband and wife mistakenly signed each other’s will
i. Held: Will is invalid because exceptions cannot be made to Wills
Act.
b. In re Snide: Same as Pavlinko, but wills were identical
i. Held: Will properly admitted to probate, dispositive provisions in
both wills are identical.

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Curative Doctrines
I. Overview
a. Gives court the power to dispense with formalities if there is clear and
convincing evidence that D intended document to be his will
b. Harmless Error
c. Attestation Clauses: provide prima facie evidence that T voluntarily
signed will in presence of witnesses
d. Self-Proving Affidavits: sworn statements by eyewitnesses that will has
been duly executed.
II. Substantial Compliance –
a. When T almost complied wholly
b. If there is clear and convincing evidence that purposes of formalities were
served despite a defective execution, will admitted to probate
c. Ranney
i. Accidentally signed attestation clause instead of something else.
ii. Remanded to determine whether execution of will substantially
complies with statutory requirements.
d. A: If T videotapes his will, S.C. will not help because T hasn’t complied at
all.
III. Dispensing Power
a. Statute providing for probate of a document that was not properly
executed if court is satisfied that there can be no reasonable doubt that
deceased intended the document to constitute his will.
b. UPC §2-503: Court is to look not for whether purposes of formalities
were served [like substantial compliance], but at whether T intended the
document or writing to constitute his will.
c. Estate of Hall
i. Husband and wife executed joint wills, notarized but no W.
ii. Will probated: evidence that he intended this to be his will, and he
had directed that his prior will be destroyed.
iii. Ausness: Joint wills are bad idea.
IV. Reciprocal Wills (these are common)
a. Testamentary scheme – reflected in both wills – when 1st spouse dies,
remaining property goes to surviving spouse
b. When 2nd spouse dies, gift goes to 3rd person because survivorship clause
(to spouse if alive) isn’t met
V. Reformation
a. Change language so will reflects actual intent of parties
b. Allows extrinsic evidence to show intent
VI. Integration
a. May have to integrate another document to get the will (may be more than
one)
b. Technique of will construction and interpretation
c. Try to figure out what is the will and what is not.
VII. Dependent Relative Revocation (explained later)

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 a. When revocation of will is based on a misunderstanding as to the legal
effect or factual questions, the revocation is conditional upon those facts
being correct.

Holographic Wills
I. Overview
a. To be valid, entire will must be handwritten and signed by T.
b. KY does not require Ws if will is entirely in T’s handwriting
II. UPC §2-502(b)
a. A will that is not executed is valid as a holographic will, whether or not
witnessed, if the signature and material portions of document are in T’s
handwriting.
b. Material portions = parts that dispose of property and reflect testamentary
intent.
c. §2-502(c): Intent that the document constitutes T’s will can be established
by extrinsic evidence, including, for holographic wills, printed portions
in the will.
d. Can’t use printed part to provide essential language to will being
testamentary
III. Kimmel’s Estate
a. Signed “father” at end and said “If anything happens to me.”
b. Probated, testamentary intent to execute will is apparent.
IV. Conditional Wills
a. “If I don’t return…”
b. Condition is a statement of inducement for execution of will.
c. Does not mean will is to be probated only if condition occurs.
V. Cases
a. Kuralt
i. Use of term “inherit” in letter shows testamentary intent
b. Mulkins
i. Eliminate pre-printed language as “mere surplasage,” look at what
is in T’s handwriting to see whether there’s enough for holographic
will
VI. Codicil
a. Addition to previous will changing some, but not all, of the provisions of
previous will.

Revocation of Wills
Revocation by Writing or Physical Act
I. All states permit revocation of will by
a. 1. Subsequent writing executed with testamentary formalities, or
b. 2. Physical act such as destroying, burning will, etc.
c. Oral declaration that will is revoked, without more, is insufficient.
d. If a duly executed will is not revoked in a manner permitted by statute,
the will is admitted to probate.

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 II. UPC §2-507 Revocation by Writing or Act
a. A will or any part thereof is revoked
i. By executing subsequent will that revokes previous will or part
expressly or by inconsistency, or
ii. By performing a revocatory act on the will, if performed act with
intent and for purpose of revoking will or part or if another person
performed act with T’s conscious presence and at his direction.
III. Lost Wills
a. Can still be probated if accidentally lost or unintentionally destroyed
b. No revocatory intent
IV. Codicil
a. Supplements will, does not replace it.
b. If subsequent will does not make a complete disposition of T’s estate, it
is not presumed to revoke the prior will but is viewed as a codicil.
c. If a codicil is revoked, return to original will without codicil.
V. Duplicate wills
a. Not a good idea
b. If you do, write “Copy” on it.
VI. Presumption of Revocation
a. If no one can find will, presumption is that T intentionally revoked it by
act.
b. Courts vary on strength of this presumption
VII. Cases
a. Harrison v. Bird
i. T wants to revoke, L rips into 4 pieces and sends to her.
ii. If evidence shows T had possession of will before death, but will
is not found, rebuttable presumption that T destroyed will.
b. Thompson v. Royall
i. T intended to revoke will, judge wrote “void” on back of it.
ii. The attempted revocation is ineffectual because T intended to
revoke will by subsequent writings not executed , and because it
was not physically defaced in any way.
iii. Intent, but no revocatory act.
iv. If T had written the revocation, and this was holographic will,
revocation would probably be ok.
VIII. Canceling
a. Cancel through clause 1 and not the others.
b. Construed as partial revocation that revokes clause 1.

Dependent Relative Revocation and Revival

I. DRR Elements
a. 1. Valid will
b. 2. Purported Revocation
i. By physical act, or
ii. By subsequent testamentary instrument
c. 3. Mistake of law or fact

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 d. 4. Which frustrates T’s alternative plan of distribution
II. Overview
a. If T mistakenly believes new will is valid and destroys old will, old will
will be probated.
b. DRR Applies ONLY:
i. 1. When there is an alternative plan of disposition that fails, or
ii. 2. Where the mistake is recited in the terms of the revoking
instrument or, possibly, is established by clear and convincing
evidence
III. LaCrox
a. T left will and codicil clarifying a name. Codicil was void because of
interested W.
b. Held: T’s intention to revoke will was conditioned upon execution of
codicil that had same disposition as estate. No intestacy.

Revival
I. Requirements:
a. 1. Valid Will
b. 2. Revocation by subsequent testamentary instrument (usu. another
will)
c. 3. Revocation (by any method) of covering will
d. Note: If you tear will #1 up, there is no revival. Revival occurs only when
will #1 is replaced by will #2, then #2 is revoked in any way.
IV. Revival Approaches
a. CL: Automatic revival
b. Majority (old UPC):
i. Will revived if T so intends
ii. A likes this.
iii. §2-804 Revocation upon Divorce: Revokes any revocable (i)
disposition of property made by divorced individual to his former
spouse in governing instrument and any disposition created by
law/instrument to relative of divorced one’s former spouse, and 2)
Severs the interests of former spouses in property held by them at
time of divorce/annulment as JT, transforming interests of former
spouses into equal tenancies in common.
c. Minority (KY)
i. Will must be re-executed or republished by codicil.
V. Estate of Alburn
a. T executed will M, then will K, and tore up K will mistakenly believing it
would revive M.
b. K will probated under doctrine of relevant revocation because it was
revoked by mistaken understanding that M would then be valid.

Components of a Will
I. Integration of Wills

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 a. All papers present at time of execution, intended to be part of the will, are
integrated into the will.
b. Preventable by fastening all pages together.
II. Republication by Codicil
a. Works like a re-execution of the will.
b. Ex: Will #2 revokes #1. T adds codicil to #1. Will #1 is republished and
#2 is squeezed out.
c. Difference between Republication and Inc. by Reference: Republication
applies only to a prior validly executed will, whereas incorporation by
reference can apply to incorporate into a will language/instruments that
have never been validly executed.
III. Incorporation by Reference
a. Non-testamentary things are incorporated into will.
b. UPC §2-510: Any writing in existence when a will is executed may be
incorporated by reference if language of will manifests this intent and
describes the writing sufficiently to permit its identification.
c. To apply: 1) Incorporated document in existence, 2) Will manifests an
intent to incorporate, and 3) Will sufficiently describes writing to be Inc.
d. Clark v. Greenhalge
i. T stated in will she had designated items in notebook memo.
ii. Notebook incorporated by reference into T’s will.
iii. Notebook existed when she executed her codicil, which
republished her will.
e. Simon v. Grayson
i. T’s will left $ to be paid as directed in letter. Letter’s date differed
than will’s description.
ii. Held: This was the letter, despite discrepancy in date.
iii. Letter was dated prior to codicil, which republished will, so was in
existence at time will executed.
IV. Acts of Independent Significance
a. If beneficiary/property designations are identified by acts/events that have
a lifetime motive and significance apart from effect on will, gift upheld
b. UPC §2-512: Events of Independent Significance
i. Will may dispose of property by reference to acts/events that have
significance apart from their effect on the dispositions made by
will, whether they occur before or after execution of will or T’s
death. The execution or revocation of another’s will is such an
event.
c. Differs from incorporation because here, it can occur before or after
execution of will or T’s death.

Power of Appointment: 2 types

I. General Power
a. Gives holder of power (donee) power to choose anyone, including himself,
as beneficiary.
b. (Ex’s on page 44 notes, imp)

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 II. Special Power
a. Can only choose among a limited class. (Ex: charitable trust only)
III. Johnson
a. T left typed will, no Ws, no signature or date. T later added codicil in his
own handwriting on bottom of page.
b. Admitted to probate; The handwritten portion was a valid holographic
codicil that republished and validated the prior will.
c. Codicil incorporated prior will by reference and republished, validated.
d. A disagrees with outcome because will was not validly executed.

Contracts Relating to Wills

I. Overview
a. One may enter into K to make a will or to not revoke a will
b. Remedies: 1) Receive its value or 2) Specific performance
II. Will Contracts
a. 1. Contracts to make a will
i. Consideration required
ii. Statute of Frauds applies
b. 2. Contracts not to make a will
i. Die intestate
c. 3. Contract not to revoke existing will
i. Breach of K if they do.
III. Note
a. Usually applies to
i. Joint Will: one instrument executed by two persons as will of both.
Probated at each death.
ii. Mutual wills: Separate wills of two or more persons that contain
similar or reciprocal provisions.
iii. Joint and Mutual Will: Joint will in which respective Ts make
similar or reciprocal provisions.
1. A mutual will with an underlying K.
IV. UPC §3-514 Contracts Concerning Succession
a. Requirements for K to make a will
i. Provisions of will stating material provisions of K
ii. Express reference in will to a K and extrinsic evidence proving
terms of K
iii. Writing signed by T evidencing K (independent of will)
iv. Note: Doesn’t require K to be in writing, but easier to prove if it is
V. Via v. Putnam
a. H, W executed mutual wills to give children estate after deaths. H
remarries after W death. H dies, children want creditor status before W2.
b. Pretermitted Spouse Statute: (FL) Surviving spouse shall receive share
at/equal to what he/she would receive under intestacy.
c. Held: Children, as 3rd party beneficiaries, should not be given creditor
status when interests contravene spouse interests under PSS.
d. Children will get out of residuary estate, but spouse takes first

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 e. Note: Ks do not apply to property surviving spouse acquires after death of
spouse.

Chapter 6: Will Construction

Mistaken or Ambiguous Language in Wills
I. Overview
a. JDs: Bar admission of evidence to vary terms of will.
b. Plain Meaning Rule: extrinsic evidence admitted to resolve some
ambiguities, but plain meaning of words not disturbed
c. No Reformation Rule: Reformation would correct a mistaken term in
will to reflect T’s intention.
II. Mahoney v. Grainger
a. It is only where testamentary language is unclear in its application to
facts that evidence may be introduced as circumstances under which T
used language to help its meaning.
b. Where no doubt exists as to the property or identity, no extrinsic
evidence is allowed.
III. Note
a. Personal usage exception: If extrinsic evidence shows that T always
referred to one by a nickname, evidence is admissible to show T meant
someone other than person with that legal name.
b. Patent ambiguity: ambiguity appears on face of will. JDs vary.
c. Latent ambiguity: ambiguity manifests itself when will terms are applied.
i. Equivocation: Fits two or more people or things
ii. Fits nothing
IV. Anheiter (wrong house #)
a. Where description of thing/person consists of several particulars and all
of them do not fit any one person/thing, less essential particulars may be
rejected provided the remainder of description clearly fits.
b. Gibbs: Middle initials, house #s will normally be taken out if inconsistent

Openly Reforming Wills for Mistake

I. Mistake in Execution
a. Courts usually won’t help you with this
II. Mistake in the Inducement
a. T makes/revokes will because of some mistake
b. Courts are reluctant to allow extrinsic evidence to reform will
c. Sometimes use Dependent Relative Revocation
III. Misdescription
IV. Scrivenor’s Errors
a. L makes mistake by writing/leaving out the wrong thing
b. Traditional Approach: No relief
c. Modern Approach: Reform will so it reflects T’s intent
d. Erickson: If scrivenor’s error has misled T into executing will on belief
that will be valid notwithstanding T’s subsequent marriage, extrinsic
evidence of that error is admissible to show intent of T.

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 V. Rest. §12.1
a. A donative document, though unambiguous, may be reformed to conform
text to donor’s intention if, by clear and convincing evidence
i. Mistake of fact or law affected specified terms, and
ii. Donor’s intention is known

Death of Beneficiary Before Death of Testator

I. Anti-Lapse Statutes
a. Lapse = If devisee does not survive T, gift lapses
b. Some states have anti-lapse statutes, which substitute another beneficiary
for predeceased devisee in certain circumstances.
c. UPC §2-605 (Old UPC) Antilapse; Deceased Devisee, Class Gifts
i. If devisee who is grandparent/lineal descendent of grandparent of
T is dead at time of execution of will, fails to survive T, or is
treated as if he predeceased T, the issue of deceased devisee who
survives at least 120 hours takes in place of deceased devisee.
ii. If all of same degree of kinship to devisee, they take equally. If
unequal degree, then those of more remote degree take by
representation.
iii. One who would have been a devisee under a class gift if he had
survived T is treated as devisee under this § whether his death
occurred before or after execution of will
iv. Note: This applies only when will does not specify what should
happen next.
v. Note: UPC Applies only to devisees to grandparent or lineal
descendent of grandparent.
d. To avoid anti-lapse statute, say, “To A if he survives me,” or state that
antilapse should not apply.
e. Does not prevent a lapse, merely substitutes other beneficiaries (usu.
issue) for dead beneficiary if certain requirements are met.
f. Be sure to determine whether will language indicates T had a “contrary
intention” to the application of antilapse statute.
II. Estate of Russell
a. Left ½ estate to dog.
b. Intended gift to dog is invalid b/c he can’t be beneficiary. Through
intestate succession, the heir was entitled to receive the ½ interest intended
for dog.
III. Allen v. Talley
a. “To living brothers and sisters, to share and share alike.”
b. Will contained words of survivorship, precluding application of
antilapse statute.

Class Gifts
I. Overview
a. If class member predeceases T, surviving class members divide total gift
b. TEST for whether it’s a class = Whether T is “group-minded”

15
 i. If T uses class label in describing beneficiaries
ii. If individual names: court admits extrinsic evidence to determine if
T would want survivors to divide property
II. Rest. §13.1: Class Gift Defined
a. Class gift is a disposition to beneficiaries who are described by a group
label and are intended to take as a group. Taking as a group mean:
i. Membership of class is typically not static, but subject to
fluctuation by increase/decrease until time when class member is
entitled to distribution, and
ii. Upon distribution, property is divided among then-entitled class
members on fractional basis
b. If terms of disposition identify beneficiaries only by a group label,
disposition creates a class gift, unless language or circumstances indicate
that transferor intended beneficiaries to take as individuals
III. Rest. §13.2: Class Gifts Distinguished from Individuals
a. If terms of disposition identify beneficiaries only by name, without any
reference to group label, the disposition does not create a class gift, but is
to the beneficiaries taking as individuals.
b. If the terms of disposition identify beneficiaries 1) by group label and
2)Either by name or by number of beneficiaries who then fit the group
label, the disposition is presumed not to create a class gift, but is to the
beneficiaries taking as individuals. The presumption is rebutted if
language or circumstances indicate that the transferor intended the
beneficiaries to take as a group.
IV. Dawson v. Yucus
a. T left ½ gift to one nephew 1, and ½ to other (left one out). 1 died.
b. Held: T’s will did not create class gift and 1’s gift will pass to 1’s heirs.
No language to indicate T wanted class gift.
V. Sullivan
a. Court admitted extrinsic evidence to prove class gift to because T didn’t
want to pass by intestacy.
VI. In re Moss (A likes)
a. T intended class gift because property is to be shared equally.

Changes in Property after Execution of Will

I. Types of Devises
a. Specific
i. Some identifiable type of property. (house, car)
b. Demonstrative
i. Hybrid; Bequest of certain amount of money to come from a
specific source.
c. General
i. Something fungible; usu. money
d. Residuary
i. Everything that has not been disposed of under the categories.
II. 1. Ademption by Extinction

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 a. Applies to specific devises of property only.
b. Two Theories
i. Identity Theory: if specifically devised item is not in T’s estate,
gift is extinguished (Traditional Rule)
ii. Intent Theory: Beneficiary may get cash value of the item if he can
show that this is what T would have wanted.
c. Applies only when there is a change to specific devise after will executed
and before death
d. UPC §2-606 (Intent-based approach)
i. A specific devise has a right to the specifically devised property in
T’s estate at death and
1. Any balance of purchase price
2. Any amount of condemnation award for taking property
3. Any proceeds unpaid at death on fire/casualty insurance
4. Property acquired as a result of foreclosure
5. *Real or tangible personal property owned by T at death
which T acquired as a replacement for specifically devised
real or tangible personal property.
6. If not covered under 1-5, a pecuniary devise equal to value
as of its date of disposition of other specifically devised
property disposed of T’s life as long as intent
ii. If specifically devised property is sold/mortgaged by conservator
or by agent acting within authority…or if condemnation award,
insurance, or recovery for injury to property are paid to
conservator or agent…the specific devisee has right to a general
pecuniary devise equal to net sale price, amount of unpaid loan,
condemnation award, insurance proceeds, or the recovery
iii. Right of specific devisee under (b) is reduced by any right devisee
has under (a)
III. Waserman (Identity theory)
a. T left building to A, but sold property before death.
b. Held: Specific devise was adeemed by act of T. (Same rule for wills &
trust)
c. Focus is on actual existence/nonexistence of property, and not on intent of
T with respect to it. To be effective, a specific devise must be in existence
and owned by T at time of death.
IV. 2. Stock Splits and Problem of Increase
a. Absent contrary showing of intent, devisee of stock is entitled to
additional shares received by T as result of stock split.
V. 3. Satisfaction of General Pecuniary Bequests
a. Ademption by Satisfaction
b. Applies to general pecuniary bequests only. If specific property is given to
beneficiary, gift is adeemed by extinction, not satisfaction
c. When T makes transfer to devisee (while living) after executing will.
d. Rebuttable presumption that gift is in satisfaction of will gift.
e. Some states consider T’s intent.

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 VI. 4. Exoneration of Liens
a. When will makes specific devise of land, on which there is a mortgage
b. Some states apply this doctrine, so presumed that T wanted debt to be paid
out of residuary estate.
VII. Abatement (Imp!) – Matt has fractions
a. Arises only when estate has insufficient assets to pay debts and devises.
b. In absence of any indication in will as to how devises should abate/be
reduced, devises ordinarily abate in this order:
i. 1. Residuary devises reduced first
ii. 2. General devises reduced
iii. 3. Specific and demonstrative are last and reduced pro rata

Chapter 7: Restrictions on the Power of Disposition: Protection of Spouse & Kids

I. Rights of Surviving Spouse
a. Two Different Marital Property Systems
i. Separate Property
1. Gives surviving spouse, by statute, an elective share (aka
forced share) in estate of deceased spouse
2. Enforceable against all property of decedent
ii. Community Property
1. These states give ½ interest to spouse
II. Devices to Protect Family of Decedent
a. *These are ahead of the claims of creditors.
i. Order: These allowances, creditors, beneficiaries
b. Homestead Allowance
i. Fixed-sum allowance
ii. UPC §2-408 recommends $15,000
c. Personal Property Set-Aside
i. Family members may set aside a some personal property
ii. UPC recommends $10,000
d. Family Allowance
i. Maintenance while will is being probated
ii. UPC allows probate court to set aside reasonable allowance
iii. Usually based on estate size and lifestyle
iv. Cutoff is at 1 year.
e. Dower and Curtesy:
i. Applies only to intestacy situations and inheritable property only
ii. Inchoate dower: if D owned property at any time during marriage,
and then sold it, spouse had a “lesser right” (life estate) to 1/3 of it.
iii. If spouse ever bought property during marriage, spouse gets 1/3
iv. Exception: If D mortgaged property prior to marriage, no dower
rights
f. Also includes: Social security, ERISA

Rights of Surviving Spouse to Share of Decedent’s Property

I. The Elective Share

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 a. Spouse can either take under D’s will or renounce will and take fractional
share of D’s estate
b. UPC: Share determined by % based on length of marriage
c. Estate of Cross – Incompetent wife. Judge elected for her to take intestate
share.
i. In Wife’s best interest. Otherwise, she would receive no money
and be deemed ineligible for benefits for failing to avail herself to
potential income.
d. Cooper
i. Homosexual relationship does not give rise to any spousal rights
under elective share.
II. Property Subject to Elective Share
a. Trusts:
i. Assets of inter vivos trust created during marriage to D spouse
over which he alone had general power of appointment is treated
as part of the D’s estate.(Sullivan)
ii. No consideration of motive or intent of D is needed.
iii. Note: Elective share statutes ignore inter vivos trusts and focus on
entire estate (includes this trust) - ?
b. UPC (1990): How augmented estate is computer
i. Calculate elective share % (usu. 50%)
ii. Determine value of augmented estate
iii. Determine elective share amount
c. Example
i. H and W married 25 years. Under §2-202, W entitled to elective
share of 50%. H’s augmented estate consists of:
1. $100k probate estate, to A
2. $150k nonprobate transfers to other than W
3. .$25k life insurance to W
4. $50k H’s ½ interest in JT with W
5. $75k W’s property
6. $50k W’s ½ JT interest
ii. W has elective share of 50% of whole ($225k). Since W owns $75
in own name, that amount is credited against her elective share,
reducing it to $150k. Also credited are $25k life ins., $50k H/s ½
JT share, $50k W’s ½ JT share. So, W entitled to $25k elective
share.
III. Waiver
a. Premarital agreements enforcing waiver of right to elective share are
valid.
b. UPC §2-213
c. Estate of Garbade
i. Premarital waiver of elective share is valid
ii. The party attacking the validity of the waiver has burden of
showing evidence of fraud.
IV. Rights of Surviving Spouse in Community Property

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 a. After marriage, all property that comes into marriage (except inheritance),
belongs to married couple jointly, regardless of title.
b. Becomes community property immediately absent agreement to contrary
c. Widow’s Election
i. H executes will devising all community property in trust for W
income for life. Requires W to elect between surrendering her ½ of
community property and taking under H’s will.
V. Migrating Couples and Property Holdings
a. From Separate Property State to Community Property State
i. Ownership of movable property is determined by law of state
where couple is domiciled when property acquired.
ii. Real property is subject to state where it’s located.
b. From Community Property State to Separate
i. Does not change the preexisting property rights of spouse.
ii. Can always voluntarily change character of property (JT, etc)

Pretermitted Children
I. Old UPC (KY)
a. Child receives intestate share when D fails to provide for child born or
adopted after will executed, unless appears that omission was intentional.
b. Prevent this by giving child $1.
II. Azcunce
a. Child born after will executed, but before codicil. No provision for him.
b. Held: Child was not pretermitted child under statute because codicil
republished will and child was alive at this time.

Chapter 8: Trusts: Creation & Characteristics

I. Express trusts
a. Normally in writing
II. Inter vivos trusts (aka living trust)
a. Trust created during lifetime of settlor
b. Can be revocable (flexible) or irrevocable (tax break)
c. Created either by declaration of trust or deed of trust
III. Declaration of Trust
a. Settlor is trustee and there’s no actual transfer.
b. “I hold my assets in trust for benefit of A.”
c. Equitable title goes to beneficiary and legal title to settlor/trustee.
IV. Deed of Trust
a. Transfer of both legal and equitable title
b. “X transfers property of Y (trustee) for benefit of Z.”
c. Requires delivery of deed/property.
V. Trust Corpus or Principal
VI. Testamentary Trust
a. Created by will
b. Irrevocable since you’ll be dead
VII. 3 Groups

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 a. Settlor
b. Trustee
i. Holds legal title, has fiduciary duties, can have more than one.
c. Beneficiary
i. May be settlor, trustee, and beneficiary, as long as there’s another
beneficiary as well.
VIII. Overview
a. If settlor creates trust but fails to name trustee, court appoints one.
b. Trust will not fail for want of a trustee.
c. Applies only to testamentary, not inter vivos, because of delivery
IX. Intent to Create Trust
a. Sole question is whether S manifested an intention to create trust
b. Unless contrary intention appears in will or appointment is deemed
improper or undesirable, executor will be trustee.
X. Jimnez
a. Father used trust money intended for children’s education for stocks.
b. Father violated duty to beneficiary to administer trust solely for
beneficiary’s interest.
c. Violated fiduciary duty; he’s responsible for paying for it.
XI. Hebrew University
a. D told university she intended to make gift of library to them.
b. Held: Had D delivered library, would have been a valid gift.
c. Nothing evidence indicates D intended to create a trust.
XII. Hebrew University II
a. Delivery of the memorandum with D’s acts and declarations shows an
intention to give ownership of library and is sufficient to create a gift.

Necessity of Trust Property

I. Unthank v. Rippstein
a. D wrote letter to R and said he’d send her monthly payments for 5 years,
even in event of death.
b. Writing is insufficient to establish a trust; The writing was merely a
promise to make a series of gifts in the future and is unenforceable.
II. Brainard
a. B orally declared a trust of his expected profits. No stock existed at time.
b. Did not create a valid trust for future profits.
c. If B actually had stock/profits at time of declaration, trust would be
created.
III. Speelman
a. P made K with beneficiary to assign shares in future royalties from play.
b. This is a gift case, not trust, but same question: Was any property capable
of delivery?
c. Held: Beneficiaries entitled to receive %s in K because assignment to Π
of future interest not present at time of assignment created irrevocable
transfer to Π .
IV. Note

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 a. One may assign future profits from an existing thing.
b. One may assign future earnings from existing K.
V. Power of Appointment
a. Right to say who receives property

Necessity of Trust Beneficiaries

I. Clark v. Campbell
a. D’s will instructed “friends” to distribute his property.
b. Not a trust because there are no identifiable beneficiaries and no
sufficient criterion to govern selection of individual “friends.”
II. In re Searight’s Estate
a. D’s will provided $ for the care of his dog. $1,000: .75/day, will last under
21 years
b. Held: Trust does not violate the Rule Against Perpetuities he provided a
time limit under RAP.
c. This is not a charitable trust because benefit is for only one dog.
d. Honorary Trust: Binds the conscious of the trustee, since there is no
beneficiary capable of enforcing the trust
i. Not recognized in all states.

Oral Trusts for Disposition at Death

I. Oliliffe v. Wells
a. D left will devising will to A to distribute in manner D expressed during
life (charity)
b. Held: Trust not sufficiently declared on face of will and cannot therefore
be set up by extrinsic evidence to defeat rights of heirs.
c. Trust is too indefinite on its face to be carried out.
II. Semi-Secret Trust
a. We know there is a trust, but not the terms of the trust. (Oliffe)
b. Not enforced!
III. Secret Trust
a. We don’t even know a trusts exists
b. Extrinsic evidence is allowed to establish that a trust exists and its terms
c. Enforceable. (Secret are better than Semi)

Chapter 5: Non-probate Transfers & Planning for Incapacity

Revocable Trusts
I. Inter-vivos trusts
a. Can be irrevocable or revocable
b. Revocable = S may change terms of trust, so functions like a will.
II. Farkas
a. F created inter vivos trust for W with stock certificates, and retained right
to vote, terminate, etc.
b. As settlor, F can revoke/amend trust. F can receive dividends, so he and W
are beneficiaries.

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 c. Held: Trust valid because beneficiary acquired immediate, though
undefined, interest in trust at creation, and F had fid. duties.
III. Pour-Over Wills
a. A will giving money or property to an existing trust (Black’s)
b. Pilafas
i. No presumption of revocation if trust instrument is not found.
ii. Rest: To revoke, may use any means as long as intent to revoke.
c. Reiser
i. Where person places property in trust and reserves right to
amend and revoke, settlor’s creditors may, following death,
reach in satisfaction to debts owed, to extent not satisfied by S’s
estate.
d. Note
i. Life insurance usually exempt from creditors’ claims.
IV. Uniform Testamentary Additions to Trust Act (UTATA)
V. §2-511 Testamentary Additions to Trusts
a. p. 311 [write this]
VI. Clymer
a. W created inter vivos trust for H while married. Divorced, W died.
b. Divorced spouse should not take under revocable trust in these
circumstances because divorce implies an intent.

Right of Beneficiaries to Distributions from the Trust

I. Overview (most trusts are hybrid)
a. Mandatory Trust
i. Trustee must distribute all income.
ii. No discretion
b. Discretionary Trust
i. Trustee has discretion over payment of income and/or principal
ii. Complete Discretion: Spray Trust
1. Trustee has discretion to determine who and what amount
2. Trustee must distribute all the income.
iii. Support Trust
1. Discretion limited by ascertainable support standard.
2. Trustee determines amount of money beneficiary requires
to maintain current lifestyle
iv. Discretionary Support Trust
1. Trustee gives beneficiary amount he deems necessary to
support
II. Trustee Standard of Care –2 Standards
a. 1. Reasonable Judgment Standard
i. Objective due care standard
b. 2. Good Faith Standard
i. Subjective standard
III. Marsman
a. Will created support trust with F to support C.

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 b. Will imposed a duty of inquiry on trustee, and therefore a constructive
trust imposed on amounts that should have been distributed to C.
c. Exculpatory clause is effective.
IV. Exculpatory Clauses
a. UPC
i. An exculpatory term drafted or caused to be drafted by trustee is
invalid unless trustee proves that the term is fair under
circumstances and its existence and contents were adequately
communicated to settlor.
b. Exculpatory Clause will not be enforced if it covers bad faith, reckless
indifference, or intentional or willful neglect.
V. Mandatory Arbitration Clauses
a. Not enforceable.

Rights of Beneficiaries Creditors

I. Self-Settled Rights
a. Debtor creates trust for himself
b. Creditors can generally reach this, even if discretionary interest.
II. Third Party Trusts
a. Discretionary
i. Create merely an expectancy, not a real interest, so nothing for
creditors to reach.
ii. Creditors cannot reach until money is actually given
iii. Courts cannot force trustee to exercise discretion in particular way
iv. Since beneficiary has no right to payment, creditor also cannot
compel trustee to pay him.
b. Support Trusts
i. Purpose is to provide support for beneficiary
ii. Free from general creditor’s claims because trust purpose is very
specific
iii. Exception: Providers of “necessaries” can get money directly from
the trustee.
c. Spendthrift Trusts
i. Trust where beneficiary is prohibited from alienating his own
interest in the trust.
ii. Must expressly restrict power of alienation.
iii. Since beneficiary has no power to alienate trust, neither do
creditors
iv. Exceptions:
1. Beneficiary is also the settlor, or
2. Assets were fraudulently transferred to the trust
3. Maintenance, child support, necessary goods/services, taxes
d. Asset Protection Trusts
e. Note: Once money is in debtor’s hands, creditors can reach it. To get
around this, redirect money to Swiss account, etc.
III. Uniform Trust Code §504

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 a. Except as in (c), creditor of beneficiary may not compel distribution that is
subject to trustee’s discretion.
b. (c) To extent trustee has not complied with standard of distribution or has
abused a discretion
i. Distribution may be ordered by court to satisfy judgment to pay
child, spouse, or former spouse, and
ii. Pay such amount as is equitable for this, but not more than amount
trustee would have been required to distribute to beneficiary had
trustee complied.
IV. Protective Trust
a. Trustee is directed to pay income to B, but if B’s creditors attach B’s
interest, B’s mandatory income interest ceases, and discretionary trust
automatically arises.
b. Creditors of B cannot demand any part of it.
V. Scheffel – Tort Claims
a. Π has tort claim against ∆ who abused Π ’s daughter. ∆ ’s trust has
spendthrift provision. (Hybrid: Spendthrift + support)
b. The spendthrift provision bars Π ’s claim against the trust.
VI. Shelly v. Shelly
a. Beneficiary’s (spendthrift trust) 2 ex-wives demanded child support and
alimony.
b. Children and ex-wives may reach trust income, but spouses cannot
invade corpus and force it to be paid to them. Children may reach corpus
money because of “emergency provision” in trust, since beneficiary
(father) had disappeared.
c. If there had been no “emergency” provision, no one could invade trust
corpus.
d. Court cannot order trustee to pay; Court will review trustee’s discretion in
paying children under reasonableness standard.

Self-Settled Asset Protection Trusts

I. Overview
a. U.S. courts usually successful only if settlor has some type of control over
trust.
b. Settlor must argue he has no control over trust.
II. Foreign Asset Protection Trusts
a. Trust Protector Clause
i. Mechanism that allows protector to oversee and sometimes
override trustee
ii. Should not be the settlor
iii. Best if protector is not under U.S. JD
b. Anti-Duress Clause
i. Directs trustee not to honor any order from U.S. Court or from
settlor if he’s under U.S. court order
c. Flight Clause

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 i. If things deteriorate politically in country in which trust is located,
authorizes trustee or protector to move situs of trust from one place
to another
d. Non-binding letter of intent
i. Settlor instructs on what to do in certain situations
ii. Non-binding, but settlor can remove trustee if trustee does not
carry out settlor’s intentions.
III. Federal Trade v. Affordable Media
a. Ponzi scheme, settlers refuse to comply with order to repay using trust.
b. Held in contempt; Trust is operating as settlers intended.
c. ∆ s were protectors, and reserved right to determine whether event was
duress.
IV. In re Lawrence
a. Where person charged with contempt is responsible for his inability to
comply, impossibility is not a defense to contempt proceedings.

Modification and Termination of Trusts

I. Claffin Doctrine
a. Trust cannot be modified or terminated prior to fixed time even if all
beneficiaries consent, if it would be contrary to material purpose/intent
of settlor!
b. Note: Claffin does not apply if settlor is still alive (consent of all needed)!
II. Modification
a. *Settlor can give beneficiary or independent 3rd party (protector) the
power to modify or terminate the trust.
b. Stuchel
i. B seek modification for mentally retarded B.
ii. Held: Modification denied – no CL or statutory exception for this
situation.
III. Reformation
a. Court will correct lawyer’s error in drafting the instrument
b. Equitable remedy will conform to settlor’s intention at time of execution
IV. Equitable Deviation
a. Modification to achieve settlor’s probable intent in light of changed
circumstances
V. Virtual Representation
a. Where class is composed of living and potential members, living and
identifiable members can represent unborn/unidentifiable members.
VI. Uniform Trust Code §412
a. Court may modify or terminate the trust if, because of circumstances not
anticipated by settlor, it will further the purposes of the trust. To extent
practicable, the modification must be made in accordance with settler’s
probable intent.
b. Court may modify terms of trust if continuation of trust on its existing
terms would be impracticable or wasteful or impair its administration.

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 c. Upon termination, trustee shall distribute trust property consistent with
purposes of trust.
VII. Termination
a. Brown
i. Termination of trust denied.
ii. Settlor’s intention to assure a life-long income for the
beneficiaries would have been defeated if termination of trust were
allowed.

Chapter 12: Charitable Trusts

I. Overview
a. Must be for the benefit of an indefinite number of persons.
b. Can be a limited number of persons.
c. Exempt from Rule Against Perpetuities.
i. Unlike private trust, need not have ascertainable beneficiary or
specific number of years.
d. If T’s intent is merely benevolent, trust is invalid because it violates RAP
e. Rule Against Unreasonable Accumulations
i. Charitable trusts must distribute the money, can’t accumulate
money without doing anything for public.
II. Charitable Purposes
a. The relief of poverty
b. The advancement of education
c. The advancement of religion
d. The promotion of health
e. Governmental of municipal purposes, and
f. Other purposes the accomplishment of which is beneficial to the
community
III. Shenandoah Valley
a. T left $ to school children for holidays for “education.”
b. Held: The trust is merely benevolent, not a charitable, trust because it
accomplishes no educational purpose.
c. Doesn’t satisfy “beneficial to community” because doesn’t target needy
children.
d. This could have been valid private trust, but needs time limit so as to not
violate RAP.

Modification of Charitable Trusts: Cy Pres

I. Cy Pres
a. “As nearly as possible.”
b. Requirements for Application
i. 1. Settlor has shown general charitable intent, and
ii. 2. Impossible, impracticable, or illegal to do what specified.
c. If settlor’s exact charitable purpose cannot be carried out, court may direct
trust property to another charitable purpose that approximates settlor’s
intention.

27
 d. Cannot leave charitable trust for specific political party, but may for social
issues, etc. they stand for. “Advance the interests of socialism.”
e. UTC & Rest.
i. Court must show donor had a general charitable intent.
II. In Re Neher
a. Settlor intended trust to be used for town hospital. Hospital not needed.
b. When compliance is altogether impracticable, gift may be executed cy
pres through general charitable purpose
III. The Buck Trust
a. Settlor left funds for one county, but had much more money. Π s want to
spend on other counties as well.
b. Cy Pres does not authorize court to vary terms of bequest merely because
it will accommodate the desire of trustee.
IV. The Barnes Foundation
a. Settlor left art collection with very strict rules.
b. Court granted Π s motion to move gallery to more practical place.

Supervision of Charitable Trusts

I. Herzog
a. T left money for nursing scholarships for students
b. Only attorney general has standing to challenge the use of funds,
foundation representing donor has no standing.
II. Smithers
a. W of donor discovered hospital misappropriated H’s funds.
b. W has standing to sue because NY statute does not name attorney general
as exclusive person with standing to sue.
c. Donor’s expressed intent is entitled to protection.
III. The Bishop Estate (Hawaii corruption)
a. Misappropriation; IRS revoked estate’s charitable purpose tax exemption
retroactively and they must repay government.

Chapter 13: Trust Administration: The Fiduciary Obligation

I. Overview
a. Fiduciary duties of trustees: loyalty, prudence, and other subsidiary rules
b. Note: You can waive these duties, but courts are suspicious
c. Most standards have relaxed
II. Loyalty
a. Self Dealing
b. TEST: Conflict of interest
i. 1. Must act in good faith, and
ii. 2. Price must be a fair price.
III. Management of Assets
a. Collect and protect
b. Earmark
i. Trust property should be different from yours and identified.
c. Not to compromise

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IV. Duty not to Delegate
a. Trustees are to act together.
b. Some states require unanimity, others majority.
c. Do not delegate tasks to person with most experience.
V. Impartiality
VI. Prudent Investor Standard:
a. 1. Distribute risk by reasonable diversification of investments, unless it’s
not prudent to do so.
b. 2. 2nd mortgages are not proper trust instruments, unless it’s reasonable
method of settling a claim or making possible the sale of property.
c. 3. Trustee shall give careful attention to valuation of trust property, to
make sure margin of security is adequate
d. Uniform Prudent Investor Act (p.797)
e. Estate of Collins
i. Trustees failed to follow prudent investor standard by making
improper investments, investing 2/3 principal in single investment,
and made investment without investigating borrowers.
VII. Duty to Account
a. Keep good records
VIII. Rothco
a. Breach of duty to estate because conflict of interest since trustee worked
for gallery.
b. 3rd trustee breached duty to exercise ordinary prudence by failing to
oversee other trustees.
c. The appreciated value of the paintings at time of trial was measure of
damages for unreturned paintings.
IX. Co-trustees
a. If there is more than one trustee of a private, non-charitable trust, the
trustees must act as a group and with unanimity, unless trust instrument
provides to contrary.
b. Co-trustee is liable for wrongful acts of a co-trustee.
X. Rest. §258: Contribution or Indemnity from Co-Trustee
a. Except as (2), where two trstuees are liable to beneficiary for breach of
trust, each is entitled to contribution from the other, except
b. If one is substantially more at fault than the other, he’s not entitled to
contribution from other but other is entitled to indemnity from him, or
c. If one receives a benefit from breach of trust, the other is entitled to
indemnity from him to extent of benefit; and for any further liability, if
neither is more at fault than other, each entitled to contribution
d. (2) Trustee who commits breach of trust in bad faith is not entitled to
contribution or indemnity from his co-trustee.
XI. Surcharges
a. Trustees can be ordered to pay this when they breach fiduciary duty.
b. Pay out of pocket.

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Subrules Relating to Trust Property
I. Duties
a. Collect and Protect Trust Property
b. Earmark Trust Property
c. Not to Mingle trust funds with trustee’s own
d. Inform and account to beneficiaries
II. Fletcher
a. Trustee has duty to disclose to beneficiary all information in his
possession.
b. In other situations, trustee can be directed to disclose only particular
information to beneficiaries.
c. Courts normally favor beneficiaries.
III. National Academy (not assigned)
a. Wife’s receipt of trust conditioned on unmarried. Didn’t report marriage.
b. Constructive Fraud
i. Imposes liability when one has duty to disclose information
ii. When truth of the fact is objectively determinative
c. Trust company had obligation to make an inquiry into whether beneficiary
was still unmarried since it was a condition on the trust.

Chapter 14: Wealth Transfer Taxation: Tax Planning

I. Overview
a. Estate Tax
i. Tax on estate of decedent and paid by estate
b. Gift Tax
i. Tax on inter vivos transfers
ii. Tax base is the value of property transferred
c. Inheritance Tax
i. Tax imposed upon beneficiary for receiving money from dead
d. Annual Exclusion
i. $11,000 is excluded per person, per year
ii. Doubled for married couples
iii. Ex: Married couple could give tax free gift of $22,000 child/year
iv. Must be a present interest!
e. Unified Credit
i. $1 million base credit for whole life, which is $345,800 tax credit
ii. Value of tax is based on value of property at the time
f. *Problems on p. 59 of my notes
g. Qualified Disclaimer
i. Disclaimer results in taxable gift unless §2518 applies.
ii. §2518:No taxable gift is made if it’s qualified disclaimer.
iii. Qualified Disclaimer
1. Disclaimer is in writing and made within 9 months after
interest created or 9 months after disclaimer is 21.
2. Disclaimer has accepted no interest in property, and

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 3. Transfer is to persons under local law and not designated
by disclaimant.

Federal Gift Tax

I. Overview
a. Gift = owner gives up complete dominion and control
b. If owner retains some ownership, there is no tax because no gift.
i. Ex: Revocable trust
II. Holtz’s Estate
a. Trust for himself, $ for welfare, etc., then to wife if she survived.
b. H: No gift tax. As long as the possibility that the entire corpus might be
distributed during S’s lifetime and no one else would receive anything, S
did not abandon complete dominion and control to make the gift.
c. Placing discretionary power in the trustee to invade corpus makes the gift
incomplete here.
III. The Annual Exclusion
a. §2503(b): Taxpayer permitted to exclude from taxable gifts $11,000
person/year.
b. Unlimited exclusion for medical and tuition expenses.
c. Not available for gifts of future interests.
d. §2503(c) Transfer for benefit of minor:
i. No part of gift to one under 21 on date of transfer shall be
considered a gift of future interest if property/income therefrom:
1. May be expended by, or benefit of, donee before 21, and
2. Will to the extent not so expended,
a. Pass to donee when 21, and
b. If dies before 21, payable to estate of donee or as he
may appoint.
e. No person other than the minor can have beneficial interest in property
IV. Cristofani
a. S created trust and 7 annual exclusions of $10k each, they could draw this
amount within 15 days each year.
b. Pressent interest because they had a” right to enjoy” immediate
possession of corpus
c. H: Credit given; Amount did not exceed $11k and was present interest.
d. If B has the legal right to withdraw the money, it’s a present interest.
V. Gifts Between Spouses
a. Spouse may take unlimited marital deductions for gift to other spouse.
b. Does not apply to terminable interests (ex: life estate)
i. Exceptions:
1. Life estate followed by general power of appointment
a. Regarded as full ownership
2. Q-Tip
a. (Not sure what this is)
c. Note: Married couple could use $22k per year annual gift + $1 million
each unified gift tax credit

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The Federal Estate Tax (Exam question) p. 63 bottom on my notes is good
I. §2033: Property Owned at Death
a. All property owned at death that passes by will or intestacy
b. Would not include a life estate
II. §2034 Dower or Curtesy
a. Included in gross estate
b. May be marital deduction, since it goes to spouse.
III. §2039 Annuities & Employee Death Benefits
a. In gross estate if decedent possessed right to receive benefits during life.
b. Ex: Annuity or pension payments.
c. When decedent dies, these payments are made to surviving spouse.
d. Not included if it’s by state (ex: SSI)
IV. §2042 Life Insurance
a. Where one takes policy on own life and names family member as
beneficiary, proceeds are taxed in insured’s estate if he holds any
incidents of ownership over policy.
b. Main point: It matters who owns the policy.
V. §2036: Lifetime Transfers
a. Value of gross estate includes value of all property of which decedent has
at any time made a transfer, unless bona fide sale for full consideration,
by trust or otherwise
b. Note: Although you pay gift tax on part of it, you still may have pay estate
tax on the value now. Gift tax you paid on prior value will be credited.
VI. Estate of Maxwell
a. Transfer was not a bona fide sale because decedent’s “rent” payments
cancelled out mortgage interest, and no evidence she intended to collect $
b. Property is taxable as part of D’s estate because not bona fide sale.
VII. Old Colony
a. Trust taxed because settlor named himself trustee and determined the
standard and amount of payment for beneficiary.
VIII. §2038 Revocable Transfers (on p. 68 my notes)
a.
IX. §2035 Transfers Within 3 Years of Death
a. Transfers made within 3 years of death included in D’s gross estate if
i. Gift tax paid by D or estate within 3 years of death
ii. Any transfer or release of interest in property if would have been in
§2036, §2037, §2038, §2042
b. *Must be when otherwise would’ve been included in gross estate:
i. Retained power in trust
ii. **Life insurance (Ausness focuses on this!)

The Gross Estate: Powers of Appointment: §2041

I. §2041
a. Gross estate includes value of property over which D held a general
power of appointment:

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 i.Decedent
ii.His creditors
iii.Decedent’s estate
iv. Creditors of decedent’s estate
v. Regardless of whether decedent exercised the power
vi. Exceptions
1. Ascertainable Standard
a. Standard that relates to health, education, support or
maintenance (Vissering)
2. 5 and 5
a. Donee given 5% or $5k (Hertz)
b. Right to determine who receives it is an incident of ownership
II. Special Power of Appointment
a. Decedent cannot appoint power to himself.
III. Vissering
a. Invasion allowed for “continued comfort, maintenance” etc of D.
b. Assets not includable in taxable estate
c. D did not have general power of appointment because ability to invade
trust was limited to ascertainable standard
IV. Kurtz
a. D could take 5% of F trust per year, only if M trust was exhausted.
b. 5% of F trust includable in estate because she could have withdrawn this.
c. Having a 2-step process does not protect D when D controls.

Taxable Estate: Last Day

I. Marital Deduction
a. If D leaves all money to spouse, D owes no estate taxes.
II. Q-Tip Trust
a. Terminable interest
III. Charitable Trust
a. Fully deductible, so long as it meets requirements of actual charity
b. If you give to spouse, then remainder to charity: p. 917

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