Wills & Trusts

UPC Order of Inheritance

spouse, descendants, parents, parent's descendants, grandparents, grandparent's descendants, deceased spouse's descendants

CA Order of Inheritance

spouse, descendants, parents, parent's descendants, grandparents, grandparent's descendants, descendants of deceased spouse, next of kin, parents of deceased spouse

UPC Spousal Share - no D, no P

entire estate

UPC Spousal Share – all Ds shared, no P

entire estate

UPC Spousal Share – all Ds shared, yes P

entire estate

UPC Surviving Spouse Share - no D, yes P

$300k + 3/4 remaining

UPC Surviving Spouse Share - SS has other Ds

$225k + 1/2 remaining

UPC Surviving Spouse Share - dec. has other kids

$150k + 1/2 remaining

UPC Parental Share

• Only if no Ds

• Divide estate into as many shares as there are surviving parents & deceased parents with at least 1 surviving D

• One share to each living parent, remaining balance passes to surviving Ds of deceased Ps

  • If surviving Ds of deceased P are also Ds of surviving P, treat as predeceased

CA Spousal Share – No D, P, or P’s Ds

all seperate property

CA Spousal Share – No D, yes P or P's D

1/2 seperate property

CA Spousal Share - 1 D or Ds from 1 dead D

1/2 seperate property

CA Spousal Share – more than 1 D

1/3 separate property

CA Spousal Share - 1 D & D(s) from 1+ dead D

1/3 seperate property

CA Spousal Share – D(s) from 2+ dead Ds

1/3 seperate property

Simultaneous Death

must survive by 120 hours to inherit; otherwise treated as predeceasing dec.

Slayer Rule

• Felonious & intentional killing of dec

• Slayer forfeits all benefits with respect to dec's estate

Disclaimer

Can disclaim but must be in writing

Attested Will (formalities)

1. writing

2. signature

3. attestation

Attestation - UPC

• no presence requirement; sign within reasonable time (could even be after T's death)

• interested witnesses OK

Attestation - CA

• simultaneous presence for T's signature; must happen during T's life

• interested witness = rebuttable presumption of undue influence/duress/fraud (if not rebutted, limited to intestate share)

Harmless Error – Attested Wills

• UPC – anything

• CPC – attestation issues only

Holographic Will

1. handwriting

2. signature

3. intent

Holographic Will – Date

not required to be valid BUT

• If no date & T incapacitated at any time during which will could have been written, not valid

• If order of docs can't be determined, assume against validity (if revocation)

Harmless Error – Holographic Will

UPC – yes

CA – no

Notarized Wills

1. writing

2. signature

3. notary

Testator Capacity

18 + & have a general understanding of:

• Nature & extent of their property

• Natural objects of their bounty (their peeps)

• Dispositions they’re making (who gets what)

• Orderly plan

Insane Delusion

will doesn't stand if it was product of insane delusion

• insane = no evidence to support belief

• delusion = not mistake; T won't change belief if corrected

Undue Influence

Wrongdoer exerted such influence over T that it caused them to make a donative transfer they wouldn’t have otherwise made

Presumption of Undue Influence

confidential relationship + suspicious circumstances

CA Statutory Presumption of Undue Influence

• Rebuttable if donative transfer to drafter, transcriber, or care custodian of T

• Conclusive presumption if donative transfer of person related to or employed by drafter, transcriber, or care custodian (except if related to/cohabitant of T)

Proving Undue Influence (direct evidence)

• Somebody overcame T’s freewill

• Caused T to make disposition they wouldn’t have otherwise made

Inferring Undue Influence from Circumstantial Evidence

• T was susceptible to undue influence

• Wrongdoer had opportunity

• Wrongdoer had inclination

• Resulted in disposition T wouldn't have otherwise made

Duress

wrongdoer threatened to perform or did perform wrongful act that caused T to make disposition they wouldn't have otherwise made

Fraud

Wrongdoer knowingly or recklessly made false representation of material fact that was intended to & did cause T to make disposition they wouldn't have otherwise made

Tortious Interference with an Expectancy

1. Existence of an expectancy

2. Intentional interference with expectancy by tortious conduct

3. Causation

4. Harm/damages

If undue influence/duress/fraud prevented someone from executing a will

2 remedies:

1. Constructive trust

2. Tortious interference with an expectancy

Integration

docs present at time of will execution (not referenced by will) that are intended to be part of the will are treated as part of the will (fact specific inquiry)

Incorporation by Reference

• Docs in existence at time of will execution, referenced by the will

• May be incorporated into will if sufficiently described

Tangible Personal Property Memo

• doesn’t need to be in existence at time of will execution but must be referenced by will

• may be changed after will execution

• can’t dispose of cash

Tangible Personal Property Memo – UPC requirements

writing must be signed by T

Tangible Personal Property Memo – CPC requirements

• Writing must be dated & signed by T or in T’s handwriting

• Total value can’t be > $25k or > $5k per item

Revocation by Writing

express revocation by subsequent writing OR implied revocation by later inconsistent will

new will that provides complete disposition

presumption it was meant to revoke

new will that makes incomplete disposition

presumption of amendment (codicil)

Revocation by Physical Act

physical act that destroys or obliterates will performed by T or by 3P at T's direction in their presence

Dependent Relative Revocation

if T revoked under mistaken belief, revocation ineffective if T wouldn't have revoked but for mistaken belief

later will that is total revocation is revoked

UPC & CA – presumption that 1st will remains revoked

later will that is partial revocation is revoked

UPC – presumption that 1st will is revived

CA – presumption that 1st will stays revoked

Republication by Codicil

• Date of will changes to date of codicil execution

• In CA, republication can correct errors in execution

Contracts Relating to Wills

if valid will doesn't comply with terms of K, will probated but K beneficiary entitled to remedy for breach

Mistaken/Ambiguous Language – traditional law

• Latent ambiguity (not clear on face) – can bring in extrinsic evidence to show existence of ambiguity

• Patent ambiguity – no extrinsic evidence allowed, interpret plain meaning

Mistaken/Ambiguous Language – modern law

extrinsic evidence allowed for all ambiguities

Reformation – traditional law

• No reformation

• Provision will fail if it can’t be construed

• If provision can be construed through plain language, it will be carried out (even if against T’s intent)

Reformation – modern law

Reform if clear & convincing evidence of T’s intent & that terms were affected by mistake of law or fact

Acts of Independent Significance

Donative transfer under will can be determined by acts that have seperate significance apart from their effect on dispositions made by the will

Void Testamentary Gifts

Fail at time of execution

Lapsed Testamentary Gifts

fine at time of execution but fails later

Specific Bequest Void/Lapsed

Goes to residue

General Bequest Void/Lapsed

Goes to residue

Remainder Void/Lapsed

Partial Failure:

• Traditional rule – no residue of a residue, goes to intestacy

• Modern rule – goes to other taker of remainder

Total Failure

• Goes to intestacy

Class Gift Void/Lapsed

If partial failure → divide among living members of class

If complete failure → goes to residue

Antilapse

Failed devise goes to descendants of transferee

When does antilapse apply?

• Only transfers to close relatives of T

• Applies if no opt out or alternative disposition

Words of Survivorship

UPC – insufficient to avoid triggering the antilapse statute

CA – sufficient to avoid triggering the antilapse statute

Ademption by Extinction

Specific gift of property fails bc property is no longer in T's estate at time of death

Ademption by Extinction – UPC

intent theory; beneficiary can get substitute or value of item if consistent with T’s intent

Ademption by Extinction – CPC

identity theory; devise fails

Ademption by Satisfaction

T makes inter vivos transfer to devisee after executing the will; devisee doesn’t get property through will bc devise was already satisfied

UPC Order of Abatement

1. Property not disposed of in will

2. Residuary devises

3. General bequests (pro rata)

4. Specific bequests (pro rata)

CPC Order of Abatement

1. Property not disposed of by instrument

2. Residuary gifts

3. General bequests to persons other than T’s relatives

4. General bequest to T’s relatives

5. Specific bequests to persons other than T’s relatives

6. Specific bequests to T’s relatives

Exoneration of Leins

If property that has mortgage on it is devised, rest of estate must pay of mortgage (devisee takes it free of mortgage)

Planning for Incapacity

• Trust (inter vivos)

• Power of attorney for healthcare

• Power of attorney for finances

Requirements to Create Trust

1. Settlor capacity

2. Settlor intent to create trust

3. Trust property (res)

4. Ascertainable beneficiaries (or trust for animal, charitable trust, or trust for noncharitable purpose)

5. Duties of trustee

6. Same person is not sole trustee & beneficiary

7. Writing (if required)

When does trust creation require a writing?

• Testamentary trust created by wills (must comply with wills formalities)

• If property involved, must satisfy SOF

Testamentary Trust

Trust created by will

Deed of Trust

Settlor makes transfer to someone else as trustee

Declaration of Trust

Settlor makes transfer to self as trustee

Ascertainable Beneficiaries

• Bs may be designated by class, but must be definable class (e.g., not “my friends”)

• Must be ascertainable within RAP

Breaches of Trust – 2 types

1. Power – trustee wasn’t authorized to take action by terms of the trust

2. Duty – trustee had authority to take action, but doing so in the way they did violated their fiduciary duties

Remedies for Breach of Trust

• Trustee removal

• Compensatory Damages – what trust would have had but for the breach

• Disgorgement – trustee’s profits

Fiduciary Duties of Trustee

• Duty of Loyalty

• Duty of Prudence

• Duty of Impartiality

• Duty to Inform & Account

Duty of Loyalty

• Must act solely for benefit of B

• Avoid self-dealing

No Further Inquiry Rue

If trustee takes action that involves a conflict of interest between their fiduciary capacity & personal interests, no further inquiry is made into whether it was fair & in good faith

Duty of Loyalty – analysis

1. No further inquiry rule – Strict liability for self-dealing (unless defense or exception)

2. If no self-dealing, did trustee act in good faith & was deal fair?

Self-dealing Defenses

• Settlor authorized

• Beneficiary consent

• Advanced court approval

Self-dealing Exceptions

• Structural conflict (created by settlor)

  • Settlor knew conflict existed when selecting trustee

• Reasonable fees

• Investment in own stock

Duty of Prudence – general rule

Administer trust as prudent person would with reasonable skill, care, & caution, considering trust purpose, terms, distribution requirements and other circumstances of trust

1. Distributions

2. Investment

3. Custodial & Administrative

Duty of Prudence – Distribution

• Trustee must make distributions to trust Bs as mandated by terms of the trust

• Failure to make mandatory distributions = per se breach of trust

• Refusal to make discretionary distribution may be breach of trust if trustee failed to act reasonably & in good faith

Duty of Prudence – Investment

• Prudent Investor Rule: Trustee must invest & manage trust assets as a prudent investor would, by considering the purposes, terms, distribution requirements, & other circumstances of the trust

• Invest for total return (ignore principal vs income)

• Create diversified portfolio (to manage risk)

• Liquidate concentrations

Duty of Prudence – Custodial & Administrative

• Take control of trust property

• Don't commingle trust property with own property

• Keep good records

• Bring/defend claims

Duty of Impartiality

• Must act fairly & impartially in managing, investing, and distributing trust assets, considering B’s respective interests

• Balance interest of income & principal Bs

Duty to Inform & Account

• Keep Bs reasonably informed about administration of trust & material facts necessary for them to protect their interests

• Promptly respond to B’s reasonable request for info

• Must give advanced notice to Bs of non-routine transaction

• Provide accounting to qualified Bs at least annually

Trust Modification/Termination – by trustee

• Can terminate uneconomic trust

• Effective modification by changing behavior (investment, distribution, administration)

Settlor Modification/Termination

• Revocable trust – settlor can revoke or modify at any time

• Irrevocable trust – settlor can revoke or modify if all qualified Bs consent (current Bs can virtually rep unborn Bs)

Claflin Doctrine

• If all Bs consent, trust can be modified/terminated as long as it doesn’t violate a material purpose of the trust

• Under UTC, court can also terminate/modify without all B’s consent if nonconsenting B’s interest is protected

Equitable Deviation

• Due to unforeseen circumstances, termination/modification isnecessary to carry out trust purpose (being advantageous is not enough)

• Must be consistent with settlor intent

Decanting

Trustee who has authority to distribute all principal can distribute trust property into new trust with updated provisions

Trustee Removal

• Serious breach of trust

• Substantial change in circumstances or removal requested by all qualified Bs and:

  • Ct finds removal serves interests of all Bs

  • Removal not inconsistent with material purpose of trust

  • Suitable co-trustee or successor trustee is available

Trust Alienation – traditional law

• Mandatory trust – whatever T is required to distribute to B

• Support trust – child/spouse or provider of necessities can attach trust property under support obligation

• Discretionary support/Pure discretionary – nothing but Hamilton order can intercept distributions made to B