Wills + Trusts

Valid Will

A valid will requires: (1) a writing (2) signed by the testator (3) made in the presence of 2 witnesses (4) with testamentary intent and (5) understanding of the extent, nature, and bounty of the property.

After 1/1/2009, a will not meeting witnessing requirements may still be admitted to probate if there is clear convincing evidence that testator intended the document to be his will.

Defenses to Capacity, LUFIM

Lack of Capacity

Undue Influence: three types: (1) common law, (2) statutory, and (3) standard

Common law UI requires beneficiary: (1) be in confidential relationship with the testator (2) participate in procuring the gift, (3) the gift is unnatural

Statutory UI requires beneficiary: (1) be an attorney or caregiver who drafts the will or (2) be in a fiduciary relationship with testator and transcribes the will

Standard UI requires: (1) an unfair influence on testator (2) overpowering testator's free will and (3) will would not have been executed without the influence

Fraud either in the (1) execution or (2) in the inducement

(1) Testator was misled about the instrument's nature

(2) testator misled by false representations influence their motivation

Insane Delusion requires specific delusions causing the bequest. Requires a "but for" analysis.

Mistake either in the (1) execution or (2) in the inducement

(1) mistake in the execution requires a misunderstanding the document's nature

(2) mistake in the inducement requires will was based on false belief

Revocation of Will

A will may be revoked by three methods: (1) physical act, (2) operation of law, and (3) subsequent will

Physical act requires any action cancelling, tearing, or destroying the prior will

Operation of Law requires a divorce or termination of domestic partnership.

Subsequent Will

Holographic Instrument + Extrinsic Evidence

A valid holographic will or codicil requires: (1) signed by the Testator and (2) the material provisions are made in testator's own handwriting. Material provisions include the gifts to be made and the beneficiaries' names.

Extrinsic evidence is admissible to determine the Testator's intent. Where an undated holograph is inconsistent with the provisions of another will, the undated holograph is invalid to the extent of the inconsistency unless it can be established that the undated will came after the other will.

Revival, RC[DRR]

A prior will may be revived by three methods: (1) re-execution of the revoked will, (2) codicil, (3) Doctrine of Dependent Relative Revocation

Re-execution of the Revoked Will requires: (1) recreating and signing a new or identical will (2) following all legal formalities of creating a valid will

Codicil: Revival by codicil requires: (1) clear expression of the testator's intention to revive the will and (2) describes the revoked will sufficiently.

Dependent Relative Revocation: requires: (1) testator revoke all or part of a will based upon mistake, (2) the new will is legally invalid, (3) courts give effect to the revoked will only where consistent with testator's intent

Substituted Judgment- Conservator/tee

Court-approved execution of will/trust by a conservator for conservatee lacking capacity. Substituted judgment requires: (1) noticed hearing (2) conservatee's lack of opposition or capacity and (3) adequate provision for the convservatee

Other Valid contents of a will, CII[P}A

Codicil is an alteration to a prior will, valid if executed with the required formalities as either an attested or holographic will.

Integration is presumed when: (1) papers are physically connected and have (2) an internal sense of connection shown by provisions running from one page to the next. Extrinsic evidence is admissible to prove intent and presence.

Incorporation by Reference requires: (1) writing exist at will execution date, (2) will shows intent to incorporate the writing (3) writing is sufficiently described in the will and (4) testator intended to incorporate the writing

Pour-over Provision: testator may dispose of property by will to an inter vivos trust, requires: (1) trust be clearly identified in the will and (2) be executed before/concurrently with the will

Acts of Independent Significance resolve ambiguities by: (1) referring to non-testamentary documents or acts and (2) act/event must have significance beyond its impact beyond the will

Abatement

abatement requires gifts are reduced pro rata under a will to satisfy the debts and claims of an estate in the following order: (1) intestate property, (2) residuary devises, (3) general devises, (4) demonstrative devises, (5) specific devises

Ademption by Extinction

Failure of a specific gift because the property is not in the testator's estate when he dies.

If occurring intentionally by sale, testator may collect balance of any sale price he intended the property to go to the original beneficiary

Ademption by Satisfaction

An inter vivos gift in advance will be treated as a satisfaction of testamentary gift if: (1) instrument specifies deduction of the lifetime gift from the testamentary gift, (2) a testator declares in a contemporaneous writing that transfer is to be deducted from the testamentary gift or (3) transferee acknowledges so in writing

Simultaneous death --> Lapse

If it cannot be established by clear and convincing evidence that one survived the other by 120 hours, the property is administered as if the intended beneficiary predeceased the testator

Lapsed Gifts/Anti lapse

A gift lapses if: (1) the beneficiary predeceases the testator or (2) if the beneficiary is treated as predeceasing the testator because the beneficiary disclaimed, did not survive long enough, or committed elder abuse

Anti-Lapse statute: unless otherwise stated in the will, anti-lapse requires: (1) Predeceased beneficiary is related to testator/spouse/partner (2) Beneficiary left surviving issue (3) Gift goes to surviving issue, divided per capita by right of representation

Disclaimer

Disclaim occurs when an intended beneficiary irrevocably refuses a gift, requires: (1) disclaimer must be in writing, (2) identify testator, describe the interest being disclaimed and declaring the disclaimer, and (3) signed by the beneficiary

No right of exoneration

in CA, a specific devise passes subject to any liens existing at death

Intestate Succession, Surviving Spouse

By intestacy, a surviving spouse shall receive 1/2 CP and QCP (total 100% CP). Separate property distributions will be based upon intestacy statutes. SS is entitled to all SP if survived by SS alone, 1/2 SP if decedent is survived by either an issue of child or an issue of parents. SS is entitled to 1/3 if survived by multiple children or their issue survive.

Per Capita/Per Capita with right of representation

Under intestacy, with out a testamentary distribution scheme, SP passes: (1) per capita or (2) per capita with right of representation.

Per capita requires each living member of a class of beneficiaries gets equal share

Per capita with right of representation requires dividing the estate based on the number of branches in a family. If a beneficiary in a generation predeceases the testator, their share is divided equally among their surviving children

CA law defaults to "per capita with right of representation" for distributions made under wills, trusts, and other instruments executed on or after January 1, 1986, unless the document specifies otherwise.

Pretermitted Child

A child born after a will is executed, who is not provided for by the will receives intestate share unless: (1) the will shows omission was intention, (2) testator provided substitute transfer outside the will or (3) testator had other children and left estate to parent of omitted child

A substitute transfer is an inter vivos gift in advance.

Omitted Spouse

An omitted spouse receives a statutory share of the decedent's estate equal in value to that which the spouse would have received if the decedent had died without ever having executed any testamentary instrument, unless: (1) the will shows the omission was intentional (2) testator provided for the spouse by transfer outside of the will with the intention that the transfer be in lieu of any testamentary provision (3) omitted spouse signed a waiver agreement

Adopted Person Dies Intestate

Property is distributed among those who would have been kindred.

Child born out of wedlock

A natural parent may not inherit from the child unless the parent (1) acknowledge the child and (2) contributed to support or care of the the child

Bars to Succession

Slayer Statute: a beneficiary who feloniously or intentionally kills the decedent is not entitled to benefit from his estate

Elder abuse: a beneficiary who by clear and convincing evidence committed elder abuse is treated as though they predecease the testator

No Contest Clause: will be enforced unless challenged by beneficiary with probable cause of forgery, revocation, interested witness, fraud/UI/duress

Valid Express Trust

To be a valid express trust there must be 1) a settlor, 2) a trustee, 3) a beneficiary, 4) a res, 5) delivery of property to the trustee, 6) a valid purpose, and 7) an intent to create a trust.

Lack of a trustee does not invalidate a trust, the court will appoint one

Trustee, Powers

The trustee has: (1) express powers granted in the trust and (2) implied powers necessary to act as a reasonably prudent person in managing the trust

Trustee, Resignation

Secret Trusts + Constructive Trust

A secret trust is an absolute gift by will with a beneficiary's promise to hold it in trust for another. Extrinsic evidence is allowed to prove the agreement and prevent unjust enrichment.

If proven by clear and convincing evidence, the court will impose a constructive trust on the beneficiary/secret trustee.

Constructive trust requires: (1) a confidential or fiduciary relationship (2) a promise, express or implied, (3) a transfer made in reliance on that promise, (4) unjust enrichment

Semi-Secret Trust

Semi-secret trusts occur when a gift is explicitly or implicitly in a trust, but does not name the beneficiary or purpose. The gifts are unenforceable as a violation of the Statutes of Wills, property shall go to testator's heirs or residue.

Charitable Trust --> Cy Pres

A charitable trust is valid if it (1) has a stated charitable purpose and (2) exists for the benefit of the community at large or for a class of persons with variable membership

Cy pres doctrine applies when the specific charitable use becomes impossible or impractical. The court determines the trustor's intent: (1) if specific charitable intent exists, the trust fails and property goes to settlor's successors (2) if general charitable intent, the court finds a similar use

Spendthrift trust + Preferred Creditors

Spendthrift trust imposes restraints on a beneficiary's alienation, preventing beneficiary from transferring interest in the trust until disbursement.

Preferred creditors who can break through a spendthrift clause include: (1) creditors for necessaries of life, (2) claims from dependents, (3) federal government claim for back taxes

Discretionary Trust

Gives trustee discretion to distribute or withhold payment to beneficiary. Trust interest is protected from creditors before disbursement.

Trustee must pay creditors directly if aware of an assignment/attachment, unless there is a spendthrift clause. A court will not interfere with trustee's discretion unless it is abused

Support Trusts

Support trusts require the trustee pay only the amount needed for a beneficiary's support. This is non-assignable and protected from creditors

Termination of Trusts

A trust terminates automatically if: (1) its stated term expires or purpose is accomplished or (2) all beneficiaries agree and termination won't frustrate material purpose of the trust.

Modification of Trusts

A trust may be modified when (1) all beneficiaries agree and (2) modification does not interfere with a material purpose of the trust

Failure of Express Trust, Resulting Trust

Resulting trust are implied by law to hold property in an attempt to achieve the intent of the settlor until legal title can be reclaimed

Trustee Delegation

Trustee can delegate functions that a prudent trustee would, trustee cannot delegate non-administrative duties without permission granted in the trust.

Must exercise care in: (1) selecting the agent, (2) establishing the scope and terms and (3) reviewing the agent's actions. Trustee remains responsible for the delegate's actions

Trustee Resignation

Trustee can only resign where permitted by trust, court, or all beneficiaries' approval.

Trustee Duties C[LG]EP[PP]A

(1) Duty of Care: requires use of reasonable care and skills in managing the trust. Mistakes in judgment do not expose trustee to liability so long as reasonable care was exercised.

(2) Duty of Loyalty and Good faith: requires trustee to put interest of the trust and beneficiaries first, requires: (1) no self dealing, (2) avoid conflict of interest.

(3) Duty to Earmark: requires trustee to (1) keep trust assets separate from personal assets and (2) title assets in the trustee's name as trustee

(4) Duty of prudence: requires trustee to: (1) act as a prudent investor (2) diversify investments (3) ensure trust assets generate income

(5) Duty to Account: requires trustee (1) follow trust instructions in administering trust assets (2) prove trust was administered for beneficiary’s benefit

Remedies for Trustee Breach of Fiduciary Duty

Beneficiaries are entitled to recover profit and property from a breaching trustee. Beneficiaries may also ratify the trustee's actions, waiving breach. Losses and gains from different breaches cannot be offset. The trustee may be removed.