Wills & Trusts

probate assets

• real estate

• bank accounts

• stocks, securities, mutual funds

• promissory notes

• business interests

• insurance policies

• pension or retirement funds

• personal property

lifetime (inter vivos) gifts

donative intent

actual, symbolic, or constructive delivery

acceptance

life insurance policy

beneficiary cannot be changed by a will

joint tenancy

common method for transfer outside of probate

right of survivorship

revocable inter vivos trusts

settlor can serve as trustee and beneficiary

assigns a secondary trustee and beneficiary for when settlor dies

settlor’s creditor’s can reach assets during lifetime

becomes irrevocable trust when settlor dies

guardianship

legal relationship filed with court giving legal authority to make personal and health realted decisions for an incapacitated person

• incapacitated seniors

• minors

• developmentally disabled adults

• adults found to be incompetent

conservatorship

legal relationship that gives someone comprehensive authority to manage affairs of incompetent or incapaciated persons or a business

personal care and finances

custodianship

perosn nominated by donor to manage assetes transferred to a minor child when other planning measures are not used

usually ends when minor reaches age 18-25 depending on state

Powers of attorney

written authorization to represent or act on another’s behalf in private affairs, business, health care decisions, or some other legal matter

voluntary

durable power of attorney

designates another perosn to act on principal’s behalf and includes a durable clause that maintains the power of attorney the principal becomes incapacitated

general power of attorney

agent can perform almost any act as the principal

termianted when principal regains capacity, revokes power of attorney, or passes away

temprorary power of attorney

when grantor only needs agent to act for a limited time

special or limited power of attorney

agent has specific powers limited to certain area

springing durable power of attorney

becomes effective when specified event occurs (like when principal becomes incapacitated)

advance healthcare directives

states patient’s healthcare choices

must be of sound mind when executed the form

signed by individual, witnessed or notarized

intestacy

decedent dies without a will

will is invalid in whole

will does not dispose of all property in estate

provision in will is invalid and does not fall into residue

slayer statute

conviction

for a felony - intentional crime

treated like they predeceased

disclaimer

heir may disclaim in whole or in part an interest in intestate estate

treated like predeceased

intestate succession

• surviving spouse

• children of decedent

• parents of decedent

• siblings

• nephews and nieces

• grandparents, aunts, uncles, and their descendants

• great grandparents, great aunts and uncles, and their descendants

• escheat

CA surviving spouse distribution intestate

• if no descendants, spouse gets entire estate

• if one child, spouse gets half of SP, child gets half of SP

• if two or more children, spouse gets 1/3 of SP, children divide the rest of SP

• if no lineal descendants, spouse takes all of CP but divides SP with decedent’s parents or grandparents

survivorship requirement

must survivive by 120 hours (5 days)

clear and convincing evidence

per capita with right of representation

shares determined at first generational level where there is a surviving descendant

if predeceased descendant, children receive the share

posthumously born children

conceived during life, born after death

inherit intestate share

must be in gestation at time of death and survive 120 hours

posthumously conceived children

only considered children for inheritance if:

• prior to decedent’s death, they specified in writing that their genetic material shall be used for posthumous conception

• child conceived within 2 years of decedent’s death

advancement

lifetime transfers but intestate

requirements:

• made to an heir

• decedent delcares that transfer is an advancement against inheritance in a contemporaneous writing signed OR

• declaration of advancement acknowledged by heir in writing

share is calculated into hotchpot and deducted from intestate share

if predeceased, advancement not deducted

hotchpot

• calculate total advancements

• calculate total estate value

• add advancements to estate (hotchpot)

• divide hotchpot among issues

• substract advancements issue received from hotchpot share

• if advancement exceeds share, remove that person and recalculate

joint ownership

testator conveys property to more than one recipient

default is tenancy in common (no right of survivorship, shares need not be equal)

attested will requirements

in writing

signed by testator (or individual in conscious presence and by direction)

witnessed by at least two people

will witness requirements

• sign will within reasonable time after witnessing testator’s signature or hearing declaration that it is their will

• must sign while testaor alive

• in line of sight or conscious presence of testator

• in each other’s presence

• extra witnesses not required, but helpful (supernumerary)

interested witnesses

witness who is also beneficiary under the will

rebuttable presumption that witness has procured gift by duress, menace, fraud, or undue influence

• if unable to rebut, witness’s share reduced to what they would get intestate

• purging statute allows will to be admitted to probate but voids bequest to interested witnesses

holographic will

handwritten by testator

CA - material provisions must be handwritten

traditional - entirely handwritten

UPC - material portions

statutory will

pre-printed form that testator fills in blanks

must be witnessed by two witnesses

joint will

single will jointly executed by 2 or more testators

mutual will

one of two separate wills with reciprocal provisions

mirror image will

one of two separate wills with distribution plans that are virtually identical

harmless error

will considered valid even if not properly executed

clear and convincing evidence of teatatmentary intent may excuse errors of signature and attestation

substantial compliance

emphasis on intent of testator

court can decide to probate a will if clear and convincing evidence shows the pruposes of formalities were served despite defective execution

reformation

court may reform language of will to correct mistake in drafting or in the formalities

codicil

testator can amend will by codicil

add, subtract, or alter original will

if provisions entirely inconsistent with originial will - considered a substitute will

codicil requirements

generally same as wills - can be attested or holographic

can mix and match

should be signed and dated but not required

location of codicil

can be separate document that references original will

or can be written into original will - at end, margins, interlineated

can be physically attached to will

republication by codicil

may republish original will by codicil if properly worded

date of codicil’s execution becomes effective date of original will as well as codicil

revocation by act

destructive act on document with intent and purpose of revocation

done by testator or by another in conscious presence and by direction

destructive acts:

• burning

• tearing

• cancelling

• obliteration

act need not touch all words of the will

revocation by writing

execute a subsequent will that expressly or implicitly revokes previous will

implicit - intent to replace, complete disposition of estate which revokes entire will, incomplete disposition that revokes any inconsistent provisions

revocation by presumption

lost wills

when document was last in testator’s possession and cannot be found after testator’s death

revival

by act or writing

may revive by revoking subsequent will with a new will or codicil

revived to extent that terms of new will indictae intent to revive

dependent relative revocation

previous will still in effect if execution of subsequent will or revocation of previous wills is found invalid

assumes testator only revoked on mistaken belief that second will was valid

prevents estate from being distributed intestate

integration

will consists of pages that are present at time of execution and intended to be part of same will

probate court will admit and integrate multiple documents that are consistent

incorporation by reference

testator may incorporate any writing not present at time of execution by usuing language that

• expresses intent to incorporate the writing

• describes writing with reaosnable certainty

• indicates writing is in existnce at time of execution

list of tangible personal property

may refer to written list of tangible personal property in will as long as:

• signed by testator

• describes items and beneficiaries with reasonable certainty

will must refer to list

list can be created before or after execution and can be amended

acts or events of independent significance

actions or occurrences that are motivated by needs and desires of testator during their life

act must have some significance other than testamentary distribution of property to be valid

ambiguous documents

unclear whether document is new will, codicil, explanatory document incorporated by reference, or has no testamentary significance

characterize document:

• date of document

• content

• any reference to will in the document

capacity to make a will

testators and witnesses must have capacity

testator must be at least 18 and of sound mind

test for capacity related to mental state

testator must have ability to understand:

• nature and extent of property

• natural objects of their bounty

• nature of testamentary act being performed

• disposition of property as set forth by will

defects in capacity

at time of execution

court may strike provision affected by defect or invalidate will entirely

insane delusion

testator adheres to false belief in nonexistent state of facts against all rational evidence such that there is a material effect on the will

undue influence

testator improperly influenced by another person at time of execution such that testator’s intent is substituted by other person’s intent

presumption of undue influence if:

• testator and influencer are in confidential relationship

• suspicious circumstances are involved in execution of the will

• will makes unnatural disposition of property without a reasonable basis

fraud

false misrepresentation is knowingly and intentionally made to influence testator’s will, causing disposition that would not have happened otherwise

judicial interpretation of wills

• intention of testator is controlling

• every expression in will should be given effect if possible

• preference given to interpretation that avoids intestacy

• words of will given ordinary meaning unless different intention can be ascertained

latent abiguity

language of will clear on face, but more than one meaning when distribution is attempted

extrinsic evidence always admissible

patent ambiguity

uncertainty on face of will

common law - no extrinsic evidence

modern law in CA - extrinsic evidence admissible

extrinsic evidence

also admissible to prove:

• testator’s intent

• fraud, duress, and undue influence

• prove will is valid

• intent to execute or revoke

• interpret erroneous description

• interpret ambiguity

• correct scrivener’s error

equivocation

where description fits two or more external objects equally well

extrinsic evidence admissible

lapse

when beneficiary predeceases testaor

bequest will lapse unless anti-lapse statute

anti-lapse statute

allows issue of a devisee who predeceases testator to take in devisee’s place absent contrary intent of testator

applies to kin only

residue

CA - predeceased residuary share falls back into residue

other places - transfers to beneficiary’s heirs

traditional rule - no residue to the residue

class gift

aggregate sum to body of persons uncertain in number at time of gift but ascertainable at time of death

share common characteristic

when one member of class predeceases, share is reabsorbed into class

• in CA, anti-lapse statute can apply to gift if member of class is kin

specific bequest

specifically identifiable property

general gifts

general assets, not specific property

demonstrative gifts

general gift that specifies source of funds

residuary gifts

what remains after specific and general gifts

ademption

applies only to specific bequests of real and personal property

bequest ceased to be part of the estate at time of testator’s death

by extinction or partial

ademption by extinction

destruction or extinction of a testamentary bequest

ademption by satisfaction

inter vivos transfer of gift during testator’s lifetime after executing will can be done in complete or partial satisfaction of testamentary bequest

identity theory

bequest void if adeemed

intent theory

court will salvage declareing a change in form

sale proceeds usually used to save the gift

order of abatement

if estate does not have enough assets to pay everyone off:

• specific bequest to spouse

• specific bequest to issue

• specific bequest to others

• demonstrative bequest from specific source

• general bequest of money, stock, bonds

• residuary bequest

• any other property

trust

transfer of property from grantor to trustee to hold in trust for beneficiary

trustee

owns legal title to res

fiduciary duties

trust never fails for want of trustee - court will appoint

beneficiary

owns equitable title to res

must be definitive and ascertainable

timing of trust

during lifetime - inter vivos trust

created by will - testamentary trust

trust elements

must have legitimate purpose

elements:

• grantor’s intent

• property or res

• beneficiaries

• trustee (can be appointed later)

• protector (sometimes)

intent of settlor

• must manifest intent to create

• need only express intent to convey to anotehr for use or benefit of 3rd party

• no magic words

• not just precatory language or equitable charge

trust writing requirements

oral inter vivos trust in personal property is enforceable

if res is land, written instrument is required (SoF)

failure of trust

will fail if:

• material purpose has been frustrated

• trust lacks beneficiaries

• lack of trust property

resulting trust

where trust fails for want of beneficiaries or res

trust property goes to settlor

constructive trust

court imposed over any trust assets the trustee has transderred to personal ownership or improper 3rd party

plaintiffs must be able to trace property to which the trustee has taken personal title to trust assets

secret trust

will does not indicate a trust

independent agreement with recipient or promise by beneficiary to use the gift for a specific reason would be enforceable provided it can be proved by extrinsic evidence

valid

semi-secret trust

will indicate intent to create a trust but element is missing

incomplete and fails for missing components

extrinsic evidence admissible to prove the trust

honorary trust

gift in which donor intends to benefit a non-human, non-charitable purpose

common law - not recognized, property reverts to settlor

modern law - trustee may enforce but may only use res for designated purpose

may not exceed RAP

mandatory trust

trustee must distribute income pursuant to specific instructions

discretionary trust

trustee has discretion to distribute income or principal or both

can be wide or limited

if trustee acts in good faith, beneficiary cannot compel

court cannot compell

creditors can reach if distributed

spendthrift trust

creation for benefit of person unable to control their spending

trustee has fill authority to make decisions for benefit of beneficiary

• beneficary cannot voluntarily alienate his interest

• interests protected from creditors

• exceptions: spousal support, child support, tort creditors, excess over amount needed for support

• tax lien

• self-settled trust

support trust

trustee directed to make distributions as necessary for education and maintenance

shields against creditors

special needs trust

funds to supplement public benefits without interfering

fiduciary administration

general duty of loyalty

• must follow trust instructions

• duty to manage trust assets responsibly

• must balance interests of primary beneficiaries, secondary beneficiaries, and grantor

• must remian impartial

• no self-dealing

delegation

duty not to delegate trust duties

modern law allows delegation of adminitsrative tasks like accounting, tax preparation

duty to use reasonable care when selecting person

duty of impartiality

deal with primary and secondary beneficiaries impartially and pursuant to terms of trust

trust res must produce reasonable income for distribution to income life beneficiary, principal ulmiately distributed to remainder person

trust instructions

powers of trustee limited to what is in the instructions

duty to diversify

held to prudent investor standard

should diversify investments and increase value of trust fund if possoble

look at entire portfolio