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WILLS AND TRUSTS - Sitemason Vanderbilt

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					                                                WILLS AND TRUSTS
                                        PROFESSOR SCHOENBLUM, SPRING 2010

I.   The Right of Inheritance from a Policy and Constitutional Perspective ................................................ 3
      The Dead Hand ........................................................................................................................................ 4
      What is the estate? ................................................................................................................................... 6
II. Terminology; The Process of Transferring Property at Death ............................................................... 6
      Probate process ........................................................................................................................................ 6
         o Property passing outside of probate .................................................................................................. 7
      Aspects of probate process ...................................................................................................................... 7
         o Small estate procedure ...................................................................................................................... 8
III. Intestate Succession: What Happens When a Person Dies Without a Valid Will? ............................... 8
      Relevant intestacy statutes ...................................................................................................................... 9
      Distributing estate to descendants: 3 methods ...................................................................................... 10
      Simultaneous death ............................................................................................................................... 12
      Who is a descendant? ............................................................................................................................ 13
         o Adoption ......................................................................................................................................... 13
         o Equitable adoption .......................................................................................................................... 14
         o Posthumous Children ...................................................................................................................... 14
          See p. 115 ........................................................................................................................................ 14
         o Guardianship and conservatorship of minors ................................................................................. 16
         o Advancements ................................................................................................................................. 18
         o Disclaimers ..................................................................................................................................... 18
IV. Wills............................................................................................................................................................. 20
     A. Capacity to Make a Will .......................................................................................................................... 20
      Hierarchy of capacity ............................................................................................................................ 20
      Insane delusion ...................................................................................................................................... 21
      Undue influence .................................................................................................................................... 22
      Attorney (mis)conduct ........................................................................................................................... 23
      Fraud...................................................................................................................................................... 24
      Duress .................................................................................................................................................... 25
      Tortious interference with an expectancy ............................................................................................. 26
     B. Will formalities........................................................................................................................................ 28
      Four functions served by will formalities ............................................................................................. 29
      (Dis)Interested witnesses ....................................................................................................................... 30
      Substantial compliance v. harmless error .............................................................................................. 30
      Formalities of will execution................................................................................................................. 31
      Holographic wills .................................................................................................................................. 33
      Revocation of wills................................................................................................................................ 35
         o Dependent relative revocation (DRR) and revival ......................................................................... 37
         o Revocation by operation of law ...................................................................................................... 40
      Components of a will ............................................................................................................................ 41
         o Republication .................................................................................................................................. 41
         o Incorporation by reference .............................................................................................................. 41
         o 42
         o Acts of independent significance .................................................................................................... 43
V. Interpreting and Construing the Dispositive Instrument ...................................................................... 44
      Contracts relating to wills ..................................................................................................................... 44
      Joint, mutual, reciprocal, and joint and mutual wills ............................................................................ 45
        
        Reformation of Wills ............................................................................................................................. 47
        o Exceptions to no-reformation rule .................................................................................................. 47
      Death of beneficiary before death of testator ........................................................................................ 50
      Changes in property after execution of will .......................................................................................... 52
        o Cash dividends ................................................................................................................................ 55
        o Interest on general and specific legacies ......................................................................................... 55
        o Exoneration of liens ........................................................................................................................ 55
        o Abatement ....................................................................................................................................... 56
VI. Special Protections for the Surviving Spouse .......................................................................................... 57
      Elective share ........................................................................................................................................ 57
      Waiver ................................................................................................................................................... 59
VII. Trusts in Detail ........................................................................................................................................... 61
      Major functions of trusts ....................................................................................................................... 61
      Types of trusts ....................................................................................................................................... 62
      Removal of trustee ................................................................................................................................ 62
      Modification and termination of trusts .................................................................................................. 63
      Will substitutes—“the mighty self-settled revocable trust” .................................................................. 64
        o Creditors’ reach of revocable trusts ................................................................................................ 66
      Pour-over wills and revocable trusts in modern estate planning ........................................................... 67
      Planning for incapacity.......................................................................................................................... 68
        o Durable power of attorney .............................................................................................................. 68
      Trust beneficiaries ................................................................................................................................. 70
        o Honorary trust ................................................................................................................................. 70
        o Statutory purpose trust .................................................................................................................... 71
      Rights of the beneficiary to distributions .............................................................................................. 71
        o Exculpatory clauses ........................................................................................................................ 74
      Rights of the beneficiary’s creditors ..................................................................................................... 75
        o Can creditors reach an irrevocable trust? ........................................................................................ 75




                                                                               -2-
I. THE RIGHT OF INHERITANCE FROM A POLICY AND CONSTITUTIONAL PERSPECTIVE

   Jefferson v. Locke v. Blackstone on right to inherit/devise
        o Jefferson: No right to inherit/devise; person has right to use property while alive and afterward it
            goes to public
                 Consequences: lack of motivation; increase in giving away property during life; increase in
                    consumption v. capital investment
        o Blackstone: There is a right to inherit/devise but it can be regulated/abolished by the State; not a
            natural right but matter of custom; see Irving Trust Co. v. Day (p. 3)
                 “Wills…are creatures of the civil or municipal laws, and accordingly are in all respects
                    regulated by them…neither does anything vary more than the right of inheritance under
                    different national establishments
                 Irving v. Day: “nothing…forbids the legislature of a state to limit, condition, or even abolish
                    the power of testamentary disposition over property within its jurisdiction.”
        o Locke: (Constrained) Natural right to dispose of property at death  key is inheritance (to children)
   Hodel v. Irving (p. 3)
        o Says govt. goes too far – cannot have total abrogation of these rights
        o Statute can block 100% either right to transfer wealth by will or ability to have property pass by
            intestacy, but not both
                 Govt. cannot completely eliminate transmission of property at death
        o Distinguishes Irving v. Day even though this case says that the power of testamentary disposition
            over property can be abolished (Hodel: “the difference in this case is the fact that both descent and
            devise are completely abolished…”
        o Problem? Courts are citing Irving but not Hodel
   Basic concepts
        o Property can be given away during life (inter vivos) or at death (testamentary) and by will (devised)
            or statute (intestacy)
        o Babbitt v. Youpee: there is a constitutional right to transmit property to heirs
                 Govt.’s attempt to restrict right to transmit property must be restrained; i.e., cannot impose
                    100% tax on property at death (but there was once a 92% tax)
        o Is there a right to inherit property? No
            Practice exam question: one state has decided to eliminate the right of inheritance, with all property
            passing to other than lineal descendants and spouses escheating instead. Most likely, inheritance by
            intestacy can be eliminated if there is still a right to devise property
        o United States v. Perkins: not an interference for a state to have heavy tax on property devised to the
            United States
                 Question in Hodel whether property devised/inherited that was acquired through investment
                    is less subject to restrictions than property devised/inherited as a gift
                 Though taxing property would seem like total taking, Perkins permits such a tax
                 SC in Hodel allows for distinguishing the level of regulation permissible between those who
                    were gifted property and want to give it away v. those who created their wealth and sought to
                    transfer it; less regulation for those who created wealth in order to promote this behavior
        o Fractionation = undivided interest; divided interests discourage people from working; single parcel =
            correct depiction
        o Inter vivos revocable trust = rather straightforward (not complex); allows testator to create, amend,
            revoke trust within one’s lifetime; can establish these orally


                                                       -3-
   The Dead Hand
       o Concept where decedent wants to dictate how people live after he/she is dead; while circumstances
          can change while person is alive and there is room for negotiation, this is not so after person dies
       o Development against Rule Against Perpetuities (RAP) means that dead hand could come into play
          (i.e., specify generations down the line how people can enjoy decedent’s property)
       o Example from Hodel v. Irving: when Indian land was restricted it was difficult for people to work
          and on care about the land (inefficient use of property, no flexibility)
       o Restatement (Third) of Property §10.1 (p. 27): controlling consideration is donor’s intention, given
          to the maximum effect  freedom of testation allows person to do with property what he/she wants
                State regulation that restricts this is the elective share for surviving spouses, the omitted child
                   share (children born after execution of will), and creditor’s rights
       o Shapira v. Union National Bank (p. 28) = restriction on right to marry someone of another
          race/religion:
                OK for father to tell son that he would not inherit if he married outside his religion; he was
                   not telling his son who to marry; leaving property to State of Israel evidence of father’s intent
                   to preserve Jewish community
                Court also found that 7 years was sufficient time for man to meet/marry Jewish girl; difficult
                   drawing the line on what is a sufficient period of time; better not to have bright-line rule
                Court hesitant with defining whether someone fits within a certain religion – makes sense
                   from public policy standpoint to stay away from making determinations such as these
                In re Tuck’s Settlement Trusts (FN p. 31): Trust set up where income paid if he was of
                   Jewish faith and married to wife of Jewish blood/faith; Rabbi’s decision would solve any
                   dispute  OK, not void for uncertainty
                Maddox v. Maddox: uncle’s will stating that niece would inherit only if she were a member
                   of the Society of Friends was an unreasonable restraint on marriage and void; with Shapira,
                   however, there was at least one Jewish girl the man could marry
                Note: public policy is an “enemy” to testamentary freedom
                Child does not have right to inherit under Hodel – omitted child statute is recourse
                Courts do not want to be in position of enforcing clauses that punish individuals/threaten
                   people (i.e., in terrorem clauses)
       o Terminology
                Bequest  legatee, while devise  devisee; covers distributions of personal property and
                   real estate; mechanism needed to regulate person’s access to property
                Executor = legal successor to decedent; tasks include paying out creditors, taking net amount
                   after paying creditors and distributing it to persons designated in will; does not administer
                   property over extended period of time; gets letters testamentary and everyone must give
                   credibility to this; Shapira wrong that executor had dual roles of that and trustee
                Testamentary trust = trust set up in will
       o In re Estate of Max Feinberg (Handout)
                Beneficiary restriction that if child/grandchild did not marry Jewish person, they would not
                   receive their share of the trust; all but one child was “deceased”; wife given limited power of
                   appointment
                IL SC said this was a valid restriction; cannot take back something that was already given
                   (invalid condition subsequent) but condition precedent was ok
                Estate of Robertson (p. 35): “so long as she remains my widow” is valid limitation; trust that
                   provides income to spouse for life but terminates if spouse remarries is invalid condition
                   since it deprives someone of something because they decided to remarry
                These are formalistic arguments; goes away from “reasonableness” analysis in Shapira


                                                        -4-
           Mattered that wife had power of appointment (limited power to amend will after one’s death)
            because that affected whether condition was precedent or subsequent; descendants only had
            an expectancy since interest was not yet vested – person cannot be given an interest that can
            later be cut back
o   Feinberg v. Shapira: whether vested interest is cut back (pwr of appt.) v. public policy analysis that
    condition on marrying someone of particular faith, race, ethnicity will turn on reasonableness
         Feinberg bottom line: if property being given away at death and there is no dead hand
            problem, there is no issue with restriction
         Restriction in Shapira would probably fail if decided by Feinberg court
         Lieberman “compromise” example; violated law as executor and could have been sued but
            parties reached agreement
o   Fiduciary duty and trustee – what can be done to prevent collusion to change testamentary plan
         Professional trustee
         Family member as trustee and professional as co-trustee
         Individual as trustee and “trust protector”
o   Sample clauses
         $100k to daughter who marries person other than Af-Am, Jew, Asian  ok under Shapira
         $100k to daughter if she marries Af-Am  ok under Shapira and Feinberg
         Who is Af-Am harder to define than who is Jew
         Clause where Jewish man wants daughter to marry Jew  alternative devise does not
            emphasize commitment to condition; wrote “son” instead of “daughter”
o   Restatement (Second) of Property §6.2 (p. 34): restraint unreasonably limits transferee’s opportunity
    to marry if marriage permitted by restraint is not likely to occur  variation on Shapira
         Likelihood of marriage is factual question that should be answered from particular facts and
            circumstances of each case
         Fineman v. Central National Bank (p. 32): OH public policy against bequest conditioned on
            beneficiary’s obtaining separation/divorce
o   Restatement (Third) of Trusts (p. 35): Invalidates trusts contrary to public policy; “frowns on”
    restraints on beneficiary behavior and those that disrupt family relationships and choice of careers

Sample clauses

Clause                                                        Upheld?
Wife shall not receive trust distribution if she remarries    No public policy favoring remarriage; may find support
                                                              in Roberts as limitation
Wife shall not receive trust distribution unless she          Uncertain
remarries
Daughter shall not receive trust distribution unless she      Not upheld
divorces son-in-law
Daughter shall receive trust distribution if she is           May be upheld (consider facts and circumstances clause
divorced from son-in-law                                      from Restatement)
Son shall not receive distribution unless he attends          See Shapira; probably not upheld
Mass
Husband shall receive estate if converted to Shintoism        Feinberg: is or is not convert, so no dead hand control
at death
Son shall be entitled to trust distribution if he submits     Incentive trust (p. 36); situation can get complicated
to drug test before each distribution                         when considering details of administration of drug tests
                                                              and involvement of trustee
Daughter entitled to outright distribution of $20k if         Dead hand control, intrusive on individual’s life; 2.0
graduates from VLS with 3.6                                   GPA, in contrast, not an incentive now

                                                        -5-
       o Disinheritance  see Paris Hilton, Casey Johnson; incentives could/did not help

   What is the estate?
       o Shaw Family Archives v. CMG Worldwide (p. 10)
                 Residuary clause – doctor received 25% of “balance thereof” for furtherance of work of
                    psychiatric institutions; gave rest to Lee Strasberg
                 Under law of states involved, there was no right to dispose of publicity at time of death;
                    Marilyn Monroe did not have postmortem rights to publicity to give away; CA changed this
                    years later to give celebrities such rights
                 Contrast with Kafka, who owned manuscript and had right to give it away (p. 37)
                 Monroe’s estate open for 40 years; tough on executor since he/she has fiduciary duty and
                    held to highest standard of care
                 Have to contemplate ultimate flow of property (think big picture); do not want property to
                    pass outside lines of those who are designated to receive it
                 UPC §2-602 (p. 13) states that will may pass property acquired by estate after testator’s death
                    but provision did not apply to this case (no state adopted it; only 18 states adopted UPC)
                 Which law governs? Real property  law of the situs (site of property) governs; personal
                    property  law of the domicile governs
                         Problems with real/personal property distinction; issue with defining domicile
                 Almost entire opinion is discussion of where Monroe was domiciled at death (NY); time of
                    death determines the controlling law; will becomes effective at death
                 Question of testamentary document – will is not one here since postmortem publicity rights
                    can be passed on while alive and one cannot do this with a will
                 Recap: most states do not recognize postmortem publicity rights; some states do not
                    recognize inter vivos publicity rights; for the states that do, steps need to be taken during life
                    to preserve likeness (not retroactive); one way to do this is to have a revocable trust
   Destruction/burial of one’s property at death
       o Strong public policy against destruction of wealth; but someone can be buried with property
       o Eyerman v. Mercantile Trust Co. (FN p. 37): person cannot direct executor to tear down apartment
           building; local neighbors had standing because this would have displaced people, undercut $ values
       o Difficult to find someone to carry out this duty (see Kafka example; tough call who is the best judge
           of literary quality or reputation)
       o Person can do whatever he wants with property during life (artist DeGrazia destroying paintings to
           avoid estate tax) (letting people do what they want v. society suffering consequences of people’s
           actions)

II. TERMINOLOGY; THE PROCESS OF TRANSFERRING PROPERTY AT DEATH

   Probate process
       o 3 core functions of probate
       (1) Transfer title to new owners
       (2) Protect creditors to the extent they are entitled to protection
       (3) Distribute to persons designated after creditors are paid
                Probate also exists in terms of a will; to probate a will = prove that the will is in fact the
                   decedent’s
       o Probate is an in rem proceeding
       o Property owned at death passes through probate process either by will or intestacy
                Individuals’ wealth more often passes outside of probate


                                                         -6-
       o Property passing outside of probate
                See p. 39
                JT/Tenancy by the entirety (right of survivorship)
                Life insurance (designated beneficiary)
                Payable on death (POD) provisions; third party designated as beneficiary upon death of
                   decedent
                        Bank accounts
                        Brokerage accounts (transfer on death, or TOD)
                        Retirement plans, i.e., ERISA
                        IV trusts, both irrevocable and revocable; trust always has successor to trustee so no
                           problem of life and death
   Transfers at death
       o Will
                For will, devise = real property  devisees; bequeath = personal property  legatees
                   DO NOT USE “GIVE”
                This is the net estate because something is going to creditors
       o Intestate succession
                Descends = real property  heirs; distribute = personal property  next-of-kin (person who
                   inherits personal property is not an heir)
                Not all statutes use “heirs” to cover both; creditors have to be paid off here, too
   Probate/verification
       o Will
                If proof of will successful, then letters testamentary issued; executor shows that he can act on
                   behalf of estate
                In broader probate process, executor must pay creditors and distribute net estate to devisees
       o Intestate succession
                Same process except with letters of administration; administrator; property goes to heirs or
                   next-of-kin
       o Personal representative = executor or administrator; duty to carry out terms of instrument
                Executor cannot typically be family member from out-of-state (p. 40); bank or trust company
                   can be executor but there are rules governing this
                If executor does not qualify, court appoints administrator (if no relatives around…) but this is
                   not desirable
   Aspects of probate process
       o Common law probate (p. 43): ex parte proceeding in which no notice or process was issued to any
           person
                Used when executive is trusted family member and beneficiary (or –ies?) is family member
                Question of whether person who has not received notice can challenge the will later on; some
                   debate over state statutory limits on when person can make a challenge
                Most desirable when everyone is on board and family wants to get this done quickly
       o Solemn form probate: must send notice to every interested person (heirs)
                Give persons specified time to come into court and file will contest to challenge validity of
                   will in whole or in part, otherwise final judgment is issued and no one can challenge it
                This is used when you know there will likely be a challenge – typically people back down
                   since the process can get expensive and executor has resources of estate to defend will
       o Informal v. formal probate
                With formal probate, executor has to file inventory of assets and get appraisals of property;
                   onerous, time consuming, and costly process, and under court supervision


                                                       -7-
               Informal probate does not require these steps and PR can administer estate without going
                back to court; BUT have to give notification to all interested persons 30 days after
                appointment of personal representative
             Informal probate is the norm but interested party can file petition for formal probate at any
                time during administration of estate
       o Creditors
             Two classes of creditors: (1) those who are unknown or who could not reasonably be
                identified and (2) those who could be identified
             Under the UPC they have 4 months to file claim; otherwise they have no claim (nonclaim
                statute); only notice given is publication notice
             Tulsa Prof. Collection Servs. v. Pope, (p. 45): if executor knows of particular creditors or
                has reason to know of these creditors, he has to give them actual notice (before barred by
                short-term statute)
             Another statute of limitations whether or not will is probated: 1 year, sometimes 1 1/2-2
                years; goal is to close the estate as quickly as possible, and the purpose is to limit this period
       o Small estate procedure
             Aka, summary administration
             Available almost everywhere and set by limits of value of estate ($5,000 to $100,000);
                executor not appointed
             Find out if decedent had will; if not, ask court to sign affidavit to allow family member to
                collect assets
             No real probate if there is a will; just bring in will and staff issues affidavit
             Determining the amount can be tricky; if other assets bring you over $100k limit the entire
                status can be revoked
             Bank is ok if it looks at affidavit and this is stamped by the court
       o Other requirements/issues
             Statute of limitations for probating will: UPC = 3 years (FN p. 43)
             Unsettled controversy over whether anyone has to probate a will; not required in TN and GA
             BUT absolute duty to file will with probate court to make clear to public that will exists
             Problem 1, p. 47: Vehicle: < $15,000, goes to surviving spouse; more than $15k or more
                than one vehicle  part of the estate
             Can ignore such items as clothing or furniture but not jewelry
             If item such as mutual fund does not have POD/TOD, it would have to go through
                administration; joint checking acct., life insurance, pension skip probate
             Problem 2, p. 48: statute of descent or distribution: divided between spouse and children;
                problematic if they do not get along; if not adult children then guardians need to be appointed
                and court proceeding is unavoidable
             Each state has control over any property of a decedent that is situated in the state at the time
                of decedent’s death; can ignore order of court in other jx.; problem for people with property
                in multiple jx’s and die intestate as well as people who die testate

III. INTESTATE SUCCESSION: WHAT HAPPENS WHEN A PERSON DIES WITHOUT A VALID
        WILL?

   Foundation for the work done by estate lawyers; helps Ls frame how to draft wills and trusts
   Reference to heirs or next of kin implicates intestate succession mode
       o “If my children do not survive me, I leave it to my grandchildren…”; “If I have no descendants, I
           leave it to my heirs”
       o Have to define who these people are; can look to intestate succession statute or relevant caselaw

                                                       -8-
   Relevant intestacy statutes
        o UPC §2-101. Intestate Estate; §2-102 Share of Spouse (p. 73)
                  Spouse has prominent position for entitlement under UPC; not as much under TN law
        o Tenn. Code. Ann. §31-2-104: Share of surviving spouse and issue
            (a) The intestate share of the surviving spouse is:
                 (1) If there is no surviving issue of the decedent, the entire intestate estate; or
                 (2) If there are surviving issue of the decedent, either one-third (1/3) or a child’s share of the
                     entire intestate estate, whichever is greater
                  So spouse gets 1/3 or a child’s share, whichever is greater
        o Practice exam question: In Tennessee, Walter dies without a will. He is survived by his wife, Mary,
            and two adult children and one minor child, all three from a prior marriage. The net estate is
            $900,000. Mary takes: $300,000 (1/3 is greater than child’s share)
        o Practice exam question: The facts are the same in the prior question but the UPC applies. Mary
            takes: $525,000 ($150,000 + ($750,000/2 = $375,000))
   Real Property and Personal Property
        o Real Property
                  Must be administered in jx. where found; state not bound by judgment issued in other state
        o Personal Property
                  Distinguish between tangible and intangible personal property; physical control counts
                  Jx. for intangible personal property is ordinarily the domicile at decedent’s death; but have to
                     ask who exercises access over it
                  Bank account  jx. is where bank is maintained
        o Make distinction between jurisdiction and choice of law
   Example: Janet set to marry Joe Smith; Joe predeceases Janet and:
        o Joe’s father is only surviving ancestor/descendant
                  No UPC jx. over primary residence, vacation home, bank account
                  UPC jx. over painting
                  §2-102(2): Spouse gets $300,000 plus 3/4 of any balance of intestate estate; if she takes 3/4
                     of $200,000 that’s an extra $150,000
                  Note: statute did not address multi-jurisdictional situations
        o Joe is survived by Joe’s father and Joe’s son, Bill, who is also Janet’s son
                  §2-102(1)(B): Spouse gets entire intestate estate; since there is a child Joe’s father is not
                     entitled to anything
                  TN: Since there is “issue” both Janet and Bill get a “child’s share,” or 1/2
                  Note: local court applies UPC law when personal property is involved; Janet gets entire bank
                     account and no threshold issue since she is entitled to the entire intestate estate
        o Joe is survived by Janet, Bill, and Mary, Janet’s child from previous marriage
                  §2-102(3): Spouse gets first $225,000
        o Joe is survived by Janet, Bill, Mary, and Mike, Joe’s child from previous marriage
                  §2-102(4): Spouse gets first $150,000
                  TN: Wife is treated as child so she gets child’s share or 1/3
                  Question whether UPC balance calculation is distinct process from TN calculation
   Practice exam question: R has a wife and they have two adult children. He owns various assets and wishes
    his estate to pass to the surviving spouse. He wonders why he needs a will and why he cannot die intestate
    like most persons. One reason is that: under the typical non-UPC intestate statute his wife will not receive
    his entire estate (p. 76 – under current intestacy laws in most states, surviving spouse usually receives at
    least a one-half share of the decedent’s estate)



                                                        -9-
Reasons for avoiding intestacy – think Steve McNair

    (1) Inability to name guardian for minor children                 (8) Cannot give to other devisees such as charities, friends,
    (2) Inability to name executor                                         or collateral relatives
    (3) Cannot manage property in trust; must be given outright       (9) Generally incurs higher tax liability
    (4) Minors get property outright with expensive, unwieldy         (10) Typically awards all to spouse and nothing to adult
        guardianship                                                       children when spouse is parent of these children
    (5) Cannot avoid probate                                          (11) May not address delicate problems of second marriage
    (6) Cannot avoid multiple state probates/administrations and           with children from first marriage out of wedlock
        may result in duplicate/inconsistent distributions            (12) Fails to deal with co-habitant situation
    (7) Cannot differentiate among children or other designated       (13) Does not dispense with bond and/or inventory
        devisees in terms of shares                                   (14) Loss of privacy
                                                                      (15) Greater risk of escheat

   No inheritance right for couples who live together for long period of time but who are not married
       o This is also true for same-sex couples
       o Few states recognize common-law marriage (but can recognize marriage est. in another state; does
           not have to give full faith and credit but can do so); some states recognize same-sex marriage but
           there are issues with federal law v. state law for tax purposes
       o Question 3, p. 79: H marries W, who was born a man but had sex-change surgery
                Estate of Gardiner (p. 79): W not entitled to intestate share bc W had male genetic makeup
                If man marries woman and she decides to become a man, she can inherit
   Negative will – think Anna Nicole Smith
       o Negative will (to disinherit someone) possible via UPC §2-101(b) (p. 91); Smith’s will with this
           clause would have left daughter out since only the son is mentioned but CA did not recognize this
   Distributing estate to descendants: 3 methods
       (1) English/traditional per stirpes – generation level matters
       (2) Modern per stirpes/per capita with representation – first generation with living descendant
       (3) Per capita at each generation [usually same result as modern per stirpes]
       o Problem 1, p. 90 (Slide 6-12)
                English per stirpes: D gets 1/2, F gets 1/4, G, H get 1/8
                Modern per stirpes: D, F get 1/3, G, H get 1/6
                Per capita at each generation: Same as modern per stirpes
       o Problem 2, p. 90 (Slide 6-13)
                English per stirpes: D gets 1/2, F gets 1/4, G, H get 1/8
                Modern per stirpes: D, F get 1/3, G, H get 1/6
                   Per capita at each generation: Same as modern per stirpes
       o Problem 2 but F is dead (Slide 6-14)
                English per stirpes: D gets 1/2, I gets 1/4, G, H get 1/8
                Modern per stirpes: D gets 1/3, I gets 1/3, G, H get 1/6
                Per capita at each generation: D gets 1/3, I, G, H get 2/9 (2/3 x 1/3)
       o Practice exam questions: A testator leaves property to his three children’s descendants. He is
           survived by the two daughters of his son, A, the three grandsons of his daughter, B who are the
           children of grandson GC3, B’s only child, and his daughter C’s sole child, a daughter.
                Under per stirpes: The three grandsons of daughter B each take 1/9
                Under modern per stirpes: The daughter of C takes 1/4
                Under per capita at each generation: (All living descendants of the testator take 1/6




                                                               -10-
                                                 Text for each method of distribution

English Per Stirpes                                                    descendants at my death. A share shall be distributed to each
(A) The property shall be divided into as many equal shares as         living descendant in the nearest degree or by representation to the
there are (i) children of such person living at that specified time,   descendants of a deceased descendant of such degree.
if any, and (ii) children of such person who are then deceased
who have any lineal descendant(s) then living, if any (i.e., the       Per Capita at Each Generation
initial division of the property into equal shares shall be made at    (A) The property shall be divided into as many equal shares as
the children level, regardless of whether or not any children are      there are (i) then living lineal descendants of such person in the
then living) and                                                       generation nearest to such person that contains one or more of
(B) Each then living child, if any, is allocated one share and the     such person's descendants who are living at that specified time
share for each then deceased child with descendants then living,       and (ii) then deceased descendants of such person in that same
if any, shall be further divided in the same manner, with such a       generation who have any lineal descendant(s) then living, if any,
further division repeated at each succeeding generation until the      and
property is fully allocated among then living descendants.             (B) Each then living descendant in such nearest generation is
                                                                       allocated one share and the remaining shares, if any, are
Modern Per Stirpes                                                     combined and then divided in the same manner among the
Should any of my children predecease me, the descendants of            remaining then living lineal descendants of such person as if the
that child shall take by representation. If there are no children of   descendants already allocated a share and their descendants had
mine surviving, the living descendant(s) of mine in the nearest        predeceased that specified time. This division is repeated until all
degree shall be determined and my estate divided into as many          the property has been allocated.
equal shares as there are such living persons and deceased
descendants in the same degree who are themselves survived by


   UPC §2-103. Share of Heirs Other than Surviving Spouse (i.e., collateral relatives) (pp. 273-74)
       o 103(2) : No spouse or descendants  parents
       o 103(2): If two parents  take equally
       o 103(3): If no parents  siblings, then nephews and nieces
       o 103(4): If none of these  grandparents; divide equally between maternal and paternal gp’s
       o 103(5): If no grandparents on one side, the other side takes all
       o 103(b): Not many states have this but share of estate would go do deceased spouse’s descendants…
   UPC §2-105. No Taker (p. 274)
       o If there is no taker…intestate estate passes to the State
       o Alternative introduced in 2008 to allow stepbrothers/sisters to take (103(b))
   Examples
       o Under the UPC, if decedent has two living grandparents on maternal side and cousin once removed
          on paternal side, that cousin gets 50%
       o Problem 1, p. 96: If decedent has no spouse or children, then mother takes all
       o Problem 2, p. 96: If decedent has one first cousin on mother’s side and two first cousins on father’s
          side, cousin 1 gets 50% and cousins 2 and 3 get 25% each (mother  grandparents  cousins)
       o Problem 3, p. 96: If decedent has mother’s first cousin, that person does not take since it would
          have to go to great-grandparent to get to him; instead the first cousin twice removed would take
          (father  grandparents  aunt  first cousin’s grandchild
               Note: if common law degree counting method applied, the mother’s first cousin would take
               MA applies parentelic preference method, and first cousin’s grandchild would still take
               Practice exam question: K dies intestate. He is survived by Y, his paternal first cousin, and
                  Z, his maternal great grandmother’s son. Under an intestacy statute that follows the MA
                  approach to the civil law degree counting method, Y takes all.
       o What about half-bloods?
               UPC §2-107: half-blood treated as whole-blood; this has been criticized



                                                                   -11-
                  Scottish rule (FL, TX): half-blood is half as deserving as whole-blood; if 3 whole-bloods and
                   one half-blood, all three whole-bloods would get twice as much as half-blood
                MS: half-blood takes when there are no whole blood relatives of the same degree
   Simultaneous death
       o Accidents where people both die – difficulty determining what the meaning of “alive” is; when
           someone dies can have major consequences on wealth transfer
       o Janus v. Terasewicz (p. 80)
                H and W took pills laced with cyanide and collapsed at house; H lost vital signs en route to
                   hospital but W still had pulse
                Court determined that W survived H; W was beneficiary of life insurance policy, H’s mother
                   claimed she was contingent beneficiary
                        H should have had clause such that should W not survive him by X period then
                           contingent beneficiary would take; result was that in-laws took
                Person claiming entitlement to share of estate has burden of proving survivorship (In re
                   Estate of Moran, p. 84)
                For IL court, total brain death needed to occur; various factors indicated this (In re Haymer)
                        How can we tell? Uniform Determination of Death Act (UDDA)
                        Some states require that there is no cardiopulmonary activity
       o Gray v. Sawyer (Slide 9-3)
                H and W died in railroad accident and lower courts determined they had died simultaneously
                Claim that because blood coming out in spurts from W that she had survived husband
       o Definition of life and death is a critical part of determining wealth transfer; which state’s law
           determines death matters
                Instead of having the brain death standard, death defined as having no consciousness, thereby
                   allowing fresh organs to be harvested, is highly controversial
       o Uniform Simultaneous Death Act (USDA) designed to solve situation of simultaneous death;
           eventually adopted by UPC (§2-104 and §2-702, p. 87) and added 120-hour rule
                Huge premium placed on getting time of death right
                Risk of seeing property pass outside of the family
                Sample clause on slide 9-6 – never use “days”; “on account of a common disaster” is too
                   ambiguous; to avoid problems use a longer period of survivorship, i.e., at X hour on 30th day
       o May be better to pass to spouse even if spouse survives for 1 second due to tax benefits –
           problematic if both spouses have same clause, however
                Problem 1, p. 86: If H and W drown in boating accident and W struggled to survive while H
                   submitted to death, not sufficient evidence that W survived H; BUT if H and W were killed
                   in plane crash and W had carbon monoxide in lungs while H’s brain was crushed and could
                   not have breathed the chemical, then there is sufficient evidence to show that W survived H
       o Death certificate is prime facie evidence of person’s death (includes time of death, etc.)
   How do we know who heirs are?
       o Many states require giving notice to heirs; UPC has 30-day period (p. 80)
       o Usually have to construct family tree, since all family members going to grandparent parentela need
           to be notified; must also identify everyone named in will/trust and every person named
           executor/trustee, etc.
       o People hire heir hunters to do this job; with missing persons, common law requires 7-year wait
           before declaring them deceased
   Death and the estate tax
       o 2010 was special year where estate tax did not apply [?]; people who were near death at end of 2009
           had clauses that directed resources to be used to keep them alive, while those near death at the end of


                                                       -12-
           2010 would have clauses to “ensure [their] immediate death” to save hundreds of thousands or
           millions of dollars
   Who is a descendant?
      o Who is a child? Defined as person born to father and mother by natural sexual intercourse while they
           were married
      o Adoption
                Emerged in the U.S. in the mid-1800s; UPC 2008 version changed nature of parent-child
                  relationship (p. 101)
      o Hall v. Vallandingham (p. 97)
                H had 4 children and dies; W remarries and H2 adopts the children; property to go to H’s
                  brother’s descendants
                Once H2 adopted children, they were no longer H’s natural children – done to keep child
                  from knowing identity of biological parents
                After 1959, adopted children could inherit from natural parents, but relatives of child could
                  not inherit from him/her
      o Example: Wife married to C1 but marries brother, C2, when C1 dies; GC1 from marriage to C1 is
           adopted by C2; W and C2 have GC2, GC3; when GP dies, GC1 entitled to inherit from C1 and C2
                If UPC applied then GC1 would only get the larger of the two shares
                If English per stirpes applied GC1 would get 1/2 and other two would get 1/4
                In Mississippi, GC1 would get both shares
      o So child can inherit from and through adoptive parents and adoptive parents can inherit from
           adopted child; adopted child generally cannot inherit from or through natural parents
                Texas and other states allow child to inherit from both adoptive and natural parents; minority
                  of states say they can also inherit through natural parents from natural relatives; “I leave my
                  property to my grandchildren” would be ok
                Even in minority states, however, natural parent cannot inherit from the child
                Important distinction for purposes of intestate succession: if you can inherit from natural
                  parents you can also inherit through them (if you cannot inherit from, you cannot inherit
                  through)
      o Example based on UPC §2-119(c): If sibling adopts child, child becomes child of sibling but still
           remains child of person married to sibling who is a genetic parent; child also remains child of
           deceased genetic parent; child gets larger of these shares (adjustment in §2-113) (p. 101)
                Note that child can inherit through the natural parents from the natural relatives but natural
                  parent cannot inherit from the child (one-way street only)
      o When surviving parent remarries and the person he/she remarries adopts child, surviving genetic
           parent maintains parent-child relationship with the child
                Child can inherit from grandparent from deceased parent’s side even though child is now
                  child of stepfather; see §2-119(b)(2)
      o When both of child’s parents die the child can inherit through his or her parents from the
           grandparents; see §2-119(d) – public policy reason since child is now orphan; remember that
           grandparents (i.e., their descendants) cannot inherit from Sally
      o Note that these UPC statutes refer to intestate succession, not wills; in areas of ambiguity (i.e., what
           “niece” means) courts often give meaning to the terms
      o Example: Sally’s genetic aunt, Mabel, leaves estate by will to “my nieces”
                Was Mabel alive when adoption took place? If deceased, then Sally should be included
                  among nieces; if alive, she could have expressed that Sally be treated the same as her nieces
                Devise to X’s children v. X’s heirs or issue; issue read to mean descendants
                Is change in the law that allows adopted child to be included in relative’s will retroactive?


                                                      -13-
o Minary v. Citizens Fidelity Bank & Trust Co. (p. 103)
      Man married woman and then adopted her; question whether she was man’s mother’s
         grandchild or daughter in law for inheritance purposes
      Bedinger v. Graybill’s Executors (p. 105): court allowed adoption of wife since it did not
         violate public policy; also, language stated “heirs at law of Robert,” not “my heirs,” “issue”
o Other points on adoption
      NY: does not recognize adoptions after parties had sexual relationship
      In re Robert Paul P. (p. 102): court did not exercise gay man adopting lover
      If gay man was dying and wanted to leave estate to lover, could adopt him since lover could
         not inherit anyway; risk of lover not taking from natural family
      Doris Duke case (p. 107): Duke tried to cut child off
              Could have written will in a way that cut her off
              Father could have had provision in will that only allowed natural-born grandchildren
                  to children who were married to take
      Not easy to launch collateral attack; burden on person challenging adoption, requires clear
         and convincing evidence to establish fraud
      In re Adoption of Patricia S. (Slide 9/10-11): ME court validated adoption of same-sex
         partner by granddaughter of IBM founder; couple split but Patricia remained daughter of
         Olive and in this way could receive share of funds from Watson family trust as
         granddaughter
o Equitable adoption
      Example of couples going through adoption and forgetting to have signature notarized
      O’Neal v. Wilkes (p. 109)
              Majority view: child can inherit under statutory adoption or contractual arrangement;
                  only recognize express K
              Guardian has authority to agree to adoption; not a substitute for parent, however
              Custodian does not have authority to enter into K of behalf of child
              Dissent has more lenient standard that would allow individuals to agree to K even if
                  they did not have the authority to consent to the adoption (p. 113)
      Practice exam question: Alfred and Mary agree to adopt Fred, but never actually file the
         papers. They hold Fred out as their son. Alfred’s father, Bob, has a will drafted, leaving all
         his estate to his “grandchildren in equal shares”. Alfred and Mary have two children of their
         own. Probably, Fred will not inherit any of Bob’s estate
      To protect parents from having foster children inherit, add provision in will stating that
         children do not include foster children + statement that the will excludes equitable adoption
      Courts split on whether exhumation of body is permissible to determine relationship
      Omer Bhatti and Michael Jackson example; 3 “children” of Michael named in will, Omer
         not; Omer can take DNA test and would have to have standing as heir in order to take
o Posthumous Children
      See p. 115
      Uniform Parentage Act (300 days) v. common law presumption (280 days) from date of
         death of father to determine if person is his child; if child is born after this time he/she does
         not have the benefit of the presumption
              Note that child just has to be born alive – no requirement that child survive a period
                  of time to inherit
      Question whether children born 6 months after decedent’s death have survived the decedent
         – test for posthumous children is whether they are born viable



                                               -14-
                Different interpretations: either child has to survive for 120 hours after being born or
                 simply survive the decedent by 120 hours and the time from conception counts
              UPC interpretation: child must live in the world for 120 hours
              In NY, Lalli v. Lalli (p. 116): nonmarital child can inherit from father only if father
                 had married mother or if had been formally adjudicated father by the court during
                 life; this includes using DNA testing to establish paternity
      Posthumous children of unmarried parents are at a distinct disadvantage
              But most states have extended rights of posthumous child to wills and trusts
      Example: will states that estate devised to “my children living at my death”
              Intestacy: if child is in fact born, child deemed to be living at moment of conception;
                 could extend this to wills law unless testator referred to the layperson understanding
                 of “living at my death”
              Need to know who drafted the will, the client or the lawyer
      Note: if it is to the child’s advantage to be treated as in being from the time of conception
         rather than from the time of birth, the child will be so treated if born alive (p. 115)
      Omitted child theory: if child is not mentioned in will, he/she is not meant to be included;
         BUT this does not include children born after the will was executed
      Trimble v. Gordon (p. 115): state discrimination against nonmarital children must have a
         substantial justification as serving an important state interest; IL statute denying nonmarital
         child inheritance rights from the father was deemed unconstitutional
              Before Trimble, children could only inherit from mothers and fathers who
                 acknowledged them as their child
              Policy reflected the desire for efficiency in probate for distributing assets and the
                 difficulty in establishing paternity
              Connection to Ray Charles case: Charles set up $500,000 trusts for each of his
                 children to take effect at his death; met with all 12 children, who later fought over
                 mgmt. of Charles’ assets
      Some states allow postmortem establishment of paternity
      Father cannot inherit from child when father was not legally deemed as such during life
o Hecht v. Superior Court (p. 117)
      Question of what is sperm and whether you can devise this
      Girlfriend sought to conceive child after decedent’s death; other children upset because there
         were 15 vials of sperm and future children could take from their share; decedent did not say
         anything about child having right to his property/inheritance
      Girlfriend used two vials and failed to conceive; court allowed her to use additional vials
      Parties could not contract over how to settle the distribution of the vials; sperm had to go to
         girlfriend, and if she did not use it to impregnate herself it had to be destroyed; key is
         testator’s manifest intent
      Question of sperm donor K – is this sufficient regarding surrender of inheritance rights and
         protection from liability? What about anonymity? Depends on each state’s law
o Woodward v. Commissioner of Social Security (p. 118)
      Question whether MA intestacy statute accords inheritance rights to posthumously conceived
         genetic children
      Surviving spouse must satisfy two-part consent test on part of the donor
         (1) Consent to posthumous conception; and
         (2) Consent to support children
      Example of child being born 21 years later would probably not be accepted under Woodward
      Note: much of this is being developed through statutory enactments (p. 125; see below)


                                              -15-
       (Next page for statutes)


       Relevant State Statutes (p. 125)
       California: Child of decedent conceived after death of decedent shall deemed to have been born
       during lifetime of decedent if decedent consented in signed and dated writing and notice served
       [to appropriate distributor] within 4 months of decedent’s death, and child was in utero within 2
       years of decedent’s death and is not a clone of decedent
       Louisiana: PC granted inheritance rights if born to surviving spouse within 3 years of decedent’s
       death
       Uniform Parentage Act: Parent must consent to posthumous conception in writing (note that
       there is no timeframe, just simple consent – most liberal of all statutes)
       Florida: PC inherits only if provided for expressly in the decedent’s will
       UPC §2-120: PC inherits if during life the parent consented to conception in signed writing (or
       consent otherwise proved by clear and convincing evidence) and child in utero not later than 36
       months or is born not later than 45 months after parent’s death
       Restatement (third) of Property: child must be born within a reasonable time after decedent’s
       death in circumstances indicating that decedent would have approved of child’s right to inherit
       New York: In re Martin B. (p. 126): Adopts Restatement rule with regard to future interests; as
       long as there is consent from the parent, it does not matter when the child is born (p. 129)

o Surrogate mothers
      Johnson v. Calvert (p. 130): parenthood…should turn on the intent of the parties as shown
         by surrogacy K
      In CA, child can inherit from father and may inherit from mother depending on intent
      In MI, surrogacy for compensation is illegal
      Note difference between genetic and gestational surrogate
              For gestational surrogate, child would inherit only from genetic parents
o Assisted reproduction and same-sex couples
      2008 UPC Amendments: child conceived by assisted reproduction other than gestational
         surrogacy is in a parent-child relationship and thus entitled to inherit by/from/through child’s
         birth mother; another person can also have parent-child relationship if other person either
         consented in writing to assisted reproduction by the birth mother with the intent to be other
         parent or functioned as parent of child within 2 years of child’s birth (p. 132)
o Guardianship and conservatorship of minors
      Part of one of the 3 functions of a will
         (1) Dispose of property
         (2) Appoint legal successor
         (3) Designate guardian for minor children
      Guardian of the person distinct from guardian of the property (who is responsible for
         supervising child’s assets); must be specific when naming guardian and think of dual roles
      Parents are natural guardians of the person; cannot override fundamental association of child
         with actual natural parent; in other words, cannot make second wife the new guardian
      Question of whether testator wants to leave it up to probate judge to decide who will manage
         property for the children; also, for multiple children different guardians may be named
      Some states allow people outside the jx. to serve as co-guardians if they have a specific
         relationship to the child


                                              -16-
   Consequences of guardianship
         Costly; have to go to court for everything; must hire attorney; child’s assets depleted
            during this process
         Guardian should not be owner of bulk of estate that passes to minor child
         Schoenblum: terrible mechanism for taking care of wealth of the child
   Practice exam question: one of the problems with guardianship is that the guardian must
    seek court approval for all investment decisions
   Conservatorship
         Only annual visit to courthouse; still under court supervision (but a compromise)
         Not an available alternative in some states
         IMPORTANT: conservator has title to minor’s property until the child turns 18; can
            sell property without explaining it to the court
   Guardian ad litem: appointed to represent child’s interests in court, need not be the guardian
    of the person/property
   Custodianship
         Need not report to the court; involves smaller sums of money and child still has title
            to property
         Arises in 2 contexts
            (1) Decedent dies and appoints someone as custodian; think Uniform Transfer to
                Minors Act (UTMA); allows for ownership of variety of properties
            (2) Donor makes gift to child and holds it as custodian
         Age of transfer must occur by 21 according to UTMA
         Practice exam question: one of the problems with custodianship is that the property
            must be distributed at age 21 typically
   Trust
         Person can hold on to property for longer period of time; income can be distributed in
            the interim to the child, however
         For multiple children, can use single trust that will take into account children’s
            changing needs without having to divide estate and allocate amounts to children
         Most flexible device for managing wealth of family when multiple children involved
         Practice exam question: In providing for the ownership of bank accounts in the
            event of the death of L, whose preferred beneficiaries would be his children, now
            aged 6 and 9, the most desirable approach, assuming (1) he wishes absolute
            ownership during life, (2) distribution of one-half of the cash to each child upon
            attaining age 25, and (3) he dies with a valid will, L should provide in his will for a
            guardianship of the person, coupled with a testamentary trust consisting of two
            subtrusts
         Court does not supervise “shelf trust” (assets of estate pour over into trust set up
            during life) – think Ray Charles and Michael Jackson—trust only subject to will
         Administration may be complicated; drafter must think things through carefully
         BUT for anyone with serious assets and long-term concerns for minor child’s interest,
            trust is the way to go
         Facility of payment clause: assets that are distributed outright to a minor may be
            paid instead to custodian/parent/guardian or a provider of services for the beneficiary;
            gives trustee multiple options for deploying funds for child’s benefit and is good for
            changing circumstances (p. 138)



                                        -17-
                 Practice exam question: a facility of payment clause is especially useful when
                  dealing with a trust established to provide for a minor, even if a guardian has been
                  approved
              Another option is to have a contingent trust in case there may be a minor beneficiary
              Note: sub-trusts are always an option; think also about mandatory v. discretionary
                  income
      Sample guardianship clause: “Upon my death, whether or not my spouse survives me, I name
         my mother guardian of my two children. She should raise them as Catholics. In addition, she
         should provide them with private school education and a good home. If she cannot serve, my
         sister who resides in Berlin, Germany, and has four children of her own, shall serve.”
              If spouse survived him, no need for a guardian
              Mother may not be able to serve as guardian (i.e., too old)
              Court cannot enforce directive to raise as Catholics
              Money needed for private school education and good home
              Risky to have guardian outside the jx.
      Michael Jackson’s will is a well-drafted instrument but the guardian clause is weak; not a
         good choice to name aging mother and Diana Ross as guardians
o Advancements
      Purpose is to equalize the treatment of children/descendants
      Common-law rule: any lifetime gift is presumed to be an advancement; but parents do not
         typically intend for these gifts to be advancements
              Some states still follow this; note that wife is not taken into account with this rule
      UPC §2-109: not presumed to be an advancement but instead an absolute gift unless decedent
         declared in contemporaneous writing or heir acknowledged in writing that it was an
         advancement…
              Note that to declare an advancement the decedent need not use the word
                  “advancement” (“now I want it to be equalized” would be ok) but he must express
                  intentions in writing
      Hotchpot: gifts are brought together in this form and divided between the children (p. 134);
         this is on every single bar exam though it does not occur in real life
o Disclaimers
      Three uses of post-mortem disclaimers
         (1) Tax savings
         (2) Defeating creditors’ claims
         (3) Altering inheritances of different branches of the family (post-mortem planning)
      Think of it as a shield – property bounces off shield and goes to next person entitled to take;
         BUT these have to be valid under state/federal law
      To qualify under federal tax code, disclaimer must be executed/delivered within 9 months of
         creation of interest (after date of death) or after donee turns 21, whichever is later
              Does not matter if this is a contingent or future interest
              Ok to have a partial disclaimer
      Uniform Disclaimer of Property Interest Act (UDPIA); incorporated as part of the UPC (§§2-
         1101-07, p. 153)
              “Reasonable time” rule; this would apply to future interest
              Problem where disclaimer would be valid under state law but invalid under fed. law
      No re-dos; if you disclaim once, you cannot disclaim again for federal tax purposes
      Conflict of laws question
              Some states follow tax law and others follow UPC/UDPIA

                                             -18-
           State law relevant when talking about creditors or reallocation of assets w/in the state
           Which state’s law applies? State where disclaimant or decedent is domiciled? Where
            property is located?
   What about the residuary estate? Can you accept one asset and disclaim the rest? Unclear
   Drye v. United States (p. 155)
         Drye owed tax lien on “property and rights to property” and made disclaimer;
            property passed by intestacy to daughter; daughter set up a trust and named father
            beneficiary; question whether Dry’e disclaimer was effective to pass property to
            daughter free from federal tax lien
         Whether something is property for purposes of how it appears in Internal Revenue
            Code is question of federal common law; state law may only determine whether
            someone has an interest
         Here there was a distinction between interest and property
         Court held that man could not disclaim property; unclear whether holding applies
            only when there is a lien on the property; not intended to thwart disclaimer system
   In re Costas (p. 154)
         States that Drye should be limited to tax liens and tax law
         Note that generally disclaimers can be used to defeat creditors, but it won’t work if
            bankruptcy is filed (works before bankruptcy is filed)
         Some states do not require bankruptcy; disclaimant just needs to be insolvent
   Disclaimers and Medicaid
         To qualify for Medicaid, applicant must “spend down” assets to a few thousand
            dollars and cannot give away property
         Look back period of 60 months, or 5 years; anything given away during this time will
            count against Medicaid benefits
         Practice exam question: Joseph is 75 years old and in poor health. He and his
            children are concerned about the depletion of his estate in the event of illness. The
            hope is to take advantage of Medicaid. Which of the following would work: transfer
            assets into an irrevocable trust no less than five years in advance of seeking Medicaid
         In some states, legislature authorized state to go after gift recipients; see Troy v. Hart
            (pp. 156-57)
         Tennessee requires certification from agency that it is not owed money before will
            can be probated
   Problem p. 154: O has 2 children, A and B; B dies, C survives him; O dies intestate; A has
    four children and A disclaims
         If A disclaims, it is as if A was also dead when O dies and inheritance goes to
            grandchildren
         If modern per stripes is in effect, each grandchild would get 1/5 of the property and
            A’s children would get 4/5 instead of 1/2 collectively
         BUT §UPC 2-1106(b)(3)(C) states that if A disclaims, grandchildren can only share
            what A would have gotten, which is 1/2 (so no increase in A’s share)
         Practice exam question: Oscar leaves property to his two children, Bill and Mary.
            Bill has six children and Mary has one child. Apart from certain states, especially
            those following the revised UPC, if Bill disclaims: he may be able to enhance the
            share of the estate going to his side of the family only if Mary predeceases Oscar and
            there is no alternative disposition in Oscar’s will in the event of a disclaimer



                                        -19-
IV. WILLS

   What is a will? Either an appropriately executed document or holograph instrument that
    (1) Disposes of property
    (2) Names a guardian for minor children
    (3) Names a fiduciary (i.e., personal representative or executor)
    (4) Revokes a prior testamentary instrument
   Issues dealt with are the capacity to make a will, undue influence, fraud, duress, intentional interference
    with and expectancy of inheritance

A. Capacity to Make a Will

   Three tests
        o Restatement (p. 159): Generally have to be an adult, 18 years of age, though in Georgia the age is
            14; must be capable of knowing and understanding
            (1) the nature and extent of his or her own property,
            (2) the natural objects of his or her bounty, and
            (3) the disposition that he or she is making of the property;
            (4) must also be capable of relating those elements to one another and forming an orderly desire
                 regarding disposition of the property
        o Cunningham test from Cunningham v. Stender (p. 175): testator must
            (1) understand the nature of her act
            (2) know the extent of her property
            (3) understand the proposed testamentary disposition
            (4) know the natural objects of her bounty; and
            (5) the will (must) represent her wishes
        o Wilson v. Lane test (p. 161): Person is mentally capable to make a will if she has sufficient intellect
            to enable her to have a decided and rational desire as to the disposition of her property; very liberal
   In re Estate of Washburn vs. Wilson v. Lane
        o Court held that testator in Washburn lacked mental capacity; did not recognize niece who was
            supposed to be heir; subsequent wills gave more to caretaker than to family
                  But doctor did not examine her until one year after she executed her will
        o There is a presumption of sanity and person contesting the will has to rebut this; burden then shifts to
            person being challenged to show that the will was executed with capacity (so the burden is to
            establish capacity in the end)
        o Wilson: woman had strange fear of water and guardianship was appointed; but this does not mean
            she automatically lacked capacity to make a will
                  In Wilson, burden rests on the challenger
        o Note that the person with the burden has the more difficult task – not easy to establish that a person
            is/is not capable
        o Client only has to have capacity when the will is executed; L “may not draft will for person L
            believes to be incompetent, but L may rely on own judgment of client’s capacity” (p. 165)
                  Schoenblum: If it’s borderline, don’t do it (contrary to ACTEC commentaries)
   Hierarchy of capacity
        (1) Contract, irrevocable inter vivos trust
                  “To make an irrevocable lifetime gift, not only must one have capacity to make a will, but
                     one “must also be capable of understanding the effect that the gift may have on the future
                     financial security of the donor and of anyone who may be dependent on the donor” (p. 166)


                                                       -20-
        (2) Revocable Trust
        (3) Will
                 Lee v. Lee: court held that deed was invalid but will was valid; person under conservatorship
                    can write valid will if it was written during a lucid interval (p. 166)
        (4) Marriage
                 Substantially lower than test for making will
                 Estate of Park: Person may have insufficient capacity to make a will on the same day as the
                    person has sufficient capacity to marry
                 Hoffman v. Kohns: Housekeeper married senile man and marriage held invalid though will
                    set aside
        (5) Child
   Insane delusion
        o Definitions: “belief not susceptible to correction by presenting the testator with evidence indicating
            the falsity of the belief” (p. 168); and “a persistent belief in that which has no existence in fact, and
            which is adhered to against all evidence” (p. 175)
                 Key between delusion and insane delusion is person in latter case is resisting all evidence to
                    the contrary
        o In re Strittmater (p. 169): “Paranoiac condition” where she said horrible things about her parents,
            killed kittens, yearned for way where women could reproduce w/o men, and gave estate to National
            Woman’s Party – weak evidence?
        o Causal link is important – must know whether insane delusion has impacted the disposition such that
            it was caused by the delusion rather than by the person’s free will
                 Practice exam question: After the testator’s death evidence is introduced that he belonged to
                    the flat-earth society and donated funds during life to fund research proving that the earth is
                    flat. He repeatedly was confronted by his family members with the error of his belief. He left
                    his estate to his companion of many years.  The will most likely cannot be overturned even
                    if his companion was a member of the flat earth society.
        o Breeden v. Stone (p. 171)
                 Hanks v. McNeil test: “such insanity does not make one incompetent to K unless the subject
                    matter of the k is so connected with an insane delusion as to render the afflicted party
                    incapable of understanding the nature and effect of the agmt. or of acting rationally in the
                    transaction”
                 Court conflates following two tests:
                          Akers v. Hodel test: whether insane delusion materially affected the will
                          Benjamin v. Woodring test: will must be the consequence or product of the delusion
                 Minority of jx.’s: In re Honigman’s Will test (NY): dispositive provisions might have been
                    caused or affected by insane delusion
                 Person suffering insane delusion does not have to be wrong all the time, but just because
                    there’s some truth does not mean that the person is not suffering from an insane delusion
                 Breeden thought that family/friends were FBI agents; one actually was an agent; drug dealer
                    ended up inheriting his estate
                 Court found under Cunningham test that Breeden had capacity; he knew he wanted to cut his
                    family out; previous wills had cut out the family and no evidence that will was product of the
                    delusions
                 Practice exam question: In planning for a client with an unorthodox lifestyle, who may be
                    leaving his estate to persons other than his natural family, a trust is often advisable but only if
                    it is a revocable trust, fully funded during life, in existence for some time, and administered
                    by an independent trustee


                                                         -21-
       o Example: 1/2 of estate to brother because son is a dog, literally; other 1/2 to church
               Must question testator and he must state this in the face of persistent belief and evidence to
                  the contrary
               Insane delusion has nothing to do with the 1/2 given to the church
               BUT if the person is shown to lack testamentary capacity, the whole will is invalid
       o Statements as examples of insane delusion or not
               “Disinheriting children bc they don’t send me X-mas cards” – Lipper v. Weslow – no mistake
                  if they don’t send cards, but if they do send cards, and she sees the cards and still believes
                  they do not send them to her, then the devise is likely to fail
               “Leaving entire estate to Church of Scientology” – insane delusion has to be false conception
                  of reality; impossible to disprove faith so it cannot be an insane delusion
               “Entire estate to Pope in the hope that this will save me from Hell” – cannot be disproved so
                  no insane delusion
               “1/2 of estate to Donald Trump and 1/2 of estate to Rosie O’Donnell because they are nice
                  people and need money” – what does “need money” mean? Not likely to be insane delusion
   Undue influence
       o Restatement §8.3 definition (p. 181): “donative transfer procured by undue influence if the
          wrongdoer exerted such influence over the donor that it overcame the donor’s free will and caused
          the donor to make a donative transfer that the donor would not otherwise have made”
               Actual wording varies by state
       o If no direct evidence of undue influence, circumstantial evidence sufficient to raise inference of
          undue influence if person contesting will proves that
          (1) Donor was susceptible to undue influence,
          (2) Alleged wrongdoer had an opportunity (particular orientation, i.e., motive) to exert undue
              influence,
          (3) Alleged wrongdoer had a disposition (general orientation) to exert undue influence, and
          (4) There was a result appearing to be the effect (or outcome) of the undue influence
       o Physical weakness is not itself the basis for undue influence, but its presence can form the basis for
          showing testator’s susceptibility (i.e., may affect person’s ability to resist, etc.)
       o Estate of Lakatosh (p. 182): Proponent of will has to establish that the will was properly executed
          (“formalities of execution have been followed”); then the person who contests the will for undue
          influence has the burden of proof; contestant must prove by clear and convincing evidence
          (1) That there was a confidential relationship,
          (2) That the person enjoying such relationship received bulk of the estate, and
          (3) That the decedent’s intellect was weakened
          Burden then shifts and proponent has to prove there was no undue influence
               Three types of confidential relationship: (1) fiduciary relationship (attorney, agent under
                  power of attorney), (2) reliant relationship (one based on special trust and confidence, i.e.,
                  doctor-patient), or (3) dominant-subservient relationship
               Difficulty to tell whether family member is in confidential relationship; distant family
                  member may fall into this category but it is hard to distinguish from close family member
       o Practice exam question: If a person is an attorney-in-fact, a devise in the will to this person by the
          principal: in a Restatement (Third) state is presumed subject to undue influence if suspicious
          circumstances are present (see p. 184)
       o In addition to confidential relationship, contestant must also show there were suspicious
          circumstances; Restatement provides list of eight of these (p. 185); note though that in Lakatosh the
          elements were that the person received bulk of estate and that decedent’s intellect was weakened
               Only need “slight” evidence of suspicious circumstances if there is a confidential relationship


                                                      -22-
       o Another approach: there is a confidential relationship and evidence that the person sought to
           “procure” the will, even if not for himself
       o Texas/renegade approach: Lipper v. Weslow: court says that contestants established confidential
           relationship between testatrix and Frank Lipper, lawyer and relative, as well as opportunity and
           motive for undue influence, but “proof of this type simply sets the stage” since contestants “must
           prove …that the will as written resulted from D Lipper substituting his mind and will for that of the
           testatrix” (p. 197)
                Very hard to shift the burden here – did not occur in Lipper
                Test for undue influence stated differently: “test is whether such control was exercised over
                    the mind of the testatrix as to overcome her free agency and free will and to substitute the
                    will of another so as to cause the testatrix to do what she would not otherwise have done but
                    for such control” (p. 196)
       o What proponent has to establish to satisfy clear and convincing standard
                Jackson v. Schrader (p. 185): prove that “grantee acted in good faith throughout the
                    transaction and the grantor acted freely, intelligently, and voluntarily”; easy test to satisfy
                But not so easy in other jx’s: would have to show that there was no disposition, motive,
                    opportunity, or that the disposition was not the result of undue influence; almost impossible
                    to show no opportunity or motive
                Practice exam question: Andrew drafts a will for his mother. Andrew is an attorney. The
                    will names him executor and gives him two-thirds of the estate with one-third passing to his
                    sister. The sister contests the will, alleging undue influence. There is very probably a
                    confidential relationship, so the contestant need only show in certain jurisdictions suspicious
                    circumstances and a weakened condition, thereby shifting the burden to the proponent who
                    may only have to show good faith and free, intelligent, and voluntary execution
       o Care custodians (CA) (p. 186)
                Defined as any “protective, public, sectarian, mental health, or private assistance or advocacy
                    agency or person providing health services or social services to elders or dependent adults”
                Must have certificate of independent review; who does this cover? Bernard v. Foley: applies
                    to personal friends; when in doubt, get the certification
       o Important: like insane delusion, finding of undue influence does not nec. invalidate an entire will
                Practice exam question: Don dies with a will which devises $500,000 to Mary and the rest
                    to Sally. A will contest is brought establishing undue influence by Mary. The will is invalid
                    as to Mary; the will is otherwise valid.
       o Example of someone who didn’t get away with it: In re Will of Moses (p. 186)
                Court because of social norms (like Strittmater) concluded that woman was weak and
                    susceptible; Fannie Mae Moses was ill, disfigured, and an alcoholic
                Holland not involved in the preparation /execution of her will but the intimate nature of their
                    relationship warranted an undue influence
                Note that in Lipper the relative was “buttering her up” and the court did not follow usual
                    rules with regard to confidential relationships and did not shift burden of proof
       o In re Kaufmann’s Will (p. 191): court found there was a dominant-subservient relationship between
           the two (gay) men; dominator was younger than testator and testator “relied exclusively on
           proponent’s knowledge and judgment in the disposition of almost all of the material circumstances
           affecting the conduct of his life” (p. 192)
       o One way to avoid undue influence challenge and have access to estate is to marry
           (1) Court not likely to find undue influence in marital context
           (2) Even if will were overturned or court found undue influence, spouse usually is automatically
               entitled to portion of the estate
   Attorney (mis)conduct

                                                       -23-
       o Ls “rip off clients” in 3 ways:
            (1) Being named as fiduciary/executor
                 Note that attorney can be named this but cannot get a higher commission; in many states, this
                    commission is sliced in half
                 Also note MR 1.8 where L cannot receive substantial gift unless L is related to client (p. 201)
                 BUT CA Probate Code has exception where gift permitted to non-related lawyer/drafter if
                    client consults independent L who attaches certificate of independent review (p. 201); NY
                    requires affidavit explaining facts and circumstances of the gift (p. 200)
            (2) Want the entire estate and named sole devisee
            (3) Continue serving as attorney after testator’s death
       o L can name self or firm as attorney for the estate; executor can fire at will but attorney can insert
            provision to replace executor, but it’s better to “play nice”
       o L can witness the will; note though that L cannot be both witness and executor
       o L can take more than family members; if L is family member, confidential relationship does not
            extend to family members and statutory approach excludes relatives (close, family relationship)
       o L can get another attorney to name him devisee/beneficiary/attorney – as long as this is done
            independently it should be fine
       o Practice exam question: If Jane wishes to leave her drafting attorney a bequest, and name him
            executor of the estate, consistent with his professional responsibility: the attorney should ask Jane to
            reconsider, point out potential conflicts and alternatives, and should refuse to draft the will if the
            bequest is insisted upon by Jane. Under these circumstances he can, however, accept the
            appointment
   No-contest or in terrorem clauses – must know the law of the particular state since there are subtle diff’s
       o Definition: beneficiary who contests the will shall take nothing, or a token amount, in lieu of the
            provisions made for the beneficiary in the will
       o No-contest clauses are sustained/enforced on the surface; but probable cause exception (adopted by
            UPC §§2-517 and 3-905 and Restatement of Property §8.5) can allow people to contest will (p. 199)
       o FL and IN will not enforce a no-contest clause at all
       o CA and other states: enforce no-contest clauses unless contestant alleges forgery or subsequent
            revocation by later will/codicil…Schoenblum: can be a pretty powerful tool
   Steps to fight off will contest (pp. 205-06)
       o Client should not state reasons in the will (for devising to A and not B, for example)
       o Want to exchange drafts of instrument with the client and encourage client to make comments,
            remarks (though not if client is borderline); may want to purposely insert typo
       o Perhaps attach letter to the document explaining the effect of each disposition
       o Show several iterations of draft and show that client was a participant
       o Have medical examination before and after execution ceremony (and get letter)
       o Don’t ever use a video but audiotape can be used to good benefit; be careful with letter as it can be
            misinterpreted (think Kaufman)
       o Get family to meet together (like Ray Charles case)
       o Always get disinterested witnesses, i.e., most famous and respected people in town
       o Set up revocable trust (what Fannie Mae Moses should have done) or make outright gift
       o Keep attorneys distinct – who is representing whom?
       o Getty tactic – add codicils to will each year; would have to go through each document to get to root
            disposition
   Fraud
       o Courts fail to draw distinctions between this and undue influence; a complaint should state the
            elements for each separately


                                                        -24-
       o Definition in CB: “testator is deceived by a deliberate misrepresentation and does that which he
           would not have done had the misrepresentation not been made” (p. 207)
       o Requirements for establishing fraud:
               False statement or withholding of information – must be material
               If statement, person making the statement knows it is false, and it must be made with the
                  intent to deceive
               If withholding, must be withheld with intent to deceive
               The statement or withholding was intended to cause and causes testator to act in reliance and
                  does in fact deceive the testator
       o Fraud in the inducement: effort through misrepresentation of facts to cause execution of will in
           way that benefits someone but has consequence that results in instrument that otherwise would not
           have been executed
               This need not involve entire will; person could be deceived into inserting particular clause
       o Fraud in the execution: getting someone to sign instrument that was not the intended will
               This does involve the whole will
       o Estate of Carson (p. 208)
               Woman went through marriage ceremony and thought she was married to man who actually
                  had several spouses; she died after one year and left most of her estate to him; court said it
                  was up to the jury to determine (whether deception negatively affected testator’s decision)
               There must be causal link between misstatement/fraud/failure to disclose information and the
                  disposition that was made
               Most jx’s apply standard of causation where disposition would not have been made if testator
                  knew true facts
       o Fraud v. undue influence: Puckett v. Krida (p. 209)
               Alzheimer’s testator convinced by nurses that family members were danger to her and she
                  terminated fiduciary relationship with niece and entered into relationship with nurses
               Both were involved in this case, and it is common to allege both, but court does not
                  distinguish between the two
               Fraud need not involve person suffering from weakness, though weak person could be easily
                  influenced by misleading statements
               Undue influence does not require fraud, or the use of false statements or deception to obtain a
                  certain result
       o Problem, p. 210 (Brazil v. Silva): H asked W to destroy will and W appeared to do this but did not;
           W then probated H’s will under which she would take H’s entire estate; other heirs entitled to
           constructive trust?
               Constructive trust: equitable remedy by court to ensure that wrongdoing/injustice is not
                  created
               Practice exam question: In the event that there is fraud and the relief of a constructive trust
                  is sought: the wrongdoer must turn over the property to the persons entitled to it and will not
                  administer it on an ongoing basis for the benefit of the persons entitled to it
               Will can be revoked by burning and testator had the intent to destroy it but it was not actually
                  destroyed, so it was not formally revoked; the will could also have been revoked if testator
                  had written a new will with a provision that revoked the prior will
               Therefore, will would have to be probated and W would be entitled to certain share; because
                  of the fraud, a constructive trust would apply only to the assets exceeding W’s intestate share
       o Practice exam question: in the event that there is fraud and the relief of a constructive trust is
           sought, the wrongdoer must turn over the property to the persons entitled to it and will not
           administer it on an ongoing basis for the benefit of the persons entitled to it
   Duress

                                                      -25-
        o Duress is a stronger version of undue influence that involves coercion, threats, actual violence; not
            common to see such allegations
        o As with undue influence and fraud, it is possible for only a portion of the will to be invalidated
        o Latham v. Father Divine (p. 210): Similar to Brazil v. Silva and focuses on prevention of testator
            revoking an instrument
                 Victim had old will that left estate to Father Divine and associates; wanted new will to
                     revoke prior will and name new individuals; victim was physically prevented from changing
                     will and she died as a result
                 Parties reached settlement but some believed the new will would have left assets to them;
                     court cannot write persons’ wills de novo, however
                 Court used “far-reaching language”: “constructive trust will be erected whenever necessary
                     to satisfy the demands of justice” and “its applicability is limited only by the inventiveness of
                     men who find new ways to enrich themselves unjustly…there seems to be no way of
                     achieving total justice except by the procedure used here” (p. 213)
                          Court indirectly rewrote the will by imposing constructive trust
                 Constructive trust = technique that has been developed to alter actual disposition of probated
                     will to prevent unjust results but “completely assaults” system of wills requirements; some
                     courts try to limit this doctrine while others apply it with great discretion
   Secret trust: legitimate, non-fraudulent trust up front that is not carried out; called secret because the will
    indicates no trust
        o Example: Case 1, p. 208: H promises O that if O gives property to H, H will give it to A; H keeps
            property instead; A can seek imposition of secret trust that would require H to turn over prop. to A
                 Same as equitable remedy of a constructive trust
        o Contrast with semi-secret trust, which is not totally secret because trust was intended
                 Example where trust is created (i.e., in a will) but beneficiaries not named, only the trustee,
                     and trustee does not make distributions to these beneficiaries
                 What result? Trust is not effectuated in full (it fails) and property likely returns to estate and
                     passes by intestacy by resulting trust
   More on constructive trusts
        o Riggs v. Palmer (p. 213): grandson killed grandfather to receive property; daughters sought to
            impose constructive trust so they could take as if the will was not given effect; though will not
            formally revoked, court held that son predeceased grandfather and daughters were entitled to take
        o Different from Latham in that court was not rewriting new will; Latham court took property away
            from heirs in will and was not concerned with rewriting since it was correcting an injustice
        o Pope v. Garrett (p. 214): certain heirs physically prevented testator from executing new will in favor
            of a friend; court imposed constructive trust to effectuate testator’s wishes; innocent heirs who were
            not involved did not get anything since they would have been unjustly enriched had the old will been
            in effect; Schoenblum: this was a dramatic move and real intrusion on testamentary freedom
                 Practice exam question: Evidence establishes that Mary convinced the testator that James,
                     the testators’ only descendant, was dead. This led the testator to devise the rest of the estate
                     to Sally, the testator’s best friend. Mary did it because she always disliked James. She does
                     not know Sally. The devise to Sally is not valid.
   Tortious interference with an expectancy
        o Elements laid out in Schilling v. Herrera (p. 215) on p. 217:
            (1) Existence of an expectancy
            (2) Intentional interference with expectancy through tortious conduct
            (3) Causation
            (4) Damages


                                                        -26-
       o Schilling hired caretaker to watch over sister; after a while caretaker stopped taking his calls and was
           notified of sister’s death months after it occurred so that he could not timely file a challenge
       o In order to allege tortious interference, you must exhaust probate remedies, and he did not do this
           before filing suit
                So even though all of the elements were satisfied, he would have lost if the court had not
                   made an exception to overturn dismissal and allow him to try the case on the merits
                Note: if a person contests a will and loses, he/she is ordinarily barred by res judicata from
                   suing in tort
       o Not all states recognize this cause of action; some think it is a way to bypass the probate process, and
           others think the use of constructive trusts is sufficient
       o Example: Anna Nicole Smith case, Marshall v. Marshall (pp. 220-21)
                Claim emerged from son preventing Smith from inheriting Marshall’s estate; son’s counsel
                   that TX probate court had exclusive jx. over Marshall’s assets (and claims such as fraud,
                   duress, undue influence)
                SC cabined the probate exception above in stating that interference with assets (in personam
                   litigation) is not part of this exception
   Constructive trust v. tortious interference with expectancy
       o Remember that some states only have constructive trust remedy and other states allow tortious
           interference as an alternative

                          Constructive Trust                                     Tortious Interference with Expectancy
    No compensatory or punitive damages (i.e., no IIED)                 Potential for awarding of compensatory, punitive, and other
                                                                        types of damages just as in other tort actions

    No right to a jury trial; action in equity                          Right to a jury trial; may be very desirable if you think there
                                                                        will be a sympathetic jury
    Equitable defense to this claim = “clean hands”
          Secret trust not found since conveyor of property had
          done so to perpetuate fraud in divorce proceeding
          (Pappas v. Pappas, p. 596)
                Individual made real estate transfer to son because
                   he was having marital difficulties; goal was to
                   avoid producing this property
                Son refused to return property to father; father
                   sues
                Court did not impose a constructive trust but
                   father did not have clean hands since he was
                   using son to defeat wife's claim

    Statute of limitations                                               Actual period of the statute somewhat longer than claims
           Generally in a constructive trust situation you only have    statute for probate
           a few months because of the SOL                                     Discovery rules: SOL does not start running until
                                                                               alleged wrong is discovered or should be discovered
    If the court applies Latham doctrine where the goal is to do
    justice, don’t have to worry about satisfying elements such as             P can thus bring suit after death of testator
    with tortious interference
            Constructive trust is wide open; many possibilities to
            claim justice and get relief on this basis

                                                                        Fact that you have to go to probate court limits ability to act on
                                                                        tortious interference
                                                                               Can claim this if you can show no adequate remedy in
                                                                               the probate court



                                                                 -27-
                                                                     Or maybe there’s a remedy but damages are inadequate

                                                                     It is possible that one could have some opportunity in
                                                                     the probate court but show that you cannot get an
                                                                     adequate remedy
                                                                             May have to seek initial relief and then build on it
                                                                             by bringing a separate action

                                                              Real concern with this cause of action is that it allows people to
                                                              introduce facts outside the will and do it after probate and
                                                              undermines the statutory grounds of all challenges to wills

                                                              Pretty broad strategy and has certain advantages

   Practice exam question: In the event that your client believes that he has been denied a share of an estate
    because the testator’s brother told lies to the testator about your client, the remedy under tortious
    interference with inheritance might be preferable to seeking imposition of a constructive trust in equity
    because: punitive damages could possibly be obtained

B. Will formalities

   Compliance with these formalities is extremely important; if formalities are not fulfilled, the entire will is
    invalidated
        o Only the most minor deviations will be tolerated
        o Traditional rule: personal property  domicile at death; real property  situs of property
                  Practice exam question: Suppose George dies owning stocks, a building, and automobiles.
                     His will must comply with the substantive law of: his domicile at death with respect to the
                     stocks and automobiles and with regard to the building the state in which it is situated
        o Depending on type of property involved, a single doc could be partially valid and partially invalid
        o Some states apply this law to substance in addition to formality of wills
        o Will must be executed in such a way that it complies with all jx’s involved
                  BUT some states have provision where will is validated in terms of formalities if it complies
                     with law of one of several jx’s
        o IMPORTANT: even when testator’s intent is manifest, the will can still fail
   Since it is unknown where person will end up when he/she dies, it is better to follow recommended method
    for executing will (pp. 242-44)
    10 steps
    (1) If the will consists of more than one page, the pages are fastened together securely. The will specifies
        the exact number of pages of which it consists.
    (2) The lawyer confirms that the testator has read the will and understands its contents.
    (3) The lawyer, the testator, two (or three) disinterested witnesses, and a notary public are brought together
        in a room from which everyone else is excluded. (If the lawyer is a notary, an additional notary is
        unnecessary.) The door to the room is closed. No one enters or leaves the room until the ceremony is
        finished.
    (4) The lawyer asks the testator the following three questions:
        (a) Is this your will?
        (b) Have you read it and do you understand it?
        (c) Does it dispose of your property in accordance with your wishes?
    After each question the testator should answer “Yes” in a voice that can be heard by the three witnesses and
    the notary. It is neither necessary nor customary for the witnesses to know the terms of the will. If, however,
    the lawyer foresees a possible will contest, added precautions might be taken at this time. (See p. 205)

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    (5) The lawyer asks the testator the following question: Do you request X, Y, and Z (the witnesses) to
        witness the signing of your will? The testator should answer Yes in a voice audible to the witnesses.
    (6) The witnesses should be standing or sitting so that all can see the testator sign. The testator signs on the
        margin of each page of the will. This is done for purposes of identification and to prevent subsequent
        substitution of pages. The testator then signs her name at the end of the will.
    (7) One of the witnesses reads aloud the attestation clause, which attests that the foregoing things were
        done.
    (8) Each witness then signs and writes his or her address next to the signature.
    (9) A self-proving affidavit, typed at the end of the will, sewaring before a notary public that the will was
        duly executed, is then signed by the testator and the witnesses before the notary public, who in turn signs
        and attaches the required seal. (p. 244)
    (10) Although not required, the lawyer should undertake a few precautionary post-execution measures.
        The lawyer should review the will to check that all the signatures are in the correct places and that each
        page is initialed or signed in the margin. If an error was made, it is easier to correct by redoing the
        execution ceremony than by litigation after death. It is also a good practice for the lawyer to write a
        short memo…(and) send a copy of the will to the client
   Four functions served by will formalities
    (1) Ritual/cautionary function (p. 224) – helps justify the terms of the will
    (2) Evidentiary function – debate over what can be admitted to show testator’s intent since s/he cannot
        speak for him/herself
    (3) Protective function – helps determine whether person is capable, delusional, subject to undue influence
    (4) Channeling function – formal process tends to make wills look similar; standardized form makes it
        easier to determine person’s wishes
   In re Groffman (p. 228)
        o Wife challenged validity of will; no doubt that testator intended three people to take; testator signed
            will by himself or in front of someone who was not a witness; witnesses signed in separate rooms
            and at separate times
        o UPC §2-502 Execution; Witnessed or Notarized Wills; Holographic Wills (p. 227)
                 (a) “dispenses altogether with the requirement that witnesses sign in testator’s presence” (p.
                    233)
                 (a)(3) requires two witnesses to sign within a reasonable time after individual witnessed
                    either signing of the will or the testator’s acknowledgement of that signature or
                    acknowledgment of the will
                          It is possible under the UPC for witnesses to witness at different times; thus, this will
                            would pass muster
        o Will fails under English Wills Act of 1837 because two witnesses must be present at the same time
            in order to see the testator sign/acknowledge
        o Practice exam question: Andrew proceeds to execute a will, but then wonders whether it was
            properly executed. Which is the fatal problem in terms of the validity of the will? The will was
            signed by the testator at his home and the will was then carried to the home of the witnesses, who
            signed in each other’s presence, but not in Andrew’s presence
   Stevens v. Casdorph (p. 229)
        o Testator placed in bank branch so several witnesses could see his signature; testator signed in lobby
            and 2 individuals signed separately; nieces challenged validity of will and it was held invalid
        o West Virginia §41-1-3 requires witnesses to see each other attest (“such witnesses shall subscribe to
            the will in the presence of the testator, and of each other” (p. 230)
        o See Wade v. Wade narrow exception: witness can acknowledge signature on a will in the physical
            presence of testator and other witness; this, however, will rarely occur


                                                       -29-
   (Dis)Interested witnesses
       o Most states require 2 disinterested witnesses; Louisiana requires 3, though it’s better to have 3
           witnesses just in case
                If there are sufficient disinterested witnesses, excess interested witness is supernumerary and
                   entitled to full bequest
       o No statutory age requirement; some courts say the age at which someone can testify
                Good to have a respected person who does not really know testator
       o 3 approaches to interested witnesses
                UPC §2-505(b) (p. 241): will is valid even if witnessed by interested party and interested
                   witness does not forfeit bequest even if it is greater than that which he would have received
                   under a prior will or by intestacy
                         Drafters are against formalism; smaller point of not wanting to invalidate home-
                            written wills in which family members are witnesses
                         Practice exam question: Jack’s will is signed by three witnesses, who are not
                            relatives. One witness is receiving $70,000, the second is receiving the remainder of
                            the estate, and the third is the attorney who drafted the will. The will is valid as to all
                            dispositions
                Purging statutes: if you are a witness and also a devisee, you lose your devise
                CA’s middle ground: rebuttable presumption of duress/menace/fraud/undue influence if
                   bequest made to witness
       o 3 witnesses, A, B, C; A receives nothing, B receives $5,000, and C receives residue; B entitled to
           $2,000 or $8,000 through intestacy
                New York  Estate of Morea (p. 239): “beneficial disposition” concept where witness
                   would not be disqualified if intestacy share were $8,000 since what he would take under the
                   will is less than what he would take under intestacy (think of beneficial as advantageous)
                         If the intestacy share were $2,000, he would have to forfeit the excess of $3,000
                UPC: C not disqualified; the fact that B is getting something is irrelevant
                CA: C has to rebut presumption of undue influence, etc.
                If C pays B to disclaim, B would no longer be an interested witness, but whether a witness is
                   interested depends on the time of the will’s execution, and disclaimer dates back to death of
                   decedent, so this strategy will not work
   Substantial compliance v. harmless error
       o See p. 261
       o Substantial compliance: If four functions of will formalities were satisfied by clear and convincing
           evidence, the court will give effect to the will
       o Harmless error: looks to intent of the testator – whether court can say with confidence that this will
           manifest’s testator’s intent; UPC §2-503 codified harmless error doctrine (p. 258) but only a few
           states have adopted this doctrine
                Areas where this arises are in the writing, signature, and attestation of the will (p. 262)
                If there is no writing, even harmless error will not save the will
                It depends if there is no signature – must have all of the facts
                If no attestation, harmless error will almost always preserve the will; under the UPC will may
                   still be valid if it is notarized
       o In re Estate of Hall (p. 259)
                Joint will where both people signed one document, but there were no witnesses; document
                   was notarized and under UPC 2008 version of §2-502(a)(3)(B) (p. 227) it would have been
                   enough to have a notary (or other individual authorized by law to take acknowledgments (?))
                   (p. 265-66)


                                                         -30-
                   Debate over whether this will was meant to be an official will or whether it was really
                    intended as a draft and not an official will until the final one was completed
                 Evidence came out on the side of validation: prior wills were revoked and wife was
                    instructed to destroy original will; question of whether this was “clear and convincing
                    evidence”
   Formalities of will execution
    Yes or No? State follows the UPC and English Act of Wills
    (1) Testator signs will on back of last page
        o UPC: Just requires signature, but name appearing on document is not enough
                 Signature embodies endorsement of the provisions set forth in the instrument and filling in a
                    blank with someone’s name will not work
        o English Wills Act: Will must be signed at the foot/end of the writing  subscription (p. 237)
                 Blanks between last word and signature have caused problems – don’t skip lines
                 If the last line of the will is on the last line of the page, then having signature on back is ok
                 Integration: if pages were numbered and if back of last page was part of previous page’s text,
                    then signature would be fine
        o Bottom line: better not to have signature on the back of the page where the instrument’s text ends;
            just keep it at the foot of the actual provisions
    (2) Page 234, (a) and (b): (a): witnesses signed T’s will in T’s dining room when T was in bedroom; (b): T
        signs will at home and L attests as witness and then takes will to office and has T speak with secretary to
        ask for attestation, and then secretary signs; another situation = witness sits at desk and testator can
        only see hand moving when he signs
        o Line of sight test: comes from theory that testator should see witnesses signing so no new provisions
            would be inserted in will; test now requires witnesses to be in testator’s line of sight such that the
            testator could have seen witnesses signing
                 McCormick v. Jeffers (p. 234): person has to be able to see the witnesses based on chair in
                    which the testator was sitting
                 Think “pen to paper” – witnesses should stand right behind testator
        o Conscious presence test: effort to reform line of sight test by allowing other senses to come into
            play; this is a very vague test and would not work telephonically
                 (a) would work under this test since they could hear one another
                 Might work if you heard someone speaking on the other side of the wall
                 Webcam would not work, though, since you need some type of physical presence or you
                    could not tell if documents were swapped
        o Will cannot be probated in (b) since there must be ocular evidence (In re Jefferson (p. 234))
    (3) Testator signs using cursive font on PC and prints out doc with witnesses’ names in cursive font
        o Similar to Taylor v. Holt (p. 235) except witnesses signed document in that case; will validated
        o Cursive font technique will not work in most states – stick with ink
        o BUT statutes typically allow signature in the form of a mark or symbol (computerized mark ok)
    (4) Testator signs will with his nickname, “Honest Abe”
        o Ideally you want the person’s full legal name; sometimes you can use AKA
        o Remember that mark that indicates testator’s intent should be sufficient
        o Will should be named “Last Will and Testament of Honest Abe”
        o In re Colling (p. 237): one of witnesses had to leave room while testator was signing name and will
            could not be probated; no answer as to how far the signer needs to get with signature
    (5) The witnesses sign first followed by the testator
        o Witnesses typically cannot sign before testator bc they are supposed to witness testator signing will
        o Restatement of Property §3.1 (p. 237): if they all sign “as part of a single (or continuous) transaction,
            the exact order of signing is not critical”

                                                       -31-
(6) Testator adds devise in his handwriting after subscribing and the witnesses have signed; addition
    is below testator’s signature
    o Answer initially depends on whether line was on will when it was signed by testator; if line added
        after signature, will would be admitted to probate but line would be ineffective as subsequent
        unexecuted codicil; if line added before signature,
    o Bennett v. Ditto (p. 237):
(7) Same as 6 except the addition is above testator’s signature
    o Ineffective because it came after the will was signed
(8) Same as 6 except addition occurs before testator and witnesses sign
    o UPC: this would be ok since it occurred beforehand and there’s no requirement that the subscription
        be at the foot of the will
    o English Wills Act: likely invalid because there was not a signing at the foot of the document
(9) Same as 8 except addition is situated above testator’s signature
    o As long as it was made above the signature and before testator and witnesses sign it should be fine
        under UPC and English Wills Act
(10) There is no attestation clause
    o Attestation clause is not required and will would not be invalid without it, but it serves as a function
        of will execution and every will should have one
    o Colling: later acknowledgement did not work since testator must sign or acknowledge signature
        before either witness attests; signature seems to be the same as attest
             Some courts say attest means to sign but most courts say that it means something else
             English Wills Act: “such witnesses shall attest and shall subscribe” – most courts interpret
                 this as attest means witness and subscribe means sign
             So attest probably means to actually witness [the signature]
    o So you could sign document at some point after testator signs but must witness the signing at a
        particular time and must be there when the other witness is attesting
    o Even under the UPC a witness cannot acknowledge a signature, though a testator can endorse/state
        “This is my Will”
(11) There is no self-proving affidavit
    o Swears before notary public that will was duly executed, and signed by testator and witnesses
    o This is not required, though it would make it easier to probate the will and it prevents a challenge of
        due execution of the will
    o Note that this is not part of the will itself unless it is included as a one-step self-proving affidavit
    o With two-step self-proving affidavit, affidavit must be signed by testator/witnesses in front of notary
        after testator/witnesses have signed the will (p. 244)
    o UPC §2-504(a)  one-step; §2-504(b)  two-step
(12) Will not signed by testator or witnesses but self-proving affidavit is
    o UPC’s one-step process introduced as means to address this problem; will may still be valid under
        two-step process; harmless error/substantial compliance may also save the will
    o In other states, the will is no good
(13) Will is notarized but not witnessed
    o Has UPC state adopted the 2008 provision? If so, then will is valid, but otherwise it is not since you
        need 2 witnesses
(14) Will is witnessed by one witness and signed by a notary
    o 2008 UPC (§2-502) could count notary as witness, but notary cannot be moved into attestation
        position if he did not intend to attest the will as a witness
(15) Testator fails to state “I intend this to be my will” prior to signing the will
    o UPC does not have publication requirement; under common law, testator should make this statement
    o Testator should do this because it is important for witnesses to know that they are attesting to a will

                                                   -32-
    (16) Attorney states that she is required to retain all originals of wills prepared
        o Will would still be valid
        o State v. Gulbankian (p. 245): Could be seen as unethical as it solicits return visits to L’s office and
          discourages client from making changes to will instrument
        o Contrast with ACTEC Commentaries which permit L to keep instrument so long as client consents
        o Schoenblum: Follow Gulbankian and ask client to keep original will in safe deposit box
               Practice exam question: Marie is concerned about the safekeeping of her will. The best
                   advice is to retain a copy of the signed original, while keeping the original in a safe deposit
                   box.
    (17) Should the will pages be stapled, numbered and identified on each page as “Will of ___”?
        o Better not to staple pages initially because you remove them to make copies and there could be
          possible litigation over tampering
        o Only staple the pages after you have made all of the copies and the ceremony is over
        o Yes, identify each page as “Will of ___”, i.e., at the bottom of each page and write “Page X of Y”
               Michael Jackson will had initials at each paragraph but did not have anything on the bottom
                   of each page
    (18) Will is not on paper but in the form of a voice print preserved on DVD
        o UPC is agnostic on whether video recording could constitute “document or writing” sufficient to be
          admitted under harmless error rule (p. 238)
        o Schoenblum: this would be a mistake, even if state like Nevada authorizes electronic wills
    (19) DVD is introduced into evidence to show testamentary capacity
        o Estate of Reed (p. 238): tape recorded statement cannot be admitted to probate as a will; also not a
          holographic will
        o Schoenblum: extremely dangerous to have video like this; better to have self-proving affidavit so
          there is no ability to question a will’s formality
        o Indiana and Louisiana: video of an execution ceremony may be admissible to prove due execution
          (p. 238)
   Holographic wills
        o Very important part of state planning; arises in case where person wants to change a will while on a
          trip, in extremis (near death) etc. and there’s no time to re-do or re-type the will and obtain witnesses
               Prevalent in over half the states, including those in the South, Southwest, Midwest; several
                   states do not accept them, however, and they should not be used in the typical situation
               Example of movement away from formalism
               Many courts err on the side of validating a holographic will since there is a resistance toward
                   seeing testators die intestate
        o Holographic wills and functions of will formalities
               Ritual function: holographic will does not further this function
               Evidentiary function: principal reason to have holographic will
               Protective function: more protection to require person to write out instrument
               Channeling function: not satisfied by holographic wills; docs rarely in standard form
        o Example: Signed written note states that “if I die from surgery then all goes to Mary” but person
          lives for another six years; note introduced into probate as will and heirs contest
               This is a conditional will – see p. 272 and Eaton v. Brown
               If the condition is fulfilled, then no problem – Kimmel’s Estate (p. 269)
               Most courts presume the language of condition does not mean that the will is to be probated
                   only if the stated event happens but is, instead, merely a statement of the inducement for
                   execution of the will, which can be probated upon death from any cause
               Estate of Perez (p. 273): Condition was specific: “I make the following disposition to be
                   fulfilled in case my death occurs during the surgery” and will was not admitted to probate;

                                                       -33-
            while there is a strong inclination to assure that testator does not die intestate, one cannot
            depart from specific language of instrument
         Note UPC §2-502(c) (p. 228): may be possible to show through use of extrinsic evidence that
            statement was not a condition but an inducement
         Practice exam question: Joe directs his broker, in writing, to pay any cash from stock sale
            proceeds to his wife in the event he is deceased and if there are funds in the account. This
            directive is an invalid testamentary substitute in most jurisdictions
o   Note 22, p. 273: note written on bedroom wall to fiancée (“You take care of all my belongings”) and
    plaster was removed and offered as will
         Kimmel’s Estate: two conditions for holographic wills
            (1) Is the [document] testamentary in character? Must manifest testamentary intent
            (2) Is the signature to it a sufficient compliance with Wills Act? Must abide by formalities
                of holographic wills
                     Note that will may be signed at beginning or anywhere else on face of doc but that if
                     not signed at end there may be doubt about whether decedent intended name to be
                     signature (p. 277)
         This note was not likely testamentary in nature; in addition, language sounds like executor’s
            role; remember that wills have four primary functions: dispose of property, appoint legal
            successor, designate guardian for minor children, revoke prior instrument, etc.
o   Example: person buys book with printed will forms, makes copy and fills in the blanks; what result?
         First-generation approach, or “Intent to incorporate” doctrine (p. 279): everything that
            appears on the page is intended to be incorporated and the will is invalid if something is not
            in testator’s handwriting
         Summary: everything has to be in the handwriting of the testator; there must also be a
            signature and a date
                 St. Regis embossment would invalidate will
                 Some states require full date
o   Estate of Gonzalez (p. 274)
         Testator filled in blanks of pre-printed will form and intended to copy language onto blank
            form but died before doing this; witnesses signed the blank form while only testator signed
            the first form
         Courts abided by second-generation approach (material provisions) and held that “printed
            portions of a will form can be incorporated into a holographic will where the trial court finds
            a testamentary intent, considering all of the evidence in the case” (p. 276) in other words, the
            court incorporated the preprinted text by reference
         In other words, you are allowed to look at the rest of the text for context; stretches material
            provisions approach and most courts following it would have resisted this – see In re Will of
            Ferree and Berry v. Trible (p. 277) (court denied probate to partially printed, partially
            handwritten doc) [note: think “material portions,” not provisions, when you think context]
o   Third-generation approach: material portion and extrinsic evidence allowed
         Conscious change in later UPC to overcome problems by pre-printed forms; “A will…is
            valid as holographic will…if the signature and material portions of the document are in the
            testator’s handwriting” (p. 279); to the extent you are uncertain about this you can look at
            extrinsic evidence  UPC §2-502(c)
         Remember evidentiary function and reason for upholding holographic wills
         Schoenblum in later class: portions doctrine allows extrinsic evidence and looking into
            context into which those words appear
         Practice exam question: Maureen finds in the library a book with printed will forms. She
            makes a photocopy of one and fills in the space for bequests and devises, that follows the

                                                -34-
                  printed words: “I bequeath and devise to:” and then signs it. Any such disposition will clearly
                  be valid in a state that applies the material portion, but not the material provision, approach to
                  holographic wills
       o Other issues
               Can holographic will signed after witnessed will has been executed prevail over witnessed
                  will?
               Will v. codicil – codicil is a testamentary instrument that amends a prior will but does not
                  replace it; remember that it is only a piece of the will (p. 285)
               Precatory language, aka not final language; in Gonzalez, the instrument was not intended to
                  be his actual will; in Kuralt, the letter he wrote to Pam was not intended to be his actual will,
                  either – therefore, must ask if document was intended to be the testamentary dispositive
                  instrument of the testator, or if this was the instrument by which the testator intended to carry
                  out his intent
                       Practice exam question: “intend to leave you $100,000” probably will not be
                          regarded as effectuating testamentary disposition (may or may not be valid
                          holograph)
                       Williams v. Towle (p. 278): court admitted to probate will that had in block letters at
                          the top of the first page “Last Will Etc. or What?”; coincides with intense interest of
                          not allowing someone to die intestate
               Harmless error doctrine not mentioned by majority in Kuralt but was mentioned by dissent
       o In re Estate of Kuralt (p. 280)
               Kuralt had long-term affair with woman and arranged for property to be transferred to her;
                  wanted to give her rest of property in MT and indicated such in a letter to her but died before
                  he could do this; formal will left everything to wife and children
               Woman succeeded with argument that the letter, though precatory in language, was a
                  holographic instrument and a codicil to the will
                       Evidence such as their long-term relationship, support of her in the past, use of word
                          “inherit” in letter strengthening her case
               Taxes were paid from residue of estate so wife was paying for mistress’s property; must
                  include provision that allocates burden for debt and taxes and thus avoids this outcome
   Revocation of wills
       o Two major ways to revoke a will (p. 286)
          (1) By writing, either by express revocation or inconsistency of the instrument
          (2) By physical act
               Practice tip: always revoke will and codicils by writing; physical act is too ambiguous; better
                  to execute a new will revoking the prior will rather than just draft a codicil and to send a
                  single instrument to the probate court
       o Page 287, (a) and (b): 2003—T executes will that gives all property to A; 2008—T executes will
          (aka codicil) that gives diamond ring to B and car to C; (a): Early 2009—T destroys 2008 codicil
          with intention of revoking it and dies in 2009; 2003 will offered for probate; (b): T destroys 2003
          will with intention of revoking it; 2008 codicil offered for probate
               (a): Codicil built on foundation of will and if it is destroyed the will is still in place; property
                  goes to A
               (b): Varies whether it can be admitted to probate; if more than one instrument, try to read
                  codicils and wills consistently; but if testator destroyed a will that was executed after a
                  codicil the codicil may still stand unless there was language indicating the contrary (“Will
                  should be read consistent with codicil”); another theory is that if the will does not exist, the
                  codicil must fail since it gets context and substance from the will


                                                       -35-
o Harrison v. Bird (p. 287)
       Testator executed will naming Harrison as main beneficiary and attorney kept original will
           while duplicate original given to Harrison; testator later decided to revoke will and attorney
           tore the will into four pieces and wrote letter saying that will was “revoked,” enclosing the
           pieces; letter found after testator’s death but not the four pieces
       Remember that you must engage in a physical act with an intent to revoke a will; dangerous
           to have more than one original copy of a will since any revocatory act to one eliminates the
           other  never make more than one original signed version of a will
       UPC §2-507 Revocation by Writing or by Act
       Burning, tearing, canceling, obliterating, destroying are the physical acts which result in
           revocation
                Unsure what UPC drafters meant with these terms; debate will be whether there was
                   an intent to revoke that corresponded with the time of the physical act
                Note that physical act does not have to be done by the testator but must be done in the
                   presence of the testator and by the testator’s direction (§2-507(a)(2))
       Attorney cutting up testator’s will at her direction is not a valid revocation
       BUT presumption of revocation states that when a will known to be in testator’s possession
           cannot be found, one must assume that testator intended for it to be revoked
                Harrison could have presented evidence to the rebut the presumption; generally is a
                   preponderance of the evidence but some jx’s might require clear and convincing
                   evidence
                Could also that testator did throw out will but did so because it was void
       Strange case since will was revoked despite clean and unaffected original will
o If will is thrown out during testator’s life, copy can be probated in some jx’s so long as all signatures
  are on it; for some courts, existence = legal existence; other jx’s do not allow copy to be probated
o Slide 25-2 to 25-6 examples: Janet informs you that she has an outstanding will executed in 2005.
  The will leaves everything to her former husband, Ray. She asks whether any of the following will
  suffice to revoke the prior will:
       Writing “REVOKED” on the first page in the margin
                This is not a holographic will since it is not entirely written, signed, or dated in
                   handwriting
                Even if holograph, “revoked” has no meaning in isolation and material provisions
                   doctrine would not help; with material portions, perhaps word in context may mean
                   that the instrument was to be revoked, but there was no signature alongside the word
                Steps:
                   (1) Do these words in the physical revocation context constitute another will?—could
                       have another instrument (i.e., holograph) on the same piece of paper
                   (2) Is this something that physically revokes a will? (i.e., later will revokes prior will)
                   (3) Is this a partial or total revocation?
                Of possible physical revocations under UPC §2-507, canceling is most relevant; this
                   means to mark over the document in some way
                Here, word “revoked” has no significance; extrinsic evidence would only be allowed
                   to show that it was in the testator’s handwriting
                If the word was on an entirely separate page clipped to the will, would it function as a
                   cancelation (see p. 293 and comment on Thompson v. Royall (p. 290))? What if it
                   was written on the back of the instrument? Schoenblum: markings may need to be on
                   the will even though UPC does not require that the markings touch the words



                                                 -36-
                
                Bottom line: cannot be sure in this example if there has been a partial or total
                revocation; extrinsic evidence may help with this determination
      Writing “REVOKED” on the last page over the text
             Assume that this is not a holographic will and that it is a cancelation under the UPC
             May be a total revocation based on where “revoked” is located; difference between
                this and the previous example is that the page where “revoked” is written has the
                signature and attestation of witnesses
      Writing “HA, HA, HA!” on the last page over the text
             Not a valid holograph
             Question of the testator’s intent; does this mean testator wanted to revoke the will or
                say “I’m screwing you over!”? Can we erase the markings and show no revocation?
             Evidence can be introduced to show that this was her markings but cannot show the
                meaning behind these markings (aka, her intent); must rely on the document itself
             Dependent relative revocation (DRR, p. 295) may come into effect here but we can
                only use this if we thought testator was actually trying to revoke the will
      Writing “I REALLY LOVE THIS WILL” on the last page over the text
             Tough situation—may assume by these words that testator did not intend revocation
                as it appears to be an endorsement of the old will (but cannot infer intent from these
                words?)
      Cutting off Janet’s signature on the last page
             “Cutting” not mentioned in UPC §2-507 – must abide by physical acts explicitly laid
                out in the statute
             Will there be leeway on this? Is testator’s intent clear? This is also problematic
o Dependent relative revocation (DRR) and revival
      Doctrine: If testator purports to revoke will upon mistaken assumption of law or fact, the
        revocation is ineffective if testator would not have revoked his will had he known the truth;
        theory is that testator lacks true revocatory intent if revocation was based on mistaken belief
        (p. 295)
             Testators may condition their revocation but there are problems when condition is
                unstated or there is a mistake surrounding it—most cases are mistake cases (of fact or
                of law) and most involve acts of physical revocation
             Cases emerge when testators are not aware of the law (LaCroix, Alburn)
      Justifications: Clear intention of testator to avoid intestacy; must carry out presumed intent
        with testator confronted with situation where plan for new disposition has failed
      Several approaches to this
        (1) (Rarely followed): since testator revoked first will and later will was invalid, testator is
            out of luck and dies intestate
        (2) If second revocation is invalid, revocation of the first did not work; preserve first will and
            imply conditionality on theory that person’s intent is not to die intestate
        (3) Imply conditionality in act of revocation but carefully analyze and accept extrinsic
            evidence to determine whether person would have preferred intestacy or first will
             Note: partial physical revocations are allowed so the issue may not be intestacy v.
                first will; if there is partial revocation of a particular bequest and it fails, it will pass to
                the residuary beneficiary, not through intestacy
      LaCroix v. Senecal (p. 295)
             Originally, half of estate given to Nelson and half to Aurea; codicil changed Nelson’s
                name to clarify who he was but did not change dispositions


                                                 -37-
          BUT second instrument witnessed by Aurea’s husband; no disinterested or
           supernumerary witnesses
        DRR arises since revocation would be contrary to testator’s intent; doctrine recap =
           deems individuals to make conditional revocation that is dependent and relative to
           some other act (i.e., successful second instrument being effectuated)
        Here, will was not revoked in full; codicil in effect such that it gave half of estate to
           Nelson; so there is potential partial DRR
        Contrary result in Rosoff v. Harding (p. 297): court could not apply DRR because
           new/second will was otherwise valid (despite ineffective exercise of power of
           attorney) and it expressly revoked prior will
        So, we have to determine if a state allows complete DRR, partial DRR, or no DRR
   Question 2, p. 298: Testator crosses out $1,000 sum and writes in $1,500 and writes initials
    and date; OR testator writes $500 and writes initials and date; OR testator just writes $500
        Must ask if jx. allows partial physical revocation and whether this is a valid physical
           revocation under §2-507; must ask if state allows holographic wills
        Practice exam question: Suppose instead of a letter, Joe crosses out “Jane” in a
           bequest of $50,000 to Jane” in a formally executed will and writes above her name,
           “Sally.” He initials it in the margin and dates the change. The change is not valid
           simply because the state recognizes partial physical revocation
       Example 1
        If state accepted holographs, only third-generation approach would work since
           context is allowed
        DRR comes to the rescue—using mechanical approach, could find partial physical
           revocation and state that condition was not satisfied (and beneficiary gets $1,000)
           since testator did not want beneficiary to lose as result of failed holograph (and thus
           preferred to salvage devise); using analytical approach, could find that testator wanted
           beneficiary to have something and increased the amt. so he should get $1,000, not $0
        Cannot give $1,500 because it would subvert the wills rules
       Example 2
        Assuming this is not a valid holograph, analytical approach is a better result; it would
           result in beneficiary getting $0 since testator did not want him to get $1,000
        Under mechanical approach, beneficiary would still get $1,000
       Example 3
        No signature so definitely not a valid holograph
        If number were $100 instead of $500, mechanical approach would be out of line with
           testator’s intent since it would give beneficiary $1,000; under analytical approach,
           testator would probably refer beneficiary to receive $0 rather than $1,000
   Question 3, p. 298: Testator crosses out husband’s name in typewritten will and replaces it
    with wife’s name
        If John and Nancy were married, there may be particular reasons why testator made
           this change not related to just removing John
        Under mechanical approach, John would get the devise
        Under analytical approach, can introduce evidence to determine if there was a
           conditional revocation
   Question 4, p. 298: Will 1: one half to Matty, one half to Heather; Will 2: one half to Matty,
    one half to Heather in trust (but trust violates RAP)
        Did Will 2 have a revocation clause? If not, there is a revocation with inconsistency


                                       -38-
            Still have portion of Will 2 that fails; could partial DRR apply? Clear in both
             instruments that Matty was entitled to one half of the estate
         Rosoff: DRR could apply in instances where second will failed because of execution
             problem but not when disposition was in error
         Key: courts have held that partial DRR will not apply except when dealing with
             codicil or because failure of second will was on formality rather than disposition
             grounds
   Practice exam question: Joe destroys his previously executed will by tearing it up. One year
    later, he writes a holograph, which turns out to be defective. Suppose the relevant state has
    no revival statute. Under the facts of the example: DRR will be of no use
   Practice exam question: Franklin fails to sign his will, although the witnesses do sign. The
    document devises his entire estate to Pete. Franklin executes a codicil that is properly
    executed and which provides that “I hereby devise my jewelry to Sally.” At his death: The
    estate, other than the jewelry, passes by intestacy.
   Estate of Alburn (p. 300)
         Testator wanted Kankakee will revoked and testimony indicated that testator wanted
             Milwaukee will to come into effect; Kankakee will revoked prior instrument and is
             still in effect (had express revocation clause)
         Question whether second will can be revoked; second will would revoke first will;
             raises question of revival
         No-revival rule (of WI) is an unusual rule; under old English common law, second
             will does not count until testator dies and if testator revokes second will the first will
             comes back to life
         Traditional rule: will is not an effective instrument until testator’s death; cannot be
             revoked until later will revokes it and becomes effective at death
         UPC: Second will revokes first when it is signed and executed; look to extrinsic
             evidence to determine what testator intended
         Additional evidence in this case that testator did not take steps to draft a new will
             supported use of DRR
         Caselaw states that person invoking DRR has the burden of proof; presumption that
             DRR should apply if second will is drafted (at least in part) as attempt to replace first
             will; burden then shifts to those arguing that first will should not come into play
   UPC §2-509 Revival of Revoked Will (p. 304)
         509(a): Will 2 physically revokes Will 1 in full; presumption of no revival (“previous
             will remains revoked unless it is revived” BUT could bring in evidence of
             circumstances, testator’s contemporaneous statements, etc. to show that testator
             intended Will 1 to take effect
         509(b): Will 2 partially physically revokes Will 1 (Will 2 like a codicil); revocation
             by inconsistency; presumption of revival; can bring in evidence of circumstances or
             testator’s contemporary declarations to show that testator did not intend revoked part
             to take effect
         509(c): Express revocation by writing of Will 2 by Will 3; ok for Will 3 to revoke
             Will 2 in part; presumption of no revival of Will 1; unlike (a) and (b), can only revive
             will if terms of Will 3 state that testator intended for Will 1 to take effect – since you
             can say whether you want to revive the prior will, it is presumed that you do not want
             to if you do not act

   Questions, p. 305 – some notes

                                         -39-
                  Outcome may be different depending on whether both instruments are wholly (2-
                   509(a)) or partially (2-509(b)) inconsistent
               Logic makes sense in theory but is more difficult in practice; i.e., hard to tell when
                   Will 2 is completely inconsistent and revocatory of Will 2; the fact that some of the
                   same names appear as beneficiaries does not mean the wills are consistent
               Question 2: testator’s safe deposit box has 1999 will with property to A, 2006 will
                   with property to B, and 2007 document that revokes 2006 will; presumption under
                   509(c) that previous will remains revoked (no revival); if testator said orally that the
                   intent was to revive Will 1, but there was no statement in Will 3, then Will 1 is not
                   revived—oral declaration would be enough, however, under 509(a)
       DRR not intended to apply in states that adopt UPC 2-503 and 2-509; superior doctrine if the
          focus is on following testator’s intent; problem is how often testator’s intent is known and
          whether you have clear and convincing evidence to prove it
o Recap of four types of revocation
  (1) Physical instrument (note: is this physical revocation?)
  (2) Express revocation (note: is this revocation by writing?)
  (3) (revocation by) Inconsistency
  (4) (revocation by) Operation of Law (i.e., divorce)
o Revocation by operation of law
       Courts treated divorce as if wife predeceased husband; in Problem 1, p. 306, one scenario
          would enable stepson (divorced person’s descendant) to take stepfather’s property (Bloom v.
          Selfon); we do not want this to happen
       UPC §2-804 Revocation of Probate and Nonprobate Transfers by Divorce…takes away any
          devise to relatives (p. 306)
               804(d): treat as if spouse, relatives disclaimed all provisions; former spouse cannot be
                   PR/executor of decedent’s estate (note: some state statutes allow spouse to do this)
               Statute refers to governing instrument (see (b)), which is any type of instrument that
                   disposes of property, including bank accounts, POD designations, powers of appt.,
                   revocable trusts
       Practice exam question: Harvey executes a will and life insurance beneficiary designation
          form, leaving all to his wife, and if she dies, to his stepdaughter, who is his wife’s child from
          a prior marriage. He later divorces his wife. Neither the life insurance, nor the estate, will
          pass to the stepdaughter
       Question: testator fails to change will but statute provides that former spouse deemed to
          predecease testator; survived by ex-wife and two children
               If she predeceases him and he has no alternative, he dies partially intestate
               The cash goes to the children
               Pension benefits and POD account go to spouse
       Most statutes only cover dispositions by will and do not use “governing instrument”
          language of §2-804
       In order to ensure that spouse does not get property, lawyer must address various situations
          other than divorce; note that “living together” is vague and could harm some relationships
          where spouse is overseas or in a nursing home; must cover both the dispositive and fiduciary
          sides so that estranged spouse is not later the administrator
       Under common law, existing will revoked entirely by marriage; under modern approach, will
          is not revoked but spouse would get intestate share and whoever would take under the will
          would have to contribute to spouse’s share; spouse does not get intestate share if she is
          mentioned in contemplation of marriage and is provided a specific amount


                                               -40-
                Marriage followed by birth of a child in some states has effect of revoking will executed
                 before the marriage (p. 307)
   Components of a will
      o Focus on what exactly is the will, what the parameters are of a will, how testamentary is defined, etc.
      o Republication
              Idea that validly executed will that is deemed invalid because of lack of capacity can be
                 republished by a later valid codicil at a time when the person had capacity
              If a will not validly executed due to problems with formalities, republication doctrine cannot
                 make this will valid
              But how can we say a prior will was valid if the person lacked capacity? This document
                 could at least be given “testamentary life” but for the incapacity, whereas will without a
                 signature cannot be given testamentary life even if there is capacity; note that this document
                 could be given life “ as some other document” by incorporation by reference
              Doctrine of republication by codicil should only be applied when it is consistent with
                 testator’s intent; courts have ignored this, however –Azcunce v. Estate of Azcunce (p. 309)
      o Incorporation by reference
              Applies when will refers to writing in existence when the will is executed and the language
                 of will adequately identifies writing and manifests the testator’s intention to incorporate
                 writing as part of the will
              This doctrine does not apply in New York
              Documents are not actually part of the will
              Will not apply to list (writing) added after will’s execution date
              UPC §2-510 Incorporation by Reference (p. 310)
              Not a good way to deal with personal items; UPC §2-513 Separate Writing Identifying
                 Devise of Certain Types of Tangible Personal Property written in response (p. 316)
      o Clark v. Greenhalge (p. 310)
              Testator had list of personal property as memorandum in 1972 and amended this in 1976;
                 told nurses near date of death that farm scene painting was to go to a friend and made entry
                 in plastic notebook kept in desk; nurses observed her write in notebook
              So writing consisted of memorandum (agreed on by both parties) and notebook; will
                 executed in 1977, notebook dated 1979, codicils dated 1980
              Since codicils republished the will, and the notebook predated codicils, the notebook was
                 hence preexisting and incorporated into the will (p. 314)
              Important question: what is the writing? The notebook or the entry as to the painting?
                      Problem with simply referring to existence of notebook – new way of executing wills
                         as you could just open the notebook and write things in or have someone do it for you
                      Principle court laid here is at odds with what other courts might say
                      Better to focus on when testator wrote “I leave my farm painting to X” rather than
                         focus on whether the notebook was a memorandum
      o UPC §2-513 Separate Writing Identifying Devise of Certain Types of Tangible Personal Property
         (p. 316)
              Will may refer to written statement or list to dispose of items of tangible personal
                 property…other than money (or stock)
              Testator must sign writing and must describe items and devisees with reasonable certainty
                      Note: this does not need to be in testator’s handwriting or comply with will
                         formalities (other than being signed)
                      Practice exam question: Bernard wants to dispose of his furniture to his children. He
                         keeps on adding pieces and changing his views as to whom should get what. Bernard


                                                     -41-
                 may prepare a list but it does not have to be in his own writing as long as it is signed
                 by him
      Writing may in existence at time of testator’s death; may be prepared before or after will
         execution; may be altered by testator after preparation; may be writing that has no
         significance apart form effect on will’s dispositions
      Why do this? Clients change their minds and this is an easy way for them to handle such
         items; problem is that there is no dollar value limit, so expensive items can be handled this
         way and no witnesses or evidence of an extensive writing is required
      Note that will is going to take precedence over a writing; a codicil or new will is the only
         way to make a change to dispositions
o Example: Coins to B, stamps to J, car to P, Raphael painting to M, sell Picasso and distribute
  proceeds to P, $100,000 to F, dated Feb. 16, 2007
      Need signature for this to be valid
      Must describe items and devisees with reasonable certainty (though extrinsic evidence may
         be allowed to clarify ambiguity)
      Last Will and Testament of Moor (p. 317) allowed executor to sell testator’s tangible
         personal property and distribute proceeds as indicated in separate writing
      Remember cash does not count so F does not take
      In a state that does not have UPC §2-513, testator would have to create new will; cannot do
         incorporation by reference since list must be made before will’s execution date
               Alternative to this is to shift assets to a trust and create a list under a revocable trust;
                 the trustee can distribute the assets according to testator’s intent
o Johnson v. Johnson (p. 317)
      Will had typewritten portion that was not signed or dated and had handwritten portion at the
         bottom of the sheet of paper
      Court misstates republication doctrine – this doctrine requires will to be validly executed and
         court says that codicil can republic a will no matter what defects it had; this refers instead to
         incorporation by reference
      If this is a valid codicil (and if trying to explain total validity), may be able to apply
         incorporation by reference
               Remember that typewritten portion had to be in existence prior to handwritten portion
               “This will” needs to identify typewritten portion; if this is ambiguous and there is no
                 extrinsic evidence indicating that the reference is to the typewritten portion then
                 incorporation by reference cannot occur
      Could also try to argue for integration (used to bring separate documents together)
               Here, handwritten will could be viewed not as a codicil but as one continuous will
               Can be used if there are two loose unnumbered pages that should be one document
               Problem is that integrating these documents could “ruin the will” unless it were a
                 valid holograph
      Handwriting might be treated as holograph under material portions doctrine (but not under
         first generation of holographic wills or material provisions); if not recognized as holograph,
         then bottom part would be invalid
      Important: if arguing incorporation by reference or integration, document would have to be a
         valid holograph, and there is weak evidence of that in this case
      If trying to explain validity of handwritten portion alone, first generation would have
         problem with typewritten material on the page but second and third generations would just
         ignore the typewritten portion
o


                                                -42-
o Acts of independent significance
       “If beneficiary or property designations are identified by acts or events that have a lifetime
          motive and significance apart from their effect on the will, the gift will be upheld”
       Do not typically get a new husband to change will or new car to devise different property—
          acts have independent non-testamentary significance
       Document can come into existence or change after execution of the will; does not have to be
          a document/writing
       There is a risk of the open will and avoiding formalities and protections of the holograph, but
          the doctrine is widely accepted
       Example: Mark Rothko (painting featured p. 681) – artist left paintings hanging in townhouse
          to named individual, but people switched works of art so that lesser valuable paintings were
          on the wall; this was open will since he did not specify the paintings he was giving away;
          note the potential for fraud here
       Practice exam question: The following clause is provided in a will, which otherwise only
          names an executor: “I hereby include as part of this will the entries on the legal paid with the
          heading ‘changes to my will.’ The writing I add in the future to the legal pad will detail the
          disposition of my estate. I will have it clipped to this original of my will.” At the time of the
          testator’s death, the identified legal pad is found as described. This may well be a case in
          which the doctrine of acts of independent significance would not apply.
o Problems 1-2, p. 324:
  Problem 1: T bequeaths “contents of my house” to A, variety of belongings in T’s house; T
  bequeaths “contents of my safe deposit box in Security Bank to B” and “…in First National Bank to
  C”; will provides “I have put in my safe deposit box shares of stock in several envelopes.”
       Note that this is the will itself, not a separate doc; will devises property by describing
          location and leaves opportunity to substitute items—what matters is what items of property
          are in the house at the time of testator’s death
       Minority view: stock certificates and cash would not be included (In re Estate of Light;
          question of personal and chattel property limiting items to personal and tangible property);
          generally, however, stock certificates and cash found in the house would pass with contents
          of the house
       In re Estate of Isenberg: “Household items” including valuable paintings would count;
          Schoenblum: household items suggest items used on regular basis
       Note that the debate is over the meaning of the term – no question that you can dispose of
          property using terms such as “contents of my house” and “household items”
       As for safe deposit box, possibility that everything passes with right of survivorship; note
          that joint owner only has ownership in the box itself, not the contents that do not belong to
          her—better to just have a separate box; number of related situations, i.e., give someone else
          contents of the box after death
       Stock certificates in envelopes—yes, beneficiaries take; NY made “silly distinction” between
          identification vs. incorporation by reference; iffy whether doctrine of acts of independent
          significance applies, since purpose of having envelopes with names on them is to facilitate
          dispositions
  Problem 2: S executes will devising residue to any charitable trust established by will of brother,
  Barney (B); B executes will and devises property to trust established by B’s will; B dies before S
  dies; (what if B survived Sarah?)
       Yes, B’s trust is entitled to residue because S is pouring assets into that trust; there is act of
          independent significance as B is doing estate planning; S is not doing things to change
          dispositions without actually changing will


                                               -43-
       o If T devises estate to W’s lifetime revocable and amendable trust, which is relevant, incorporation by
         reference or acts of independent significance?
              Document (trust) was in existence when will was executed and can be given effect under
                 incorporation by reference; could also be given effect under act of independent significance
                 since W’s act was independent of T’s own estate planning
              Wife made change after will was executed to devise to another party – no incorporation by
                 reference
                      BUT if focus is on existence of the trust, then incorporation by reference may work
                         because trust came before will was executed
              Majority rule on this: no incorporation by reference – property must pass by intestacy
              Alternative to majority rule: though no incorporation by reference, still a devise and court
                 can read document as it was in existence on date of will’s execution
              Act of independent significance does not apply since disposition is changed to leave property
                 to new devisee
              Practice exam question: Joe wants his estate to be distributed in accordance with the terms
                 of his wife’s will. Accordingly, he provides that “my residuary estate shall be disposed of to
                 the beneficiaries of the residue of the estate of my wife as set forth in her will in effect at my
                 death.” The disposition probably is valid under the doctrine of acts of independent
                 significance
              Practice exam question: Alfred wishes to have his estate pour over into an inter vivos
                 revocable trust created by his wife. The trustee of the trust is a beneficiary of a life insurance
                 policy on Alfred’s life and the policy is owned by his wife. The trust has no cash or other
                 assets. Assuming Alfred predeceases his wife and at the time she has let the policy on his life
                 lapse: she will be able to amend her trust after his death and change the disposition of his
                 property from what he believed to be the case at the time of his death
       o If wife remarries after T’s death, will T’s estate be distributed in whole or in part to new H? If not H,
         then to whom?
              Under acts of independent significance, she can change the conditions of the trust
              But court may be uncomfortable with allowing W to change disposition when T is dead and
                 can no longer change will – could limit acts of independent significance to when T is still
                 alive; here, two trusts would be embodied in one trust; would be hard to dissemble assets if
                 they were mixed, though
              Remember that wife is free to dispose of her own assets as she wishes
              Most jx’s would apply acts of independent significance  see Uniform Testamentary
                 Additions to Trusts Act (UTATA)

V. INTERPRETING AND CONSTRUING THE DISPOSITIVE INSTRUMENT

   Contracts relating to wills
       o Problems 1-4, pp. 326-27
           Problem 1: “I promised to remember [Sidney] in my will”; Does Sidney have enforceable claim
           against ER’s estate?
                Must think separately of validity of will devise from whether there is a contractual obligation
                No obligation that the parties entered into here, though Sidney could make quantum meruit
                    argument that he provided services and should be paid for such services (though he was
                    probably paid for services as valet)
                So will did not give Sidney anything and there is no enforceable K, oral or written



                                                      -44-
               Follow this analysis:
               (1) Is the person entitled to something under the will?
               (2) Was there a K, oral or written?
               (3) Does a particular state recognize oral Ks?
               (4) If there wasn’t an enforceable K claim, can person recover under restitution or quantum
                   meruit?

            Problem 2: T makes K to leave everything at death to A if A will take care of T for life; T executes
            will leaving estate to A; A changes mind and decides not to care for T; T rescinds K; Is A entitled to
            take under T’s will?
                 Trotter v. Trotter (p. 327)
                 Will independent from any K obligation; will must be given effect in probate if not revoked
                 T’s heirs could file claim of breach of K against A after will introduced into probate; note
                    that A could still take if he proved that T knew that A was not fulfilling promise and left A as
                    devisee
            Problem 3: A dies of AIDS and B claims that A promised to leave B half of estate if B cared for A;
            B produces document typed by B and signed by A and one witness devising one half to B; jx. has
            enacted UPC §2-514, requiring that K be evidenced by writing signed by decedent
                 Flip side of Trotter as there is nothing in will but B claims promise/obligation and A did not
                    fulfill this—someone performed services but did not get compensated
                 K will not be enforced without consideration by B; here promisee is seeking relief
                 This is different from heir H seeking relief if A promises to name H in will and fails to do so
                    though services were performed by H – H would have claim against the estate
            Problem 4: W promises to care for H in exchange for H giving her Blackacre; H devises Blackacre
            to A; is K enforceable? Did W provide consideration?
                 Borelli v. Brusseau (p. 327): No consideration/basis for K since H and W owe legal duty of
                    care to each other; BUT no duty owed by “live-in lover” (Byrne v. Laura) and this person
                    would have potential quantum meruit claim
                 In re Estate of Braaten: stepson sought quantum meruit recovery; courts disinclined to allow
                    relatives to recover for services provided since they theoretically provide these gratuitously
                    and not in expectation of something in return
                 Practice exam question: F, a close friend of T sues T’s estate, arguing that he is entitled to
                    recover for services rendered in caring for T before T’s death: F is not likely to recover.
        o UPC §2-514 Contracts Concerning Succession (p. 328)
   Joint, mutual, reciprocal, and joint and mutual wills
        o See p. 327
        o Joint will: single doc executed by both spouses and governs disposition of their property at their
            respective deaths—one will for two people
                 Indicated by single doc that parties have signed but references made through “we,” “our,”
                    and other pronouns that suggest mutuality of testamentary intent
                 Very dangerous document for tax or non-tax purposes
        o Mutual will: separate wills where each person leaves income (i.e., in trust) to the other with
            remainder to children; very common with spouses having similar goals
                 Often regarded as implying K not to revoke—surviving spouse bound not to change will and
                    those who would have taken under mutual will would have third-party claim
                         Lots of issues with this; can be a troublesome arrangement




                                                        -45-
           Under UPC §2-514, presumption is that K not to revoke not intended unless there is clear
            evidence of K (“execution of joint or mutual wills does not create a presumption of a K not to
            revoke the will or wills”)
                 As a result, codicil can be written through which T names new devisee; not every
                    state takes this position, however
                 Practice exam question: If Jon and his wife execute wills that have identical
                    provisions, but for naming each other executor of the other’s estate and giving the
                    other an income interest for life followed by a remainder to all their children in equal
                    shares: once executed, the wills can be changed
         IMPORTANT: In order for there to be a K, person must show one of 3 elements:
            (1) Provisions of will state that there is a K
            (2) Express reference to a K, and extrinsic evidence proves this
            (3) Some writing (signed by decedent evidencing K)
o   Reciprocal will: Way of referring to reciprocity between parties so each treats the other the same;
    part of underlying K agmt.
         Courts have confused this term and used reciprocal to mean joint or mutual
o   Joint and mutual will: joint will in which testators make similar or reciprocal provisions—a will
    cannot be both joint and mutual (FN 47, p. 327)
o   Via v. Putnam (p. 329)
         Decedent’s surviving spouse v. decedent’s children from first marriage who claimed that
            parents’ mutual wills naming them residuary beneficiaries gave rise to creditor’s K claim that
            had priority against surviving spouse’s claim against the estate
         Opinion confuses elective share and pretermitted share
                 Elective share intended to protect spouse regardless of whether spouse was mentioned
                    in the will
                 Pretermitted spouse statute intended to apply to situation where parties married and
                    spouse was not mentioned in the will
                 Presumption is that testator wants to leave something to spouse and that if the will
                    were drafted before the marriage, the testator just did not get around to re-writing it
                    (but would at least like spouse to get intestate share)
         Court concluded that children were not (standard) creditors; otherwise they would have been
            able to take before spouse received her elective share (remember that this is a net amount)
         Argument in this case was that K not to revoke was breached by surviving spouse remarrying
                 New spouse would have elective share right that was superior to K right
                 Implication: every time a spouse remarried, this type of K would be breached
         Court says that in all instances elective share trumps K rights  behind every K is the
            awareness that there could be an elective share claim
         Unclear whether spouse who remarries can be sued by people entitled under original K not to
            revoke
o   Problem 3, p. 334: H and W want surviving spouse to have “everything” and divide property
    equally among all children but feel uncomfortable leaving disposition entirely in survivor’s hands;
    creating a trust might help solve this problem
         Want the following trust provisions: “income to spouse for life” and “payment to my and my
            spouse’s children but payment shall go to my spouse’s children only if trustee determines that
            spouse has similar provisions in her instrument and that assets pass equally to my children”
         Benefit of trust is to impose conditions and have trustee determine if spouse has fulfilled
            promise; have to be careful not to say “remainder to my children and spouse’s children”
            since you don’t know what your spouse’s instrument says – has to be conditionality


                                                -46-
       o Mutual wills with implied K not to revoke  assume H dies first; what can W spend? Is there a
          limitation on property H devised to her or does limitation also apply to her property?
               W has obligation to leave assets to children upon her death in her will, but does she have any
                  limitations during life?
               “Remainder to my children”  likely that W is getting income interest, but what is spouse’s
                  responsibility?
               If W spends assets on own maintenance, this is what H wanted, but some courts may
                  question if W is using assets to make gifts to companion; may be ok for her to go on round-
                  the-world cruise as long as she is spending the money on herself
               No clear answers to questions like if W is spending money to go on cruise and pays for
                  companion to go, etc.
               Some courts critical of spouse transferring gratuitous interest to new wife (Robison v.
                  Graham (p. 333))
               Inter vivos gifts permitted so long as they are not inconsistent with K or defeat its purpose
                  (Schwartz v. Horn); minor gifts may be permitted but major ones will not
   Reformation of Wills
       o Majority of jx’s follow plain meaning rule: look at the four corners of a will, do not introduce
          extrinsic evidence, and determine meaning from the will itself; no reformation of the will
               See Sanderson v. Norcross (p. 336), Mahoney v. Grainger, Flannery v. McNamara
                  (rejecting reformation of wills other than to obtain tax advantages)
               Gustafson v. Svenson (p. 338): T wanted devise to go to Enoch or “heirs per stirpes” and
                  widow received the devise after Enoch died, despite testator’s intent not to leave it to her,
                  since “heirs per stirpes” was unambiguous
                       If law has been revised since execution of will, question of which law applies—give
                          meaning to term when will was executed or at T’s death?
               Estate of Smith: testator left devise to “Perry Manor, Inc.” and this went to NV corporation
                  rather than to nursing home named “Perry Manor”; had testator written “Perry Manor” it may
                  have gone to the nursing home instead
               Check the exact name of the charitable organization or branch of the organization your client
                  wants charitable devise to go to – see National Socy. For the Prevention of Cruelty to
                  Children (p. 339) and Estate of Scale (national v. state Audubon Society); include location
               MA courts deeply concerned about possibility of opening every will to challenge of what
                  testator meant; courts on the whole have been adamant about not introducing reformation
                  rule into wills law with certain exceptions

       The Causes and Effects of Will Defects (p. 342)

                                 Effect: Lack of Volition            Effect: Mistaken Terms
       Cause: Intentional        Undue influence, duress             Fraud
       Wrongdoing                (relief granted)                    (relief granted)
       Cause: Innocent Acts      Lack of capacity, insane delusion   Mistake
                                 (relief granted)                    (no relief)

       o Exceptions to no-reformation rule
         (1) Personal usage, or “testator’s personal dictionary”
              “My sister Mary” is ok even if she is not testator’s sister  Moseley v. Goodman (p. 340);
                introducing extrinsic evidence to show this is ok
         (2) Falsa demonstratio non nocet


                                                       -47-
         Even if there is a minor problem with language used, if substance is correct the instrument
          will be sufficient and can be given effect
       Arnheiter v. Arnheiter (p. 343): wrong house number does not mean devise fails; know that
          there was property on given street that was to be devised
(3)   Mistake in details of identification
       Variation on (2); Estate of Gibbs (p. 344): use of wrong initial did not prevent proper devise,
          even if no ambiguity—see explanation on p. 345
(4)   No animus testandi (if necessary witness aware before completion of attestation)
       Fleming v. Morrison (p. 356): Testator did not intend to leave woman anything under will
          but created will to have liaison with her; lawyer aware of that this was not supposed to
          operate as real will
       Will cannot be given effect and evidence can be used to prove this
       BUT if there were supernumerary or other witnesses who did not know the will was fake, it
          may have been given effect
(5)   Mere descriptive words, especially location at execution of will; prominence sometimes
      given to capitalized words in a clause
       Think of Perry Manor case—if surrounding words are capitalized they will be given effect
          over the non-capitalized word (PERRY MANOR, INC., Pinckneyville, IL; p. 338)
(6)   Tax savings; avoidance of intestacy
       Even MA allows will that failed to take tax considerations into account (Flannery)
               “Growing trend in the cases, endorsed by UPC §2-806, UTC §416, and Restatement
                   §12.2 allowing reformation of mistake (as well as outright modification) of wills and
                   trusts as necessary to obtain a tax advantage” (p. 355)
       In other words, if wrong language is used that would generate taxation, language would be
          reformed; devisee would not change but manner in which devisee enjoyed interest would
          change
       Same principle would apply to salvage will so person does not die intestate  Estate of
          Ikuta (p. 354)
(7)   Patent ambiguity—some jx’s
       Patent ambiguity appears on the face of the will (i.e., 1/2 to A, 1/2 to B, 1/2 to C)
       Traditional rule: this did not result in reformation of will and no extrinsic evidence allowed
          to clarify the ambiguity and devise fails
       Some jx’s have moved away from this and allowed in extrinsic evidence (p. 340)
(8)   Latent ambiguity
       Does not appear on the face of the will; manifests itself only when the terms of the will are
          applied to testator’s property or designated beneficiaries (p. 340)
       Equivocation: when two or more persons or things fit description in the will (i.e., two people
          named Alicia)
               Another situation is when no person or thing fits the description
               Extrinsic evidence can be introduced in both cases to clear up the ambiguity
       Ihl v. Oetting (p. 341): Devise to Mr. and Mrs. Richard Hess – Richard married twice and
          second wife wanted devise, but only first wife lived at residence described and court allowed
          extrinsic evidence that indicated that devise intended to go to first wife
       Estate of Black (p. 341): “The University of Southern California known as The U.C.L.A.”
               Court found this was a latent ambiguity and allowed in extrinsic evidence
               Schoenblum: patent ambiguity but if this were the case no evidence would have been
                   let in and devise would have failed



                                             -48-
              Great example of why there should be reformation of wills; avoid getting into
               scenarios where you have to find a way to salvage a will
(9) Scrivener’s error—some jx’s
     Estate of Lord (p. 354): “trust”/“trustee”; court interpreted “estate” and “PR” instead
     Estate of Getman: “created this date”  “created May 9, 1999”
     Estate of Ikuta: “oldest”  “youngest”
     Estate of Herceg: no line about residue but this was present in three prior wills; court
       awarded residue to beneficiary’s wife
(10) Multiple clause devises
     Note: not developed in the reading but key is to harmonize all clauses in the will and not find
       them contradictory (i.e., to prevent revocation by inconsistency)
     (1) First clause that appears takes precedence, but (2) outright devise takes precedence over
       devise that is more restrictive in nature
     (3) Specific cuts down the general—if you have general devise but another clause with much
       more detail, the specific is given effect over the general
     No answer as to which clause prevails over the other—court decides preference
(11) Restatement (Third)—clear and convincing evidence of mistake AND intent
     Restatement §12.5 and UPC §2-805 (2008) endorsed power to reform wills and trusts for
       mistake (p. 351)
     Think back to harmless error doctrine and §2-503 requirement of clear and convincing
       evidence
     “Let’s see to it” that testator’s intent is fulfilled if this is the ultimate goal
(12) NJ doctrine of probable intent
     “If contingency occurs for which no provision is made in the will, the court studies the
       family circumstances and the plan of testamentary disposition set forth in the will and then
       places itself in the position of testator and decides how testator probably would have
       responded to the contingency” (p. 356)
            Estate of Payne (p. 356); NJ Stat. Ann. §3B:3-33.1
     Example: “My estate to Joe” and Joe is dead—should person die intestate or should court
       figure out where the property should go?
     Problem: NJ opens the way for the court writing into the will what it thinks should go into
       the gap; thus, party outside testator’s family has authority to dispose of testator’s property
     This is the most extreme/expansive provision
(13) Gap-filling, which may include also changing or adding punctuation and prepositions
     See Jackson v. Schultz (p. 374); devise to “A and her heirs”; court read term “and” as “or” to
       provide substitute gift for children since T had no living heirs
     Involves changing prepositions, i.e., from “and” to “or”, reading minor words differently,
       change a period to a comma, etc. in order to avoid intestacy; not commonly used
     This is still reformation and can have dramatic effects; some courts are not willing to do this
       (Hofing v. Willis, p. 374)
(14) English Variation Order; clerical error, misunderstanding of intent, legal effect
     UK goes one step beyond NJ and court has power to re-write estate plan, change schedule of
       payments, add new executor, set up trusts, make charitable gifts, etc.
     Courts also refuse to make changes that would save millions of pounds in tax savings
     Example: Princess Diana’s estate; not apparent that court explored what Diana’s intent
       actually was when it made its decisions




                                          -49-
   Death of beneficiary before death of testator
    Think down-the-line drafting
       o **Follow the flowchart for analyzing rules of succession**
       o If devisee does not survive testator, devise fails, or lapses, but antilapse statutes in nearly all states
           substitute another beneficiary for predeceased devisee (p. 358)
                If devisee is already dead at the time the will is executed, or the devisee is an ineligible taker,
                   the devise is void, and same default rules for lapsed devise apply to voided devise
       o Common law rules = default rules that apply when will does not indicate what happens when devisee
           predeceases testator and antilapse statute is not applicable
           (1) Specific or general devise
                If this lapses, devise falls into the residue; example of specific devise is “my watch”;
                   example of a general devise is “$10,000”
           (2) Residuary devise
                If residuary devise lapses, heirs of testator take by intestacy; if only a share of the residue
                   lapses, the lapsed residuary share passes by intestacy to testator’s heirs rather than to
                   remaining residuary devisees  no residue of a residue rule (NRR)
                Note that in most states this rule has been overturned by statute or judicial decision
       o Testator should indicate if he is making a class gift, or devising to a class of persons; if one member
           of the class dies before the testator, the surviving members divide the gift
                Then testator should indicate if an antilapse statute applies; may use language such as “No
                   lapse or antilapse statute shall apply to any disposition of property under this will” (p. 374)
                Testator does not want antilapse statute to apply
       o Goal is to have an alternate taker, i.e., under Boxes 5, 6—do not want to be in Box 7: “no subsequent
           alternate taker named; distribute as if no alternate taker under will language  J”
       o Example: Testator devises by will to child, child makes a will that devises to wife of child, but child
           predeceases testator
                If antilapse statute applies, property passes to child’s descendant, not heir; this would be
                   testator’s minor grandchild and now guardian issues are involved
                Child’s own intention of what to do with property is defeated by antilapse statute; almost the
                   same result in every jx.; Schoenblum: vehemently opposed to antilapse statutes
                Antilapse statute does not apply in every case (but it does in TN)
                        Practice exam question: Danny, domiciled in Tennessee, devises his securities to his
                           friend, Alfredo and the rest of his estate to Jamie. Alfredo predeceases Danny.
                           Alfredo is survived by a grandchild, Tom. Alfredo’s will devises his entire estate to
                           his brother, Marcus. Accordingly: Tom inherits Danny’s securities.
                Devisee must be in the right relationship to the testator – excerpt from Ruotolo v. Tietjen (p.
                   367): “When a devisee or legatee, being a child, stepchild, grandchild, brother or sister of the
                   testator, dies before him, and no provision has been made in the will for such contingency,
                   the issue of such devisee or legatee shall take the estate so devised or bequeathed”
                If devisees are dead before testator executed will, antilapse statute generally will not apply
       o UPC §2-605 Antilapse; deceased devisee; class gifts (p. 365)
                Applies intestacy parentelic analysis (anyone who falls under grandparent parentela)
       o Descendants  per stirpes, modern per stirpes, or per capita representation matters for
           apportionment of devise
       o Estate of Russell (p. 359): 0CGMP12
                Testator had valid holographic will and left property to friend, dog
                Dog does not constitute proper relationship so devise is void  must go down in flowchart
                   from 0 to C to G since antilapse statute does not apply


                                                       -50-
                Note: some states now recognize “pet trusts” through which trustee can care for
                 animal; cannot leave devise to animal, however
       Gift was 1/2 of residue so go from G to M; court applied NRR (P) and 12 (intestate
         succession) was the final result; rule says that if you have more than one residuary
         beneficiary and the devise to one fails, let the other half pass by intestacy (as opposed to
         residue of the residue rule which would allow devise to pass by other residuary devisee)
       Note that if went from M to O (residue of the residue rule), either 11 or 12 would have been
         an option depending on if there was a surviving residuary devisee; would have been 11 in
         this case since there was one (Quinn)
       Notes: UPC §2-604(b) and Restatement §5.5 reject NRR (p. 363)
o Ruotolo v. Tietjen (p. 367): if antilapse, then 0BD2; otherwise, path of Russell
       T left 1/2 of residue of estate to H, “if she survives me”; other 1/2 of estate divided between
         four people; H left an heir but predeceased T
       What does “if she survives me” mean?
              Majority view: H only has right to take if she survives him; if she does not survive
                 him there is no basis for antilapse statute to leave to descendants
              Minority view: If devisee dies before T, then T’s intent for H’s heirs to take; “if she
                 survives me” is boilerplate language; Restatement favors this view and errs on side of
                 favoring antilapse statute because it is a remedial measure that reflects strong public
                 policy to avoid lapse
       If no antilapse statute applies, go down same path as Russell and end up at fork at M
       Court wanted to avoid intestacy and used this to justify view in favor of antilapse statute (p.
         372); stated that testator could have expressed intent for antilapse statute not to apply in will
         or provided for alternate bequest
o Allen v. Talley (p. 365): If alternate taker: 0CFHBox 5; If antilapse statute and class gift:
  E 3 or 4
       “To my living brothers and sisters to share and share alike”
       Survival requirement and antilapse statute not applicable  alternate taker with siblings 
         0CFHBox 5
       Alternative – see this as class gift; elements are the following:
         (1) There must be a group label
         (2) The class must be open/dynamic
              Can grow/shrink in size
       Use of names in addition to group label?
              Majority view: not presumed class gift unless rebutted by extrinsic evidence—look at
                 instrument and surrounding circumstances to determine testator’s intent
              Minority view: no class gift allowed if names are included
       Court found no class gift here
       BUT if class gift, go from 0B E; then decide if state’s law applies antilapse statute to
         class gift
              Traditional rule: Antilapse statute does not apply  Box 4, surviving members of
                 class take
              Reform rule (current prevailing rule): Antilapse statute applies and devise goes to
                 issue of predeceased class member rather than to surviving class members  Box 3
o Estate of Kuruzovich (p. 366): 0BD2
       Same as Allen except without “living”
       Antilapse statute applies because testator wants devisees to take equally and no alternate
         takers created; end up with Box 2 because no class gift


                                               -51-
       o Jackson v. Schultz (p. 374)
               Testator: “To A (spouse) and her heirs and assigns”; T had no heirs of his own, so if devise to
                  wife’s children failed the property would go to intestacy
               Some courts will change pronouns in order to avoid intestacy (“and” to “or”); using “or”
                  would create alternate takers
                       Recall that in Hofing v. Willis the court reached the opposite conclusion as to do this
                          would mean that the court is writing the dispositive instrument
                       In re Mangel’s Estate: Court reason was not to avoid intestacy but because they
                          believed that testator would have preferred substitute gift to A’s heirs rather than for
                          gift to lapse and pass to T’s heirs
                               o This is a major departure from standard rules about no reformation of a will
               “And (her heirs and assigns)”: words of limitation – do not create separate interest but
                  confirms that A’s interest is in fee simple (what interest in the property is devised) (would
                  lead to choice between O and P); Box 12 would be result regardless of choosing O or P since
                  wife would be only residuary beneficiary
               “Or (heirs or assigns)”: words of purchase – heirs of wife take if she predeceases the
                  testator as alternate takers (would lead to Box 5)
       o Dawson v. Yucus (p. 376)
               Testator was left 1/5 interest in husband’s family’s farm and wants it to go back to his family
                  so she leaves 1/2 to nephew Stewart and 1/2 to nephew Gene; Gene predeceases Stewart
               Court did not find class gift because she did not indicate that there be survivorship and
                  nephews were named (while other nieces and nephews were not); property ends up in residue
               Traditionally, without antilapse statute, specific (or general) devise such as this passes to
                  residue of estate
               If specific/general devise fails, there is no antilapse statute, and no alternate taker is named,
                  move from CG and then choose between K (no class gift) and L (class gift)
                       Since no class gift, go to Box 8, residuary estate
                       If class gift, then L10 (other class members); Stewart would have gotten property
               What if an antilapse statute had applied?
                       Analysis turns on whether it is a class gift
                       If not class gift, then Box 2  Gene’s descendants
                       If class gift, then either Box 3 (antilapse statute applies, most states do this  Gene’s
                          descendants) or Box 4 (traditional rule  Stewart)
                       Note: Antilapse statute would have worked in this case but may be dangerous
               Sullivan v. Sullivan (p. 378): there was a class gift (“to my nephews…and to my niece…in
                  equal shares”); Iozapavichus v. Fournier: gift to two close friends was class gift
                       Court in latter case stated that ruling was based on extrinsic evidence that contrary
                          finding would lead to intestacy and that testator would not want this
                       Schoenblum: holding in Iozapavichus is “troubling” since this stretches the
                          boundaries for what can be a class
   Changes in property after execution of will
       o Ademption by extinction
               Only applies to specific devises
               Identity theory: if specifically devised item is not in testator’s estate, the gift is extinguished
               Intent theory: identity theory only applies if this corresponds with testator’s intent; courts
                  open process to introduction of extrinsic evidence to establish this intent
                       Schoenblum: this is not a way to streamline probate process; results are completely
                          unpredictable and back and forth can be costly and time-consuming

                                                       -52-
   Modified intent theory: more like modified identity theory; stick with identity theory BUT:
    (1) If liquidation of asset was involuntary because of conservator/guardian’s actions, or
    (2) Property was destroyed contemporaneously with time of death (i.e., in fire), then
    Person has not lost the right to have a substitute in value of the item no longer present
         Unclear if you value asset at time of death or time of disposition
         Even if (liquidation is) voluntary, it may still result in substitutionary devise;
             example: liquidation by power of attorney, but question whether testator had
             knowledge of what was going on when person was liquidating assets
   In re Estate of Anton (p. 381)
         Testator executed will where she bequeathed 1/2 interest in property to stepdaughter
             and 1/2 to son, Robert; remainder went to Robert and testator’s daughter, Nancy
         Nancy acted as power of attorney for testator after she had an accident and Nancy
             began selling mother’s assets to cover living expenses; testator generally aware that
             this was happening but no evidence that testator knew specific property was sold
         Court applied modified intent theory and held no ademption from sale of property
         For ademption to apply, testator had to have contemporaneous knowledge that asset
             subject to specific devise has been removed from the state, and testator here only had
             general knowledge
         Estate of Hegel (p. 384): property sold by person with power of attorney who was to
             receive the property under the will was adeemed; distinguished acting under power of
             attorney from acting as a guardian (which would have led to nonademption)
   UPC §2-606 Nonademption of Specific Devises; Unpaid Proceeds of Sale, Condemnation, or
    Insurance; Sale by Conservator or Agent
         This was in response to the theories above – identity theory too harsh, intent theory
             too unpredictable/messy, modified intent theory has too many unanswered questions
         See chart below and pp. 387-88
   Specific v. general v. demonstrative devises (p. 380)
         Need classifications for (1) ademption and (2) creditors; order of classifications is (1)
             specific, (2) demonstrative, (3) general, and (4) residuary
         Specific devise: disposition of specific item of testator’s property
         General devise: Testator wishes to confer general ben. and not give particular asset
         Demonstrative devise: hybrid—general devise, yet payable from specific source
         Usually valuable to have asset classified as specific since it is the last source for
             paying creditors
         Residuary devise: conveys portion of testator’s estate not otherwise effectively
             devised by other parts of the will (“all the rest, residue, and remainder”)
         Generic specific devise: “All automobiles I own at my death”
         Specific devise: “$4,000 from my account at X bank”; could count as replacement
             property under UPC but otherwise devisee is out of luck if it is gone
         General devise: “1,000 shares of ABD stock”; would have been specific if it were
             “my 1,000 shares” or “the 1,000 shares”
         Jackie Kennedy Onassis will: “if owned by me at the time of my death” a poorly-
             written clause; should have said, “if not owned by me, she shall not be entitled to any
             substitutionary devise”
         Cole Porter will: “which I shall own at my death” an even worse clause; question
             whether “cigarette cases” are specific devises; at least he had alternate taker



                                        -53-
   Example: “I devise my residence at 111 Smith Street to Mary”

Event                       Identity Theory                Intent          UPC §2-606 (pp. 387-88)
House burns down;           Ademption                      ?               (a)(3): No ademption; only
unpaid insurance at death                                  (depending on   preserves for Mary if
                                                           evidence)       insurance has not been paid
                                                                           at time of testator’s death
House condemned and         Ademption                      ?               (a)(2): No ademption
$X awarded but unpaid at
death
Security obtained on        Ademption                      ?               (a)(4): No ademption
account of devised                                                         (security interest)
property, but defaulted
obligation
    Example: Sell X to
    someone and they
    promise to pay over
    time and give
    promissory note (and
    security in some
    asset) and leave
    promissory note to
    Mary
Attorney-in-fact sells      Ademption                      ?               (b): general pecuniary
property                                                                   devise equal to net sale
    Anton: durable POA                                                     price (i.e., whatever is left
    still in effect even                                                   after selling the house)
    after person has
    become incapacitated
Sale and acquisition of     ?; argument that this          ?               (a)(5): no ademption;
new residence at 158        was a change in form,                          replacement for specifically
Jones Avenue                since it is still testator’s                   devised real or tangible
                            residence, though                              personal property
                            change in form usually
                            refers to stock (p. 387)

 Problems 1 and 2, pp. 388-89
Problem 1: Ford  Rolls Royce; Ford  Honda and Rolls Royce; Ford  motorcycle
        Rolls Royce does not replace Ford, but open question as to what “replace” means;
          funds have to have some connection with original property; UPC comment says
          “other funds” can be used
        So the more distance in time/source the less likely there will be a replacement
        If Honda and Rolls, maybe the Honda will serve as replacement; motorcycle would
          work if it served as source of transportation
        Have to ask what it is you are replacing; note that identity theory makes things easier
          in this regard; intent theory complicates this and UPC has some problems
        From Blackacre to Whiteacre? Fletcher v. Ellenburg (p. 388) does not use UPC
Problem 2: Aunt devises snuff bottles but no one knows where they are or how many there are
        Under identity theory, devisee would have no rights



                                            -54-
                  With UPC, if (a)(1)-(5) do not apply, devisee may be entitled to pecuniary devise
                   under (a)(6), i.e., cash; must show that ademption would be inconsistent with
                   testator’s manifested intent
                Problem, though, with “value as of date of disposition” and finding evidence that
                   ademption would be inconsistent
                Burden is on the person arguing for no ademption
o Cash dividends
       McIlvaine v. AmSouth (Supplement)
       “I devise 100 shares of X Corp. to Bill”; dividend declared = T1, record date = T2, death =
          T3, dividend paid = T4
                Declaration date: date the corporation will declare dividend
                Must say who the owners of the shares are (or who gets the dividend); this can be on
                   the declaration date but it is usually a later date
                Dividend may be paid on later date
                If record date is before date of death, dividend becomes part of the estate and not
                   attached to stock that may be passing to someone
                Note that will itself not affected until date of testator’s death; until that time, testator
                   owned stock and got the cash; since he could have deposited the cash as of the
                   moment of his death, it is just part of his assets
                Note that this is a general devise – not “my” or “the”
                If record date is after date of death, it goes to the devisee because it’s now his stock
                General/specific distinction with cash dividends: If this is a general devise, dividends
                   would not follow stock; if specific, then dividends would follow stock since devisee
                   entitled to stock (i.e., has rights) at date of death
       No general/specific distinction with stock dividends
o Interest on general and specific legacies
       “I devise $500,000 to Joe”; death of testator = T1, one year later = T2, four years later, estate
          still open = T3
       In re Estate of Jones (Supplement): Only get interest on specific legacies, i.e., “$500,000 in
          bank account in X”
       Matter of Estate of Froehlich (Supplement): Get interest on general legacies
       Far more states say that general legacy owns interest
       Usually get interest seven months to a year after date of testator’s death; in New York, this is
          6%
       Interest paid from the residue; tough spot for executor since goal is to wrap up the estate
          quickly but some may want to delay the process
o Exoneration of liens
       Does devise pass free of the mortgage?
       Doctrine states that “when a will makes a specific disposition of real or personal property
          that is subject to a mortgage to secure a note on which the testator is personally liable, it is
          presumed, absent contrary language in the will, that the testator wanted the debt, like other
          debts, to be paid out of the residuary estate” (p. 391)
       UPC §2-607 reverses the common-law rule
       Example: “I devise my house to Janet and the rest of my estate to Seth”; house is worth
          $300,000 but has debt of $200,000; residue has $200,000
                Following common law rule, Seth will not get anything, since payment on mortgage
                   comes out of the residue


                                                -55-
               Under UPC, Seth would get $200,000; Janet can sell house and have $100,000 but
                will have a problem if she wants to live in the house
             Does not make sense to leave a house to someone with a substantial amount of debt
      May work to include this provision: “I want my spouse to have the house free and clear of all
        debt”; most wills have “my executor shall pay all of my legal and just debts”
             Don’t ever write this clause; “just debts” means debts that creditors cannot enforce
                under statute of limitations
o Abatement
      One of the most complicated topics
      Want clause in the will that states how the burden of debts will be handled; must conclude
        who is the most important beneficiary and how the burden is allocated between each class
      In most jx’s, taxes are apportioned based on the share each beneficiary is receiving regardless
        of classification of devise; aka “apportionment based on benefit principle”
      Burden on the residue rule, aka “reverse hierarchy”: residuary  general  (demonstrative)
         specific
      If testator has revocable trust in which assets will be dispersed to X at death and a clause that
        states “I leave my entire estate to Y”, Y will have to worry about funeral and administrative
        expenses since they were not accounted for in the trust provisions
      In re Estate of Maierhofer (Supplement)
             Court keeps burden on the residue rule but recognizes that other states have taken
                different approach
             Requires trust beneficiary to bear part of the expense; in general, may want to draft a
                clause in the trust and in the will to coordinate the two instruments and this can be
                complex
      Example
            Jim’s estate picture is as follows:
            (1) Specific devises of jewelry worth $10,000 each to 20 friends
            (2) General pecuniary legacy of $200,000 to B, a sister
            (3) Residue with value of $600,000 to C, his beloved son
            Debts are:
            (1) Funeral and administration expenses -- $200,000
            (2) Outstanding claims -- $400,000
            (3) State death taxes -- $100,000
      Case 13, p. 392: T devises $300k to charity B, $100k to charity C, and residue to son, A; T
        has $800k in assets but becomes ill; treatment costs $500k; T dies with $300k estate; under
        traditional abatement, A takes nothing, B takes $225k, C takes $75k
             Standard rule is that debts/obligations come out of the residue, so A gets nothing
             Book suggested making charities residuary devisees instead of giving them general
                legacy (pecuniary devise) so they are not superior to the son
             Improper here because testator favors son and only reason son does not get anything
                is the reverse abatement rule
             To fix this, can put language in the will that states the opposite of the burden on the
                residue rule; example: “with regard to any claims made against the estate, you shall
                liquidate on a proportionate basis the legacies made to charity B and C and only after
                those devises have been fully liquidated shall you reduce the devise made to the son
                because I prefer my son to any devisees mentioned in this will”
             Could also make son general legatee and charities residuary legatees (though specific
                directive is preferred)

                                              -56-
                  Remember that the whole idea is to carry testator’s intent

VI. SPECIAL PROTECTIONS FOR THE SURVIVING SPOUSE

   41 states have common law (separate) property system and 9 have community property system; we will
    focus on common law system
   Elective share
        o Huge threat to freedom of testator; best way to undo damage is to have a prenuptial agreement
        o Georgia is the only state that does not have elective share right (p. 476); CT, RI, OH are states where
            elective share only applies to probate estate
        o Applies to all of decedent’s property; net figure
        o No length of marriage requirement for spouse to obtain elective share; Estate of Neiderhiser (p.
            478): wife entitled to elective share when groom dropped dead after saying “I will”
                 Note: TN has provision that makes entitlement to elective share hinge on survival; also has
                    sliding scale in terms of elective share for how long spouse has been married (9 yrs., 40%)
                 1990 UPC also has sliding scale
                 Some states adhering to partnership theory over support theory (p. 477) so length of marriage
                    could increase share
                 Other states stick with straight 1/3 share no matter how long the marriage is
                 To obtain Social Security benefits, spouse who is divorced must have been married for 10
                    years and former spouse must be over 60 years of age; very complicated area of law
        o Does not take into account widower’s other assets or earning potential; shows fraudulence of the
            theory, which was designed for “helpless widows”
                 Children have no elective share rights (parents can cut them out) but cannot cut out surviving
                    spouse even if she has independent wealth
        o Spouse (mis)conduct
                 Vast majority of jx’s don’t penalize spouse for inappropriate conduct
                 Spouse has elective share claim if other spouse dies even if final divorce decree has not been
                    signed
                 In NY, abandonment is grounds for denial of elective share
                         Line between abandonment and separation in preparation for a divorce
                         Spouses must maintain duty of support, i.e., by maintaining family residence, etc.
                         Few states concerned with abandonment, however
        o Make sure to draft provision addressing elective share in the will since what has been left in the will
            in many jx’s is not credited against elective share
                 Start with satisfying elective share out of property already given to spouse under the will
                 Spouse can elect against will because spouse thinks it is in adequate
                 Typically cannot elect and take under the will, though some states allow this
        o UPC §2-202, 1969 version, is the most widely accepted by the states
                 Takes into account transfers to the spouse during life—other states say no
                         This is why you want to avoid the elective share, as it is a real problem
                 Takes combined assets and makes a calculation
                 Augmented estate goes toward the elective share
                         All states count probate estate in this; revocable trust is most traditional asset
                            included in augmented estate; no difference in husband’s control regarding these
        o Problem (slide): client left $100,000 in will and spouse left the following; decedent’s annual income
            was $200k; client and husband lived on all of it; administration expenses and debts are $100k



                                                      -57-
        $100k in expenses would presumably be paid out of the residue; would only bring $100k of
         residue into the augmented estate
      Spouse could claim family allowance off of $200k income; UPC  reasonable allowance,
         tied into standard of living (p. 475)
              Recommend client to show spending habits through checkbook; incentive to keep
                  process going depending on what spouse can obtain per year
1.   Cadillac Escalade SUV [devised to companion]                    $35,000
2.   His family’s Bible [devised to son]                             --
      Not worth much from monetary standpoint but it is tangible personal property; example of
         nostalgic, religious, sentimental value
3.   Furniture [devised to son]                                      $25,000
4.   Clothes [devised to son]                                        --
      1-4 are examples of tangible personal property that adds up to $60k; spouse is entitled to
         $15k under UPC §2-403 so not all would pass under this exemption
      Spouse cannot get a piece of each; usually decides on an item but may not have power to
         decide which item to sell
      Note that the exemption is subject to cost of living adjustment (though some states do not
         have inflation adjustment)
      Personal property set-aside is not an election against will but rather is in addition to the will
      Note that spouse beats out all unsecured creditors
5.   Residue of $200,000 [½ to son and ½ to companion]               $200,000
6.   ERISA Qualified Deferred Compensation Pension Plan
     [she waived all rights a day before marriage and was
     represented by independent counsel when she did so;
     Vanderbilt designated as primary beneficiary]                   $2,000,000
      ERISA has provision that marriage had to actually happen before spouse could waive marital
         rights; this statute preempts any state statute that has contrary provision
              Federal preemption may help spouse obtain 50% as opposed to 1/3
      ERISA comes up in context of divorce—much more complicated
      Spouse entitled to joint and survivor annuity; 1/2 sum of ERISA account at time of spouse’s
         death, spread over the life of the surviving spouse
7.   Residence in his name only [direction in his will to sell
     and distribute proceeds to son]                                 $500,000
      Homestead exemption leaves home to surviving spouse/children; UPC only allows $22,500
      Best decision is to sell the house and add the exemption; proceeds from sale of house could
         be divided or other beneficiaries could substitute by providing the cash
      TN: allows spouse to live in house under extenuating circumstances so long as the spouse
         survives (aka “overlife”)
              Other states give 1-3 year period
8.   Life insurance term policy [proceeds to son]                    $1,000,000
      Excluded from 1969 UPC version but 1990 version allows this and 1/5 of states have adopted
         1990 version
      To get 1/3 of this policy, spouse could have order against life insurance co. to compel
         company to write check to spouse; spouse could also sue son before he takes assets and
         moves outside of the jx.; could also pay out of other assets over which probate judge has
         control, but this would hurt other beneficiaries under the will—typical practice is to make
         other devisees pay



                                            -58-
           9. Revocable trust naming his male companion
              as beneficiary upon his death                                   $2,000,000
               Traditional asset placed in augmented estate
      o Additional doctrines
               Illusory transfer (Newman v. Dore (p. 493))
                        Revocable trust is illusory transfer that may be recognized under the law but husband
                           has not given up control
               Intent to defraud test
                        Judges can tell when individuals are trying to defraud spouses; if enough indicators
                           are there, they will decide that there was an intent to defraud
                        Subjective approach: have to figure out what was motivating decedent
      o Bottom line: must know exposure with regard to elective share; some states have strategies to limit it
      o If surviving spouse dies before elective share claim is made, executor/PR does not have the right to
           exercise elective share in most states, though it is possible in TN
               Do not assume that state does not allow this—have to check
               Elective share claim typically must be made 9 months after estate is opened and executor is
                  appointed—no extensions
   Waiver
      o Prenuptial agreement – real way to counteract the elective share
               Reason for this: protection of spouse upon divorce
               Themes of freedom of testation and freedom of contract – at odds with elective share and
                  public policy of protecting the former spouse; but there is a way for prenup to override this
               More than half the states follow the Uniform Premarital Agreement Act (UPAA) (p. 502)
                        Overrides presumption of fraud that some courts attached to prenup
                        Party opposing enforcement must prove that agreement either
                           (1) Was not voluntary, or
                           (2) Was unconscionable when executed and party opposing enforcement did not have
                               fair and reasonable disclosure of other party’s property/finances
                        UPC adopts UPAA’s enforcement standard, extends it to pre- and postnuptial agmts.
               UPC §2-213 Waiver of Right to Elect and of Other Rights (p. 503)
                  (b) (summarized): waiver not enforceable if spouse can prove that he/she did not execute
                  waiver voluntarily or waiver was unconscionable when it was executed and spouse not
                  provided fair and reasonable disclosure of property or financial obligations before execution
                  (c): court decides on issue of unconscionability of a waiver
                        Focus is on when it was executed; cannot reopen the agreement due to changed
                           circumstances (not unconscionability at death)
                  (d): waiver of all rights means waiver of all rights to elective share, homestead allowance,
                  exempt property, and family allowance…and a renunciation of …all benefits that would pass
                  by intestate succession or by virtue of any will executed before waiver…
                        Remember that UPC does not address other rights such as temporary alimony or
                           attorneys’ fees
               Relevant governing law is critical
                        “All separate property states will enforce a waiver of the right of election by
                           premarital agreement” (p. 502)
                        BUT some states more likely to call into question the agreement than others, i.e., no
                           assurance in PA that agreement will be operative while such agreements are favored
                           by public policy in TN (p. 505)
                        Typically want people to be in the state and have assets situated/managed in that state

                                                      -59-
          Usually law in state where divorce is being filed will apply but parties may add
           choice of law provision to the agreement; either way, get as many contacts as possible
           and have as many assets managed as possible in that state and also get parties to live
           there; traditionally law that applied was of the state were the agmt. was executed, but
           no longer
   Points of interest:
         Same counsel should not represent both parties, though independent counsel is not
           required (though more jx.’s are requiring it, p. 507)
         Spouse should not identify and pay for other party’s counsel; sometimes, however,
           other party does not have resources so the fiancee’s lawyer can send the bill
         Spouse can deny other party rights such as inheritance, family allowance, personal
           property exemption, homestead, and elective share through waiver
         Must specify/delineate each item in the agreement, i.e., alimony, property settlement,
           ***temporary alimony*** (what is paid while couple is still married but going
           through divorce), attorneys’ fees, and determines what happens to each
         Note: most states will not waive temporary alimony since it involves support to
           spouse while still married; same problem with attorneys’ fees
         Attorney drafting prenup should associate with divorce lawyer
         Cannot shift child support to other parent; each has a legal obligation of support
           (Kessler v. Kessler (Supplement))
         May waive disclosure of financial worth if it is in writing; UPC refers to “fair and
           reasonable disclosure” – what does this mean?
                o It is in the client’s interest not to state actual values of specific property;
                    estimated value is ok
                o Also want to show debts
         Many states say the party contesting prenuptial agreement has burden of proof
                o Can overturn agreement by showing duress (§2-213(b)(2)(iii))
                o NY: burden is on party defending prenuptial agreement
         Advised to sign prenuptial agreement 3-4 months before wedding
   Not clear if part of the document is invalidated whether the rest will be preserved
         Invalidation of some clauses should not deprive spouse of other protections or
           undermine the primary purpose of the parties
         Again, look to state law to analyze whether a particular waived entitlement can be
           severed from the agreement with the agreement still preserved
   Reece v. Elliott (p. 503)
         Husband owned shares of stock but wife did not know value until after his death
         Court upheld premarital agreement as husband was never dishonest and did not
           mislead wife (p. 506) during or after signing of the agreement
   In re Estate of Davis (p. 507)
         Wife’s list of her holdings was missing and there was uncertainty over whether there
           was full and fair disclosure of holdings to husband
         Must be full and fair disclosure of the “nature, extent, and value of holdings”
         Court held premarital agreement invalid for insufficient disclosure




                                       -60-
VII.   TRUSTS IN DETAIL

   Trusts are dramatically different from wills; flexible and great vehicle for managing assets; once you know
    their structure, you can predict what the outcome will be
        o Example: certain states = asset protection trusts (AK, DE, NV, SD, TN); creditors’ rights are curbed
   Uniform Trust Code (UTC) promulgated in 2000; enacted in 20+ jurisdictions (p. 545); deviates in detail
    from common law in some ways and is conservative in other ways
   Major functions of trusts
    (1) Managing assets over time (dead hand control)
    (2) Asset protection
    (3) Use of irrevocable trusts for tax planning purposes (limited to wealthy people)
   Trust involves at least 3 parties
        o Settlor: aka trustor, grantor; person who creates a trust; may also be a trustee and a beneficiary
                 If the settlor/trustee was the sole trustee and beneficiary, the equitable and legal titles would
                     merge and settlor would be left with absolute legal title
                          Even if someone has the slightest contingent interest, there is a reason for the trustee
                              to administer the property
                 Settlor as trustee must not commingle trust property and own personal property (p. 550)
                 If settlor is not the trustee, deed of trust or actual delivery of the trust property to the trustee
                     is necessary
        o Trustee: may be an individual or corporation; may be a third party, the settlor or a beneficiary
                 “Trust will not fail for want of trustee” – court will appoint successor trustee if need arises
                          Better not to give trustee the authority to appoint successor
                 Holds legal title to the trust property—remember that title is in the trustee, not the trust
                 Functions of trustee (Langbein): investment, administration, distribution (p. 552)
                 If trustee has no active duties, trust is “passive” or “dry”, the trust fails, and beneficiaries
                     acquire legal title to property (p. 549)
                 Individual v. corporation as trustee: Schoenblum wary about appointing bank as trustee,
                     though professional would not care about currying favor and would adhere strictly to terms
                     of the trust instrument, and function of prof. trustee emerges with trust extended over time
                          However, trustees now permitted to delegate investment functions to professionals
                          Directed trust: professional trustee takes lower compensation and third party handles
                              investment or distribution; trustee must follow their decisions (p. 552)
                          Administration function not that complicated, either
                          Best scenario: family member who is a professional can be trustee with prof. trustee
                              as backup
                 Trustee entitled to “reasonable compensation” (p. 551); family members usually waive this
                 Fiduciary duties include duty of loyalty, prudence, impartiality, duty not to commingle the
                     trust property…duty to inform and account to the beneficiaries (p. 550)
                 Trust is not a freestanding legal entity with power to sue; if trustee commits breach of K (or
                     other unnecessary claims against trust assets are filed), third party can only sue the trustee
                     and reach assets under his control to which he has legal title as trustee (p. 549)
                          This hurts beneficiaries; cost comes out of the trust estate; beneficiaries will then sue
                              trustee to recoup these assets
                          Note: personal creditor of the trustee has no recourse against trust property; creditor
                              of trustee as trustee has recourse against trust property but not against trustee’s
                              personal property (p. 549)
        o Beneficiary (or beneficiaries): can also be a trustee

                                                         -61-
                  Have equitable, or beneficial, interests in the trust property
                        To the outside world, trustee is sole owner of property; they may never know who
                          beneficiaries are
                        Trustee holds property for equity or benefit of the beneficiaries
                  Have claim against trustee for breach of trust (p. 553)
                  Creation of trust usually involves creation of one or more equitable future interests as well as
                   present interest in the income
   Types of trusts
       o Testamentary trust: trusts established by a will (p. 548); see Slide 37-2
                A testamentary trust is always irrevocable
                Settlor cannot be trustee
                No privacy—trust is on public record; continued (and possible long-term) court supervision
                Underlying will must be valid (i.e., formalities must be observed) for trust to be valid
                2 parts:
                    (1) Devise of property (specific, general, demonstrative) to trustee
                    (2) Separate provision that delineates actual trust provisions
                Six steps to creation and administration  see slide
       o Inter vivos trusts: trusts created during settlor’s life
                May be created by an oral or written declaration of trust in which settlor declares that he
                    holds certain property in trust or a deed in trust in which settlor transfers property to another
                    person as trustee
                Declaration of trust of personal property does not require delivery or a deed of gift; donor
                    just needs to manifest intention to hold property in trust
                         But if trust to be funded with real property, Statute of Frauds requires a writing
                         Few states, i.e., FL, require IV trusts to be in writing and meet requirements as if real
                            property were being transferred (even if only personal property is transferred)
                Four steps to creation and administration  see slide
                         Transfer of property must comply with all requirements associated with such transfer
                         If transfer of property to trust does not occur at the same time, the trust is passive/dry
                            and hence there is no valid trust
                         Note: Uniform Testamentary Addition to Trust Act (UTATA) allows settlor to
                            establish a trust without trust property
                         Trust can be called deed of trust, trust agreement, trust instrument, etc.
                IV trust is private, or completely outside supervision of the court
                A revocable trust is always an inter vivos trust
   Terminology in use of trusts
       o Testamentary trust
                Trust + (property, res, corpus, estate, principal, fund)
                Testator bequeaths/devises to trustee or trustees (co-trustees ok)
                How does testator manifest intent to create a trust?
                         No particular form of words is necessary; not even trust is required (p. 557)
                         Right way to do this is to state: “I transfer property in trust…”
                         Acceptable language includes “for the use and benefit” of another person
                         Be careful with precatory language—if not interpreted as a trust it will be considered
                            an outright gift
   Removal of trustee
       o See p. 559
       o Tension between interests of settlor/trust creator and interests of the beneficiary

                                                        -62-
      o Common law rule: trustee cannot be replaced by beneficiaries without cause
                Court may remove trustee who is dishonest or who has engaged in a serious breach of trust;
                  court will not replace trustee because beneficiary is dissatisfied with his performance or
                  believes another trustee would better manage the trust
                Trusts today often include provision that overrides default law of trustee removal by
                  providing mechanism for beneficiaries to remove trustee so long as replacement is corporate
                  trustee independent of the beneficiaries
      o Settlor can retain power to remove and replace trustee or give power to a third party called a trust
           protector (pp. 552, 651) (UTC §808, p. 652)
      o UTC §706 Removal of Trustee (p. 660)
                Trustee must have committed serious breach of trust or a lack of cooperation among co-
                  trustees substantially impairs administration of the trust
                Difference from common law is 706(b)(3): “because of unfitness, unwillingness, or persistent
                  failure of the trustee to administer the trust effectively, the court determines that removal of
                  the trustee best serves the interests of the beneficiaries”
                See also (b)(4): “…substantial change of circumstances or removal is requested by all of the
                  qualified beneficiaries, the court finds that removal…best serves the interests of all the
                  beneficiaries and is not inconsistent with a material purpose of the trust, and a suitable
                  cotrustee or successor trustee is available”
                        Note language “in the interests of the beneficiaries” – what about the interest of the
                          settlor/trust creator/testator? Who identifies their interest?
                Important: this is not a mandatory provision – the court may remove a trustee
   Modification and termination of trusts
      o If settlor/beneficiaries consent, irrevocable trust may be modified or terminated; if settlor is dead or
           does not consent, question whether beneficiaries can modify or terminate trust if they all agree
      o England: Saunders v. Vautier (p. 641)
                Trust can be terminated at any time if beneficiaries are adult (and sui juris) and all consent
      o United States: traditional rule is that trust cannot be terminated or modified prior to time fixed for
           termination by petition of all beneficiaries if termination or modification would be contrary to a
           material purpose of the settlor—aka Claflin doctrine; see Claflin v. Claflin (p. 642)
                Several states’ statutes have relaxed the conditions under which a trust may be modified by
                  request of the beneficiaries (p. 656)
                Some statutes weaken material purpose limitation and others authorize modification by
                  consent of only some of the beneficiaries
                UTC one of the sources of law that follow liberalizing trend
      o UTC §411 Modification or Termination of Noncharitable Irrevocable Trust By Consent
                (b): “noncharitable irrevocable trust may be terminated upon consent of all the beneficiaries
                  if the court concludes that continuance of the trust is not necessary to achieve any material
                  purpose of the trust”
                (d): upon termination of a trust, the trustee shall distribute the trust property as agreed by the
                  beneficiaries
      o Cannot assure client that trust will not be altered, but can draft provision that states how various
           changes would have a negative consequence or be inconsistent with the material purposes of the
           trust—this would force court to disagree with the testator’s explicit statement, which they won’t do
      o Administrative deviation (or deviation from administrative directions)
                Courts more willing to permit trusts to deviate in this manner as a result of an unanticipated
                  change in circumstances than to deviate with regard to distributive provisions
                UTC §412 Modification or Termination Because of Unanticipated Circumstances or Inability
                  to Administer Trust Effectively

                                                       -63-
                          (a): court may modify administrative or dispositive terms of a trust or terminate the
                           trust if, because of circumstances not anticipated by the settlor, modification or
                           termination will further the purposes of the trust. To the extent practicable, the
                           modification must be made in accordance with the settlor’s probable intention (p.
                           645)
                        Note: court can change who gets what under this provision
                Distinction between this and Claflin is that situations arise that may impede effective
                   accomplishment of the trust’s purposes or there are distributional provisions that no longer
                   make sense
                In re Trust of Stuchell (p. 643)
                        Testator created trust for family; one of the beneficiaries, Edna, had son who was
                           mentally challenged, and parties wanted to deviate from trust
                        Court denied beneficiaries’ petition—focus is not on furthering beneficiaries’ interest
                           but rather it is the material purpose or intent of the settlor that must be carried out
                        Modification here would have occurred with respect to both administrative and
                           dispositive terms and the court did not want to be involved with this
                Remember the no-reformation rule in wills? Completely different under trust law, as court
                   can modify or reform IV trust because of mistake in terms of the inducement, drafting,
                   execution
                        BUT with testamentary trusts, reformation is not an option because the trust is
                           governed by wills construction
                        COUNTER: UTC §415, which allows reformation to apply to testamentary trusts (p.
                           651)
   Will substitutes—“the mighty self-settled revocable trust”
       o Central document in estate planning today
       o Famous case: Farkas v. Williams (p. 398)
                Testator bought 4 stock certificates  declaration of trust  name on certificates listed
                   testator as trustee for Williams
                        Williams had contingent future interest and had to survive testator to take
                If testator died intestate, property would pass through administration and go to heirs; as
                   trustee when testator ties the name on stock is changed to Williams (as successor trustee)
                Every revocable trust becomes irrevocable upon the death of the settlor/trust creator
                Heirs argued that Williams did not have right to anything since no interest was transferred to
                   Williams (they claimed that this was a testamentary disposition)
                        What did Williams have? A “farkas”—an infinitesimal, or interest smaller than any
                           interest that can be named (FN, p. 400)
                        Had to find that interest was transferred now to disregard noncompliance with will
                           formalities
                Court validated the trust; what emerged was new mechanism for disposing of property
                   without complying with wills law—no real formalities for trust unless transferring real
                   property, which requires writing under the Statute of Frauds
       o UTC §603 Settlor’s Powers; Powers of Withdrawal (p. 403)
                (a): While a trust is revocable (and the settlor has the capacity to revoke the trust), rights of
                   the beneficiaries are subject to the control of, and the duties of the trustee are owed
                   exclusively to, the settlor
                This indicates that revocable trust is a testamentary substitute




                                                       -64-
         Farkas indicated that settlor as trustee owes some sort of fiduciary duty to the beneficiary
          due to transfer during life; UTC says that as long as settlor has power to revoke, duty of
          trustee are owed to the settlor
o In re Estate and Trust of Pilafas (p. 414)
       Presumption that if will was in the possession of the testator and the will cannot be found at
          testator’s residence, the testator destroyed/revoked the will
       Argument then that subsidiary rules of wills law should apply to revocable trusts since they
          are wills substitutes
       BUT there is no revocation of the trust if the trust has an explicit provision (specific
          methodology) on how it can be amended or revoked; since the settlor specifies the operation
          of the trust, the court must adhere to those directions
               This demonstrates the significance of the revocation clause
o Alteration, amendment, or modification of a trust is not the same as revocation
       These may constitute a partial revocation, but a revocation ends the trust
       May be comparable to codicil, but does not mean that the instrument is terminated
o Problems 1-3, pp. 415-16:
  Problem 1: What if Pilafas executed subsequent will that revoked inter vivos trust and the will was
  found among his papers?
       Revocation clause states that it may be done so in writing and delivered to the trustee
       What constitutes delivery? If declaration of trust, delivery not required
               If settlor was trustee, does settlor need to deliver it to himself?
               If bank was required to deliver the instrument and does not do so, it failed to comply
                   with revocation clause
               Practice exam question: Mary Ann wishes to revoke her self-settled revocable trust.
                   The trust instrument states that: “this instrument may be revoked by a written or typed
                   instrument signed by the settlor and delivered to the original trustee.” At her death,
                   Mary Ann’s will states: “By this will I hereby revoke my revocable trust.” This may
                   not be a valid revocation but only because the will becomes effective upon the death
                   of Mary Ann and at that time the trust is irrevocable; there is a second reason in that
                   there cannot be a delivery to the trustee
       Is the will a writing? When is a will effective?
               Common law states that will does not have legal existence until death
               BUT UTC reverses this and states that will can dispose of property at death and
                   revoke a trust during life, if provided by the trust instrument
       If will states testator’s intent to dispose of all property testator has a right to dispose but does
          not revoke the trust, is the revocable trust revoked?
               Common law rule: given the provision “all property that I have the right to dispose of
                   by will,” cannot dispose of property by trust in a will since it passes outside of
                   probate pursuant to the terms of the trust
               BUT UTC §602(c)(2)(A) (p. 659) reverses this rule: revocation permitted by “later
                   will or codicil that expressly refers to trust” or “specifically devises property that
                   would otherwise have passed according to the terms of the trust”
                       o Not sure whether such a revocation would work under the UTC if the settlor
                           has a specific revocation clause for the revocable trust
  Problem 2: Suppose Pilafas tore both his will and trust into many pieces
       Trust is not revoked since the revocation clause requires this be done in writing (p. 415)
       Remember to check statute to see if will was sufficiently revoked
  Problem 3: What if trust did not specify mode of revocation?


                                                -65-
        Limited way to revoke wills; not clear how to revoke trusts
        Answer from UTC §602(c) and Restatement of Trusts
               UTC: can revoke by any method that manifests clear and convincing evidence of
                  intent; hence, battle over the evidence with court having the last word
               Common law is unsettled so do not want to get to this point—better to have a
                  revocation clause
      If settlor has “pretty much revoked” the trust, but not precisely, UTC states that “substantial
         compliance” is enough
               Non-UTC or other states require strict compliance with terms of settlor’s instrument
o How do you know when you can revoke a trust?
      “This is an irrevocable (or revocable) trust” must be written at the top of the instrument
      Common law: trust deemed irrevocable unless it’s expressly revocable
o Creditors’ reach of revocable trusts
      State Street Bank and Trust Co. v. Reiser (p. 416)
               Settlor created IV trust with power to amend or revoke trust and right to direct
                  disposition of principal and income; conveyed to trust capital stock of 5 closely held
                  corps; then executed will leaving residuary estate to trust; applied for $75,000 bank
                  loan, then died in accident and estate insufficient to repay bank
               Bank would have had access to trust’s assets during settlor’s life; question whether
                  chain broken at death since powers to amend/revoke ceased and remainder interests
                  vested
               Holding: “when a person places property in trust and reserves right to amend/revoke,
                  or to direct disposition of principal and income, settlor’s creditors may, following
                  settlor’s death, reach in satisfaction of settlor’s debts to them, to extent not satisfied
                  by settlor’s estate, those assets owned by trust over which settlor had control at time
                  of death that would have enabled settlor to use trust assets for own benefit” (p. 417)
      Reiser: During life of settlor…when person creates for his own benefit a trust for support or a
         discretionary trust, creditors can reach the maximum amount which trustee, under terms of
         the trust, could pay to him or apply for his benefit (p. 416)
      Revocable trust: “certainly during person’s life the creditors can reach this amount”
      Irrevocable trust: When trustee has discretion to give property to another person or the
         settlor, the creditors can reach the assets under this trust
               Trust is deemed by creditors the same pocket as that of the settlor
      Bottom line: no way to shelter assets via a trust if settlor keeps even a slight discretionary
         beneficiary right; assets can be reached to the extent the trustee could have applied them to
         the settlor
               Practice exam question: A revocable trust agreement with the discretion in a third
                  party trustee to distribute to the settlor no more than one-half the trust assets or,
                  alternatively to distribute as much as all to his relatives, would be highly advisable for
                  a client in order to: (actually) will not protect the trust assets at all from creditors
                  during or after life
      What happens when revocable trust becomes irrevocable (at settlor’s death)? Arguments in
         favor of creditors (p. 417)
               Revocable trust is integral part of estate plan so subsidiary rule of wills should apply
                  and creditors can make a claim
               Public policy does not allow person to use tools/stratagems to defeat creditors’ claims
      Creditors can reach the assets if the assets of the probate estate are exhausted (p. 418)



                                                -66-
                       
                       Beneficiaries who are not devisees under the will are happy about this since people
                       who are getting probate property are paying off the debts
                    But if there is both a will and a trust, why should the residuary devisees bear most of
                       the burden?
                    There is no nonclaim statute for revocable trusts (recall that these limit time creditors
                       have to make claims, otherwise they are wiped out)
                           o Why can’t you act the same with regard to trust property as with wills
                               property?
                           o THINK: Is it within the power of a court to read in a statute that says nothing
                               about trusts and apply it to a trust? (think Clymer v. Mayo (p. 445) and
                               revocation of instrument by divorce)
       o Revocable trusts and “consequences” (pp. 439-43)
                  Consequences during life of settlor
                       Property management by                                         Income and gift taxes
                          fiduciary                                                    Dealing with incompetency
                       Keeping title clear
                  Consequences at death of settlor
                       Costs                                                          Avoiding restrictions on
                       Delays                                                          testamentary trusts
                       Creditors                                                      Lack of certainty in the law
                       Publicity                                                      Avoiding will contests
                       Ancillary probate                                              Estate taxation
                       Avoiding restrictions                                          Controlling surviving spouse’s
                          protecting family members                                     distribution
                                                                                       Perceived complexity
   Pour-over wills and revocable trusts in modern estate planning
       o Pour-over will: process by which probate assets are poured over into an IV trust that allows testator
           to establish an IV trust that serves as a single receptacle for all of settlor’s probate/nonprobate
           property
                Settlor designates trustee of revocable trust as beneficiary of all will substitutes and names
                   the trustee as beneficiary under the will (p. 436)
                Other way of explaining: O sets up revocable IV trust naming X as trustee; O then executes
                   will devising residue of his estate to X, as trustee, to hold under terms of the trust (p. 443)
                Practice exam question: Joe is considering the use of a pour-over trust. The trust into which
                   the estate poured would not have to be irrevocable
       o Problems with acts of independent significance and incorporation by reference and pour-over wills
                Acts of independent significance: requirement that IV trust have some property transferred to
                   it during life, which the trust disposes of; hence, cannot justify under-funded pour-over will
                Incorporation by reference: trust instrument would be appended to the will and made part of
                   the testamentary disposition, so amendments after date of will’s execution would not be
                   taken into account; also, whole point of pouring assets over into nonprobate vessel would be
                   lost since a testamentary trust would emerge only at testator’s death
       o Uniform Testamentary Additions to Trusts Act (UTATA): inter vivos trust instrument into which
           assets were being poured in could be executed or amended after the will was executed (p. 445)
                Can create trust to be effective as of the time of death; does not have to be in existence
                   during settlor’s life (or at the time the will was executed)
                No property needed to create a trust – can be a stand-by or shelf trust waiting for assets to
                   be poured in
                Under-funded trust: when nominal amount added to trust after self-declaration of trust is
                   made


                                                         -67-
                  Problem is that statute does not say how a trust can be amended—could theoretically do this
                   orally or with a sheet of paper that says, “I now amend my trust…”  creates an open will
                   with regard to items of tangible personal property
                        Question whether the same wills subsidiary rules applying in trust law
                        Is the capacity to alter a trust the same or higher standard than for a will? May be
                            higher, but states are all over the place on this
                        UTC: capacity to alter a trust is the same as for altering a will
       o Drafting tips with pour-over wills
                Note that power from pour-over should not be unlimited unrestricted
                Remember also to include provision stating that assets will pour over to the trustee
       o Clymer v. Mayo (p. 445)
                Wife’s will left personal property to husband and residue to be poured into a revocable trust
                   and named him as beneficiary for various life insurance and retirement plans; couple
                   divorced and wife did not revise estate plan
                Trust unfunded at time of wife’s death; UTATA provided that unfunded trusts were valid
                Issue whether doctrine of revocation by operation of law (divorce) as applied to wills should
                   also apply to trusts
                        Court held that legislative intent implied that wills doctrine should apply to trusts
                            since an integrated estate plan was involved
                        Schoenblum: this is a “tremendous leap”; other courts might not go as far as to extend
                            wills doctrine on revocation by operation of law to the trust
                Question: will we merge wills and trusts into one operation through case law even though the
                   legislature has acted and failed explicitly to include trusts, or are we going to reflect the
                   historical/conceptual differences?
       o Examples of Michael Jackson and Anna Nicole Smith wills
                Michael Jackson will: provision that if pour-over does not work then assets should be
                   managed consistent with the trust agreement (can at least incorporate by reference)
                Anna Nicole Smith will: creation of trust within will and did not set up revocable trust—this
                   made dispositions public
                        To keep assets private, should put assets into the IV trust during life and keep
                            nominal amount in the estate
   Planning for incapacity
       o Ordinary power of attorney: creates agency relationship whereby agent, called attorney-in-fact, is
           given written authorization to act on behalf of the principal
                BUT agent derives all power/authority from principal’s directions and this authority
                   terminates on principal’s incapacity
                Also, trustee has legal title to property while agent does not
       o Durable power of attorney
                Power continues throughout incapacity of the principal until principal dies; owes principal
                   fiduciary duties of loyalty, care, and obedience; powers must be created by a written
                   instrument (p. 449)
                Springing power of attorney means that a defined event must spring this power into being
                Do not want to say “if I am deemed to be incapacitated”—better to have doctors submit
                   letters stating that testator is not capable of managing financial affairs
                Also want clause stating that if testator recovers, he/she should take charge of the affairs
                Remember that trustee’s role continues after death while attorney-in-fact loses authority at
                   testator’s death



                                                      -68-
o Practice exam question: Alfred is concerned that if he should become seriously ill, the members of
  his family will become embroiled in a major dispute and he will be dragged into court for
  determination of his legal competency. To protect against this, Alfred: should prepare a durable
  power of attorney and revocable trust that sets forth the use of assets in the event of his incapacity
o In re Estate of Kurrelmeyer (p. 449)
       H gives W power of attorney and wife exercises power to create a trust and put property into
         the trust
       Durable power of attorney can be used to create a trust; can also revoke or amend a trust if
         such action is authorized in the instrument
              Unlike wills, if there is authorization then a person other than the testator can create a
                  trust
              In some states, a guardian or conservator may have power to make, amend, or revoke
                  a will, but generally others are not able to do so (N2, p. 455)
              Remember though that for wills the testator can direct another individual to sign in
                  his presence or revoke (by physical act) the will
       Court reasoned since that wife could “execute a trust instrument” she could also create a trust
         (p. 452); Schoenblum: most courts would not stretch language this far
              Language: “Given the express language granting the authority to execute trust
                  instruments, particularly in the context of the breadth of the attorney’s other express
                  powers, including, ultimately, her authority to fully substitute herself for the principal
                  to do all things ‘whatsoever necessary…to all intents and purposes’ as the principal
                  ‘might or could do if personally present,’ we find that the agent’s authority…includes
                  the authority to create a trust…”
              Other courts would say this language does not authorize anything specifically and that
                  the agent must be explicitly authorized to do these things
       Can attorneys-in-fact make gifts? Yes if they are expressly authorized
              IRS requires explicit language in the instrument that indicates this
       Court remanded to the trial court the issue of whether the wife breached her fiduciary duty by
         engaging in self-dealing
              Attorney-in-fact is a fiduciary and must abide by duties of loyalty and prudence
              Ultimately, trial court determined that she did not breach her fiduciary duty since
                  extrinsic evidence stated that ultimate goal for the husband’s estate plan was to
                  benefit his wife
       Bottom line: Kurrelmeyer is an outlier and courts strictly construe power of attorney;
         BUT fiduciary duty for trustees is higher than for attorneys-in-fact
o Incapacity: The Supercharged Pour-over Will/Self-Settled Stand-By Trust Combo with
  Durable Power of Attorney
       Stand-by trust created that is ready to accept assets
       Attorney-in-fact transfers assets to revocable trust upon incapacity; remember clause on
         meaning of incapacity; must say durable so power-of-attorney will outlast incapacity
              Trust includes segments addressing management of assets during life and death; need
                  provision allowing settlor to withdraw assets from the trust if he so wishes
              If trust has nominal amount, want provision that states whether assets are poured into
                  the trust during life via exercise of power of attorney bc testator is incapacitated
       If no incapacity, assets pour over from probate estate at death; other items such as life
         insurance, POD/TOD accounts, any residue will pour in at death
       Remember that revocable trust becomes irrevocable upon incapacity



                                                -69-
   Trust beneficiaries
       o Cestuis que trustent – “person for whom there is a trust” (p. 581)
                “Relatives” not too indefinite for establishing there are trust beneficiaries but “friends” is
                Beneficiaries need not be alive when you set up a trust; as long as persons are ascertainable
                   and there is someone when the trust comes into effect it is ok
       o Clark v. Campbell (p. 579)
                Testator sought to make bequest for benefit of his “friends”; not an outright gift because of
                   the use of trust language
                         Though if you were to say, “I hope you manage this for A, B, C” it could be viewed
                           as a gift since you are definitely giving X the property and only hope they manage it
                         If it were a charitable gift (trust) there would have had to be a charitable purpose (p.
                           585); no beneficiaries required
                This was a power coupled with a trust; powers granted to trustees must be exercised in a
                   fiduciary capacity (trustee cannot deviate from powers set out); every state has list of default
                   powers
                         If power not coupled with a trust, testator can give power of appointment (p. 581)
                               o Donee has power to authorize distributions out of the trust to persons who are
                                    the appointees
                               o This person owes no fiduciary duty and is simply able to exercises this power
                                    if donee chooses to do so (aka reach into the trust); if person does not choose
                                    to do so, the property passes to T’s heirs upon W’s death
                               o Two types: general POA and limited POA (Erla in Estate of Max Feinberg)
                               o Adds flexibility to address the concern of change of circumstances and desire
                                    to support beneficiaries
                Trust failed and property held on “resulting trust”
                         “Where a gift is impressed with a trust ineffectively declared and incapable of taking
                           effect because of the indefiniteness of the cestui que trust, the donee will hold the
                           property in trust for the next taker under the will, or for the next of kin by way of a
                           resulting trust” (p. 581)
                         Here, since it was a “general devise” and there was a residuary clause, it all fell into
                           the residuary
                         If there was no residuary clause, property would pass back to estate and to heirs
                         Point of resulting trust is that the person (with the power) has to give the property to
                           persons the settlor would otherwise direct property to
                         Resulting trust different from a constructive trust since the latter is a remedy or
                           solution to a problem with carrying out certain provisions with the trust (think fraud,
                           duress, situations were person is not allowed to keep devise); situation where
                           resulting trust emerges is one in which plan to leave to named beneficiaries fails
       o Honorary trust
                See p. 587
                These are used for a specific purpose—three types
                   (1) Express trust
                   (2) Charitable trust
                   (3) Noncharitable purpose trust (think pet trusts) (p. 585)
                Transferee is not under legal obligation to carry out the settlor’s stated purpose, since there
                   are no beneficiaries (hence honorary), but if transferee declines, he holds property upon a
                   resulting trust and property reverts to settlor or settlor’s successors (p. 587)
                Trusts cannot be for illegal or capricious purposes (though must define capricious)


                                                       -70-
                        Capricious utilization of property = destruction of property
                 Rule against perpetuities (life plus 21 years) applies in states that still have this rule
                        Does not apply to charitable trusts, however
                        No answer as to why this should also not apply to noncharitable purpose trusts (since
                           pets can live more than 21 years); some states have made changes thru pet trust laws
                 For pet trusts, courts can reduce excess amounts
                        (Statutory) UPC: Carved off property (excess) must held in trust until trust is
                           terminated (i.e., wait until pet dies) before it can be distributed
                        (Statutory) UTC: Carved off property returns to the estate
                        Drafting tips: justify expenditures and delineate care; also make sure to designate
                           alternate taker so excess goes to animal rights grp. or other charitable org., etc.; have
                           copy of pet’s DNA
                 Problematic if trustee dies before the pet does
                 In re Searight’s Estate (p. 582)
                        Honorary trust created whereby woman was to use certain amounts of money to care
                           for dog Trixie
                        Alternatively could have been galled a gift with a power that is valid when exercised
                           (p. 583)
                        No RAP violation; court here knew when the trust would end (clever lawyer) (p. 584)
                        Note: if it could not be shown that trust would end before 21 years, trust would either
                           be void ab initio or would be terminated after 21 years and distributed back to estate
                           under resulting trust
       o Statutory purpose trust
                 Most states have enacted statutes that permit trust for pet animal or other noncharitable
                   purpose for given amount of time and for perpetual care of a grave site
                 Statutes based on UPC/UTC; court authorized to reduce amount of trust property if court
                   determines that it exceeds amount required for intended use (p. 587)
                        Note: stated in class that UPC/UTC allow trust to endure for life of the pet, but the
                           trust can only be established for the live of a living pet
                 If trustee dies before pet does, court may appoint successor trustee (under UPC/UTC)
                 Examples in CB are WA (animal must have vertebrae) and CA (enforceable by any person
                   interested in welfare of the animal…); also, Leona Helmsley’s dog Trouble
                 What about standing? No provision in the UPC; UTC has trust protector
   Rights of the beneficiary to distributions
       o Mandatory trust: Trustee may face mandate with regard to income, principal, or both—no
           discretion (p. 597)
                 Example: “Trustee shall distribute all income annually to the beneficiary”; amount of
                   discretion is severely circumscribe but there is some room for leeway (i.e., when exactly to
                   distribute)
       o Very common for there to be some discretion for the trustee’s distributions; in most trusts trustee is
           given discretion affirmatively
                 Example: “Trustee shall distribute X income as the trustee deems advisable or as the trustee
                   shall determine in the trustee’s discretion” or “as the trustee determines in the sole, absolute,
                   unfettered discretion”
                        What does “sole, absolute, unfettered discretion” mean? Essentially the trustee is
                           required to act in good faith (aka, not acting arbitrarily, exercising judgment) in
                           pursuit of purposes of the settlor/trust creator
                        Reasonableness standard routinely invoked by course to assess discretion

                                                        -71-
          How much authority does the trustee have? Settlor typically puts faith into the trustee and
           lets him make a decision
        Trustee must be careful not to be perceived as discouraging beneficiary from obtaining
           distribution
        Not enough to send a questionnaire (Old Colony Trust v. Rodd (p. 602); must follow up
o   Trustee has affirmative duty to inquire (and to follow up)
o   Possible challenges to trustee’s actions: trustee failed to act when someone though the trustee should
    have acted; by distributing too much to one particular beneficiary, the trustee has taken from other
    beneficiaries
o   Marsman v. Nasca (p. 598)
        Trustee had discretionary power to pay principal for “reasonable maintenance, comfort and
           support” of settlor’s husband/beneficiary; trustee asked Cappy to send letter and explain why
           he needed the distribution and Cappy did not do this
        Court held that trustee did not fulfill his fiduciary duty by neglecting to inquire after Cappy’s
           finances or allow him to continue living in settlor’s home (pp. 601-02)
                 Fiduciary duties of loyalty and prudence at work
        No remedy in terms of recouping property from bona fide purchasers (here, Sally and
           Marlette) who bought from trustee without reason to know that trustee was breaching
           fiduciary duty
                 Remaining assets in trust should have been distributed to Cappy; constructive trust
                    imposed on those assets to be held for Cappy’s benefit
        Lower court invalidated exculpatory clause (“no trustee hereunder shall ever be liable except
           for his own willful neglect or default”) but appellate court reversed since there was no
           evidence of an abuse of trustee’s fiduciary relationship with settlor (p. 604)
                 This case is an example of a situation where an attorney could have overcome the
                    burden of having exculpatory clause invalidated by showing that settlor freely and
                    knowingly consented to clause’s inclusion in the instrument
o   Sample clause: “The trustee shall distribute income and principal as is necessary to maintain my
    spouse in the standard of living to which she was accustomed at my death”
        Trustee must ascertain exactly what spouse’s SOL at time of settlor’s death
        Think about what “at my death” means—did settlor want spouse to have higher SOL?
        What about the spouse’s other assets or resources? Division of opinion on this
                 Restatement (Second): do not take other resources of beneficiary into account—by
                    creating trust, settlor intended that trustee makes independent determination and other
                    resources/assets are beside the point
                 Restatement (Third): settlor would not want to expend assets of the trust when they
                    were not needed to be spent bc of other resources available to beneficiary
                 Counter to Restatement (Third): whole point for the trust was to make these resources
                    available to the beneficiary; by not spending them you are transferring them to a
                    subsequent beneficiary and this is not something that was set forth by plan of
                    instrument
o   Trustee has a duty to inform the beneficiary and must do the following:
        Inform beneficiary of the existence of the trust, promptly after becoming a trustee;
        Inform beneficiary that he/she is the trustee;
        Inform beneficiary that he/she is indeed a beneficiary;
        Inform beneficiary of the nature of beneficiary’s rights;
        Provide beneficiary with copy of the trust instrument;



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          Inform beneficiary of any material/significant changes in beneficiary’s status (i.e., at age X,
           can receive outright distribution, etc.);
         Provide annual report or updating of situation of trust estate;
         Respond to requests for information made by beneficiary that would bear on beneficiary's
           interest; and
         Provide beneficiary with relevant documentation or access to docs associated with
           beneficiary’s equitable interest
o   UTC §813: beneficiary does not have the same access to these rights, though beneficiary’s right to
    information is largely preserved (pp. 738-39)
         Trustee must make information available to the beneficiaries, but there may be a reduction of
           information depending on distance from present right, contingency of right, etc.
         Leaves open the question of the duty of the attorney with regard to information
o   Tenn. Code Ann. §35-15-813: revision of UTC §813 so the trust creator can specify that there not be
    disclosure to the beneficiaries
         Problems: how do ben’s know they are beneficiaries or what rights they have? What will
           prevent trustee from deviating from fundamental function of trustee?
         Want to have enough information so the interest of the beneficiary can be protected, but also
           want to have a provision that allows some restraint so the settlor can assure secrecy/non-
           disclosure to the settlor can accomplish his goals/purposes
         Common law may be too extreme in divulging information, while TN code version may be
           too extreme in concealing information
o   Who does the attorney serve?
         (Riggs, Delaware): Attorney is the attorney for the beneficiaries since they are the ultimate
           owners of the trust assets
         Other courts vehemently disagree: attorney is independent of the beneficiaries since he is
           serving the fiduciary interests of the trustee; purpose is to carry out settlor’s intent
         Also problematic because no lawyer can represent individuals with conflicting interests, and
           this would occur with beneficiaries
         But should the attorney be urging trustee to provide maximum information to the
           beneficiaries? This depends
o   Trustee can never use trust funds for personal needs
         The extent that this may be allowed is if the trustee is also a beneficiary, but trustee as trustee
           cannot use assets for personal needs or even borrow from trust at high interest—no self-
           dealing
         This falls under duty of loyalty and duty not to commingle funds (see pp. 550-51)
         Duty of prudence also applies – not prudent for trustee to take funds away for own benefit
           since the same assets could have been invested in a way that generated less risk
o   Question: to what extent may a trustee invest in income-producing assets, if the trust has an income
    and remainder beneficiary?
         Duty of loyalty includes a sub-rule on the impartiality among beneficiaries
         Traditional trust law: income beneficiary given priority with receiving income;
           remainderman only guaranteed preservation of the principal of the trust (not appreciation)
         Traditional rule severely criticized by investment experts
         Compromise = total return trust; “income beneficiary is entitled to X percent return on the
           trust”; trust can invest in asset heavy on growth so that remainder beneficiary is protected
           and income beneficiary can receive fixed certain return; provided assets go up, amount
           income beneficiary will receive will go up and remainderman is protected from inflation
         Practice exam question: Joe wishes to establish a revocable trust during his life. He can
           name himself trustee and exclusive beneficiary during his life to receive all income and

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         distributions of principal. He can provide that, at his death, the trust will terminate and any
         remaining property will go to the remainderman, his brother, Bill.
      Practice exam question: Joe divorces his wife and marries Claire, 50 years his junior. His
         children are likely to contest any will disposition to Claire. How can such a contest best be
         deterred and defeated? Transfer much of his wealth into an IV revocable trust with Joe as
         income beneficiary for life and Claire as remainder beneficiary.
o What is the remedy for beneficiaries when trustee breaches his fiduciary duty?
      Seek return of assets from non-bona fide purchaser
      Personal suit against trustee for damages (compensatory and maybe punitive), injunctive or
         declaratory relief, an accounting where trustee accounts for what he has done
      Can sue third party but only when this party was not a bona fide purchaser and was either
         complicit with or closed eyes to what was going on
      Seek constructive trust where trustee forced to distribute funds that the trustee should have
         distributed had the trustee followed the standard set forth in the trust instrument
o What investments can the trustee make?
      Fiduciary duty of prudence: invest assets of the estate prudently, used to be specified in legal
         lists what investments were permitted but this was too conservative
      Trustee required to make investments that a reasonably prudent person/investor would
         engage in
               Can take more risk and freely provide what the trust creator wishes
               Should think about how risk-averse the client is, but must let client know the
                 consequences of making conservative investments
      Duty of prudence implicates duty to conserve trust instruments and diversify investments;
         also have to insure assets
      Traditionally, trustee breaches duty by investing in its own stock, since it would be self-
         dealing in violation of the duty of loyalty; but parties can insert provision in trust instrument
         to allow this
o Exculpatory clauses
      UTC §1008(b): an exculpatory term drafted or caused to be drafted by the trustee is invalid
         as an abuse of a fiduciary or confidential relationship unless the trustee proves that the
         exculpatory term is fair under the circumstances and that its existence and contents were
         adequately communicated to the settlor (p. 607)
      Enforceable? “Any dispute between a trustee and beneficiaries must be resolved by
         arbitration”
               Schoneberger v. Oelze (p. 609): not enforced since it denies beneficiary access to the
                 courts
               Opposite result: Fla. Stat. §731.401 mandates enforcement requiring arbitration
               Schoenblum: courts have not yet addressed discontinuity bet. permissible levels of
                 exculpation for trustee and the process by which the beneficiary protects its interests
      Enforceable? “The trustee shall only be liable for willful neglect”
               Limiting liability to willful neglect is insufficient—must include the entire phrase
                 “bad faith, reckless indifference, and intentional or willful neglect” (p. 608)
      Enforceable? “The trustee shall only be liable for negligence”
               Will not work—have instead “the trustee will be free from all liability for acts except
                 in the case of bad faith, reckless indifference, and intentional or willful neglect”
               Also not enough to say “trustee shall only be liable for bad faith or intentional or
                 willful neglect”—must also have reckless indifference



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                  If lawyer is trustee, the burden is on the attorney to show that the settlor or testator freely and
                   knowingly consented to approval of the provisions at issue; same goes with bank-trustee
                   (case is stronger when settlor had attorney)
                 Okay to exculpate family member if settlor and attorney agree that it is worthwhile to have
                   person to serve as trustee; there’s a lot of exposure to risk/liability and family member
                   usually unpaid for services
       o Example of bad exculpatory trust in Elvis Presley’s testamentary trust
                 Provision is so expansive that any attempt by the trustee to assert any kind of exculpation
                   will fail
                 But are there limits to the trustee’s exercise of discretion?
                         When word “advisable” used in conjunction with “discretion”, it is read to involve
                            exercise of prudence and reasonableness; closer to “discretion” sides of continuum
                            rather than “sole, absolute, and unfettered discretion”
                         BUT no way to delineate what being reasonable and prudent actually means; at a
                            minimum, there is a duty by the trustee to inquire
   Rights of the beneficiary’s creditors
       o When is a trust irrevocable?
                 Every testamentary trust is irrevocable bc testator creates trust on account of his or her death
                 Also, revocable trust funded during life becomes irrevocable when settlor dies or when
                   settlor becomes incapacitated (and does not have power to revoke under the terms of the trust
                   or under the law)
                 When settlor has established and funded a trust during life that from its inception is
                   irrevocable
                         Why do this? Complicated and sophisticated estate planning (think asset protection
                            trusts (APTs))
       o Can creditors reach an irrevocable trust?
           Two categories:
           (1) Can creditors of the settlor reach it?
                 Generally not, if settlor does not retain interest as beneficiary, but yes if settlor made
                   fraudulent conveyance
                 If settlor made transfer to get Medicaid, remember the 5-year wait period before being
                   deemed to spend-down assets…
                 If settlor is a discretionary beneficiary, creditors could reach the maximum amount that could
                   have been distributed to the settlor
                         But a number of states have set up domestic asset protection trusts
                         Could be a conflict of laws problem
           (2) Can beneficiaries be protected from creditors?
                 Once anything has been distributed to the beneficiary, there’s no protection (creditor can get
                   court order)
       o Five types of trusts
           (1) Discretionary Trust
           (2) Support Trust
           (3) Discretionary support trust
                 “Trustee shall have discretion if my child needs it” (discretionary trust + standard)
           (4) Protected Trust
           (5) Spendthrift Trust
       o Can creditors collect against a debtor who is a:
           (1) Beneficiary of a discretionary trust


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         Generally no, but there are certain exceptions
         UTC §504 Discretionary Trusts; Effect of Standard (p. 612)
               (Summary) Subject to an exception for claims by children and spouses for child
                  support and alimony, a creditor of a beneficiary cannot compel a discretionary
                  distribution even if the beneficiary could compel such a distribution
               (c)(2): court can never order more than the amount the trustee would have been
                  required to distribute to beneficiary had trustee complied with standard or not abused
                  his discretion
       IMPORTANT: If the trust is a pure discretionary trust without a standard, there is no way
          even for a former spouse or child to reach these assets
(2)   Beneficiary of a discretionary trust where the trustee has told the beneficiary he will be
      receiving a distribution and the beneficiary tells him to hold it.
       Raises question of Hamilton v. Drogo (p. 610) order
               Order that as soon as the funds were allocated, a lien was attached so you could catch
                  the money before it was actually distributed
               Point is to get an order once the funds have been allotted
               Examples: crediting the beneficiary’s account on the trustee’s books or making an
                  oral or written declaration to the beneficiary may be a sufficient act to exercise the
                  power, thereby enabling the creditor to seize that portion of the trust property while it
                  is still in the hands of the trustee (p. 610)
               In NY you can get order that says “as soon as any funds are allotted on the records of
                  the trust” the creditors can attach the amount
(3)   Beneficiary of a discretionary trust who has received a distribution from the trust.
       One beneficiary receives the distribution, there is no restriction for creditors
(4)   Beneficiary of a discretionary trust which provides a facility of payment clause allowing
      direct payment to providers of benefits. The trustee has just informed the beneficiary’s law
      school that tuition will be paid.
       This may be enough of an allotment action that the creditor can reach it
       What if you pay directly to the provider? Can you avoid giving it to the beneficiary?
               If it goes into the hands of a provider, and there is a Drogo order, then the creditors
                  can force the trustee to pay over the creditors bc trustee evaded the court order
               Without a Drogo order, nothing is to stop discretionary trustee from paying out to
                  third party; without order, creditor needs to be there when a check arrives
(5)   Beneficiary of a support trust, who has just alienated his equitable interest to the creditor.
      The trustee refuses to pay the creditor anything.
       Support trust: instruction to pay for needs/necessaries/necessities
               Settlor’s intent was to pay providers to give food, medicine, healthcare, etc.
       Only suppliers of necessaries can reach
       If it is mixed, it is treated as a discretionary trust
(6)   Beneficiary of a support trust and creditor is a local hospital that provided emergency care
       This is exactly the type of creditor that can reach the beneficiary’s interest
(7)   Beneficiary of a support trust and the former wife of the beneficiary is suing for child
      support as well as back alimony.
       UTC §504 says nothing about a support trust because UTC eliminated this concept and treats
          it exactly like a discretionary trust
       Alimony and child support are covered through §504(c)(2): “court shall direct the trustee to
          pay to the child, spouse, or former spouse such amount as is equitable under the
          circumstances but not more than the amount the trustee would have been required to


                                              -76-
       distribute to or for the benefit of the beneficiary had the trustee complied with the standard or
       not abused the discretion” (pp. 612-13)
            Might be able to argue that child support is a necessary, but doubtful for alimony

(8) Beneficiary of a discretionary trust in a UTC state. Can the beneficiary be compelled to sue
    the trustee for abusing (its) discretion?
     Except for former spouses’ claims for alimony and child support, beneficiary cannot force
        trustee to make distribution; unclear whether any relief (?) can be obtained
(9) Beneficiary of a trust that provides “income to [the Beneficiary], but if a creditor attaches
    this interest, then the mandatory income interest shall cease and shall become a
    discretionary interest.”
     Example of a protective trust, the English invention (p. 613); arguably a much better
        solution than a discretionary trust
             Described as mandatory trust subject to a protective provision: trustee directed to pay
                income to A, but if A’s creditors attach A’s interest, A’s mandatory income trust is
                automatically changed to a discretionary interest (aka, interest is frozen)
             Trustee then has discretion to apply the income for A’s benefit, and creditors of A
                cannot demand any part of it (Restatement of Trusts §57)




                                           -77-

				
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