INTRODUCTION: A. Uniform Probate Code 1. Why study: a. State law governs law of wills and trusts b. UPC enacted in many states; influences laws of others 2. Revisions a. 1969 – major revision b. 1990 – last major revision (but some states still follow 1969) 3. Policy objectives of the UPC: a. Unification of probate and non-probate transfers (traditionally, law treats these differently) b. Gender equality c. De-emphasis on formalism in the law of wills d. Effort to respond to changes in the American family (greater prevalence of multiple marriages) B. Course topic: Wealth Transmission (usually at death but not always) 1. Wills: drafting, execution, revocation, interpretation 2. Trusts: creation and use in estate planning 3. Non-probate transfers C. Testamentary Freedom: Freedom of individuals to pass property to who they want 1. One purpose of trust laws – to protect testamentary freedom 2. Policy questions: a. Should you be able to cut off spouse, kids, or aging parents? 3. Limitations on testamentary freedom: a. Testator cannot disinherit spouse (but can disinherit children) b. Limits on how far in the future individuals can seek to control the use of their property (ex: Rule against perpetuities) c. Public policy limitations (vary from state to state) – Examples: You can’t condition a gift on: i. To influence a child to get divorced ii. On someone remaining unmarried iii. On religion or profession iv. Can’t order destruction of property upon your death d. Tax Limitations: purpose is to break down great family fortunes i. Gov’t estate taxes: 45% tax rate over $2 million (raises to $3.5 million in 2009) ii. Federal estate and gift tax goes away in 2010, but will come back in 2011 D. Terminology 1. Decedent: person who dies 2. Testate: if you die with a valid will a. Testator: person who died b. Real property: the Testator devises real property to devisees c. Personal property: the Testator bequeaths personal property to legatees 3. Partially Intestate: die with a valid will but will doesn’t dispose of all your property a. Property in will disposed of according to will b. Other property governed by intestacy laws 4. Intestate: died without leaving a valid will a. Decedent: Person who died b. Real property: descends to heirs / takers c. Personal property: distributed to next-of-kin / distributees 5. Careful with terminology; don’t just say “I give” E. Probate vs. non-probate: 1. Probate: property that passes to beneficiaries under a valid will or by intestacy a. Must pass through probate system before reaching the recipients b. Personal representative i. If you die with a valid will, you can nominate an executor ii. If no valid will, court will appoint a personal representative (called an administrator) (1) Chosen by the court from a statutory list iii. Duties of personal representative: (1) Inventory Collect assets in decedent’s estate (2) Manage and protect assets (Clear titles if necessary) (3) Pay off creditors (4) Distribute assets to beneficiaries iv. Personal reps are fiduciaries (entrusted with property for benefit of beneficiaries and creditors) 2. Non-probate (“Will substitutes”) a. Transfer property at death, but the property doesn’t go through the probate system b. Takes effect now (when executed) but property is not passed until death c. Examples: i. Life insurance policy (purchase now and retain control, beneficiary gets money at your death) ii. Pension and retirement plans with death beneficiaries iii. Bank accounts with payable on death designations iv. Trust (1) Fiduciary relationship; trustee holds legal title to the property and manage it for someone who holds equitable title (2) Terminology: (a) Settlor – person who create the trust (b) Beneficiaries – enjoy the trust (c) Trustee – manages the trust (d) Corpus Res – property in the trust v. Joint tenancy property (1) Ex: joint tenancy in land, bank accounts (2) When joint tenant dies, the interest disappears, so the other automatically owns the property (since the interest disappears, there’s nothing to pass through probate) d. Most wealth flows through non-probate transfers e. Some jurisdictions have “small estate transfers” to allow people with small estates avoid the expense and hassle of probate F. Attorney liability 1. In most jurisdictions, a beneficiary can sue the drafter of the will a. Theories: Negligence, contract as 3rd party beneficiary b. Rationale: the reasonably foreseeable harm to the intended beneficiaries c. Ex: Simpson v. Calivas (where a client has contracted with an attorney to draft a will and the client has identified to whom he wishes his estate to pass, that identified beneficiary may enforce the terms of the contract as a third party beneficiary) 2. Other jurisdictions: beneficiaries can’t recover 3. Attorney must use reasonable care – (but does not have to be perfect) INTESTACY: A. Heirs: 1. Takers are called “heirs” 2. Up until the decedent dies, they are called “heirs apparent” (a living person doesn’t have heirs) 3. Categories of heirs: a. Descendants: children, grandchildren b. Ancestors: parents, grandparents c. Collateral heirs: siblings, cousins (share a common ancestor) d. Spouse: now considered an heir B. Share of surviving Spouse: UPC §2-102 1. Share of spouse: UPC §2-102: If no descendant or parent of D survives the D Entire estate (§2-102(1)(i)) If all of the D’s surviving descendants are also descendants of the surviving spouse and there is no other descendant of the surviving spouse who survives the D Entire estate (§2-102(1)(ii)) If no descendant of the D survives the D, but a parent survives the D first $200,000 plus ¾ balance of intestate estate (§2-102(2)) If all the D’s surviving descendants are also descendants of the surviving spouse and the surviving spouse has one ore more surviving descendants who are not descendants of the D $first $150,000 plus ½ balance of intestate estate (§2102(3)) If one or more of the D’s surviving descendants are not descendants of the surviving spouse first $100,000 plus ½ balance of intestate estate (§2-102(4)) 2. Policy considerations: a. What would the decedent want? b. Family protection – reflects obligation of decedent to their family c. Keeps property from dividing in a large number of shares 3. Who is the surviving spouse: UPC §2-802: Effect of Divorce, Annulment, and Decree of Separation If divorced from D or is marriage to D is annulled NOT a surviving spouse (unless there was a subsequent marriage and married to D at time of D’s death) (§2-802(a)) A surviving spouse is NOT: o An individual who obtains or consents to a final decree or judgment of divorce from the decedent or an annulment of their marriage, which o o decree or judgment is not recognized as valid in the State (unless subsequent ceremony where they purport to marry each other) (§2802(b)(1)) An individual who, following an invalid decree or judgment of divorce, marries someone else (participates in marriage ceremony (§2-802(b)(2)) An individual who was a party to a valid proceeding concluded by an order purporting to terminate all marital property rights (§2-802(b)(3)) a. Divorced: not surviving spouse b. Separation: i. UPC: still has status of surviving spouse ii. Many states: bar the survivor from taking due to desertion or adultery (not UPC) c. Marriage-like relationship: i. Some jurisdictions: survivor can take (If jurisdiction recognizes common law marriage – 2 people have to believe they are married) (not many states) d. Putatuve spouses: person who in good faith believes they are married to someone, but they are mistaken (ex: decedent had another spouse out there and the surviving spouse didn’t know about it) i. Some jurisdictions allow them to take for intestacy purposes ii. § 209 of Uniform Marriage and Divorce Act (supplement) e. Long-term relationship with no intent to marry: i. Not treated as spouses ii. Exceptions: civil unions (possibly) C. Simultaneous Death: 1. Situation: decedent and his/her devisees die at the same time in similar circumstances. A person has to survive a decedent in order to take under a will (or not under a will) 2. Common law rule: must survive by just an instant 3. NEW RULE (UPC): Must survive by 120 hours, and there must be clear and convincing evidence that the taker survived by 5 days a. §2-104: rule for intestacy b. §2-702: rule for wills and non probate transfers i. Rule of construction: If there is a condition in the will that the beneficiary must survive the testator, read that as requiring 120 hours. If you want something different, put it in the will c. Don’t rely on every state having the 120 hour default rule; put it in the will i. Decedent might move, might have real property in another state, etc. D. Share of Heirs other than surviving spouse: UPC §2-103: Any part of the intestate estate not passing to the decedent’s surviving spouse under §2-102, or the entire intestate estate if there is no surviving spouse, passes in the following order to the individuals below who survive the decedent: (1) to the descendant’s descendants by representation (§ 2-103(1)) (2) if there is no surviving descendant to the decedent’s parents equally if both survive, or to the surviving parent (§ 2-103(2)) (3) If no surviving descendant or parent to the descendants of the decedent’s parents or either of them by representation (§2-103(3)) (4) if there is no surviving descendant, parent, or descendant of parent, but the decedent is survived by one or more grandparents or descendants of grandparents half of the estate passes to the decedent’s paternal grandparents equally if both survive, or to the surviving paternal grandparent, or to the descendants of the decedent’s paternal grandparents or either of them of both are deceased, the descendants taking by representation; and the other half passes to the decedent’s maternal relatives in the same manner (§2-103(4)) But if no surviving grandparent or descendant of a grandparent on either the paternal or the maternal side entire estate passes to the decedent’s relatives on the other side in the same manner as the half 1. Covers part of estate not going to surviving spouse under §2-102 a. If no surviving spouse descendants take everything b. If all children survive each child takes equal share c. If not all children survive but there are no grandchildren each surviving child takes an equal share 2. If there are descendants: descendants take by representation (§ 2-103(1)) 3 systems of representation: (see examples) a. English Per Stirpes (AKA Strict Per Stirpes) i. Step one: take the intestate share going to the descendants and divide into primary shares at the level of the decedent’s children. ii. Step two: allocate primary shares. Give one per surviving child and then allocate one primary share for each of the predeceased children who have left children (or descendents) of their own. (1) Note: if there are predeceased children that do not leave any children of their own, they do not get a share of the decedent’s estate (or descendants). iii. Step three: Treat predeceased children as decedents with respect to the share that goes to its descendents. (1) Sivide the share into the number of surviving children plus predeceased children leaving descendents, etc. Go through this process again. iv. How this differs from other systems: You end up having a vertical equality. Each child line and their descendents are treated equally. b. Modern Per Stirpes (AKA Per Capita with Representation) i. Step one: divide into primary shares at the generation nearest to the decedent where there is at least one surviving member. ii. Step two: allocate primary shares. Give one per surviving member and then allocate one primary share for each of the predeceased members leaving surviving descendents of their own. iii. Step three: Treat predeceased members as decedents with respect to the share that goes to its descendents. (1) After you go through the modern per stirpes division once, you revert back to strict per stirpes for further divisions. iv. Differences from other systems: (1) Step one differs from the strict per stirpes system. Otherwise it is just like strict per stirpes. (2) Per capita with representation really is descriptive because under this system, the descendents are really taking of their own right – they are no longer only taking by representation of the descendents. (3) Still vertical equality. c. 1990 UPC (AKA per capita, per generation) i. Step one: divide into primary shares at the generation nearest to the decedent where there is at least one surviving member. ii. Step two: Allocate shares by giving one share for each surviving member of the primary share generation and one share for each predeceased member of the generation that has left surviving descendents of their own. iii. Step three: Then pool the remaining shares into a pot. Allocate the remaining “pot” of shares to the surviving members of the next generation. (1) Allocate according to the 1990 UPC system. iv. Rationale: (1) The UPC drafters say that most people want horizontal equity. They want everyone in the same generation who is going to take, to take equally. (2) Everyone should take equally if they are in the same generation – shouldn’t matter how many children you have. 3. If no descendants and no surviving spouse: a. If no descendants or surviving spouse move to parents i. To parents equally if both survive, or just to the one that survives b. If no parents move to brothers, sisters, and descendants of brothers and sisters i. Use same system of representation that you would use for the decedent’s own descendants ii. Ex: If all siblings survive, each gets equal share. If is dead but has survivors, use same system of representation above c. If no surviving spouse, parents, or brothers and sisters: 2 systems (parentelic and degree of relationship) i. Parentelic system: estate passes to grandparents and their descendants, and if none to great-grandparents and their descendants, and if none to the great-great-grandparents and their descendants, and so on down each line (parentela) descended from an ancestor until an heir is found. See table on p. 92. (1) This is the UPC system up through column three [§2-103(2) through (4)]. (other J’s will go from one jurisdiction to the next) (2) In distributing the property, the per stirpes, per capita, or per capita at each generation doctrines apply, depending on the default approach in the state (3) First thing to do: split the entire estate in half. Work on maternal and paternal sides independently. (a) If one side is completely wiped out – the other side gets everything ii. Degree of relationship system: Look at all relatives and figure out degree. All the relatives with the lowest degree take equally (1) To calculate degree: count the number of steps up to the common ancestor from the descendant and the number of steps down to the decedent (a) Ex: 1st cousin: 2 steps up and 2 steps down = 4 steps (b) Ex: Great aunt: 3 steps up to great-grandparent; 1 step down to great aunt = 4 steps (2) Pure degree of relationship – if multiple people at same degree, they will split the estate (3) Degree of relationship with parentelic tie breaker: the one in the closer parentela would take iii. Most jurisdictions: follow the parentelic system through the first 2 parentelas iv. Some jurisdictions have mix of 2 systems: where those in the lowest degree of relationship include people related through different common ancestors, those related through the nearest common ancestor to the decedent take over those who are related through a more distant common ancestor d. When to cut off: Issues with “laughing heirs” i. UPC § 2-105: “If there is no taker under the provisions of this Article, the intestate estate passes to the state” (1) UPC § 2-103 eliminates more remote relatives tracing through greatgrandparents ii. Most states keep going until they find someone e. Note: Half-blood and Inlaws i. In laws usually don’t take ii. Half-blood relatives: (1) Majority and UPC: Half blood relative is treated same as wholeblood relative (ex: half sister) (UPC § 2-107) (2) Minority: differs according to state f. Note: Negative Wills i. UPC: gives effect to negative wills ii. Heir is treated as if they disclaimed their interest (as if they predeceased) iii. If you disinherit someone, you must expressly disinherit their descendants if you want to disinherit their descdents (1) Ex: “I disinherit my brother” stuff will still go to his descendants E. Who is a descendant? 1. Adopted individuals (Note: pay attention to jurisdiction; they are split) a. UPC: General rule (§ 2-114(b)) i. Adopting parents step into the shoes of the natural parents, and a parentchild relationship is established. ii. Adoption severs the parent-child relationship between the natural parents and the child (1) Child can no longer inherit from and through the natural parents (2) Natural parents can no longer inherit from and through the child iii. (Note old rule – Stranger to the adoption rule – children could take from but not through - - - this is no longer a rule) iv. Exceptions: (UPC § 2-114(b)) When adoption is by a stepparent (spouse of a natural parent): (1) The adoption does not affect the parent-child relationship (and the inheritance rights) between the adopted child and the natural parent who is married to the adopting stepparent, (a) The adoption establishes a parent-child relationship between the adopting stepparent and the child, with full inheritance rights in both directions (2) The adoption does not completely sever the parent-child relationship with the natural parent of the same gender as the adopting stepparent (a) Natural parent loses his/her right to inherit from and through the child, but (b) The child retains the right to inherit from and through the natural parent of the same gender as the adopting stepparent (3) Some jurisdictions distinguish between post-death and post-divorce (but UPC does not): Some states say that as under 2-114(b), that the adopted child can only inherit from the non-custodial biological parent if that parent dies – but not if there was a divorce (a) Note that 2-114(b) does not mention a situation where both natural parents die or are not in the picture. It only deals with the situation where one natural parent remarries. (i) Under the UPC, the adopted child will NOT inherit from the natural parents’ relatives because he is now the child of the adopting family. (ii) But under the Restatement 3rd, there is a special situation where the biological family still has continuing ties with the adopted child – and then the adopted child can still take from the biological family. Note that the Restatement 3rd supports the UPC in most situations and just acts to refine it for situations it does not provide for. b. Maryland Approach: “transplant rule” – you are a child of the adoptive family but not the biological family (not really the rule for most states i. No exception for stepparent adoption like UPC has ii. The Hall v. Vallandingham (MD): for all intents and purposes, the adopted child becomes part of the adopted family. So the adoptive family has all the normal inheritance rights with respect to the adopted child (and vice versa) and the biological family no longer has any ties to the adopted child and therefore has no rights to inherit from the adopted child (and vice versa). 2. Step Children: Generally do not take unless: i. Equitable adoption ii. You are in one of the few jurisdictions that provide that if the decedent dies with no relatives of his own, step children can take. This is very rare. 3. Equitable Adoption (applies in about ½ states) a. Occurs when: couple assumes responsibility for taking care of the child, but they never formally adopt the child b. Traditional theory: Must show: i. The child’s natural parents / legal guardian had contracted with the custodial couple to take in and adopt the child (express or implied) (O’Neal case) ii. Custodial couple takes care of child, but never formally adopts c. Wheeling approach: “Does the child stand in the same relationship to the custodial couple as a biological child or adopted child would stand in?” d. Effects of Equitable Adoption: i. Child can take from custodial couple, but custodial couple will not take from child ii. Child can take from, but not through, the custodial couple iii. Equitable adoption does not affect child’s ability to take from biological parents 4. Adult Adoption a. Most jurisdictions: no difference between adopting a child and adopting an adult (intestacy rules apply the same) b. Most states allow adult adoption (some don’t; others have exceptions) c. Reasons for adult adoption: i. Adopting a step child (bio parent wouldn’t consent when child was a minor, so they wait till child is an adult) ii. To prevent a will contest (doesn’t always work) (1) Adopt main beneficiary to make them a child. Then other heirs are no longer takers under intestacy rules, so they can’t contest the will. (as long as the other heirs are not children) (2) Remote relatives can contest the adoption on the same gronds on which they can contest the will iii. To shoehorn someone into a class gift into the will (1) Ex: X is a beneficiary of trust that A has created. “To X for life and then to her descendants”. If X doesn’t have descendants, she can try to adopt her spouse. (2) Might work, depending on the trust instrument 5. Non-marital Children (children born out of wedlock) a. UPC 2-114(a): A child is a child of both natural parents, whether or not the parents are married b. In US, non-marital children can take from their mothers; in some jurisdictions, there are restrictions on allowing them to take from biological fathers i. Supreme Court said you can’t prevent children from inheriting from their fathers altogether, but you can place restrictions on it. (The case is in the book). c. Paternity testing: i. Uniform Parentage Act: Provides framework for proving paternity (generally designed to ease the proof of paternity) ii. 2000 UPA was designed to allow testing that can be done on relative of alleged father even after the alleged father is dead iii. General trend: States heading in the direction of allowing this kid of testing 6. Children Born after father dies but conceived before he dies: a. Child is considered a child of the decedent under the common law and UPC 7. Reproductive Technology: Posthumously conceived children (conceived with insemination) a. UPA: Need consent of the decedent b. Restatement: No consent necessary, but child has to be born within a reasonable amount of time after death c. Sample of states: i. California: need consent in writing with a witness; and there’s a time limit ii. New Hampshire: Posthumously conceived children can’t take iii. Massachusetts: Posthumously conceived children may enjoy inheritance rights of “issue” under the state’s intestacy scheme where the surviving parent or child’s legal representative demonstrates: (1) a genetic relationship between the child and the decedent; and (2) that the decedent affirmatively consented to the posthumous conception and to the support of any resulting child. Also – the action must be brought in a timely manner and notice must be given to all interested parties (Woodward) F. Other Factors Affecting Intestate Share 1. Abandonment or Neglect (UPC 2-114(c)) a. Inheritance from or through a child by either natural parent or his/her kindred is precluded unless that natural parent has openly treated the child as his/hers and has not refused to support the child b. If the parent doesn’t acknowledge and support the child, that parent can’t take when the child dies, and neither can the grandparents, etc. 2. Advancement a. Defn: A gift made by the decedent during the decedent’s lifetime to a potential heir which has the effect of reducing the intestate share of the estate that the heir receives under the intestacy laws b. Common law: if child of decedent receives lifetime gift presumed advancement and reduced the share by the amount of the advancement i. Purpose: equality c. All jurisdictions now have statutes. i. Majority: presume that lifetime gifts were not meant as advancements and should not be taken into account (1) To rebut, Need to show decedent’s intent in writing that lifetime gift should be treated as an advancement d. UPC § 2-109: i. Lifetime gift is only treated as an advancement if: (1) Declared by the decedent in writing, or (2) There is a writing by the recipient of the gift demonstrating that it was intended as an advancement ii. UPC does not limit lifetime gift to children; any heir who received a lifetime gift for which you can prove it was intended as an advancement is treated as an advancee iii. UPC no longer charges the value against the descendants of the advancee if advancee predeceases the decedent iv. Hotchpot method of Valuation (see comment to UPC § 2-109) EX: Decedent dies. Probate estate of $190,000. D has three kids A, B, and C from previous marriage. A received $50,000 advancement. B received $10,000 advancement. C received no advancement. W-2 is Decedent’s surviving spouse. (1) 1st Step: Determine the hotch pot estate. This is the probate estate plus any advancements. Here this is 190+50+10= 250 is the hotch pot estate. (2) 2nd step: Figure out the takers’ share of the hotch pot using regular intestacy rules. (a) Start with surviving spouse. She gets 100 plus ½ of the remainder (under 2-102). So she gets 100+75 = 175. If there had been any advancements you would deal with them here. (b) Then go to the others under representation and the parentelic/degree of relationship system. So A, B, and C all share equally. They all get 1/3 of the remaining 75. Each gets 25. (3) 3rd step: Take advancements into account. There are no advancements to C, so C gets the 25. There is a 50 advancement to A, but you can only take A’s share down to zero (no negative takings) so A gets 25-50 = 0. B had an advancement of 10, so B gets 25-10=15. (a) However, since the advancements basically eliminate A as a taker, we start over with the process not even counting A as a possible taker. (4) So we determine the hotch pot estate is 190+10=200. (5) Figure out the takers’ shares, etc…… (a) Start with spouse. She gets 100 plus ½ of 100. So she gets 100+50=150. (b) Then to B and C since A is no longer in the picture. B and C each get ½ of 50. So they each get 25. Now take advancements into account. B gets 25-10 = 15. C gets 25. (6) Variation: What if we didn’t have advancements to the kids, but there was a 60 advancement to the spouse? (a) Hotch pot estate is 190+60=250. (b) Spouse’s share is 100 + ½ of 150 = 175. Now take advancement into account. So 175 – 60 = 115. (c) Now other’s shares: A, B and C all get 1/3 of 250 – 175. So the kids get 1/3 of 75 each. They each get 25. 3. Transfers of Property to minor Children a. Minors do not have the capacity to manage property i. Someone must be appointed to manage child’s property, even if the decedent is the parent and there is another living parent b. 3 options for property management: i. Guardianship (1) Guardian of the person: (a) Take’s care of the child’s person (b) No inherent authority to manage the child’s property (2) Guardian of property: (a) Traditionally, have limited powers and under heavy supervision by the probate court (b) Timely and expensive to go to court all the time (3) Conservator: (a) UPC – Modern conservator system - conservator has all the powers a trustee has and a lot less supervision (only in court once/year) (4) Neither the guardianship nor the conservatorship is favorable ii. Custodianship (1) Good for when small amounts of money are involved (2) A custodian is given property to manage on behalf of the beneficiary under the UTMA – Uniform Transfers to Minors Act (a) No court supervision unless there is a petition from the minor (3) History: The prior act (UGMA) only applied to lifetime transfers and not death transfers. This (UTMA) was designed to allow transfers to custodians to manage on behalf of the minors (stuff like stock). (4) Current version: States vary, but generally, all include: (a) Section 13: says custodians have all the rights, powers and authorities that married persons have over their own property. So they have broad powers of management and little supervision by the court. (b) Section 12: fiduciary duties by the custodian - Similar to the fiduciary duty of a trustee. (c) Kind of like a shelf-trust. (That is how it was designed – to function as a trust. But the difference is that this is not a trust because the title is still in the name of the minor.) (5) Differences in current version (vs. previous version): (a) applies to all kinds of property – anything can be made the subject of a transfer under the act (different from prior versions). (b) Not limited to lifetime gifts. Now, if you are writing a will, you can provide that when you die the stock, for example, will go to a custodian. (c) Nonprobate transfers to minors can also be managed by a custodian (i.e., life insurance, pension, etc.) (section 3) (d) Section five – deals with wills. (6) Even more flexibility under current version: (a) Section 6: if the decedent didn’t know about the UTMA and wanted to transfer property to the minor, it is okay, a personal representative of the decedent can transfer the property into a custodianship anyway! Just to prevent guardianship! (of course there are a few requirements) (i) Not very often adopted by states – but when it is it is useful (b) Section 9 governs the creation of the custodianship. You just have to register the property to a custodianship under the act. (7) Limitations of custodianships: (a) Any one custodianship can only be set up for one individual minor (if 15 grandchildren, need 15 custodianships) (b) At age 21, the act provides that the custodian has responsibility to distribute the property to the “minor” (i) With trusts – you can choose the age of distribution iii. Trust (1) Trustee has legal title and is responsible for managing the property on behalf of the beneficiary; the minor is the equitable beneficiary (a) Ex: contingent trust for minors created if both parents die before kids reach a certain age (b) Good for multiple kids who have different needs that vary over a period of time 4. Misconduct toward the decedent – Bars to succession a. Killing the decedent: i. Most jurisdictions have statutes that say if you kill the decedent you can’t take (1) Mahoney case – S. Ct. of Vermont considered 3 judicial approaches: (a) Property passes to killer (b) Killer barred from taking (c) Legal title passes to killer, but constructive trust imposed to prevent unjust enrichment, and court orders property to be distributed to next in line to take ii. Sub-Issues: (1) What kind of killing counts? (a) UPC: Requires manslaughter to be intentional (2) What kind of burden of proof? Is a conviction necessary? (UPC and majority) (a) A conviction is conclusive, but not necessary (b) If no conviction, court uses “preponderance of the evidence” standard (instead of “beyond a reasonable doubt”) iii. If killer cannot take, treat killer as disclaimed 5. Disclaimers a. Disclaimant is treated as if he/she predeceased the decedent b. Traditional Rule: The decedent’s estate is distributed as if the disclaimant predeceased the disclaimant i. This rule is subject to abuse ii. Ex: (chart) – G is decedent, has one surviving kid A, with 2 kids, X and Y. G has predeceased kid, B, who has living kid, Z. (1) A disclaims, and can abuse a traditional rule – can end up with 2/3 for X and Y (2) If A does not disclaim: X and Y only share ½ c. CURRENT UPC Rule: (§ 2-1106): The disclaimed interest passes as if disclaimant had predeceased the decedent i. Ex: D dies leaving one predeceased child B, who has C as kid. A has 4 kids: W, X, Y, Z: (1) If A had not disclaimed: A gets ½, and C gets ½ (2) W, X, Y, and Z will all split the ½ - so each get 1/8 d. Relation back doctrine: if there is a disclaimer, the disclaimer relates back to the decedent’s death i. Treat property as going directly from the decedent to the alternate taker; don’t treat the heir as if he/she received property e. Why people use disclaimers: i. To save taxes (1) Ex: A is rich with no spouse, has kids who are young adults starting out; better for A’s share of her brother’s estate to go right to her kids (lower income tax, no gift tax) (a) Note: If A’s father were decedent, then it would be subject to generation skipping transfer tax ii. To avoid creditors (1) Ex: If A is debt ridden, A can disclaim and she’s not treated as the owner of the property (2) Qualifications: (a) Doesn’t work if you owe money to US / IRS (b) You can’t use a disclaimer to try to qualify for Medicaid (i) In Maryland, Court could go to the alternate taker, who is a constructive trustee, and the state can go after that person for the share the government should get 6. Agreements among successors a. Successors agreeing among themselves to do things differently than what the will says (Can also apply to intestacy) b. Okay as long as the agreement is entered into by all of those affected (and all affected are competent) c. Personal rep must split up property according to the agreement d. An agreement among successors is considered to be a transfer for tax purposes and for creditor purposes i. It’s convenient b/c the personal rep has to split it up for you, but you still have the taxes WILLS: FORMALITIES AND FORMS: A. Execution of Wills 1. Benefits of having a will: (Ex: X is married to Y and she wants Y to get everything when she dies. Why would X need a will?) a. Change in law or move to a new jurisidiction b. Y could die before X c. If children – can nominate a guardian or provide for a money management mechanism d. Nominate an executor (otherwise court will appoint) e. In a well drafted will, nothing is escheated to the state (usually a residual gift going to charity) f. Allows the T to match specific devises to specific people i. (good estate planners generally discourage this, but some clients really want it g. Provide for the disinheritance of a relative who you don’t want to take 2. Definition of a valid will: A donative instrument that may: a. Transfer property at death; b. Amend, supplement, or revoke a prior will; c. Appoint an executor or nominate a guardian; d. Exclude or limit the right of an individual or group to take by intestate succession i. Negative will – still a valid will e. Other: i. Wills are “ambulatory” – subject to modification or change up until the decedent dies (1) The will doesn’t actually take effect until the decedent dies ii. Probate courts determine the validity of the will 3. General Requirements for a Valid Will: a. Execution Requirements - Follow Wills Act Requirements b. Capacity: Age and Mental capacity c. Voluntary Act of the Decedent d. Testamentary Intent 4. Execution Requirements / Wills Act Formalities: 3 basic requirements a. Four purposes for Wills Act Requirements: i. Ritual or cautionary function: to make sure people understand the significance and seriousness of what they are doing ii. Evidentiary function: Good evidence that the Testator wanted to execute the will and what the terms of the will are iii. Protective Functions: to facilitate testamentary intent (1) Ex: Witnesses there to protect against duress iv. Channeling function: Testator has certainty that the court will be able to identify the will v. Don’t want to open the door to fraudulent claims (Pavlinko) b. In Writing i. On a surface, detected, and fairly permanent (1) Ex: on car fender or suitcase okay in some jurisdictions (2) Videotape and tape recording – not okay, but might be useful in preventing will contest (ex: to demonstrate voluntariness) (3) Electronic / computer: slow to change, but Nevada allows in limited circumstances ii. Rare exceptions allow oral c. Signed by the Testator i. Must sign with the intent to apt the document as your will ii. Signature / Mark: (1) A signature is anything the testator intends as his or her signature (a) No requirement that the individual sign his or her full name, but if a person intends to sign his or her full signature and does not complete it, the general rule is that the partial signature does not qualify as the person’s signature (2) Can be a mark (if T can’t write or hold a pen) (3) Rubber stamp or electronic signature – not enough in most J’s iii. Having someone else sign for you: Okay if they do it at the direction of the Testator and in their presence. 2 tests: (1) Line of vision test: Person who signs must do it in the Testator’s line of vision (2) Conscious presence test: (UPC § 2-502) person has to be near enough so that the Testator senses their presence and knows what’s going on (3) Helping to hold the pen – only okay if the T asks for your help iv. Location of signature: (1) Some Jurisdictions require it at and of the will, but it varies d. Attested by the requisite number of witnesses: i. Must have the required number of witnesses (1) Most J’s require 2. Vermont requires 3. PA has no requirement unless it’s an X or mark ii. 3 major differences among jurisdictions for this requirement: (1) What does the witness have to witness? (a) Most J’s: witness must witness either (i) the Testator sign, OR (ii) the Testator acknowledge the signature (b) UPC § 2-502: Witness must witness: (i) The Testator sign, OR (ii) The Testator acknowledge signature, OR (iii) The Testator acknowledge the will (new option - UPC) (2) What are the signature requirements for the witnesses? (a) Non-UPC J’s require witness to sign the will in the T’s presence (b) Added requirement for some J’s: Some states require witnesses to sign in T’s presence AND in presence of each other (c) Presence: Line of vision or Conscious presence test (d) UPC 2-502: (i) Do not have to sign within the presence of the Testator or each other. (ii) Just have to sign within a reasonable period of time, which can even be after the Testator dies (3) What does the act of witnessing consist of? (a) All J’s: Witness has to actually witness T sign or T acknowledge signature (i) Not okay if the witness could have seen it but didn’t iii. Other requirements re: Attestation (1) Publication to witnesses (a) Some J’s require that T publish their will to the witnesses – declare to the witnesses that this is their will (2) Witness must be generally competent to be a witness (a) Mental capacity: cannot be incapacitated or drunk (b) Age requirement (some Jurisdictions) (3) Interested witnesses (witnesses who receive a benefit under the will) (a) Traditional rule: witnesses had to be disinterested (b) Purging statute (1700’s): will is valid but witness is stripped of their interest (i) Witness is only purged if the benefit exceeds what they would have received had the will not been executed (a) What they would have received by intestacy, or (b) What they would have received by an earlier will (c) Most non-UPC J’s: disinterested witness is not credible, but there are purging statutes (d) UPC § 2-505(b): Signing of a will by an interested witness doesn’t invalidate the will or any portion of it (40% of states follow this rule) e. General Lessons when drafting a will: i. Don’t make tiny mistakes (as in Groffman, Casdorph) – could render a will invalid ii. Don’t send clients home with instructions on how to do it on their own (Groffman) iii. Lay person should not draft a will on their own f. How to make sure execution is good in all 50 states: i. Why: UPC 2-506 says that a will is good if compliant with UPC, Jurisdiction of execution, and Jurisdiction at time of death or ___ ii. 2 important recommendations: (1) Attestation Clause: typically appears after the T’s signature and before the W’s signature; phrased from the W’s point of view. W reads aloud and signs, saying what just happened in terms of T’s execution of the will and details what the W’s are doing now (a) Creates a rebuttable presumption that the will was duly executed (b) A will is typically admitted to probate after the W’s come in and testify as to what happened. If W’s are dead or unavailable, court may admit the will with this attestation clause. (2) Self-proving Affidavit: Usually attached to the will or at the end of the will; the T and W sign after the will is signed, and it details what just happened. (a) UPC: if you have a self-proving affidavit, it conclusively proves that the execution requirements have been met (i) Better to use example provided in UPC § 2-504(b) rather than UPC §2-504(a) because more Jurisdictions recognize the one in § 2-504(b) g. Trend toward relaxing Wills Act Formalities: i. UPC § 2-502 simplifies the number and complexity of requirements for wills executions (also similar changes in non-UPC jurisdictions) ii. Turn a wills act mistake into something you can fix (1) Ex: In re Pavlinko’s Estate – signed each other’s wills by accident. Dissent wanted to consider it a “mistake in execution” rather than a “mistake in expression” – but doesn’t really work because courts don’t fix mistakes in expression h. Reform Movement: Approaches to reduce the harshness of the Wills Act Formalities i. Substantial Compliance Doctrine: (1) Test: Did what happen sufficiently approximate the wills act formalities so that the purposes of those formalities were served? (Also need evidence of testator intent) (a) Ex: Missing both witnesses would not be substantial compliance (2) In Re Will of Ranney: Court says that there was not literal compliance with the wills act. (the witnesses signed the self-proving affidavit instead of the will) But, the NJ court adopts the substantial compliance approach. It has good evidence of testator intent and there was substantial compliance with the wills act, so the will is probated. (3) Problems with this approach: (a) Becomes a “near miss” standard (b) Person who invented this approach wasn’t really satisfied with this doctrine ii. Harmless Error Doctrine: (1) Test: Was the mistake harmless? (as opposed to “was the mistake small?”) Is there clear and convincing evidence that the decedent intended this to be his will? (Brady says focus on clear and convincing evidence that T intended this to be his will!) (2) UPC § 2-503: articulates this standard (3) This approach will save more wills than the substantial compliance doctrine (4) Restatement 3rd has harmless error doctrine (5) Mistakes most likely excused: (a) Attestation – most common to be excused (b) Courts rarely excuse writing and signature requirements (6) Harmless error will save more wills than the substantial compliance approach iii. Examples: Substantial Compliance vs. Harmless Error (1) G sent a signed letter to his attorney giving directions for the preparation of his will. G died while the will was being prepared (a) Substantial compliance: NO (i) No signature, no attestation, not much to go on (b) Harmless Error: NO (i) We have clear and convincing evidence of the testamentary intentions, but (ii) You need clear and convincing evidence that the T intended the document to be the will (2) G didn’t make a will until near death. Gave instructions. Will brought to bedside. Witnesses were present. She wrote several letters of her name but not whole signature when she fell back and died. After she died, the witnesses signed the document (a) Wills Act Formalities: NO (i) Unfinished signature does not meet requirements of the wills act (b) Substantial Compliance: NO (i) Half signature is not a signature (c) Harmless Error: PROBABLY (there is a good case) (i) Clear and convincing evidence of intent (unless there is some fact that goes the other way and shows that the T had a problem with the will) (3) Ex: Casdorf Case: T took will into bank; witness requirement is completely botched, but no question that T intended the document to be his will. So there is clear and convincing evidence of testator intent iv. Rationale for these reform doctrines: (as opposed to just suing the lawyer) (1) Honor testator’s intent (2) Some people can’t afford lawyers and make mistakes (3) Malpractice insurance doesn’t always work – if lawyer died or doesn’t have enough money/insurance (4) Policy matter – litigation is expensive and settlement might not be full value of loss (5) Some heirlooms can’t be replaced with money damages 5. Holographic Wills (handwritten and signed by the decedent) a. About ½ J’s allow holographic wills b. Common situations: i. Where attestation requirement is not met ii. Not necessary in Jurisdictions that have the Harmless Error Doctrine c. Requirements in most Jurisdictions for Holographic Wills: i. Handwritten by the testator ii. Signed iii. Dated (usually just the year, but others require date and month; some J’s don’t require at all) d. UPC Requirements (UPC § 2-502(b)): i. Signature, and ii. Material portions of the will must be in T’s handwriting e. Common sources of litigation surrounding holographic wills: i. Non-Handwritten portions of the will in a jurisdiction that requires the entire will to be handwritten (1) Example: Decedent buys pre-printed will form, fills in blanks and signs with no witnesses. There’s no attestation. (2) 2 approaches the courts take: (a) Intent Theory: Did the decedent intend the non-handwritten stuff to be part of the will? (ex: something on letterhead would probably work under the intent theory) (i) If yes Will fails (ii) If no Will is okay (b) Suplussage Theory: Non-handwritten stuff will not defeat the will if we can disregard the non-handwritten stuff as surplussage (i) Ex: pre printed form – if decedent wrote enough in the handwriting to make sense as a will, it might be okay (it wouldn’t work under the intent theory) (3) Majority of statutes only require that the material provisions or portions be handwritten. What is material: (a) “who gets what” – devises and devisees (b) Appointment of a personal representative or guardian (c) Maybe testamentary intent ii. Testamentary Intent: Whether the decedent intended the writing to be a will at all. Fact specific. Focus on whether there is clear and convincing evidence. (1) Note that the Harmless Error Doctrine (UPC § 2-503) also requires clear and convincing evidence of intent. So if you don’t have intent – you can’t use the harmless error doctrine. (2) Ex: Kimmel Case – Dad writes letter to sons the day he died. Court said letter was intended to be a will. It said “if anything happens”; keep the letter safe and locked up; talks about important papers he’s going to bring – implies that he thought it had legal significance (a) Arguments against: informal, only a letter, he might not really think it’s a will (3) Ex: At bottom of letter “P.S. you can have my entire estate. Harry J. Blake (SAVE THIS)”. Usually he signs “Uncle Harry” and this is more formal; “save this” seems to have legal significance. (Blake case) (4) Ex: Kuralt case: Sick man in hospital writes letter to mistress saying that he will get a lawyer to give her property at his death – he used the word “inherit,” and he doesn’t get around to it. Court accepts into probate. Not a lot of evidence that he intended it to be a will, but there is a lot of evidence of his testamentary intentions (here the court was applying a looser approach). (5) Extrinsic Evidence: (a) UPC § 2-502(c) says that extrinsic evidence can be used to show testamentary intent (or the handwritten words) (b) Johnson case says no extrinsic evidence (testamentary intent had to be established by the handwritten words) – Don’t use Johnson! f. Holographic Codicils: i. Ex: typewritten will, T crosses out John and puts in Nancy. T signs and dates the will change. (1) Surplussage theory: If the jurisdiction requires testamentary intent to be clear from the handwritten portions alone, and all you have is “Nancy” and the date, this won’t be enough (2) UPC: allows you to look at the typewritten materials for context, and only the material portions have to be handwritten (a) Still not enough under UPC. You would need it to say “$5,000 to Nancy” 6. Statutory Wills: State authorized form a. Same problem as pre-printed will forms b. Some courts will reach for holographic will statutes to save the will 7. Oral Wills: a. In very limited circumstances in some states, oral wills can be probated. But they are rarely used, and even when used, they will not be admitted to probate unless all rules are strictly shown such as clear and convincing evidence of intent. b. UPC has no provisions whatsoever for oral wills c. Restatement – (see supplement page 9) i. Applies only in rare circumstances (see supplement) (1) Applies to personal property and in a few instances real property B. Revocation of Wills by Writing or Physical Act 1. Revocation By Writing a. Requirements: i. Must have intent to revoke ii. Must meet wills act requirements (b/c a revocatorty writing is a will) b. Can be revoked in whole or in party i. Codicil: writing that revokes in part c. Revocation can be (1) expressed or (2) by inconsistency i. Expressed: it’s a good idea to include an “express revocation clause” in every will saying that this will revokes all previous wills and codicils (1) If just a codicil – don’t expressly revoke all wills. But express the relationship between this codicil and other documents that are out there ii. Inconsistency: (1) UPC § 2-507: (a) § 2-507(b): If will #2 was meant to replace will #1 will #1 is wholly revoked (b) § 2-507(c): presumption that if will #2 made a complete disposition of T’s estate T meant to replace the first will (i) Presumption is rebuttable by clear and convincing evidence (c) § 2-507(d): If will #2 doesn’t make complete disposition of estate, presumption is that will #2 is a codicil; revokes will #1 only to the extent that it’s inconsistent with will #2 (i) Presumption rebuttable only by clear and convincing evidence Examples: Inconsistency Will #1: Antique Desk A $20,000 B Residue C Will #2: Antique Desk X $10,000 B Residue C This will makes a complete disposition of the estate (b/c of the residual clause) Under UPC 2-507(c) there is a presumption that Will #2 was meant to replace Will #1 Will #1: Antique Desk A $20,000 B Residue C Will #2: Antique Desk X $10,000 B This is not a complete disposition. Under UPC 2-507(d), the 2nd will is a codicil. Look at inconsistencies: Antique Desk: Will #2 controls Residuary Clause: No conflict Cash devise to B: T might have meant for the $10,000 to replace the $20,000 OR might have meant a total of $30,000. Look at relationship (whether there is evidence that it soured or became better) and T’s financial situation (if worse – T might have meant to reduce) Will #1: Everything to A Will #2: Diamond Ring B Car C Will #2 doesn’t say anything about will #1. Under UPC § 2-507(d), presumption that this is just a codicil. Will #1 is only revoked to the extent that it’s only inconsistent with Will #1 Therefore: A gets everything except the ring and the car. B gets the ring and C gets the car. d. Whether revocation of the will revokes the codicil: i. If will and codicil are so interdependent / intertwined where the codicil is dependent on the will for the codicil’s meaning codicil would be revoked ii. If codicil could stand on its own and be read on its own codicil would not be revoked 2. Revocation By Physical Act: a. UPC § 2-507(a)(2): (1) revocatory act on will with (2) the intent and purpose of revoking it or any part of it i. Revocatory act: Burning, Tearing, Canceling, Destroying, or Obliterating (1) Some statutes add additional acts (e.g. cutting); others don’t including “canceling” (2) Whether or not it actually touches the words on the will (a) But many J’s require words of cancellation to touch the words of the will ii. Intent to Revoke: Must perform the act with the intention to revoke the will (1) If fraudulently destroyed or damaged no revocation (2) If intent but don’t perform the act no revocation (a) Ex: stapling a memo that says “this will is null and void” iii. Okay if someone else does it at T’s direction (1) UPC uses conscious presence test; other J’s use line of sight iv. Words of Cancellation (ex: writing “cancel” or “void” on the will) (1) Common law: has to touch words on will (writing in margin not enough) (a) Thompson v. Royal followed this rule – words of cancellation on back was not revocation by writing b/c did not meet wills act formalities; not holographic b/c not in T’s handwriting (2) UPC – doesn’t require words to touch words of will v. Physical act revocation / words of cancellation must be done to the actual will, not a Xerox copy of the will vi. UPC and most jurisdictions allow for partial revocation by physical act (1) Ex: take out a pen and cross out a few people / things, BUT you can’t add things in if it’s a type written will (2) If jurisdiction doesn’t allow for partial revocation by physical act, but you have a holographic will, T can make changes to holographic will in T’s own handwriting, and T doesn’t need to resign the will 3. Burden of Proof and Shifting Burden of Proof: a. General Rules: i. Proving due execution proponent has burden of proving ii. Revocation contestant of will has burden of proving b. Exceptions where burden is shifted: i. If T dies with possession of the will, but we can’t find the will when T dies, the presumption is that T destroyed the will with the intent to revoke it. (It’s a weak presumption) (1) Proponent of the will must disprove the presumption, but it’s a weak presumption (2) If presumption is rebutted, you have a will that hasn’t been revoked, but you still can’t find it (a) Most jurisdictions require clear and convincing evidence to prove the contents of the will (b) Photocopy would be very useful here! ii. If T dies and will is in damaged condition, the presumption is that T damaged it with the intent to revoke it (1) Not a strong presumption (could have been an accident or fraudulent act) iii. Note: Duplicate wills: (both executed by the T and signed by the W’s) if you revoke one of them, you automatically revoke the other. Even if there is a copy at the lawyer’s office, but you can’t find T’s copy when he dies, the presumption is that he destroyed it with the intent to revoke it, so the one with the lawyer is also void. (1) Duplicate wills = not a good idea C. Revival Generally (will need to know revival to understand Dependant Relative Revocation) 1. 2 fool proof ways to re-validate a previously revoked will: a. Re-execute the revoked will b. Execute a codicil to it with intent to revive the earlier will 2. Common example where there is question: a. T executes Will #1 b. T executes Will #2 which revokes Will #1 either expressly or by inconsistency c. T revokes Will #2 d. In revoking will #2, does that revive will #1? 3. Majority of Jurisdictions: it’s a question of intent a. Test: Did the Testator intend to revive will #1 when he revoked will #2 b. Evidence permitted: i. Pre UPC: Statutes provided that intent has to appear from the terms of the revocation of Will #2 (so Revocation of Will #2 had to be in writing which indicated an intent to Revive Will #1) ii. UCP / Most Jurisdictions Today: Allow extrinsic evidence and / or Testator’s declaration contemporaneous with revocation. 4. UPC Revival Rule: 2-509 – creates presumptions: Provision Scenario UPC § 2-509(a) Will #2 wholly revokes Will #1 Physical Act UPC § 2-509(b) Will #2 partly revokes Will #1 (Will #2 is a codicil to Will #1) Physical Act UPC § 2-509(c) Will #2 revokes Will #1 in whole or in part. Will #3 revokes Will #2. Will # 3 must be in writing and must have wills act formalities Will #1 remains revoked. Revocation By Presumption Testator did not intend to revival of Will #1 when T revoked Will #2 Proponent of Will #1 must show that the T intended to revive Will #1 (circumstances of the revocation of Will #2 of from the T’s contemporary or subsequent declarations) T did intend to revive the revoked portions of Will #1 Must be evident from the circumstances of the revocation of Will #2 or from the T’s contemporary or subsequent declarations that the T did not intend Will #1 to be revived. How to overcome Presumption Must show that Will #3 shows an intent to have Will #1 effective. (The revocatory writing in Will #3 must show intent) 5. Minority: Anti-Revival Jurisdictions a. The revocation of Will #2 does not revive Will #1. b. To revive Will #1, T would need to (1) re-execute it or (2) execute a codicil to it with the intent to revive will #1 i. Ex: T makes Will #1 then revokes it. Then executes a codicil building on will #1 which indicates an intent to revive. This would revive will #1 in an anti-revival jurisdiction. D. Dependant Relative Revocation: (ALSO SEE ATTACHMENT WITH EXAMPLES OF DRR) 1. Definition: If the Testator purports to revoke his will upon a mistaken assumption of law or fact, the revocation is ineffective if the Testator would not have revoked his will had he known the truth 2. 2 components: a. Mistake – types of mistakes: i. The Testator revokes his will or part of his will in connection with an attempt to achieve a dispositive objective that fails under applicable law. (Rest 4.3(a)(1) Examples: (1) The Testator wholly revokes his will in connection with an attempt to make a new will that fails because of an execution defect / does not follow wills act formalities (2) The Testator partially revokes his will in connection with an attempt to make alterations to his will which fail because of noncompliance with the Wills Act (making alterations to an old will but not doing it with wills act formalities) (3) The Testator revokes his will under a mistaken belief that it will revive an earlier will that was previously revoked (a) Ex: T revokes will under the belief that by doing so, they are reviving an earlier will that was previously revoked (b) DRR will not revive the earlier will. Two options: (i) Revocation is ineffective (ii) Revocation is effective intestacy ii. The Testator revokes his will or part of his will because of a false assumption of law or because of a false belief about an objective fact where these are either recited in the revoking instrument or established by clear and convincing evidence (Rest 4.3(a)(2)) (1) Ex: T leaves everything to Mary. Mary died. T writes revocation instrument that says: “I’m not leaving anything to Mary b/c Mary is dead.” But Mary is actually alive. b. Would not have revoked if he had known the truth 3. Result: 2 choices – (T does not get the new will) a. Option #1: Revocation held to be ineffective i. Restatement and jurisdictions apply a presumption that this is what the T would have wanted –for the revocation to be ineffective b. Option #2: Revocation held to be effective i. Presumption that T would have wanted the revocation to be ineffective can be rebutted if you can show that even with the mistake, T would have wanted the revocation ii. Will usually pass through residuary clause or through intestacy c. Analysis: Compare what T really wanted to the 2 choices and pick whichever is best d. Example: T has two kids, J and M. T is unhappy with M. Will #1 leaves everything to J. Now T is unhappy with J. Tears up Will #1 and executes Will #2 leaving everything to M. There are mistakes in the execution process of Will #2. i. Options - Effect of Dependent Relative Revocation: (1) Option #1 – get Will #1 back (everything to J) (2) Option #2 – revocation of Will #1 is effective, so there’s no will intestacy (1/2 to J and ½ to M) (3) Note that getting Will #2 (what the T really wanted) is not an option ii. Probable outcome: Option #2 – not exactly what the T would have wanted, but better than option number 2. 4. UPC does not have Dependent Relative Revocation, b/c UPC has harmless error doctrine a. Note that harmless error doctrine, UPC § 2-503 also applies to an addition or alteration of the will (UPC § 2-503(iii)) b. DRR argument can still be made in UPC Jurisdiction. Scenario: i. Ex: T makes Will #1. Will #2 Revokes Will #1. Will #2 is revoked in writing by Will #3. §2-509(c) requires intent that Will #1 be revived should be in the writing of Will #3. If the intent isn’t in writing, proponent of Will #1 could argue Dependent Relative Revocation in order to get Will #2 back. 5. If there is no revocation, you can’t have dependent relative revocation a. Ex: If T goes in a crosses out John’s name and writes “Nancy” – if the jurisdiction doesn’t allow partial revocation by operation of law, there is no revocation, so the original will is going to be probated. i. (note that if it’s a holographic will, Nancy would get the money) ii. Also do not need Dependent Relative Revocation if you can consider it a holographic codicil (handwritten changes on typewritten will) E. Revocation by Operation of Law: 1. Divorce: UPC § 2-804: Allows revocation of a gift to a former spouse where there has been a divorce a. UPC includes revocation of gifts to relatives of the former spouse who are not relatives of the Testator i. Most J’s don’t include relatives b. UPC Applies to wills and non-probate transfers i. Most J’s don’t include non-probate transfers c. Effect: Spouse is treated as a disclaimant / as if spouse predeceased Testator 2. Homicide: UPC 2-803: Where a devisee kills the Testator, allows revocation of gifts to that devisee a. Devisee who kills T is treated as though they disclaimed F. Components of a Will / Scope of the Will: 1. Doctrine of Integration: What constitutes the pages of the will a. Rule: Those pieces of paper that are physically present at the time of execution and that the testator intends to be part of the will constitute the pages of the will 2. Doctrine of Republication by Codicil: Executing a codicil to a will reexecutes and republishes the underlying will a. If the underlying will is not valid, the “codicil” isn’t really a codicil and does not republish the invalid will 3. Incorporation by Reference: a. Rule: UPC § 2-510 - Writings that don’t have wills act formalities will be given effect if: i. The writing was in existence when the will was executed ii. The will indicates an intent to incorporate the writing iii. The will describes the document with reasonable certainty b. Examples: i. Incorporate a defectively executed will ii. Incorporate by reference the terms of someone else’s will c. Separate Writing Identifying Bequest of Tangible Property (UPC § 2-513) i. Permits a testator to give away his or her tangible personal property via a list not executed with Wills Act formalities, even if the list is created after the will is executed, as long as the will expressly states such intent. (this waives the requirement above that the document has to be in existence when the will was executed) ii. List must be signed by the Testator iii. Applies to personal property only 4. Doctrine of Acts of Independent Significance: UPC § 2-512 - A will may dispose of property by reference to acts outside the will as long as the referenced act has significance independent of its effect upon the Testator’s probate estate a. “I give $1,000 to each of my sons-in-law” by a T who has 2 unmarried daughters i. This is okay. The daughter’s getting married has significance entirely separate from the will b. “All the stuff in my garage to my brother” i. This is okay. Storing stuff in the garage has independent significance c. “$10,000 to each of the persons I will identify in a letter I will leave for my executor” i. Not okay, b/c the letter doesn’t have independent significance other than to control who takes under the Testator’s will d. “$10,000 to each of the persons listed as beneficiaries in my brother’s will” i. This is okay, b/c brother’s will has its own significance e. “The car I own when I die” (had a beat up Toyota at will time, at death has new Cadillac) i. Could be problematic because it’s unclear whether, when T wrote the will, she meant for the person to have a brand new car G. Contracts Relating to Wills: 1. Contract to Make a Will a. Ex: Elderly person asks family member to live with her and help take care of her, in exchange for naming the family member in the will b. Evidence necessary to enforce: Clear and convincing evidence i. UPC § 2-514: Need written evidence that there was a contract to make a will. 3 ways: (1) Provisions in the will stating material provisions of the will contract (2) Express reference in the will to the contract (3) Writing outside the will that is signed by the testator ii. Most jurisdictions require proof in writing 2. Contract not to Revoke a Will a. Typically between spouses when they execute joint wills and mutual wills; contract is a contract not to revoke without the other’s consent i. Mutual will: 2 wills with reciprocal provisions ii. Joint will: single document meant to be the will of both persons b. Evidence necessary to enforce: Clear and convincing evidence i. UPC: Draws no distinction between this and contract to make a will ii. Some jurisdictions: If you have mutual wills of joint wills, there is a presumption that there was a contract not to revoke (1) If you have a mutual or joint will – you should put in whether there is a contract not to revoke c. Generally contracts not to revoke are a bad idea; they can straightjacket surviving family members. Trusts are usually a better way to handle 3. Enforceability: Will contracts are enforceable if there is sufficient evidence proving the contract 4. Remedy: Under contract law, not will law a. Usually remedy is constructive trust on the estate – person who was in the will gets the property, but they are a trustee for the person who had the agreement with the decedent WILLS: CAPACITY AND CONTESTS: A. Requirements for making a valid will: 1. Age 2. Mental Capacity 3. Voluntariness 4. Testamentary Intent 5. Wills Act Requirements a. If the proponent of the will can prove that the Wills Act requirements are met, then all the other requirements are presumed B. Mental Capacity: 1. Most Jurisdictions: “sound mind” 2. UPC § 2-501: 18 years old and sound mind 3. Black letter test for sound mind: Must have ability to know: (don’t need to actually know) a. The nature and extent of his or her property b. The natural objects of his or her bounty, and c. The disposition that he or she is making of that property, and d. Must be capable of relating these elements to one another and forming an orderly desire regarding the disposition of the property (need to know how all the elements interrelated to form a coherent plan) 4. Lucid intervals Doctrine: Mental capacity requirement is satisfied if will is executed during a lucid interval, even if testator is incompetent other times 5. Insane Delusion Doctrine: a. Must show that (1) there was an insane delusion, (2) the insane delusion affected the will b. Only the part of the will affected by the insane delusion will be invalidated c. Ex: Elderly parent mad b/c kids put them in nursing home and disinherit the kids i. If Testator is just mad, it’s not an insane delusion, but kids will argue it ii. Sympathetic judge or jury might rule for the kids anyway, b/c one of the underlying reasons for the mental capacity requirements is to protect the decedent’s heirs d. If arguing insane delusion, it will help if you can show a specific injury that happened right before the incompetency C. Undue Influence (applies to Voluntariness Requirement) 1. Undue influence occurs when someone else coerces the testator 2. Black letter test for undue influence: Will contestant must show: a. Susceptibility: The Testator was susceptible to undue influence i. Ex: Age, infirmity b. Opportunity: The defendant had the opportunity to exert undue influence c. Motive: The defendant had a motive for exerting undue influence d. Causation: The undue influence cause the Testator to dispose of his or her property in a way that the Testator would not have otherwise 3. Courts look for a confidential relationship between the alleged influence and the Testator a. Ex: Nurse/patient; doctor/patient; pastor/parishioner; attorney/client b. Hallmark of the confidential relationship is a position of superiority of the influencer over the Testator i. Ex: child taking care of a parent’s business matter 4. To establish a presumption of undue influence (varies upon jurisdiction): a. Confidential relationship + testator has weaker intellect + property going to alleged influencer (Lakatosh case) b. Confidential relationship + unusual susceptibility to undue influence (other courts) c. Confidential relationship + suspicious circumstances (Rest 3rd) 5. If presumption of undue influence is established (varies upon jurisdiction): a. Some Jurisdictions: Burden if shifted to the proponent of the will to show lack of undue influence (Iowa / Book) b. Other Jurisdictions: Burden of proof isn’t shifted, but burden of going forward is shifted (proponent would need to show some evidence that the case can go forward) (Restatement) 6. Bequests to Attorneys a. General rule: any time an attorney who drafts an instrument receives a substantial gift under it, a presumption of undue influence arises unless the attorney is related to or married to the client b. Most jurisdictions require a heightened burden of proof to overcome the presumption, requiring clear and convincing evidence that the gift was truly the T’s intent c. Seward Johnson case – attorney was executor i. Attorney should disclose to client the full range of options available; shouldn’t push the idea; talk to client about rules for executor compensation ii. Representing both spouses: if there is a conflict of interest, lawyer has to get consent from the beginning D. Preventing Will Contests 1. No contests clauses: a clause that says that if a beneficiary under the instrument sues contesting this instrument, the beneficiary loses whatever he or she is taking under the instrument a. Pros: may deter strike suits and protect testator’s intent i. Strike suits: contestants know they have no chance of winning but seek settlement b. Cons: may actually shield a party’s wrongful conduct c. General rule: the clauses are valid, but are construed narrowly and are not enforceable in certain situations d. UPC: refuse to enforce a no contest clause if there is probable cause to support the will contest, whatever the nature of the contest (UPC § 2-517) 2. Planning for a Will Contest a. Know typical situations where will contests arise: large estate, families that don’t get along b. Act proactively: i. No contest clause (1) Downside: client might resist, may not be enforced ii. List of reasons why estate is distributed the way it is (1) Downside: wills are public documents; more facts, more grounds for inaccuracies iii. Generate evidence of capacity and voluntariness before they die: (1) Testator’s own handwriting – what they are doing and why (2) Videotape meetings (but not when testator is too old / weak) iv. Execution ceremony – choose witnesses carefully (1) Can be more than minimum (2) Young witnesses who will be alive when Testator dies (3) People of sound mind (4) Witnesses who have no interest in outcome E. Fraud: 1. A will (or part of a will) affected by fraud will be invalidated 2. Fraud occurs where the Testator is deceived by a misrepresentation made by someone else to the Testator, and as a result, the Testator does something that they otherwise wouldn’t have done a. Misrepresentation to the Testator b. Made by someone who knows they are making a misrepresentation, but they do it willfully to deceive the Testator c. Causation: As a result, the Testator does something he otherwise wouldn’t have done i. Ex: executing a will that otherwise wouldn’t be executed, putting in a provision they otherwise wouldn’t have; revoking a will they otherwise wouldn’t have revoked 3. Two types of fraud: a. Fraud in the Inducement: someone misrepresents facts to the Testator and as a result, the Testator forms a testamentary intention they otherwise wouldn’t have i. Ex: Elderly lady getting ready to make a will. X tells her that X is developing a cure for cancer, so lady leaves her money. But X is lying. b. Fraud in the Execution: Testator is defrauded about the nature or contents of the document he is executing; executes a document that doesn’t represent his desires i. Ex: Old lady with bad eyesight. Hand her the wrong document to sign. 4. Constructive trust – one remedy to deal with fraud a. Latham v. Father Divine – will obtained under fraud, duress undue influence. T was supposed to leave stuff to her 1st cousins but didn’t. Court imposed a constructive trust – made father Divine hold property for her first cousins. i. Court couldn’t fix the mistake, b/c they couldn’t create a new will b. Ironic that innocent mistakes are traditionally not fixed, but we do fix fraud: Cause: wrongdoer’s conduct Lack of volition Mistake Duress, undue influence (we don’t fix it) Fraud (we fix it) Cause: innocent mistake Incapacity, insane delusion (we fix it) Mistake (we don’t fix it) F. Settlement of Will Contests: 1. UPC § 3-1101 and 3-1102 2. In order for a court to approve a settlement agreement where there has been a will context, there has to have been a bonafide controversy (the will contest has to have been in good faith). If not, the court won’t approve the settlement agreement 3. Rationale: a. A settlement will alter the Testator’s plan, which is significant b. Taxes: Devisees are treated as receiving the property directly from the decedent (different from agreements among successors), so there would be an incentive to “cook up” a controversy and settlement where there really was no controversy CONSTRUCTION OF WILLS A. Main goal of construing wills: to give effect to the Testator’s Intent B. Extrinsic Evidence and Ambiguity 1. Two traditional rules: a. Plain Meaning Rule: Where the wording of a will is clear and unambiguous, extrinsic evidence is not admitted to vary and contradict the meaning of those words (Rule is mainly an evidence rule) i. Ex: T wants estate to go to her first cousins. She says these are her closest relatives. Lawyer drafts will to say “heirs at law”. Actually, T’s aunt is the heir at law. Court will not vary the terms because there is no ambiguity. b. No reformation Doctrine: We do not reform mistakes in the language of the will to reflect what the Testator intended to say (rule mainly deals with mistakes) c. Mahnoney v. Granger: implicated both of these rules 2. If there is ambiguity in the will – extrinsic evidence can be admitted to solve the problem a. Patent Ambiguity: Just looking at the will on its face, you know there’s an ambiguity i. Examples: (1) Ex: To my brother John, ___ dollars (blank was never filled in) (2) Ex: Two provisions – one devising all personal property to Kate; another devising all personal property to Mary ii. Courts: traditionally don’t look at extrinsic evidence (if the court can somehow make sense of the will on its face, the court will do that) b. Latent Ambiguity: Not clear from the face of the will; you would have to apply the will to the testator’s circumstances i. Ex: Simpson case – disagreement over the term “homestead” ii. Courts: Traditionally will allow extrinsic evidence (1) Exception: direct declarations of testator intent generally cannot come in regardless of type of ambiguity (a) Rationale: declarations of testator intent can be abused, because Testator is not around (i) Remember that evidence of surrounding circumstances (relationship with people, nature of property) can always come in (ii) Some reforms allow statements made to attorneys, b/c not worried as much about attorneys lying about Testator intent (b) There is a difference between T’s actual intent and T’s intent as expressed in the will (Simpson case) iii. Falsa demonstration non nocet: Latent ambiguity arises from a misdescription of persons or property (1) Ex: Putting 304 Harrison Ave instead of 317 Harrison Ave - - Court can’t go in and just fix the problem, so could just reads it as saying “property on Harrison Avenue” (2) Court strikes out the erroneous stuff and looks at what’s left; tries to make sense of what’s left 3. Reform movement in Extrinsic Evidence and Ambiguity: a. No distinction between latent and patent ambiguities - extrinsic evidence can come in for either b. More courts are admitting pre-death statements made to drafting attorneys (don’t fear that the attorney will fabricate) C. Correcting Mistakes: 1. General rule is that courts don’t fix innocent mistakes 2. Erickson case (landmark case): Where there is a mistake in the will, and it’s the result of attorney error, and it’s proved by clear and convincing evidence the court can fix the mistake (scrivener’s error doctrine) 3. Restatement § 12.1: covers mistakes that are a result of attorney error AND mistakes that are a result of T’s own error a. If there is clear and convincing evidence of a mistake courts should be able to fix 4. Types of mistakes covered by Restatement § 12.1: Mistake of fact or law, either by expression or inducement a. Mistake of fact: Gibbs case i. Ex: Will says Robert R. Leaman but should say Robert J. Leaman b. Mistake of law: Mahoney case i. Ex: T thinks his cousins are heirs when it’s really T’s aunt c. Mistake of expression: The language of the will doesn’t match T’s intent i. Something is there that T doesn’t want, or something isn’t there that T does want d. Mistake of inducement: Will contains everything T wanted it to contain, but there was a mistake that caused the T to want to formulate the will that way i. Ex: Erickson case: Will doesn’t say anything about T’s future marriage, but that’s because the lawyer told him that was okay ii. Ex: Fraud in the inducement (traditionally courts will fix this anyway) e. Rationale for § 12.1: i. Testator intent effectuated ii. Avoids unjust enrichment for unintended beneficiaries iii. Harmless error doctrine is precedent D. Default Rules of Construction – General Introduction 1. These are default rules, but T can provide for other rules in the will 2. Different kinds of devises in a will (key to understanding default rules): a. Specific devise: a devise of a specific asset i. Ex: my antique desk to A b. General devise: a devise payable from general assets of the estate i. Ex: $10,000 to B c. Demonstrative devise: specific amount of money or property that comes from a specific source of funds i. Ex: $5,000 to C from my account at First National Bank ii. (if bank account doesn’t have $5,000 – go to estate to make it up) d. Residuary devise: What’s left over after everything else has been paid E. Lapse and Anti-Lapse 1. Rule: The beneficiary has to survive the Testator in order to take a. Common law – just an instant b. UPC and Simultaneous Death Act – 120 hours c. Or something else in the will, but no matter what the beneficiary has to survive the Testator 2. If Beneficiary predeceases Testator a lapse occurs 3. Common Law Rules for Lapsed Devises: a. If a specific or general devise lapses devise falls into the residue b. If devise to the entire residue lapses the heirs of the Testator take by intestacy i. This can happen when the sole residuary devisee or all the residuary devisees predecease the Testator c. If a share of the residue lapses the lapsed residuary share passes by intestacy to the Testator’s heirs i. (this is an unpopular rule and UPC is different) ii. UPC 2-604(b): Where residue is devised to 2 or more persons, the share of the residuary devise that fails for any reason goes to the other residuary devisees in a share proportional to the share they originally got d. If a devise is to a class of persons, and one member of the class predeceases the Testator the surviving members of the class divide the gift (ex: to A’s children) e. If a devisee is dead at the time the will is executed (or the devisee is a dog or cat) the devise is void (not lapsed, just void) i. If void, the same general default rules govern as govern lapsed devises 4. Anti-Lapse Statutes: 1969 UPC (not focusing on 1990) 1969 2-605 a. General: If the deceased beneficiary is a close relative of the Testator (grandparent or descendant of the grandparent) the beneficiary’s issue are going to take the predeceased beneficiary’s gift b. Covered beneficiaries: Grandparent or descendant of a grandparent i. If not a grandparent of descendant of grandparent statute doesn’t apply and common law rules apply ii. Note that a predeceased spouse is not included as a covered beneficiary in most statutes c. Substitute Takers: Descendants of the predeceased beneficiary i. If predeceased beneficiary has no issue cannot apply statute apply common law ii. If more than one surviving descendant use regular rules for representation d. If Testator provides for his own rule re: lapse, it will take precedence over common law rules and antilapse statutes i. Ex: my piano to my brother if he survives me. But if my brother predeceases me, to my friend Sally. Sally will get the piano. e. If Testator provides “to my brother if he survives me” Most jurisdictions will construe as “I don’t want the antilapse statute to apply even if my brother leaves issue and predeceases me” so common law rules apply i. UPC 2-603(b)(3) (1990) says that these words aren’t sufficient to mean that antilapse statute shouldn’t apply, but this is a highly criticized provision of the 1990 UCP 5. Class gifts: Only lapses if all the class members predecease the Testator a. What is a “class”? i. When testator is “group minded” ii. Ex: “to A’s children” or “to my nephews and nieces” iii. When described by individual names, but forming a natural class, may be deemed a class gift if the court decides, after admitting extrinsic evidence, that the testator would want the survivors to divide the property b. Common law approach: surviving members of the class split the gift (unless all members of the class die; then it’s lapsed) c. Most courts apply antilapse statutes to class gifts (even when they don’t expressly state that they apply to class gifts) d. Effect of the antilapse statute for class gifts: gifts that would have gone to the predeceased had they survived the testator are going to go to their issue as long as the predeceased class members are covered. i. First question: are they covered under the anti-lapse statute as beneficiaries? Grandparents or descendents of grandparents? ii. If so, do they have issue? (1) If yes the issue of the predeceased class members will get the gift in their place. It won’t go to the surviving class members. iii. If no to either of these questions it will go to the other surviving members of the class 6. UPC 2-605 (1969): Anti-lapse statute applies to those Beneficiaries who predecease the Testator even before the will was executed (void devise) or after the will was executed (lapsed devise) a. Many jurisdictions only apply them to lapsed devises (not void devises), b/c they are trying to get at T’s intent (if T leaves something “to my sisters” and one of his sisters is dead at the time of the will – UPC will give share to sister’s issue but not all jurisdictions will?) 7. Ambiguity: “To my living brothers and sisters, A, B, C, and D to share” a. Poorly drafted because it’s not clear whether “living” means “at the time of the will execution” or “at the time I die” 8. Non-probate transfers: a. Common Law: i. No requirement that the Beneficiary survive the Testator ii. The gift doesn’t lapse, so there is no need for an anti-lapse statute b. UPC: sometimes has provisions that require survival for certain will substitutes and sometimes it will apply anti lapse rules for certain will substitutes – just know generally that the UPC is not consistent (don’t need to know specifics) F. Ademption 1. Arises when testator makes a specific gift in his/her will and thereafter the item in question is transferred 2. Common law: where the testator makes a specific gift, and thereafter the specific item that is the subject of the specific gift is transferred, and irrebuttable presumption arises that the testator intended to revoke the gift. The gift fails. 3. 2 approaches / theories: a. Identity approach: if the will makes a specific gift, the executor is to go through the testator’s probate estate to see if he/she can “identify” that item in the estate. If so, the beneficiary takes the item. If not, the gift is adeemed (revoked) and the court will not take any extrinsic evidence as to why the item cannot be found or what was the testator’s intent with respect to the item i. This is the traditional and still majority approach b. Intent theory: if the specifically devised item is not in the testator’s estate, the beneficiary may nonetheless be entitled to the cash value of the item, depending on whether the beneficiary can show that this is what the testator would have wanted i. What would the testator have wanted? (look at on case-by-case basis) 4. Wasserman v. Cohen: a. Settlor created an inter vivos revocable trust that directed the trustee, upon the settlor’s death, to distribute the property to certain beneficiaries. The trust directed the trustee to convey “12-14 Newton Street, . . . Apartment Building” to Elaine Wasserman b. Settlor never transferred the building to the trust. Instead, she sold it for $575,000. The residuary clause of her will was a pour-over clause transferring her residuary estate to the trust to be disposed of pursuant to the terms of the trust. c. Court: found that the gift of the apartment building was adeemed. (Used identity approach and did not consider extrinsic evidence, so Wasserman took nothing) 5. Identity theory jurisdictions – courts have developed several escape routes to avoid ademption: (p. 409) a. Classify the devise as general or demonstrative rather than specific i. Ex: Stock – unless it says “MY IBM stock,” it would be classified as general b. Classify the inter vivos disposition as a change in form, not substance i. Ex: Stock in company A, but company A merges into company B – this is just a change in form c. Construe the meaning of the will as of the time of death rather than as of the time of execution d. Create exceptions – p. 410 of casebook 6. 1990 UPC – abandons the identity theory and adopts the intent theory (UPC § 2-606(a)(6)), but as amended in 1997 creates a presumption in favor of ademption a. Devisee has burden of showing that ademption would be contrary to T’s intention b. 2-606(a)(1)(4): if there has been a sale, but something is still owed for the sale, the devisee gets traceable proceeds 7. Lessons for will drafters: a. Try to minimize specific devises; use general devises wherever possible b. Ademption planning: If T insists on specific devise plan for what should happen if the devise is not in the estate at the time of T’s death G. Accession: 1. Defn: Devised property is in the estate when T dies, but additional property is produced by the devised property a. Ex: Bonds producing interest, stock splits, cash dividend, stock dividend 2. Bonds producing interest: a. Rule: interest on bond goes to the general assets of the estate 3. Stocks splits: a. Traditional rules: i. If specific devise (if it says “my”) devisee gets additional shares from a stock split ii. If general devise divisee doesn’t get additional shares from a stock split b. Modern approach / UPC: even if general devise devisee gets additional shares from a split 4. Cash Dividends (from stock): a. Traditional rule: devisee doesn’t get dividends 5. Stock dividends (from stock): a. Traditional / majority rule: devisee doesn’t get them b. UPC: stock dividends go to the devisee of the underlying stock (§2-605(a)) 6. General point: courts differ, so discuss any gift involving stock with client; ask how potential stock splits should be treated H. Abatement: 1. Occurs when T’s estate doesn’t have sufficient assets to pay off all devises; rules regarding what devises get reduced, and in which order 2. Common Law Rules: a. Property passing by intestacy is abated first b. Then residuary devises c. Then general devises d. Then specific devises (demonstrative devises treated as specific devises) 3. Traditional common law – personal property abated before real property (but most J’s don’t make distinction) 4. UPC: a. 3-902(a): indicates same order as above b. 3-902(b): gives court ability to change the abatement rules to match the Testator’s intent 5. Note – Testator can provide for a specific order of abatement in the will 6. General Point: Advise clients not to give away too much as specific and general, otherwise there may not be anything left for the person who is supposed to get the residuary WILL SUBTITUTES: NONPROBATE TRANSFERS A. Trusts: 1. General: a. Fiduciary relationship with respect to property b. Trustee holds bare legal title only and manages it for the beneficiaries c. Beneficiaries have equitable title 2. Types of trusts: a. Testamentary trust – created by a will b. Inter vivos trust – created when alive i. Revocable inter vivos trust: functions as a will substitute (1) Presumed to be irrevocable unless the terms of trust expressly state that the trust is revocable (2) What settlor can do: Settlor can transfer trust assets to 3rd party; execute a deed transferring the assets; retain the right to the income during his lifetime; retain right to revoke the trust; retain right to amend trust; retain power to control the trustee and trustee’s management of the property (3) Settlor can name himself beneficiary (self declared inter vivos trust) (4) Farkas v. Williams – example of a revocable inter vivos trust that is recognized as a valid will substitute that did not have to comply with the Wills Act formalities (even where the settlor is also the trustee and life beneficiary) B. Contracts with Payable-on-Death Provisions: Life Insurance, Pension Plans, Etc. 1. Types: Whole life, Term life 2. Different settlement options: a. Lump sum b. Annuity for rest of beneficiary’s life c. Interest for years followed by payment of principal 3. Life insurance contracts have long been recognized as valid notwithstanding their testamentary effect a. Problems may arise when there is ambiguity whether a particular arrangement qualifies as a life insurance contract (ex: Wilhoit v. People’s Life Insurance Company – court says not a life insurance contract but rather a separate, subsequent contract with bank) 4. UPC § 6-101: Expands the historical will substitute exemption for life insurance contracts and applies it to any and all contracts and instruments with payable on death clauses a. Employment contracts b. Promissory notes c. Deposit agreements d. Pension plans e. Retirement accounts 5. Cook v. Equitable Life Assurance Society: a. Issue one: This case follows the majority rule with respect to revocation of a life insurance beneficiary designation by divorce. In most states divorce revokes a will in favor of the spouse but does not revoke the designation of the spouse as life insurance beneficiary. i. UPC 2-804: changes this majority rule and provides that divorce revokes the designation of the divorced spouse a beneficiary of an insurance policy or pension plan or other contract. b. Issue two – Changing beneficiary: In the Cook case, the attempt at cross-channel revocation in the will was not allowed. Should do this in writing and with notice to the insurance company. Rule from Cook: You cannot change the beneficiary in a nonprobate transfer by your will!! This rule is in place in most jurisdictions. i. UPC 6-101: Says that if the contract allows for cross channel revocation, it’s okay – but most of them don’t allow for it c. Lesson: Make sure that beneficiaries are changed properly C. Joint Tenancy in Land 1. Joint tenancy: all tenants have equally undivided interests 2. When one of the JT’s dies, the interest simply extinguishes, so there’s nothing that passes through probate 3. A Joint Tenant cannot devise their share in a will 4. JT not considered a pure will substitute, because when you make a JT, you can’t “take it back” like you can a trust or a life insurance policy D. Multiple Party Bank Accounts 1. Payable on death accounts: pure will substitutes a. The account has a death beneficiary and is payable on death, but the T can empty it out whenever they want b. Majority of jurisdictions allow for these (even though courts resisted for a while); not recognized by common law 2. Savings account trusts (AKA Totten Trust) a. Depositer sets up a Totten account by depositing money in the account in the name of the depositer “for the benefit of” the beneficiary i. Legal title: Depositer ii. Equitable title: Beneficiary create a trust) (the split of title constitutes an intent to b. “in trust for X” - b/c of this, courts recognized it before they recognized payable on death accounts 3. Joint Bank accounts: a. Tricky because the intent behind the creation of a joint account differs. Possible intents: i. Agency – so that someone can manage accounts if you are old/bad eyesight ii. POD – so that someone can get your money when you tie but to avoid probate (not intended to get money now) iii. True joint and survivor account b. Courts take extrinsic evidence to determine the depositor’s true intent i. Depositer’s intent at time the account was opened controls, but subsequent comments and/or actions may be relevant to this issue of his/her intent at time the account was created ii. If the depositor executes paperwork that expressly states that the account is a JT account, the paperwork creates a presumption that the account is a true JT account. Must have clear and convincing evidence to overcome presumption. iii. Ex: Franklin v. Anna National Bank of Anna – court looked at extrinsic evidence to find that elderly person wanted to be an agency account PROTECTION OF THE FAMILY A. Support Allowances: 1. General: a. Allowances apply regardless of whether decedent dies intestate or with a will b. Decedent cannot defeat the allowances c. They take precedence over creditor claims d. Decedent can say in a will that any support allowances will be deducted from what devisees receive e. Allowances are generally recoverable only from probate assets i. UPC 6-102 allows allowances to be paid from nonprobate assets if probate assets are not sufficient f. Personal rep can pay out allowances immediately 2. General order that things get distributed: Probate Estate --- Subtract Support Allowances (1st ) --- Subtract Creditor Claims (2nd) End with Net Probate Estate 3. Homestead Allowance: to give surviving spouse a place to live a. Some states: grant the surviving spouse a life estate in the family home b. Other states: lump sum of money to provide for housing c. UPC: $15,000 lump sum payment 4. Family Allowance: Amount to live on during probate, b/c the probate process can be long and drawn out. a. Duration: Some J’s stop after a certain point i. UPC: stops after one year b. Amount: UPC says it should be a reasonable allowance based on need an standard of living i. Personal rep can pay up to $18,000 in lump sum or in payments without having to go to court at all. If personal rep feels like there is more need, can have special court order. c. Applies to: Spouse and minor children (but not other children) (UPC) 5. Personal Property Set Aside: surviving spouse is entitled to claim certain tangible personal property items regardless of the deceased’s spouse’s attempts to devise them a. Some states – have statutory list of tangible personal property b. Other states – have monetary limit on how much the surviving spouse may claim B. Marital Property Systems: 1. Separate Property System a. Each spouse owns whatever they earn during the marriage, whatever they take into the marriage, whatever they receive as a gift during the marriage b. Spouse can do whatever they want with what they own, except that which they own together (ex: Joint tenancy) c. Concern: Sole earner dies first and disposes assets to disinherit surviving spouse i. Solution: elective share 2. Community Property System (9 states) a. Each spouse has ½ interest in the other spouse’s earnings and acquisitions from earnings b. Each spouse can do whatever they want with their ½ interest c. Do not have elective share C. The Elective Share of the Surviving Spouse 1. Traditional elective share: 1/3 of the decedent’s net probate estate a. Surviving spouse has the option of renouncing the will and choosing to take the elected share 2. Problems with traditional elective share: a. Loophole: Can still disinherit surviving spouse by emptying out probate estate b. Surviving spouse may be undercompensated or overcompensated i. Undercompensated: 1/3 isn’t the same as they would get in community property jurisdiction ii. Overcompensated: If married for only a short period of time, surviving spouse may get more than ½ of what was earned during marriage c. Possibility of wrong result depending on title of the property i. Ex: W has $500K in her name and H has $100K in his name. W would be entitled to 1/3 of the $100K which seems unfair. d. Overcompensation when decedent has generously provided for surviving spouse by nonprobate transfers and lifetime gifts e. Traditional elective share may not be sufficient to meet support needs of surviving spouse 3. Reforms to avoid these problems a. 1969 UPC makes traditional elective share 1/3 of augmented estate (as opposed to 1/3 of net probate estate) i. Augmented share = net probate estate + specifically identified nonprobate transfers and lifetime transfers made during marriage to persons other than surviving spouse w/o adequate compensation + property owned by surviving spouse at time of the decedent’s death and traceable from the decedent 4. How elective share will be satisfied: a. Majority Rule (1969 UPC): Surviving Spouse takes under the will and gets remainder from estate beneficiaries i. Estate beneficiaries must fork over amount on equal basis in proportion to their interest in the decedent’s overall estate (not just the probate estate – go after probate and nonprobate on equal basis in proportion to their share over overall estate) b. Minority Rule: Will is gone and the surviving spouse just takes from the beneficiaries (follows the order of abatement) D. Pretermitted Spouses: spouses who marry Testator after Testator executed the will 1. Statutes operate as a partial revocation by operation of law – they partically revoke the will and the devises to other beneficiaries are reduced 2. UPC § 2-301: a. Gives to the surviving spouse the portion of the estate they would have gotten by intestacy, except for the portion devised to: (1) a child of the testator who was born before the testator married the surviving spouse and who is not a child of the surviving spouse; (2) a descendant of such a child; or (3) property that passes to such a child or descendant of such a child under the UPC’s anti-lapse provisions. Unless: i. Evidence (in will or other evidence) that the will was made in contemplation of the marriage ii. Will says notwithstanding a marriage iii. Transfers were made to the spouse and were meant to be in lieu of will provision, and this can be proven iv. (Note that it’s very normal for courts to narrowly construe these exceptions!) b. To satisfy the share: Follow the order of abatement (UPC § 2-301(b)) (note that this is different from elective share, where they go after estate beneficiaries on an equal basis in proportion to their interest of the decedent’s estate E. Pretermitted Children: 1. Remember that in all states (except LA), it’s okay for a D to disinherit his children 2. UPC § 2-302: only protects children who were born or adopted after the will was executed a. Other statutes will protect all children not named in the will (reflecting the idea that we don’t like people to disinherit their children, so if they’re going to do it, they have to do it expressly) b. Some statutes – provide for descendants of children who are not named in the will 3. Share: the after-born child will share in what the other children get (don’t need to know how to compute) TRUSTS: INTRODUCTION AND CREATION OF A TRUST A. Sources of American Trust Law 1. Mostly judge-made, until recently 2. Restatements 3. Professors Scott and Bogart – treatises 4. Uniform Trust Code B. Definition of Trust: 1. fiduciary relationship with respect to property whereby the trustee holds legal title to the property for the beneficiaries who hold equitable title, arising out of a manifestation of an intent to create that relationship, subjecting the person who holds title to the property to duties to deal with it for one or more persons, at least one of whom is not the sole trustee C. Parties to a trust: 1. Settlor: a. Creates the trust b. Inter vivos: created during settlor’s life c. Testamentary trust: created by a will d. Settlor can be both a trustee and a beneficiary 2. Trustee: a. Can be one trustee or several trustees i. Traditional rule: more than one trustee must act with unanimity ii. UTC rule: majority of trustees must agree b. If settler intends to create a trust but fails to name a trustee, a court will appoint a trustee to carry out the trust c. Trustee holds legal title; beneficiaries have equitable title d. Trustee is held to fiduciary standard of conduct: loyalty, prudence, etc. i. Loyalty to beneficiaries – have to act SOLELY in their interest ii. Duty of proven administration – invest and administer trust property with prudence and due care iii. Duty of fairness to all beneficiaries (AKA duty of impartiality) iv. Duty to earmark trust property and keep it separate from trustee’s own assets v. Duty to keep good records and inform and account to beneficiaries e. Trustee Powers: i. Traditionally – only powers the settlor gave you ii. Most jurisdictions – statutes that list all the powers that trustees get as a matter of default law (settlor can always change) f. Corporate fiduciaries are common (trust departments in banks; law firms) 3. Beneficiaries: a. Hold equitable interests b. Beneficiaries have a personal claim against the trustee for breach of trust but has no higher priority claim than other creditors of the trustee c. Equity gives beneficiaries additional remedies d. Common for settlor to create concurrent as well as successive beneficial interests i. Ex: life interest followed by one or more future interests e. Common for one or more income beneficiaries followed by one or more remainder beneficiaries i. Ex: Put money in trust for your brother for life and on his death the principal is to go to his then surviving children f. Note: Most life estates are equitable life estates (held in trust); why this is better than a legal life estate: i. Legal life tenant has no inherent powers to do anything (buy, sell) and it’s difficult for them to coordinate to get power, make an agreement with the remainder beneficiaries ii. Equitable - trustee usually has this power (even if not drafted it’s implied) and has duty of impartiality / fairness that helps shape their coordination / balancing of all the interests involved 4. Wearing “multiple hats”: a. Common for settlor to be trustee, or for one of the beneficiaries to be named trustee b. Limitation: you cannot have the sole trustee be the sole beneficiary i. Rationale: the only people who can enforce the trustee’s duties against the trustee are the beneficiaries. The settlor doesn’t have a right unless they have named themselves a beneficiary. D. Different kinds of express trusts: 1. Inter vivos trusts (during life) a. Can be revocable or irrevocable i. Revocable: serves as a will substitute b. Can be created in 2 different ways: i. Self-declared trust: settlor can name self as trustee (all that’s required is intent to hold property in trust), OR ii. Trust with a 3rd party trustee (settlor has to transfer assets to 3rd party trustee) E. Provisions of a Trust: 1. Dispositive Provisions: provisions telling the trustee what the beneficiary’s interests are; define who gets what and when 2. Administration Provisions: telling the trustee what his/her powers are a. This is where settlor can alter default rules of fiduciary duty F. Requirements for a Valid Trust: 1. Intent to create the trust by the settlor (no specific words required) 2. Specific identifiable trust property that is in existence when the trust is created (AKA Trust corpus res; principal) 3. At least one definite beneficiary who can enforce the trust duties against the trustee a. Not necessary to know who the person is at the creation of the trust G. Trust Remedies: 1. Constructive trust or equitable lien a. Rule of equitable tracing: if a trustee improperly converts trust property into another form (like purchasing stocks with money), a court can trace that property to wherever it is and get it back, as long as it’s not in the hands of a bona fide purchaser for value (i.e. if he sold it to someone else for valid consideration) 2. Compel a trustee to act where failure to act would be breach 3. Enjoin a trustee from acting where acting would be breach 4. Compel a trustee to make reparations where appropriate (if they can’t trustee will be personally liable for the difference) 5. Jimenez v. Lee: a. It’s easy to create a trust relationship even if it looks informal b. Same duties apply to lay trustees as apply to professional trustees H. Requirement of Trust Property: Need to have this in order to have a valid trust 1. Must be in existence at the time of the creation of the trust a. any legally transferable property interest can be held in trust b. a mere expectancy cannot be held in trust (e.g. you will be an intestate heir in the future) c. Brainard v. Commissioner – no validly created trust d. Steelman Case: party had a license to produce the musical, which is an existing property/contract right e. Ex: I can declare myself a trustee of my wages, but cannot declare myself a trustee of the proceeds from the book contract I’d like to have 2. Must be Ascertainable a. Must have a description of the trust property that allows us to identify what the settlor is talking about i. Ex: All my IBM stock, All my stock these are ascertainable ii. Ex: “The bulk of my securities” this isn’t as clear I. Purpose of Trusts: 1. Private express trust: at core of modern estate planning a. Revocable inter vivos trusts: can be good ways to avoid probate but aren’t costless i. Attorneys charge more to draft, transfer fees, can be hard to get assets out of the trust once they are in the trust 2. Use trust as coordinating or unification device in connection with Testator’s estate a. Ex: pour over wills – a will that pours over the T’s assets into a trust i. Either a trust that is empty until the T dies, or ii. An inter vivos trust that is also functioning as a probate avoidance device Dependant Relative Revocation: Examples Example 1: T tries to make new will and revoke old will, but there is an execution defect T has 2 kids: John and Mary Will #1 – leave everything to John T is unhappy with John, so he tears up Will #1 and executes Will #2 leaving everything to Mary There was a small mistake in the execution process of Will #2 (one witness didn’t sign in presence) Effect of DRR: o Doesn’t give T Will #2 o 2 options: Revocation is effective Intestacy This would give John ½ and Mary ½ (probably closer to what T really wants Revocation is ineffective Will #1 This would give John everything o Presumption: T wants will #1 back But she really wants everything to M. So it’s better to have the revocation be effective in this case Other ways to save: Harmless error doctrine would allow Will #2 to take effect Example 2: T tries to make new will and revoke old will, but there is an execution defect John is T’s good friend and Mary is John’s daughter T makes Will #1 leaving everything to John T makes Will #2 leaving everything to Mary (for tax purposes). There is a mistake in execution of Will #2. DRR Options: o Revocation effective intestacy o Revocation ineffective Get Will #1 back Presumption: He wants Will #1 back Here: having old will back is better than intestacy Other ways to save will: Harmless error doctrine would allow Will #2 to take effect Example 3: (Carter Case) – might need to look at this again! Example 4: T tries to make a change to a will but there is an execution defect Will #1 – typewritten, one provision giving $5,000 to JB T crosses out JB and puts in “Nancy” Jurisdiction recognizes revocation by physical act, so the $5,000 is gone. But you don’t get the $5,000 to Nancy. DRR options: o Option #1: Revocation is effective, so $5,000 passes through residuary clause or intestacy o Option #2: Revocation is ineffective, so John gets $5,000 Presumption: They would want the revocation to be effective – but can be rebutted depending on facts of the case If Jurisdiction does not allow partial revocation by operation of law there was no revocation and you can’t apply DRR o Unless holographic will, in which case it can be changed with T’s own handwriting. Example 5: Mistake regarding Revival of an Earlier Will Will #1: Everything to A Will #2: Ring to B, Car to C, Residue to D Will #2 wholly revokes Will #1 T then revokes Will #2, thinking that this will revive Will #1. o If T tore up Will #2 apply UPC 2-509(a) presumption that T did not intend to revive Will #1 (unless proponent shows evidence that it was T’s intent to revive Will #1) DRR: (not really useful b/c you still need proof of intent, which you would need under 2-509(a)) Option 1: Revocation Effective Intestacy Option 2: Revocation Ineffective Get Will #2 If T revoked Will #2 by a revocatory writing (Will #3) only revive Will #1 if the intent is clear by the terms of Will #3 If intent is not clear in the writing, DRR might help: Option 1: Revocation Effective Intestacy Option 2: Revocation Ineffective Get Will #2 o Example 6: Auburn Case Will #1 – 1955 – Milwaukee Will Will #2 – 1959 – Kankakee Will T revoked Will #2 by tearing it up DRR options: o Option #1: Revocation effective intestacy o Option #2: Revocation ineffective Kankakee will is effective Presumption: revocation ineffective and Kankakee will is back Court sees that Kankakee will is closer to the Milwaukee will than intestacy is Applying UPC 2-509(a) – Presumption is that T did not intend to revive Will #1, but the evidence could rebut it. So under UPC, Milwaukee will is revived.