WILLS & TRUSTS OUTLINE The Question: -Who gets your property when you die? -In order to determine this we first have to determine if it is Probate or Non-Probate property. -These will be discussed below, but generally: -Will’s requirements do not apply to Non-Probate property because these types of property generally pass automatically after death. -If it is Probate Property, you must determine if there person has died Testate or Intestate. -Testate = With a Will. -Intestate = Without a Will. -You must also makes sure that the decedent has not attempted to devise property which was required, by law, to fall to someone else. -This will be at issue if there is a surviving spouse or child. Non-Probate Transfers 1. Generally: -These are often referred to as Will Substitutes. They are called this because they pass property at time of death but are not subject to Will’s Act formalities. -People usually use these to avoid the costs and burdens of creating a Will. -Normally, if a testamentary disposition of property does not qualify as one of these non-probate transfers, then it must qualify as a Will and satisfy the Will’s Act formalities! -The types of property included here are: 1. Life Insurance Polices -Included in these are the general contracts with payable on death clauses. 2. Joint Tenancy -These can be an issue also with bank account, not just real property. 3. Life-Estates/Remainders 4. Trusts 2. Contracts with Payable on Death Clauses: -Whenever you are looking at an agreement between a decedent and an insurance company, you need to determine if it is in fact an insurance contract, or if it is merely a contract with a payable-on-death clause. 1 -Common Law: -Only insurance polices could qualify as Will substitutes, a contract with a payable-on-death clause was an invalid attempt at a testamentary disposition. -Modern Trend: California Approach -All contracts between a decedent and a third party beneficiary, with a payableon-death clause, can qualify as valid Will substitutes. -Does the beneficiary have to survive the testator/transferor? -Generally there is a survival requirement. -If the person doesn’t survive, their issue will have no claim to the property. -Modern-Modern Trend: (California Approach) -Since this is a Will substitute, Lapse and Anti-Lapse apply. -Can these types of contracts be Revoked by Operation of Law? -Remember, these are situations where someone has this type of contract, or a life insurance policy, and then they get divorced. -Common Law: Revocation by operation of law only applies to Wills. -Modern Trend: This type of revocation can apply here. -California Approach: -Revocation by Operation of Law can apply to all Non-Probate transfers except Life Insurance Polices. -Can a subsequent Will revoke these types of contracts? -Super Will Doctrine: (not adopted by anyone) -A subsequent Will can revoke a Life Insurance policy. -UPC: If there is an expressed provision that a subsequent Will can revoke this type of contract, then a subsequent Will can revoke. 3. Joint Tenancy: -Remember, a Joint Tenancy cannot be severed by a Will. -Also, with these types of account, creditors can generally not reach the decedent’s interest because the interest is extinguished upon their death. -Joint Tenancy Bank Accounts: -There are three different types of Joint Accounts: 1. Convenience Accounts: (or Agency Accounts) -This would be an account where one party adds another party’s name so that the second party can access the account to help pay for things. -Inter Vivos: The second party can only take out money for the original party’s benefit. -There is no right of survivorship. 2 2. Payable on Death Accounts: -Inter Vivos: The second party cannot take out any many inter vivos. -There is a right of survivorship. -Common Law: This was an invalid testamentary disposition, and the money would go to the probate scheme. -Modern Trend: This is a valid disposition of property. 3. True Joint Tenancy: -Inter Vivos: The second party can take out money inter vivos. -There is a right of Survivorship. -Common Law: -The courts would presume that this is the type of Joint Tenancy account created. -Modern Trend: -The courts presume that you can take out, inter vivos, only an amount proportional to what you put in. However, there still remains a right of survivorship. -Exception: If the other party does not deposit anything into the account, the presumption is that the account is a Payable on Death account. -One can only rebut these presumptions by clear and convincing evidence concerning the depositor’s intent at the time the account is created, or at the time the second name is added. -Subsequent actions/comments can reflect the nature of the depositor’s intent at that time. 4. Life Estates and Remainders: -These types of non-probate transfers come to issue when you have conditional deeds which can be revoked. -But revocable deeds were very similar to Wills! -Common Law: -We had to apply the Will’s Act formalities to revocable deeds. -Modern Trend: (California Approach) -Contingent remainders are still property interests, therefore, do apply Will’s requirements to these types of deeds. Trusts: 1. Generally: -Terminology pertinent to Trusts: 3 -Settlor: The person who creates a trust. -Trustee: The person to whom the settlor transfers the trust property, and who holds legal title for the benefit of some other person. -Beneficiary: The part who holds the equitable interest in the trust. -Declaration of Trust: This is a trust where the settlor is also the trustee. -Deed of Trust: If someone other than the settlor is the trustee. -Trusts are simply gifts which are bifurcated between: a. The property deposited into the trust and the interest created by that property; and -The deposited property is usually called the Res or Corpus. b. Those who hold legal title and those who hold equitable title; and -This is the division between the trustee and the beneficiary. -A trustee cannot be the sole beneficiary, and if they are, there must be at least one other trustee. -The settlor can wear all three hats, but if they do, there must be at least one other trustee or one other beneficiary. -Merger Doctrine: -If the sole trustee is also the sole beneficiary, it is said that the legal and equitable titles merge and the Trust is terminated. c. Among those holding equitable title, those who hold a life estate and those who hold a remainder. 2. The Trust Property: -A Trust will not be effective until property is deposited into the trust. -This is to be contrasted with the general rule that a Trust will not fail for want of a Trustee. -This is similar to the “delivery” requirement of an inter vivos gift. -The determination of whether a Trust is Inter Vivos or Testamentary depends upon when the property is deposited into the Trust: a. If the property is deposited into the Trust before death, then it is an Inter Vivos Trust. b. If the property cannot be determined until death (or is not deposited until time of death), then it is a Testamentary Trust. -These types of trusts need to be found in an instrument, or be an instrument, which satisfies the Will’s Act formalities. 3. Requirement of a Trust: -In order to create a proper Trust, you must meet the four requirements: 1. There must be Intent. -This would be intent to: Transfer property to one party for the benefit of another party. 4 -What can show this proper intent? -Words such as “trustee” or “in trust” will be enough evidence that a Trust was intended. -Precatory Language: -If the phrase “I hope this person uses this for someone else” will not be construed as proper intent to create a Trust. It will be construed as intent to give a Gift with a Wish. -What is the burden of proof to show intent? a. When the settlor is not the trustee, the burden is very low. -This is true because the issue will not be whether there was intent, but whether there was a proper transfer of property. b. When the settlor is the trustee, then the burden is higher. -This is true because it is difficult to tell if there has actually been a transfer of property to the Trust, therefore, the courts will require more evidence of intent to create a Trust. -You must find the creation of an obligation by the settlor/trustee to hold the property for the benefit of another. -Look for some sort of separation of the property (implied intent). -Basically the burden of proof to show intent will coincide with whether there was actual some delivery. -If there is no delivery, there will be a more strict requirement to show intent to create a Trust. -This is based on the concern that the beneficiary is merely trying to turn a failed gift (for want of delivery) into a Trust. -Whenever you see lack of intent to create a Trust, look to see if you can qualify the “trust property” as a gift! 2. There must be Trust Property. -This is the requirement that there be qualifying property, and the property be properly delivered to the Trust. -Are Future Profits a property interest? -Generally no. -The courts have said that an Inter Vivos Gift of future profits is ok. -Exception: (not really an exception) 5 -If you see a Trust of Future Profits made, but then the profits are in fact made and subsequently transferred into the Trust, this property will couple with the intent to create a Trust, and a Trust will exist as of the time of transfer (but it will not relate back to the intent). -Are Expected Interests a property interest? -Generally no. -Sometimes the courts of equity will enforce these. -If you see a situation with either a Future Profit or Expected Interest, it may still be a proper trust if the future profits or expected interest are simply part of the “income” of the Res! -Ex: John makes a trust of his stocks, with the future profits from trading going to Bill. -There has been a transfer of his stocks into the trust which is valid property, and Bill is the equitable title holder of the income from the stock trading. -What constitutes proper delivery of the Trust Property? a. Actual Delivery: This is the preferred, and if it is possible, then it may be required. b. Symbolic Delivery: This is delivery of something which signifies the property (usually a piece of paper). c. Constructive Delivery: This is delivery of something which gives control of the property to someone else (usually a key). -What is the burden of showing delivery of the Trust Property? (this coincides with the burden of showing intent) a. If the settlor and the trustee are different people: -The burden is very low. b. If the settlor and the trustee are the same people: 1. If the trust property is personal property: -There is no real delivery requirement, but the requirement for Intent will be heightened. -Look for specific identification of the property to be trusted and a separation of that property from the settlor’s other property. 2. If the trust property is real property: 6 -The declaration of a Trust must be in writing, and there must be something must be written down to satisfy the Statute of Frauds. 3. There must be Ascertainable Beneficiaries: -The trustee must be able to name the beneficiaries who will be taking the equitable interest. -The actual names need not be there, but we need to be able to determine them by some objective means! -Remember: If you see intent to create a trust, and a transfer of property to a third party trustee, but there are not ascertainable beneficiaries, make the argument that is simply a Precatory Gift! -However, this is a losing argument! -Exceptions: 1. Unborn Children. 2. Trust involving the Honorary Trust Doctrine: -Where a trust fails for want of ascertainable beneficiaries (or for beneficiaries with standing to sue), but the trust is honorable, the court will find it to be a proper trust, as long as the honorary trustee is willing to honor the terms of the trust. -Exception: If there was a way to create a trust with ascertainable beneficiaries, but the settlor just doesn’t do it, then the court will not come to their rescue. -This doctrine only applies to trust which are inherently for the benefit of unascertainable beneficiaries. -Dogs, gravestone’s, etc... -Not people. -If the trustee does not honor the terms of the trustee, the court will create a Resulting Trust (to be discussed below). -Exception to a Trust not failing for want of a Trustee: -If the trustee dies, the court will not presume any intent, and will create a Resulting Trust. 7 4. There may be a Writing Requirement: -This is not a requirement of Trust law, but rather the overlapping of other laws onto Trust law. a. Inter Vivos Trusts: 1. Oral Trusts of Personal Property: No writing requirement. 2. Oral Trusts of Real Property: (Statute of Frauds overlaps) -This becomes an issue when someone trusts land to someone with the expectation that the person give the land back on a certain date or upon the happening of some condition, except this agreement is not on the deed. -Common Law: -The property goes to where the deed says. -Modern Trend: -The court will impose a constructive trust on the party who received the deed. -This is something the courts are willing to do when a trust fails for a lack of writing and there is some equitable basis for doing so. -Exception: If the plaintiff (transferring party) has unclean hands, the property will remain with the defendant. b. Testamentary Trusts: (Will’s Acts overlap) -Normally all Testamentary Trusts have to be in an instrument which satisfies the Will’s Act formalities, but this will generally become an issue where the terms of the trust are not in writing. -The court will not give effect to the settlor’s intent here, but rather will provide a remedial remedy. The type of remedy depends on the type of trust created: 1. Secret Trusts: -This is something which, on its face, looks to simply be a gift, and has no language indicating the creation of a fiduciary relationship, but there are 8 agreements concerning the gift which are not in writing. -The court will Constructive Trust. 2. Semi-Secret Trusts: -This is a gift which has, on its face, language indicating the creation of a fiduciary relationship. -The court will impose a Resulting Trust. -Modern Trend: In either of these situations a constructive trust should be applied. 4. Remedial Trusts: a. Resulting Trusts: -If a trust ever fails, in whole or in part, the trust property will be returned to the settlor. -If the settlor is dead, the property goes to the estate. -Purchase Money Resulting Trusts: -Where one party purchases property, and puts up all the money, but puts title to the property in some other person’s name, the presumption is that the donee is taking as trustee of the property (for the benefit of the purchaser). -Exception: If the donee is a family member. b. Constructive Trusts: -If someone is unjustly enriched, the court will put in place a constructive trust on the property for the person with the strongest equitable claim. 5. Revocable Trusts: -These are Trust which allow the settlor to alter, transfer, or sell the property of the Trust, or to revoke the trust outright. -The courts have determined that this may still qualify as a proper Trust because even a Contingent Remainder is a valid property interest. -Therefore, whenever you are looking at a Trust, the first thing you need to do is determine if it is revocable: -General Default: -Inter Vivos Trusts are not revocable unless the terms of the Trust expressly indicate that the Trust is revocable. -California Default: -Inter Vivos Trusts are presumed to be revocable unless the Trust expressly indicates otherwise. 9 impose a -Testamentary Trusts are not revocable. -How to Revoke a Trust: a. If the Trust indicates the method to Revoke: -If the Trust indicates the method, then only that method will work to revoke the Trust. -Remember, if you see the settlor attempting to revoke in another way, argue that the method included in the Trust was simply boilerplate! -This is not a winning argument. b. If the Trust does not indicate the method to Revoke: -If the Trust does not indicate the method, then anything which properly indicates the intent to revoke will qualify. -Revocation by Presumption Doctrine: 1. The Trust was last in the settlor’s possession; and 2. It cannot be found after their death; and 3. The settlor had testamentary capacity up until their death. -If the presumption is rebutted, then we must apply the Lost Trust Doctrine! 6. Beneficiary Interests: -To determine the extent of a beneficiary’s ability to reach the Res or the income of a Trust, we must determine if their interest is: 1. Mandatory: -This is an amount of either the income or res which the trustee is required to distribute to the beneficiary(s). 2. Discretionary: -This is an amount of either the income or res which is in the discretion of the trustee to distribute. -What duties does a Trustee have when exercising their discretion? a. Default Duty to Inquire: -The Trustee is required to take all reasonable steps to inquire, even if the beneficiary is difficult to deal with. -This means there is a duty to follow up. -Normally this duty will not be addressed in a Trust, and, therefore, this will normally be what is required. a. Default Duty to Distribute: -The trustee is required to act: (1) with “good faith;” and (2) “reasonably;” when determining whether to distribute or not. 10 -If there is a clause in the Trust indicating that the trustee has sole discretion (or something similar), then the court will presume that they trustee need not act reasonably, but they still must act in good faith. -Normally, there will be a statement of purpose within a discretionary trust. -If this purpose is set forth in the instrument, the courts will look to the purpose when determining if the trustee acted reasonably, and in good faith, with their discretion. -If the purpose is to provide for “comfort and support,” must the trustee take into account the beneficiary’s resources? -It falls to settlor’s intent, but if this intent is not clear, most courts hold that the discretion should not be based on their resources. 3. Sprinkle Trusts: -This is a trust where there is a mandatory top down distribution (meaning that a certain amount of res or income must be distributed) but the bottom up distribution is completely discretionary (to whom the property must go). 7. Creditors: -With respects to creditors, the question becomes whether the creditors can reach the Trust property: -It depends on who is indebted to the creditor (the following rules assume the settlor is not the indebted beneficiary). 1. Creditors of the Beneficiary. -Generally, a creditor can step into the shoes of a beneficiary and take whatever that beneficiary is entitled to if the beneficiary has the right to transfer their interest: a. Mandatory Trusts: -Here a creditor can step into the beneficiary’s shoes and force the trustee to give them what is required by the Trust. b. Discretionary Trusts: -The creditor will only be able to reach the discretionary Trust property if they can show an abuse of discretion by the trustee with respect to the beneficiary. 11 -Exception: Spend-Thrift Clauses -These are clauses which indicate that a beneficiary cannot voluntarily, or involuntarily, transfer their interest. -A Trust cannot have a clause barring only involuntary transfers, but it can have a clause which bars only voluntary transfers. -In this case the creditor will be unable to step into the shoes of the beneficiary. -Creditor Exempt from Spend-Thrift Clauses: 1. Spouses who are entitled to alimony. 2. Children who are entitled to support. 3. Federal Taxes 4. Creditors who provide basic necessities. -Food, housing, medical. -However, these 4 creditors cannot force the trustee to distribute with a discretionary right. -Remember, once the money is given to the beneficiary, the creditors can get to it. -Support Trusts: -This is a situation where the trust language says: the trustee “can distribute as much is necessary as is required to support/educate/maintain the beneficiary.” -Look for language which limits what the trustee’s ability to distribute the property to something involving support. -The importance of this is this kind of trusts act like a spendthrift clause. -The only type of creditor which can pierce this type of spendthrift clause is creditors who provide necessities. 2. Creditors of the Settlor; or -Mandatory Trusts: -Creditors can reach this with the same power as in creditors of beneficiaries. -Discretionary Trusts: -Creditors can force the trustee to exercise the discretion to the fullest extent (meaning they get everything they possible could get to). 12 -Spendthrift Clauses: -These clauses are void with respects to all creditors. -Cannot setup a Support Trust for yourself. -What happens when the beneficiary dies? -Common Law: -The interest in trust property is extinguished. -Modern Trend: -If it is an inter vivos revocable trust, and the settlor is the beneficiary who is indebted, and there are not enough assets in the probate estate to cover the debt, then the creditors can reach the trust to the extent the beneficiary had the right during life. 8. Modification and Termination of a Trust: -Normally a Trust ends when there is no Res left in the trust. -When can a trust be modified/revoked? -If the Trust is revocable: -The settlor can unilaterally modify/revoke at any time. -If the Trust is irrevocable: -All interested parties must agree to the modification/revocation. -This includes all beneficiaries and the settlor (to some extent). -Therefore look for this pattern: 1. All beneficiaries and the settlor; or 2. All beneficiaries and the trustee. -What if the Settlor Dies? -For Modification: -Modification may occur if: 1. All beneficiaries consent; and 2. There is an unforeseen change in circumstance; and 3. This change materially frustrates the settlor’s intent. -Common Law: Had a high threshold to prove “unforeseen” and “materially frustrating. -Modern Trend: There is a lower threshold. -For Termination: -Termination may occur if: 1. All beneficiaries consent ; and 2. There are no unfulfilled material purposes left for the trust. 13 -In this situation, the only party claiming that there is unfulfilled material purpose would be the trustee. Normally the determination of these two facts is fact sensitive. -Exception: In these situations the trustee has the right to block the termination. 1. Support Trust 2. Spendthrift Trust 3. Discretionary respects to income. 4. Age specific trusts. 9. Pour-Over Wills: -These are Wills which have provisions which pour over property, into a Trust, which you did not transfer into the Trust inter vivos. -“I give the rest/remainder of my assets to the trustee subject to the provisions of the Trust.” -Even though this is found in a Will, and it is property which is being probated, the Trust determines the disposition of the property. -You must validate the Trust because the Trust is determining the disposition. -In order to Validate, we can: 1. Incorporate by Reference: (you cannot have an oral Trust also be a pour-over) -You will have to incorporate the document, therefore, the document must be in existence at the time of the execution of the Will. -This means it need not be funded! -If you amend the Trust, you must execute a codicil or reexecute your Will. -When the Trust validated in this manner, it is considered a Testamentary Trust, which allows the probate court to supervise the property in the Trust for the entire existence of the Trust. 2. Acts of Independent Significance: -The referenced act would be the creation of the Trust. -Will this type of Trust have independent significance? -If the Trust was funded inter vivos, then it does. -If the Trust was not funded inter vivos, then it has no independent significance. 14 Trusts with -What happens when the Trust is validated in this manner? -Jurisdictions are Split. 3. Uniform Testamentary Additions to Trusts Act: -Requirements: 1. The Will refers to the Trust; and 2. The Trust is in a written instrument other than the Will; and 3. The Trust must be executed (signed) before or concurrently with the execution of the Will. -The signature is the one difference between this rule and incorporation by reference. -If you meet these requirements, you don’t have to fund the Trust inter vivos, but the Trust will still be deemed Inter Vivos. -Moreover, you can modify the Trust without executing a codicil to the Will! -What happens with Revocation by Operation of Law? -If the UTATA trust is completely unfunded before time of death, the presumption is that both the Will and the Trust were integrated, and, therefore, the Trust is treated as a Testamentary Trust. -This is not an issue in California. -If the Pour-Over Clause cannot be validated, then the clause will fail and the property in the clause will either go to the residuary or intestacy. Restriction on the Power of Disposition 1. Generally: -This section involves spousal and family protection doctrines which limit one’s power to transfer one’s property at death. -The biggest issues will appear when a surviving spouse is looking for support or a share in the marital property. 2. Rights of the Surviving Spouse: -A spouse has two forms of protection: 1. A right to support: -This is not really a property interest because the spouse cannot transfer. -Common Law Support: 15 -Surviving Wife: -The wife would receive a dower. -This was a life estate in 1/3 of the qualifying real property which the husband had held during marriage. -Property was Qualifying property if it could be transferred at time of death. -It had to be divisible or inheritable. Could not be a life-estate or leasehold. -It could include property which had been sold! This advances the policy of getting both spouses to sign off on sales. -Surviving Husband: -The husband would receive Curtesy. -This was a life estate in all the qualifying real property which the wife had held during marriage, as long as there were children born from the marriage. -Current Interests in Support: -For purposes of life-time support, the surviving spouse is entitled to the following types of property despite attempts by the decedent to transfer: 1. Social Security Benefits. 2. Private Pension Plans. 3. Homestead. -The surviving spouse has the right to life in the family home, free and clear of creditors. -UPC says this free and clear status includes only $15,000. -Other states give a life-estate. 4. Personal Property Set-Aside. -This is similar to homestead, but for personal property. -Some states have a list of what may qualify. 5. Family Allowance. -This is an allowance provided to the surviving spouse, usually for a period of time which will get them through the probate process (normally less than one year). 2. A right to a share of the decedent spouse’s property. -Community Property Jurisdictions: 16 -Each spouse has a half interest in the money “earned,” during marriage, at the point in time which it is earned. -Money that has been inherited/gifted/devised will remain separate property. All other property is Community Property. -For purposes of determine what is community property, a marriage ends on the date of death, or on the date a divorce is finalized. -At the point of divorce/death, the community property becomes something akin to tenancy in common. -Separate Property Jurisdictions: -This is property which, during marriage, remains separate. -In these jurisdictions, spousal protection does not kick in until divorce or death, at which time the non-wage earning spouse gets an Elective or Forced Share. -This would usually be 1/3 to ½ of the wage earning spouse’s property. But which property? -Common Law: It was limited to Probate Property only. -Modern Trend: Augmented Estate Doctrine -It includes most, if not all, non-probate property, including all gifts made within 2 years of death. -It is called Elective Share because it may be refused by the spouse who can, instead, take through intestacy. 2. Community Property Doctrines: a. Putting a Spouse to an Election: -Remember, California does not recognize the Elective Share, but it does recognize this doctrine (two different things). -This would be a situation where the decedent gives a conditional gift to someone (which normally includes some of the other spouse’s property) but then the rest of the decedent’s property to the spouse, otherwise, all the decedent’s property would go to some other party. -Basically, the other spouse will acquiesce to the gift as long as they would be better off accepting it versus not allowing it and not taking any of the decedent’s separate or community property. -Ex: Wendel gives the Fatpad to Pepperdine (which Gerri owns part of), and the remainder of Wendel’s estate to Gerri, otherwise, all of Wendel’s estate to Pepperdine. -When has the decedent put the surviving spouse to an election? -Common Law: 17 -There was a presumption that, anytime there was a gift devising some of the other spouse’s property, the surviving spouse had been put to an election. -California Approach: -There must be clear intent to put a party to an election. -The above example would suffice. -This is true because this doctrine can interfere with a No-Contest Clause. -However, remember, an action to construe a Will does not violate a No-Contest clause. b. Stepped-Up Basis: -This is a situation where the death of a spouse will cause their property interest to receive a stepped-up basis for purposes of determining capital gains following the subsequent sale of property. -Determining the percentage of property to receive a stepped-up basis depends on how the property was held before death: 1. Held as Joint Tenants or Tenants in Common: -Only the deceased spouse’s share receives a stepped up basis. 2. Held as Community Property: -Both the deceased spouse’s share, and the surviving spouse’s share, receive a stepped-up basis. -Here, no capital gains tax will be paid. -However, the property still must go through probate which creates transaction costs. -To avoid these costs, Community Property with Right of Survivorship was created. -People would get a double stepped-up basis without probate administrative costs. -California has not accepted it yet because the IRS has not recognized it yet. 3. Migrating Spouses: -When the courts determine how the spouse is to be protected, they must determine how the property accumulated during marriage is to be characterized and when the spousal protection should kick in: -Property Characterization: 18 -Property is characterized as either community or separate based on which jurisdiction the couple was in when they accumulated the property. -Spousal Protection: -Spousal protection may kick in during marriage, or after marriage is over, depending upon which jurisdiction the couple was in at time of death. -Separate Property kicks in at time of death. -Community Property kicks in during marriage. -The combination of these two doctrines can lead to inequity when couples move from one jurisdiction to another during marriage: 1. Moving from Separate to Community Property Jurisdictions: -Quasi Community Property Doctrine: -This is separate property that would have been characterized as community property if the couple had been domiciled in a community property jurisdiction when the spouses acquired it. -The property will be treated as community property for the purpose of distribution when the spouse with the quasi-community property dies. -At time of death, the surviving spouse will automatically receive a ½ interest in all the “quasi” community property. -However, before death the quasi-community property is still treated as separate property, and can be unilaterally transferred inter vivos. 2. Moving from Community to Separate Property Jurisdictions: -Uniform Disposition of Community Property: -The surviving spouse will have no elective share rights with respects to the community property interest of the deceased spouse. -Not all separate property jurisdictions have adopted this. 4. Pretermitted Spouse Doctrine: -This doctrine arises when a Will is created, the person gets married and the Will does not provide for the spouse, and then the person dies. -The Pretermitted Spouse Doctrine: 1. If all testamentary instruments are created before marriage; and 2. All instrument fail to provide for the spouse; and 3. The creator of the instruments dies. -The courts will presume that the omission was accidental. 19 -Exceptions: The presumption will not arise if 1. There is expressed intent to disinherit which is found in the instrument. -A blanket disinheritance will not rebut the presumption. -Exception: If you had an “eye towards marrying” the person, then this blanket clause will be enough. 2. The decedent provided for the surviving spouse outside the instruments and this provision was intended to be in lieu of the spouse taking under the instruments. -All evidence is admissible here. 3. The surviving spouse waived their right to spousal protection. -Look for a prenuptial agreement. -If the presumption cannot be rebutted, then the spouse will receive whatever they would have been entitled under intestacy (from the instrument). -This would include any gifts under the Will or Inter Vivos trusts. -In California the surviving spouse will receive all the community property, and no more than half of the separate property. -What if the person who the decedent eventually marries does take under the Will created before marriage? -It will depend on the amount the spouse actually takes. -If the provision fails to provide for the person in their capacity as a spouse, then the pretermitted spouse doctrine will apply. -This would be a situation where the person created the marriage giving a gift to a friend who eventually became the spouse. 5. Pretermitted and Omitted Children: -Pretermitted Child Doctrine: -Exactly the same as the pretermitted spouse doctrine. -The exceptions are also the same, except the third exceptions (because a child cannot knowingly “waive” their rights to take before they are born). 3. The decedent had more than one child, and the decedent devised substantially all the estate to the other parent of the pretermitted child. -Just like with a pretermitted spouse, if the presumption is not rebutted, the child will receive everything they would have receive through intestacy (from the instrument). -In California, the child will receive everything they are to get before all other children! -Omitted Child Doctrine: 20 -This doctrine will apply if: 1. A child does not take under any of the decedent’s testamentary instrument; and 2. The decedent failed to provide for the child because: a. The decedent believed the child was dead; or b. Was unaware of the birth of the child. -If these are shown, then the child will take under intestacy. 6. Malpractice: -One can sue a lawyer under either of a breach of contract or negligence. However, only certain people can sue under one of these theories: -Common Law: -Tort Claims: There is only a duty to the testator (or their estate). -Contract Claims: Only the testator can sue, because this is the only person in privity with the lawyer. -Modern Trend: (California Approach) -Tort Claims: The lawyer had a duty to all “foreseeable” beneficiaries. -Contract Claims: Those who are “intended beneficiaries” can also claim privity. -Intent can be proven through extrinsic evidence. -Middle Contract View: -Third party beneficiaries can sue based on privity, but this privity cannot be proven through extrinsic evidence. Probate-Testate Transfers -Generally: -When determining whether, and how, to give effect to a Will, you must determine: 1. Whether the decedent had testamentary capacity. 2. Whether the Will was created properly. 3. What is part of the Will. 4. How to construe the Will. Testamentary Capacity: 1. Generally: -In order to create or revoke a testamentary instrument, one must have testamentary capacity. -In order to have testamentary capacity, a testator must: 1. Be 18 years or older; and 2. Be of sound mind. 21 -This means that the testator must have the “ability” to understand: a. The nature and extent of their property. b. The natural objects of their bounty. -These are the heirs of the testator. c. The nature of the act the testator is performing. d. How their act will come together to form an orderly disposition of their property. -There is a strong presumption that everyone has testamentary capacity. -Remember, you only need the ability to understand. Simply not caring will not mean you do not have capacity. -A testator must also have testamentary intent! -This is intent that the instrument being creating act a disposition of their property at time of death as a Last Will & Testament. -This is presumed for Attested Wills, but will usually be the central issue for Holographic Wills (to be discussed below). -Exception: If someone does not sign their attested Will, or signs the wrong Will. -What if someone has a conservator appointed? -This is only evidence that the party may not have testamentary capacity, but there is no per se rule. -Testamentary Capacity is assed at the time: 1. The testamentary instrument is created; or 2. The testamentary instrument is revoked. -Basically, this means that one must simply have a lucid interval of time, during which they create, or revoke, a testamentary instrument. 2. Defects in Testamentary Capacity: -These are situations where someone meets the above requirements, but some other factor is preventing them from having testamentary capacity. 1. Insane Delusion: -This is where someone is operating under a “mistake,” or an “insane delusion,” when they create the Will. -The court will presume the mistake to be an insane delusion if: -Majority Rule: If an average reasonable person in the testator’s situation could not have drawn the same conclusion. -Minority Rule: If there is no factual basis to support the belief. 22 -Therefore, if there is any factual basis, then it is not an insane delusion. -This approach is more protective of intent. -However, there must be some reasonable nexus between the fact and the belief, bringing it closer to the Majority view. -Because these approaches are so fact sensitive, the courts are more likely to find the existence of an Insane Delusion when there is a life-altering event! -Argue the facts both ways!! -Something to Look For: Is the Belief Correctible? -If the belief appears to be correctible in that, were the testator shown facts to the contrary they would change their belief, the court will deem the belief a mistake, not a fact. -Showing facts of why your wife is not cheating may not change your belief, but showing facts why your child is still alive would probably change your belief. -What happens when the court finds that there was an insane delusion? -The court will strike any part of the Will that was effect by the insane delusion. -This could be only part of the Will, or the entire will. -When has the Will been affected by the delusion? -Majority Rule: If the clause/Will would have been different, butfor the delusion. -There can be no other reason for the difference. -This approach is more protective of intent. -Minority Rule: If the defect may have affected the clause/Will. -This means that it could have just contributed to the disposition that was created. -California follows the Minority Approach for determining when there is an insane delusion, and the Majority approach for determining when the delusion affected the clause/Will. -They follow the approach which is most protective of intent. -If time on the test does not allow, argue this approach only! -However, even the most protective of the approaches leads to much litigation, 77% of which is in favor of the party propounding insane delusion at the trial level. -Because of this, numerous strike suits occur when there appears to be an unnatural disposition of property. 2. Undue Influence: 23 -These are situations where one party claims that another party was unfairly influencing the testator, and, therefore, the testator lacked capacity. -What constitutes “undue influence? -Some jurisdictions prefer to view it as coercion: -Therefore they will only look to the period in time surrounding the creation of the instrument to assess the below requirements. -Some jurisdictions view it as inappropriate influence: -These jurisdictions will allow a longer time period to be looked at in order to determine if undue influence has occured. -Presumption Approach to Undue Influence: (lead with this because it’s easier) -This is an approach which creates a rebuttable presumption against the wrongdoer because the wrongdoer is the person who is in the best position to bring forward evidence showing the existence, or absence, of undue influence. -California Presumption Approach: -To create this presumption one must show: 1. A confidential relationship between the testator and the wrongdoer; and -This is where the testator confides in the wrongdoer and trusts the defendant. 2. The wrongdoer was active in the procurement or execution of the Will; and -Execution means the actual signing of the Will. -Procurement could mean helping determine what the elements of the Will would be. 3. The wrongdoer unduly benefited from the Will. -Objective Approach: -How much is the person taking relative to what they would take through intestacy? -Subjective Approach: This is California Approach -How much is the person taking relative to what their relationship with the testator was? -If it seems fair, than it’s ok. -If you can show these, the burden shifts onto the wrongdoer to prove that there was no causation. -General Approach to Undue Influence: 1. The testator was susceptible to undue influence; and 2. The defendant had motive to exercise undue influence; and 24 -This will be easy to show if the defendant takes under the instrument. 3. The defendant had an opportunity to exercise undue influence; and -This will usually overlap with susceptibility. 4. The undue influence affected the clause/Will. -This will usually be the central issue. -A majority of courts prefer to see undue influence as coercion, therefore, really focus on the events surrounding the creation of the instrument. -Gifts to Attorneys: -These kinds of gifts usually raise the question of whether the gift was undue influence or fraud. -Interested Drafter Statute: -When an attorney who drafts (transcribes) an instrument for a testator receives a substantial gift under it, a presumption of undue influence arises. -Exceptions: 1. If the attorney is related to or married to the client. -This would mean that the drafter is the testator’s natural bounty. 2. If there is a certificate of independent review by another attorney. -This person must provide counsel and not just be a scribe. -Notice, these are not exceptions to find true intent, they are basically routs around the presumption. -How can one prevent an attack on the probate of a Will because of Undue Influence? 1. Make a statement about why you are creating such a disposition, but do not make it in the Will. -This will prevent the court from finding “causation.” -Do not put it in the Will or the non-benefiting party may sue for Testamentary Libel. 2. No-Contest Clauses: (as preventative clause and Generally) -These are clauses which indicate that any beneficiary who contests any portion of the Will will receive nothing via the Will. -If a party does this, they must remember to give people something in order to discourage them from contesting the Will. -Are No-Contest Clauses valid? 25 -Generally yes. However, they are construed narrowly. -An action to construe a Will is not seen as a Will contest. -Exceptions: -Some courts will construe a contest of a Will to not violate a contest clause if the contest is based on forgery or revocation. -Some courts allow a contest to not violate the clause if there is probable cause for the contest. -California historically required both, but today: 1. A contest is allowed, based on reasonable cause, if it is one based on forgery, revocation, or against a drafter taking a gift; or 2. A contest based on probable cause and involves an interested drafter who is benefiting from the Will. -This is anyone involved in the Will execution process. -What happens if a party contests a Will? -They can receive nothing via the Will, but they still may take through intestacy. 3. Put your estate plan into an Inter-Vivos trust. -It is much more difficult to invalidate a trust than a Will. 3. Fraud: -Fraud occurs when: 1. The testator is deceived by a misrepresentation; and -A wrongdoer must intentionally make the misrepresentation while knowing it to be false. 2. The wrongdoer made the misrepresentation with the intent to deceive the testator; and 3. The wrongdoer made the misrepresentation for the purpose of influencing the testamentary disposition; and 4. The testator makes a disposition which he would not have but for the misrepresentation. -Fraud in the Inducement: -This is a misrepresentation which causes the testator to create a Will, alter a Will, or revoke a Will. 26 -This is important because it’s not a misrepresentation of the Will, but an important fact which will affect the disposition of the Will. -Fraud in the Execution: -This is a misrepresentation of the nature of the document being signed. -This could be either inducing the testator to sign something they didn’t think to be there Will, but is, or misrepresenting the terms of something they knew to be their Will. -What happens when someone misrepresents for the purpose of preventing revocation? -The court will revoke the entire Will. -What happens when someone misrepresents for the purpose of preventing execution? -The court will create a constructive trust for purposes of disposing of the property in the manner in which the non-executed Will asked for! -What will happen to a gift if can be shown that it was created because of one of the above three situations, or in general it fails for other reasons (want of beneficiary: to be discussed later) -It depends on the type of gift: 1. Specific Gifts: -These are gifts where only one item can satisfy the gift. -These gifts will fall to the residuary, and if there is not residuary, they will go to intestacy. 2. General Gifts: -These are gifts where any amount of property can satisfy the gift. -These gifts will fall to the residuary, otherwise, to intestacy. 3. Residuary Gifts: -These are gifts of all property, or all property left after the above two gifts are given out. -These gifts fall to intestacy. -What if only part of the residuary fails (for want of a taker), will the other residuary takers take? -Common Law: There is no residue of the residue, therefore, this part of the residuary will fall to intestacy. -Modern Trend: We will allow the other residuary takers to take that part of the residuary. -This is California Approach 4. Demonstrative Gifts: -This is a general gift coming from a specific source. -It’s sort of a hybrid, but treat it as a general gift. 27 -You’ll see them in “stock” situations. -If one of the above affects the entire Will, or the person generally lacks testamentary capacity, then the entire Will will be stricken, and the entire estate will go to Probate. -Exception: If there is a prior Will which does not fail in part, or entirety, because of lack of capacity, then the court will refer to that Will. -In order to bring a Will contest either because of lack of capacity, or because of a defect, the plaintiff has the burden of proving that they would, if successful, take under Intestacy, a prior Will, or the Residuary Clause of the contested Will!!! 4. Tortious Interference with an Expectancy: -This allows a person who would have taken, but for wrongful conduct by a third party, to sue the third party! -Plaintiff must show that the third party committed fraud or undue influence. -Advantages to this: 1. This is not a Will contest, it is a Tort action. 2. The plaintiff can get punitive damages. 3. There is a longer statute of limitations. Will Execution: 1. Generally: -The requirements of proper execution are usually called the Will’s Act formalities. The particular requirements will differ from state to state. -The requirements will generally serve 1 of the 4 following functions: 1. Evidentiary Function 2. Protective Function 3. Ritualistic Function 4. Channeling Function 2. Attested Wills: The two variables of an attested Will a. The requirements under the state’s (here California) Will’s Act formalities; and 1. The Will must be in writing; and 2. Signed by the testator; and -This must be: a. By the testator; or b. In the testator’s name, by some other person, in the presence of the testator and at their direction; or c. By a conservator pursuant to a court order. 3. Witnesses to the Signature. -There must be at least two witnesses who: 28 a. Are present at the same time; and b. Witness the signing of the will or the testator’s acknowledgment of his signature; and c. Understand that the instrument they are witnessing is a Will. b. The degree of compliance is required. -California is generally a Strict Compliance jurisdiction. -What constitutes presence? -Common Law: Line of Sight -The witness must have seen or be able to see at the proper moment. -Modern Trend: Conscious Presence (California Approach) -The witness/testator is in the presence of the testator/witness if, through sight, hearing, or general consciousness of events, comprehends that the testator/witness is in the act of signing. -Telephonic presence is not ok. -Normally, everyone should be in the same room, and there should be some sort of interaction (or the possibility of it) between the witnesses and the testator. -If you do not see this, there may be an execution problem. -What is the proper order of signing? -Common Law: -Both witnesses had to be present for the entire signature/acknowledgment and sign after the testator’s signature. -Modern Trend: -As long as all the witnesses and the testator are in the same room, and no one leave, then the order does not matter. -What constitutes a proper signature? -Can someone sign an X? -Common Law: -Any mark that you intend to qualify as your signature will qualify as your signature. -California Rule: -Where an individual makes an X, intending it to be their signature, the party making the X must do so in the presence of the witnesses. The witness must then write the name of the person making the X underneath the X, and then write their name under the testator’s name. -A stamp is the same as making an X. -If someone dies/stop signing during the signature: 29 -The question is whether a reasonable person in the position of the testator would have continued to sign. -If the signature is not interrupted, then it will not qualify. -If someone else signs for the testator: -That person must be requested to sign, they cannot offer to sign before being asked for help. -What happens if there are additions after the signature? -If the addition is physically below the testator’s signature: -If the jurisdiction requires the Will to be subscribed (at the end of the document): -The addition cannot be given effect. -Moreover, Courts will say that a signature made after the addition, but physically above it, will make the entire Will invalid. -Majority Rule: If the Will was signed before the addition, the Will (absent the addition) will be given effect. -If the jurisdiction does not require the Will to be subscribed: California Approach -If the addition was made before the Will was signed it will be given effect. -If the addition was made after the Will was signed the addition will have no effect. -Exception: If the addition is handwritten, then it may qualify as a holographic Will. -Video Taped Wills: -No video taped Will, which has been challenged, has been probated. -Of course, if there is no challenge, ANY Will can be probated! -Delayed Attestation: -This would be a situation where a testator signs/acknowledges a Will in the presence of witnesses, then dies, then the witnesses sign. -Common Law: -Generally this Will could not be probated because it needed to be attested in the presence of the testator. -California: -Since there is no attestation requirement (the witness need no sign in the presence of the testator) the Will simply must be signed within a reasonable time. 30 -This can even be after the testator’s death. -The witnesses must still have a “vivid recollection” of the ceremony, but generally it is 6 months. -Who may qualify as a Witness? -Common Law: -Only disinterested witnesses could qualify. -Any witness who received a gift under the Will was deemed “interested.” -What would happen if a Will was not witnessed by two disinterested parties? -Common Law: The entire Will would fail. -Modern Trend Exception: -The witness’ gift could be voided and, therefore, they would no longer be deemed interested and the Will could be probated. -Modern-Modern Trend Exception: -Instead of voiding the entire gift, the interested witness would be “purged” of any excess interest they are receiving under the current Will. -This means they could still receive something which they would have received except for this Will. -Through intestacy or a prior Will. -UPC no longer acknowledges the “interested witness” doctrine. -California Approach: -If a witness is “interested,” there is a presumption that there was misconduct. -If they can rebut the presumption, the Will will be probated and they will receive the gift. -If they cannot rebut the presumption, they will be purged of their interest from the Will. -Keep in mind: -People can still bring a claim against the witness for undue influence or fraud (especially if the witness cannot rebut the presumption)!!! -Swapped Wills: -What if people, with mirror Wills, sign the other’s will? -Common Law: 31 -The Will has not been properly signed, therefore, it is not valid. -Modern Trend: Will use one of the following doctrines to try to give effect to the testator’s intent and validate the Will: 1. Misdescription Doctrine: (to be discussed again later) -The courts will take extrinsic evidence to determine the extent of the misdescription, and then strike any words that are incorrect. The court will then see if there is enough information to give effect to the clause. -The court will not add any words. -Many courts don’t like this because this doctrine is usually used to construe a Will, not to Validate an otherwise invalid Will. 2. Scrivener’s Error Doctrine: -If an attorney intentionally swaps Wills, a constructive trust will be invoked to give effect to the testator’s intent. 3. Curative Doctrines: -Normally, the Will’s Act formalities requirements can seriously frustrate testator’s intent. -Because of this, some jurisdictions have adopted different philosophies concerning the extent to which a testator must comply with the requirements. -Substantial Compliance Approach: -If the court sees that a Will will fail for a lack of one of the requirements, they may still give effect if: 1. There is clear and convincing evidence showing the testator intended this document to constitute their last will and testament; and 2. There is clear and convincing evidence that the Will substantially complied with the Will’s Act formalities. -But what IS “substantial compliance? -Harmless Error Approach: (Dispensing Power) -This is similar to “substantial compliance,” but it focuses more on the first prong. -Basically only requires there to be clear and convincing evidence that the testator intended this to be their last will and testament. -It was called the “dispensing power” because it allows the court to dispense with requirements that had not been met. -Usually they would dispense with the witnessing or signature requirements. 32 -Modern Trend: requirement. At least still require the signature -Flexible Strict Approach: -These are Strict Compliance jurisdictions which have allowed facts, similar to those which gave rise to the “substantial compliance” or “harmless error” approaches, to create a valid Will. -These jurisdictions have generally dispensed with a strict requirement when the potential for fraud is very low. -Therefore, whenever you see a close call, and the possibility for fraud is low, indicate that the court may allow the Will to be probated. -For purposes of multiple choice, California is a strict compliance state. -For purposes of the essay, lead with strict compliance, but then make a Flexible Strict argument. -UPC has adopted the Harmless Error approach. 4. Holographic Wills: -These are Wills which need not be witnessed. -About half the jurisdictions allow Holographic Wills. -California does allows them. -Requirements of a Holographic Will: 1. The will must be in writing; and -An additional requirement is that the Will be handwritten: -How much of the Will needs to be handwritten? -Some jurisdictions required that the entire document be handwritten. -California requires that the material terms of the Will be handwritten. -At a minimum the “who” gets “what” must be in handwriting. -Does testamentary Intent need to be handwritten? -Strict Approach: -We can only determine testamentary intent by what is handwritten. -Application: handwriting, White-out and if you everything cannot not in determine testamentary intent, then the Will will fail. 33 -Contextual Approach: -If the handwritten portions are ambiguous as to testamentary intent, then we can look to the type written material to determine context. -UPC Approach: -We can take any evidence available. -California Approach: -Follows the strict approach. -Exception: If the Holographic Will is made on a commercially printed form Will, then we can use the commercially printed material to determine testamentary intent. -If you see a situation where someone fills in spaces on a non-commercially printed form will, argue that California had intended to adopt the contextual approach! -Must the Will be dated? -This would be the date of execution. -California does not require a Will to be dated. -Exceptions: 1. If the testator’s capacity to create a testamentary instrument is at issue; or -If it can be shown that the testator lacked capacity at any time which the holographic Will could have been created, then there is a presumption that the testator lacked capacity, and the Will will fail. -Relative dating can rebut a presumption. -In this situation you will invalidate the entire Will. 2. If there is another Will in existence. -If a Holographic Will is undated, the presumption is that the Holographic Will was executed before the other Will. -Only have to invalidate portions of the Holographic Will. (what?) 2. There must be a signature; and -Unlike an Attested Will, a Holographic Will must be signed by the testator. -Cannot be signed by someone else, even at the testator’s request. 34 -Just like an Attested Will, anything the testator intends to qualify as is signature will qualify as his signature. -In California the Will need not be signed at the very end. 3. There must be Testamentary Intent. -Remember, this is presumed for an Attested Will. -We have to make sure that the testator intended the writing to be his last Will and Testament. -This intent needs to be expressly written into the instrument. Therefore, look for words that indicate that the document will have at-time-of-death significance: -Whenever you see this issue, argue between the words being testamentary intent versus simple instructions to the attorney on how to dispose of the property. -Words such as “estate” are ambiguous, and does not necessarily indicate “at-time-of-death” significance. -Terminology stating “last will and testament” is obviously the preferred wording. -Also look for: “save this,” “keep this.” -Conditionals Wills: -Wills which say: “In the event that X happens, I want my property to go to Y.” -What happens when something other than the envisioned event kills the testator, will the Will still be valid? -Conditional Will Doctrine: -When there is an expressed condition precedent in a Will, and the effect of the Will is dependent upon that condition, then the Will is only effective if the condition occurs. -If the Will is a Holographic Will: -The courts will usually construe that “conditional” language only as an event which triggered the idea of creating a Will in the testator’s mind, not something which invokes the Conditional Will Doctrine. -The threshold to create a conditional Holographic Will is very high. -If the Will is an Attested Will: -The threshold for create a conditional Attested Will is much lower than for a Holographic, therefore, if you see this language, argue both sides. Will Revocation and Revival: 35 1. Generally: -There are 4 ways to revoke a Will, and two ways to “revive” a Will. 2. Revocation by Subsequent Writing: -The revoking item must qualify as a Will itself. -These types of writings revoke a prior Will in two ways: a. Expressly; or b. Implicitly. -This shows that “expressed” words of revocation are not required. -These writings can also revoke in different degrees: a. Completely; or -This would be a new Will. b. Partially. -This would be called a Codicil. -The different between a new Will and a Codicil is that the Codicil requires reference to the prior Will, where as a new Will requires no reference. -Codicils must be executed based on Will’s Act formalities. -Exception: A handwritten interlineation to a Holographic Will may qualify as a codicil, even if the interlineations could not qualify as a Will on their own. -Something to look for: -If you see someone attempt to revoke by act by writing on something, but it does not touch any portion of the Will, look to see if witnesses were around, because it could possibly stand as a delayed, attested Will. -Effect on other writings: a. The revocation of a Codicil will not revoke the underlying Will. b. The revocation of a Will will revoke a Codicil 3. Revocation by Act: -An act will qualify as revocation if the testator defaces the Will with the intent to revoke. -Someone else may perform this act at the request of the testator and in the testator’s presence. -Also, in order to have proper testamentary intent, one must have testamentary capacity!! -Always keep this in mind when you see a testamentary act. -Can the act be simply writing? -Common Law: 36 -The act of writing can be destructive, but it must be done on the face of the Will. -Modern Trend: UPC -The writing can be made anywhere on the Will. -California is silent on this, so lead with the common law, but argue the modern trend. -What if the writing is in pencil? -Argue that these were just tentative changes, and that there was in fact no intent to revoke. -Some courts have followed this. -What happens if a duplicate original is defaced? -It will revoke all other duplicate originals. -Partial Revocation by Act: -These are situations where only part of a Will is altered (and thus revoked). -Ex: $50,000 to John. But then John’s name is crossed out. -California allows partial revocation by act. -If there is partial revocation, let the Gift fall into the residuary if there is no other possible taker. -If there is a clause that reads “$10 to John and Bob,” and Bob’s name is crossed off: -California states that bob’s $5 interest will go to the residuary. -If there is no residuary, it will go to intestacy. -UPC says that John would get the $5. -Make this argument on the test. -California allows a Presumption of Partial Revocation which is exactly the same as regular Revocation by Presumption. 4. Revocation by Presumption: -A Will will be presumed to have been revoked if: 1. The Will was last in the testator’s possession; and 2. It cannot be found after their death; and 3. The testator had testamentary capacity up until their death. -If another party can explain the loss of the Will, then the question can go to the jury. -What if an Heir, who would benefit from the absence of the Will, had access to the Will? -Some courts say this alone is enough to rebut the presumption. -Other courts say this is just one factor to consider. -If the presumption is rebutted, apply the Lost Wills Doctrine: 37 -The court will take any extrinsic evidence whatsoever to determine the contents of the Will. -The burden of admitting evidence is “clear and convincing” evidence that it was part of the Will. -What if there are Duplicate Originals? -California will not apply the presumption doctrine unless none of the originals can be found. -If testator’s know there is another in existence, they may not be as careful. 5. Revocation by Operation of Law: -In California this applies to Divorce/Termination of Domestic Partnership. -A divorce/termination will treat the other spouse/partner as though the predeceased with respects to the provision of the other party’s Will. -Exception: If the Will expressly holds otherwise. -What is the scope of this doctrine? -Non-Probate Transfers? -It applies to all except Life Insurance Polices. -Does it apply to the issue of the predeceased spouse? -The relatives/issue of the predeceased spouse may still take. 6. Dependent Relative Revocation: -These are situations where someone properly revokes a Will, in whole or in Part, based on a mistake. -The revocation could simply be crossing off someone’s name and writing another in its place (something which qualifies as a partial revocation but not as a Codicil) or crossing out an amount and writing in another amount. -Dependant Relative Revocation will apply if: 1. There is a valid revocation of a, or part of, a Will; and 2. The revocation is based on a mistake; and -The mistake can be one of: a. Fact; or -This would be a situation where someone thought someone was dead, or something to that nature. b. Law -This would be a situation where someone thought they had properly edited their Will (by creation of Codicil), or had properly executed a new Will. 38 -What kind of evidence we may show to prove the mistake is dependent upon what kind of mistake we have: a. Mistakes of Fact: -Evidence of the mistake must be set forth in the written instrument. -This means that the revocation, based on a mistake of fact, must have been a revocation by a subsequent writing, and evidence of the mistake of fact must be set forth in that subsequent writing. b. Mistakes of Law: -One can provide any evidence of the failed alternative plan of disposition. -This means that the revocation, based on a mistake of law, must have been a revocation by act, and evidence of the reasons for that act can be proven through extrinsic evidence. -Remember, a failed attempt to revive an old Will through the revocation of a current Will may constitute a mistake of law!! -The mistake must also be beyond the testator’s knowledge! -If the mistake seems to be one which the testator should have personal knowledge of, then DDR will not apply. 3. The revocation would not have occured but for the mistake. -This prong basically helps the court determine whether to give effect to the revocation or ignore the revocation. -In order to do this, use a spectrum analysis when there is an alteration of a gift (revocation by act, or mistake of law) and determine whether revocation, or no revocation, would result in a gift closest the altered gift. 7. Revival Doctrine: -This would be a situation where there is a prior executed Will giving property to one person, and then a subsequently executed Will giving property to someone else. -Basically, must constitute something which is a revocation by writing. -This can be a Codicil. -What happens if the testator attempts to revive the prior Will be revoking the subsequently executed Will? -Different Views on how to show Intent to Revive: 39 1. English View: Minority Approach -The first Will is not revived because the second Will does not become effective after death. Therefore, the first will simply remains effective. 2. American Approach: Majority -The second Will became effective at time of execution, therefore, it properly revoked the first Will. -Majority Approach: California Approach -The first Will can only be revived if there is intent to revive the first Will by revoking the second Will. -What kind of evidence is admissible to show this intent? a. If there is revocation of the second Will by act: -Any evidence is admissible to show intent. b. If there is revocation by subsequent writing: -The intent to revive must be found in the writing. No extrinsic evidence. -Minority Approach: -The first Will can only be revived by re-executing it. -Or executing a Codicil to it? Components of a Will: 1. Generally: -This section deals with what papers and clauses will be part of the Will, and thus the disposition of property. 2. Doctrine of Integration: -This is the General Rule for determining what constitutes part of a Will. -The papers which are physically present at the time of execution, and which the testator intends to be part of the Will, will constitute provisions of the Will. -Limitations: -You cannot integrate typed material into a holographic Will because it violates the requirement that all material terms be handwritten. -Exception: If the typed material is incorporated by reference into the Holographic Will. -However, you can integrate holographic material onto a typed Will. 3. Expansion Doctrines: 40 a. Republication by Codicil: -The creation of a Codicil will re-execute and re-date the underlying Will. -Types of re-execution: a. Expressed Re-Execution: -A clause stating this will automatically re-execute the underlying Will. b. Implied Re-Execution: -A Codicil which does not expressly re-execute the underlying Will will be presumed to do so, unless re-execution would frustrate the testator’s intent. -Look for this argument! -This doctrine will be especially important when you see the execution of a Codicil which relates to a Will which has been revoked by a subsequent Will. -Limitations to Republication Doctrine: -A Codicil cannot republish an Invalid Will. -Exception: -Some courts allow a Codicil to republish a Will which is invalid for a reason other than invalid execution (perhaps lack of capacity). -In this situation the Codicil will be deemed a Will, even if it does not dispose of all the testator’s property. -However, the new Will (Codicil) could give effect to the intentions of the invalid Will through incorporation by reference (to be discussed below). b. Incorporation by Reference: -A Will can incorporate a document that was: (1) not part of the Will when it was executed; or (2) executed with proper Wills Act formalities; if: 1. The Will expresses the intent to incorporate the document; and -Extrinsic evidence is not admissible to show this intent. 2. The Will properly describes the document to be incorporated; and -Extrinsic evidence is not admissible to show this intent. -Courts are not strict about this requirement: -If the document is not described properly, but does what the Will says it is to do, then the court will admit it. 3. The document was in existence at the time the Will was executed. -The party moving for incorporation has the burden of providing some evidence that the document was in existence at the time of execution. 41 -Courts strictly require this, but are willing to fudge on the first two requirements. -Generally, you can only incorporate the clauses, or items, included on the document at the time the Will is executed (or republished). -UPC Exception: Tangible Property Lists -If there is a tangible property list, the court should incorporate it, irrespective of its creation relative to the execution of the Will. -California does not allow this exception. b. Acts of Independent Significance: -These are situations where the Will disposes of property be reference to an act outside of the Will. -The referenced act can control either who takes or how much they take. -In order to allow an act of independent significance to determine the disposition of property we must: 1. Determine what the act is; then 2. Determine if it is independently significant. -For it to be independently significant it must have some inter vivos importance. -Keep in mind it must have inter vivos significance for this particular testator, so the act could include the creation of someone else’s Will. -What if the act expressed in the Will is “storage?” -Generally “storage” has its own independent inter vivos significance, and thus this clause can be given effect to everything found in that particular place. -Exception: Some courts state that is must have been reasonable for each item to be found in that particular location. -Courts will usually look at the potential for fraud when determining how “reasonable” it must be. -If the potential for fraud is low, then it can be less reasonable for each item found to be in that place. -Whenever you see a future act in a Will, this doctrine may apply. 3. Contracts Relating to Wills: -These are situations where frustrated beneficiaries can claim breach of contract and become creditors of the testator. 42 -Generally there are two types of contract relating to Wills: -Remember, in either of these two situations, there must still be Consideration! -If the consideration is “to take care of person for life,” make sure the parties are not husband-wife or parent-child, because these parties already have a legal duty to care for one another! a. Contracts to Create a Will: -UPC: These claims must be in writing signed by the decedent. -California: -“Beneficiaries” can prove a contract to make a Will be either: a. A writing signed by the decedent; or -Whenever looking for a writing, always consider whether it alone could qualify as a Will!!! b. Clear and convincing evidence of an “oral agreement.” -The court may be inclined to create a Constructive Trust if either the decedent or the “beneficiary” breaches the terms of the contract. -Remember, even if there is no writing, or the party cannot show by clear and convincing evidence, the party may still be able to claim Quantum Meruit! b. Contracts not to Revoke a Will: -The burden for these types of agreements is the same as contracts to create. -Different types of Wills usually covered by contracts not to Revoke: a. Joint Wills: -This is a single instrument executed by two parties (normally spouses) which serves as the Will of each party. -The mere execution of these types of Wills does not create a presumption of a contract not to revoke. b. Mutual Wills: -These are similar to Joint Wills, except they are two separate Wills which have mirror provisions. -Does the mere execution create a presumption? -Common Law: Yes it did. -Modern Trend: No presumption is created. -This is the California Approach. -In either of these situations, today, there must be a clause in the Will indicating a contract not to revoke. 43 -However, these clauses do not become effective, for want of consideration, until one party dies (at which time the other party becomes bound by the clause). -What happens when there is an expressed contract not to revoke, one of the parties dies, and the other party remarries? -The contract not to revoke will come into conflict with Spousal protection doctrines (pretermitted spouse doctrine or elective share doctrine). -Both doctrines state that the surviving spouse should take first. -The problem is that clauses not to revoke usually state that anything which causes a divergent distribution of property will constitute a breach. -However, this depends on the wording of the clause, so read it carefully! -Majority Approach: California Approach -The second spouses’ interest in the proper is subordinate to the prior contract not to revoke/alter the disposition of the property. -Minority Approach: -The second spouse will take first! -What is the scope of the property covered by a contract not to revoke? -Generally it covers all the property gained by either spouse during their life-time. -Exception: If the contract states otherwise. -What are the limits of use for the surviving spouse? -The surviving spouse has a life-estate in the property and has the right to use such property “reasonably.” -What if the surviving spouse ignores the contract and creates a new Will? -The court will probate the second Will and force the beneficiaries under the first Will to come in and prove the contract not to revoke. Construing Wills: 1. Generally: -Whenever the court is trying to construe a Will, extrinsic evidence may be available to help determine what the testator meant by their language. -When trying to determine whether extrinsic evidence should be admissible, you have to ask what the extrinsic evidence is being offered for: 44 1. If it is being offered to prove or disprove the validity of the Will, then the court will always admit extrinsic evidence. 2. If it is being offered to construe the provisions of the Will, then the general Approach is the Plain Meaning Doctrine. 2. Plain Meaning Doctrine: -Generally, the courts do not like having to look through extrinsic evidence to determine the meaning of provisions in Wills. -How do the courts apply the Plain Meaning Doctrine? -Common Law: -The common law strictly adhered to the Plain Meaning Doctrine, and, therefore, extrinsic evidence was not admissible to help determine the meaning of a Will. -Exceptions: -If there was an ambiguity in the Will, extrinsic evidence could come in depending on what type of ambiguity it was: -An ambiguity exists if the express language in the Will is reasonably susceptible to two or more interpretations a. Patent Ambiguities: -These are ambiguities which are apparent from the face of the will. -At Common Law, extrinsic evidence was not admissible to help construe the ambiguity. b. Latent Ambiguities: -These are ambiguities which are not apparent from the face of the Will, and by their nature, extrinsic evidence is needed simply to determine that there is an ambiguity! -The Court will admit extrinsic evidence of one of the reasonable interpretations. -Latent Ambiguity Situations: a. Misdescription Doctrine: -This would be a situation where the Will describes someone to be given something, or something to be given, which doesn’t exist, but something almost meets the description. -The court would strike the inconsistent language, and see if they can give the clause effect. b. Equivocation: 45 -This is a situation where the Will’s language fits more than one object or person equally. -The court will take extrinsic evidence to determine which object/person was intended. c. Personal Usage Exception: -This is like equivocation, but you cannot tell that there is an ambiguity until you take extrinsic evidence to show that testator’s language meant something else. -Here, the court will admit extrinsic evidence the same way as in equivocation. -Modern Trend: California Approach -These jurisdictions do away with the Plain Meaning Doctrine. -They will always admit extrinsic evidence of the circumstances surrounding the testator at the time they executed the Will to determine if there is any ambiguity in the provisions of the Will. -There is also no distinction between latent and patent ambiguities. -Remember, only let in extrinsic evidence of one of the reasonable interpretations. -Can Oral Declarations come in as extrinsic evidence? -Common Law: No -Modern Trend: Yes -Some jurisdictions limit this to declarations made to the Attorney. 2. Correcting Mistakes: -Generally courts do not want to fix mistakes, however, the court will admit extrinsic evidence to fix a mistake based on the Scrivener’s Error Doctrine: -In order for the Scrivener’s Error doctrine to apply you must: 1. Show that there was a scrivener’s error by clear and convincing evidence; and 2. Show that there was an effect on the testator’s intent, by the error, through clear and convincing evidence. -If these two elements are proven, the court will admit extrinsic evidence to fix the mistake. -California has not adopted this Doctrine. 3. Death of Beneficiaries: -These are situations where a beneficiary/transferee under an instrument (remember, these rules apply to Wills and other Non-Probate transfers except Joint Tenancy) dies before the property is distributed under the instrument. 46 -Determining what happens with the gift depends upon when the beneficiary/transferee died with respect to the time of execution: 1. If the beneficiary/transferee was dead before the execution of the Will. -This is a Void Gift. 2. If the beneficiary/transferee dies after execution but before the testator/transferor: -This is deemed a Lapsed Gift. -Both Void and Lapsed Gifts are forms of failed gifts. However, these gifts may be saved by one of the two following doctrines: a. Anti-Lapse Doctrine: 1. There is a lapsed gift; and -Common Law: -Anti-lapse doctrine only applied to “lapsed” gifts. -California: -Anti-lapse doctrine applies to both “lapsed” and “void” gifts. -Remember, this doctrine also applies when the beneficiary/transferee legally predeceases (if there is disclaimer , failure to survive, or homicide). 2. The predeceased beneficiary/transferee must be sufficiently related to the testator/transferor; and -In California the beneficiary must simply be related to the testator, or to the testator’s spouse (current or former). -What is the effect of the Divorce Doctrine (revocation by law)? -Divorce revokes gifts to the ex-spouse, but not gifts to the ex-spouse’s relatives. -Are spouses “related” for purposes of “anti-lapse?” -Majority Rule: No they are not. 3. The predeceased beneficiary is survived by issue who also survive the testator; and -If the above 3 elements are shown, then a presumption that the gift should not lapse, but rather go to the issue, will arise. -Exception: If there is contrary intent expressly written into the instrument! -What if there is an expressed survival requirement? 47 -Common Law: This is enough to rebut presumption. -UPC Approach: This is not enough to show contrary intent. -California Approach: -There will be an adequate showing of contrary intent if there is: (1) an express survival requirement; or (2) an expressed gift-over clause. -A residuary clause is not enough, you must have the “otherwise to” language. b. Class Gifts: -These are similar to anti-lapse gifts, however, they bring with it a right of survivorship to all others in the class. -When determining if the gift was to a class of people, the court will look to several factors (not elements): 1. How were the individuals described? -If they are referred to as a group, it is more likely a class. -If they are referred to specifically by name, it is less likely a class. -What if the group is described as a group, and individually? -Individual description always trumps. 2. How is the gift described? -If it is described by “shares,” it is more likely a class. -If it is specifically described, it is less likely a class. 3. Is there a shared common characteristic? -If there is, it is more likely a class. -Exception: If there are other parties who share the same characteristic, and are not included, then this factor will be deemed ambiguous. 4. What is the testator’s over-all testamentary scheme? -Basically see where the gift would go if there was a lapse, and determine if it would be the testator’s intent for it to go there. 48 -If you see residuary clauses going to same other place, then it can be a factor against finding a class. -If you see the insertion of a “survivorship” requirement with some other gift, then this will be a factor against finding a class. -This is true because a class gift carries with it a right of survivorship, and if the testator includes this language somewhere else, it must mean she didn’t want it for this particular gift. -Although, if it is clearly a class gift, there should be an obvious counter argument. -What about residuary clauses with multiple takers? -Common Law: Remember no residue of residue? -Modern Trend: (California Approach) -All residuary gifts with multiple takers are treated as class gifts. -This makes sense without the specific rule. -Because anti-lapse and class gifts have different takers, which one do we apply if both can apply? -California Approach: -Anti-Lapse can apply to Class Gifts, therefore, we apply antilapse first. -Exception: Anti-Lapse will not apply if: 1. There is a void gift; and 2. The testator/transferor knew the beneficiary was dead at the time of execution. 4. Changes in Property: -These are situations where there is a gift in an instrument, but the piece of property no longer is there, or has changed, subsequent to the execution of the instrument, but prior to the death of the testator/transferor. -If a Gift is given but cannot be found, the remedy will depend on what type of gift it was: a. If a Specific Gift cannot be found: -Ademption Doctrine: -Identity Approach: Common Law/California Approach -If a Will makes a specific gift, and the gift cannot be found, then the gift is revoked. 49 -Therefore, the beneficiary has the burden of finding the gift. -If the testator really wanted to make a gift, they should execute a Codicil. -If the gift clause is ambiguous, then in California we will always let in extrinsic evidence of the testator’s intent at the time of execution. -Exceptions/Avoidance of Identity Approach: 1. Involuntary Transfers: -There is no distinction between involuntary and voluntary transfers. -This isn’t really an exception, more of an explanation. 2. Classify the devise as a general/demonstrative gift: -Whenever you see wording which is ambiguous, claim that it is general, not specific. 3. Classify the change as a change in form, not one of substance: -This would be a situation where the gift is there, it’s just in a difference place. -Different stock name, or different address. -Also look to argue Misdescription. 4. Construe the instrument at time of death, not at time of execution. -With either situation of 4 or 5, if there is a large increase in value between the item in existence and the gifted item, the court will be less likely to avoid Ademption. -Softening Doctrines to Ademption: 1. Outstanding Balance Doctrine: -If Ademption applies to a specific gift, the beneficiary of the gift will not be able to receive what is not there, but they will be able to take what is left of payment for the gift. -This would apply to insurance situations where a party dies before they receive everything. 2. Conservatorship Exception: California 50 -If the property subject to the gift is transferred during a conservatorship, Ademption does not apply. -The effect is to transform the specific gift into a general gift, and the beneficiary gets the fair market value of the gift. -Exception: 1. The conservatorship ends; and 2. The transferor survives for more than one year. -Intent Approach: -There is a rebuttable presumption that the testator wanted to give the beneficiary something, therefore, they will get either a replacement item or fair market value. b. If a General Gift cannot be found: -The executor of the estate has the obligation of either provide a similar item, or fair market value to the beneficiary. -The Ademption doctrine only applies to specific gifts. c. Gifts of Stocks: -If there is a stock split between execution and death: -Common Law: -If it is a specific gift of stock, then the beneficiary gets the benefit of the split. -If it is a general gift of stock, then the beneficiary does not get the benefit. -Modern Trend: -Stock is interest in a company, therefore, the beneficiary gets the benefit in either situation. -UPC: -The answer depends on whether the testator owned matching shares at the time of execution. -If the testator actually owned the shares described, then the beneficiary gets the benefit of any split of the stocks actually owned by the testator. -If the testator did not own any at the time of execution, then the beneficiary gets nothing. 51 -General Gifts of Privately held stock will be deemed specific gifts, and Ademption can apply. d. Exoneration of Liens: -What happens to a debt which is attached to property which has been gifted? -Common Law: -The beneficiary will take the item free and clear of the debt. -This means the estate would have the obligation of paying off the debt. This would usually come from the residuary. -Modern Trend: (California Approach) -The beneficiary will take the item subject to the debt. -Exception: If there is an expressed provision indicating that the debt should be paid off. -This must be a specific clause, it cannot be a general clause requiring the executor to “pay all debts.” e. Abatement: -This doctrine applies when there is not enough property to satisfy all gifts devised or transferred. -When there is not enough property, you will subtract property from the following gifts: (in order) 1. Residuary gets cut first. 2. General gifts. -Non-relatives get cut before relatives. 3. Specific Gifts -Non-relatives get cut before relatives. -California allows the Courts to rearrange this order. f. Satisfaction: -These are situations where the testator/transferor makes a gift to a beneficiary, and we wonder whether that gift should count against what that beneficiary is receiving under the instrument. -This is very similar to Advancement in Intestacy. -Generally: -Satisfaction can only apply to General Gifts if: -Common Law: -It depended upon the relationship between the testator/donor and the beneficary. 52 -Usually if the beneficiary was the child, and the gifts were of like-kind, a rebuttable presumption would arise that the gift should count. -Modern Trend: -No presumption arises, and for Satisfaction will only apply if there is a writing indicating that the inter vivos transfer of a gift should constitute a satisfaction of a gift. -Types of Writings: 1. Clauses in the instrument providing the gift. 2. A writing by the testator/transferor, created contemporaneous with the inter vivos gift. 3. A writing created by the beneficiary/transferee, created at anytime. Probate-Intestate Transfers 1. Generally: -Any part of a decedent’s estate not effectively disposed by Will passes to the decedent’s heirs as prescribed by statute. -Estate: This refers to the decedent’s Probate property. -Heirs: These are those people who receive property through. 2. Intestate Scheme: (look at notes 8/19-24 and handout for examples) -Once we have determined that we are Intestate, we must determined what type of property we are trying to distribute: 1. Community Property: -Community Property is property “earned” during marriage. -There is a strong presumption that any property acquired during marriage, by either spouse, is community property. -Each spouse has a half interest in the property at the moment it is earned. -Exceptions: 1. Property acquired before marriage; or 2. Property acquired through gift - inheritance devise. -Quasi Community Property: 53 -Property acquired in a non-community property jurisdiction. It remains separate property unless there is divorce or death. -Death will only change the nature of the property of the deceased spouse. -Once we have determined that the property is Community Property: -The surviving spouse will take 100% of the deceased spouses’ community property. -Remember, this is community property of the deceased spouse which has not been distributed through Will or non-probate. 2. Separate Property: -If there is a surviving spouse or domestic spouse: -The Domestic Spouse statute will apply as of January 1, 2005, nonretroactively. a. The surviving spouse will take 100% if: -The decedent didn’t leave any surviving issue, parent, or issue of parent. -Issue is not only children. b. The surviving spouse will take 50% if: i. The decedent had only 1 child; or -This may either be a child, or a deceased child with surviving issue. -You don’t count the issue, you count the child. ii. There is no issue but there is a parent or issue of parent. c. The surviving spouse will take 33% if: -There is more than one child. -Again this includes a deceased child with issue. -If there is no surviving spouse: -All remaining parties will take all Intestate parties in this order: 1. Surviving Issue -Will take equally.* (See Below) -Look for Recapture Doctrine! 2. Parents -Will take equally. 3. Issue of Parents -Will take equally.* (See Below) 4. Surviving Grandparents -Will take equally. 54 5. Issue of Grandparents -Will take equally.* (See Below) 6. Issue of Predeceased Spouse -Will take equally. 7. Next of Kin. -Will take equally. 8. Parents or Issue of Parent of Predeceased Spouse 9. Escheats to the State. 3. Recapture Doctrine: -These are situations where the predeceased spouses’ family takes something back if the situation is appropriate. -Apply Recapture Doctrine after looking for surviving issue and when: 1. The spouse dies intestate; and 2. They have no surviving spouse; and 3. They have no surviving issue; and 4. They have predeceased spouse. -If all this applies: -Will will recapture all of the qualifying property which the second spouse (to die) received by virtue of the first spouse’s death. -Qualifying Property: -Property may qualify if the second-to-die spouse did not distribute it through Will or other Non-Probate transfer**, and: 1. Real Property will qualify if the second spouse died within 15 years of the first spouses’ death. 2. Personal Property will qualify if: a. The second spouse has died within 5 years of the first spouse; and b. The property has an aggregate worth over $10,000; and c. There is a written record of ownership. -We will send all the predeceased spouses’ separate property, and their half interest in the community property, back to the family of the predeceased spouse. -The property recaptured is any property received by virtue of the death. Therefore, this will include non-probate transfers (such as Joint Tenancy land/accounts)!! -Who do we give this property to? (in order) 55 1. The issue of the predeceased spouse. -This would be issue from a prior marriage. 2. Parents of predeceased spouse. 3. Issue of parents of predeceased spouse. -If none of these have survived the second spouse, then we do not apply the Recapture Doctrine! 3. Survival Requirement: -In order to take under intestacy, the spouse had to “survive” the predeceased spouse. But what constitutes “survival?” -Common Law: -The estate of the “surviving” spouse had to show, by a preponderance of the evidence, that the “surviving” spouse survived for a millisecond. -California Approach: -Intestacy: -The estate of the “surviving” spouse must show, by clear and convincing evidence, that that spouse survived the predeceased spouse by 120 hours. -Under a Will or Non-Probate Transfer: -Adopts the common law approach, but requires clear and convincing evidence. -Exceptions: If the parties have contracted out of the default statute. -Generally Wills will have survival requirements of 6 months. -This is to prevent the probate of property twice. -What happens if the estate cannot show that the “surviving” spouse survived? -We will treat that spouse as though they predeceased. -In other words, we will treat both spouses as if they died without a surviving spouse. -What happens to Joint Tenancy? -The Joint tenancy will be turned into a Tenancy in Common. -What constitutes Death? -Common Law: When there is a irreversible cessation of circulatory and respiratory function. -Modern Trend: When these function are maintained artificially, “death” occurs when there is irreversible cessation of brain activity. 4. Spousal Requirement: -Remember that as of January 1, 2005, “spouse” also includes “domestic partner.” -First the parties must be married: 56 -Cohabitation: -California does not consider “cohabitants” as spouses. -It does not follow the approach that common law marriage will apply if the parties have been cohabitants for at least 10 years. -Multiple Marriages: -If a party is already married, a second marriage will not be valid. -Ceremony: -Generally, the parties are required to have been married in a proper marriage ceremony. -Exception: If either party has reason to believe that they were married in a property ceremony, they will be considered “putative” spouses. -When does a Marriage end? -With respects to Community Property: -Termination of community property rights occurs when the parties separate, provided that there is notice of termination with no intent to reconcile. -With respects to Inheritance Rights: -A spouses inheritance rights (taking through intestate) do not terminate until the court has given a final order on the matter. 5. Remaining Parties taking “Equally:” (look at notes 8/24 for examples) -When there is no surviving spouse, or that surviving spouse does not take all of the decedent’s property, the remaining amount falls to the next taker in line. The property will fall “equally” to each party in that tier. However, there will be different degrees of relationship, therefore, how do we determine how the parties will take “equally?” -Degree of Relationship: -We will basically determine how many steps it takes to get to the first surviving issue/relative, and all parties in that tier will take. *Taking by Representation: -If a relative dies, their surviving issue may step up and represent them at that tier! Therefore, count those deceased who are survived by issue!! -Absent adoption, only blood-relatives can take. a. Taking by Issue of Unequal Degree: (this refers to issue, issue of parent, and issue of grandparent; the only thing that changes is the “deceased” party) -When determining who takes, ask the following questions: 1. Where do we make the first division? a. Always first tier. -Should it always be divided at the children of the deceased. 57 b. At first tier where there is a live taker. 2. Once we have made the first division, we will always distribute the money to each surviving taker, or every deceased taker survived by issue. 3. How do we drop the shares down from the first division? a. By bloodline. -Drop the shares straight down and divide amongst that decedent’s surviving issue. b. By pooling. -Every time you drop down a tier, you pool the remaining property and divide equal shares amongst those surviving at the next tier. -When determining the answer to question 1 or 3, we must first determine what type of Distribution scheme we are using: (Must know all three because a Will can say any of these) 1. Per Stirpes Approach: a. Make the division at the first tier. b. Distribute one share to each surviving party or each party survived by issue. c. Drop the shares down by bloodline. 2. Per Capita Approach: (This is the California Default) a. Make the division at the first tier where there is a live taker. b. Same as above. c. Drop the shares down by bloodline. 3. Per Capita at Each Generation: a. Make the division at the first tier where there is a live taker. b. Same as above. c. Drop the shares down by pooling the remainder at each tier. -How do you determine which approach to use? -Unless you clearly express your intent, you will be provided with the default approach. -Something equivocal will not extract one from the default. -If you say “I live to my children by representation:” -This will get you Per Stirpes in California! b. Taking of Kindred: (look at notes from 8/31) -If you somehow manage to have no takers until you reach the “Next of Kin,” you determine how to distribute the property based on one of three approach: 58 -Make SURE you actually have to use these approaches! Remember: the existence of issue of grandparents will prevent this from applying! You must have to get to great-grandparents in order to use this approach. 1. Parentelic Approach: -This approach focuses on the mother or the father of the generation. -In comparison to the decedent: -Parents are the 2nd parentelic line. -Grandparents are 3rd parentelic line. -Great-Grandparents are 4th parentelic line. 2. Degree of Relationship Approach: -Here you simply count the steps between the decedent and the possible taker. In order to get the total you: 1. Count the steps from the decedent to the head of the parentelic line of the possible taker; and -This would be from the decedent to say a great-grand parent. 2. Then count the steps from the head of the parentelic line to the possible taker. -This would be from the great grand parent to the possible taker. 3. Degree of Relationship with Parentelic Tie-Breaker: We only need to know this Approach! -To Apply this Approach: 1. Determine who could be possible takers under the Degree of Relationship Approach (any larger numbered takers are excluded); and 2. If there is more than one taker, determine who is the closest based on their parentelic line. -If there is still more than one taker, apply the proper distribution approach. -Per Stirpes / Per Capita / Per Capita at each Generation. -If only one taker, give all property to that individual. c. Negative Disinheritance: -This would be a situation where someone attempts to disinherit someone, not by giving all their property away, but by stating in a Will that they do not want that person to take. -Common Law: California Approach 59 -This would not disinherit someone. In order to disinherit someone, you had to dispose of all of your property. Otherwise, the “disinherited” person could still possibly take through intestacy. -Modern Trend: -Acknowledge negative disinheritance, and the disinherited person will be treated as though they predeceased. -However, their issue may still be able to take through representation! 6. What constitutes an “Issue?” (see handout) -Determining an “issue” is based simply on having a “parent-child” relationship. -When a “parent-child” relationship is established, inheritance rights are established. a. Determining Issue in Wedlock: -Establishing Paternity: -Natural Way: If the mother is married at the time of birth there is a “virtually” irrebuttable presumption that the husband is also the natural father. -Inheritance Rights: 1. The child can inherit from and/or through the parents. 2. The parents can inherit from and/or through the child b. Out of Wedlock: -If paternity cannot be easily established: 1. If we attempt to establish paternity inter vivos: -The party promoting paternity has the burden of proving paternity by a preponderance of the evidence. 2. If we attempt to establish paternity after death: -The party must prove paternity by clear and convincing evidence. -Inheritance Rights: 1. The child can inherit from and/or through the parents. 2. In order for the parent to inherit from and/or through the child, the parent must show that: a. The parent or a relative of the parent acknowledged the child; and b. The parent or relative of the parent contributed to the support and of the child. -Exception: If you see a parent being unjustly enriched (a situation where the parent’s mother/father has done the above two) then request that the court apply a constructive trust to the property being inherited. c. Adopted Children: 60 -A Legal Adoption will have occured when someone who is the legal guardian, having authority to give someone up for adoption, gives the child up for adoption. -Equitable Adoption: -This would be a situation where a child is trying to inherit from a Foster parent (however, there is an absence of a legal barrier, therefore, cannot apply Attempted Adoption Doctrine). -To show this you must have: 1. An agreement to adopt between the natural and adopting parents; and -Some jurisdictions allow this agreement to be implied. 2. Performance of the natural parents by giving away custody; and 3. Performance of the child by living in the home of the adopting parents; and 4. Partial Performance of the Foster Parents; and -They must accept the child and treat it as their own. -It is only partial because they didn’t properly adopt! 5. The Foster parents go into intestacy. -One you have shown all this, the child may inherit from the Foster parent(s), but not through them. -Generally when adoption takes place it automatically creates a parent-child relationship. -The original inheritance rights between the child and the natural parents are completely severed. -California Exceptions: -Post Death Adoption: Inheritance Rights of Child -This would be a situation where adoption occurs after the natural parent(s) dies. If only one parent dies, the surviving parent remarries and the new spouse adopts the child. -The child may inherit from and/or through the natural parent(s) if: 1. The adoption is after the death of the natural parent; and 2. The adopted child and that natural parent had lived together. 61 -This is only important for the deceased natural parent. Inheritance rights will remain the same between the surviving natural parent and the “adopted” child. -Step-Parent Adoption: -This would be a situation where a natural parent remarries and the new spouse adopts the child. -The inheritance right of the natural parents, from and/or through the adopted child, will depend on the nature of the parent: -The Non-Remarrying Natural Parent: -The natural parent will not inherit from or through the “adopted” child. -The child will be able to inherit from and/or through the natural parent if the child had lived with the natural parent. -Remarrying Natural Parent: -Inheritance rights between this natural parent and the adopted child are not affected. -This is only important for the non-remarrying natural parent. Inheritance rights will remain the same between the adopting parent and the “adopted” child. -A second adoption will reclassify the first adopting parents as “natural parents.” -Non-Step Parent Adoption: (can be used for homosexual couples) -This would be a situation where there is adoption, but the adopting parent does not remarry a natural parent. -The adopting parent (not married with the natural parent of the opposite sex) will have full inheritance rights between themselves and the child. -There are no inheritance rights between the adopted child and the other natural parent (of the same sex as the adopting parent). -Attempted Adoption: California Statute -This is a situation where there is an attempted adoption, but the other natural parent does not want to give up their rights. -The child gains inheritance rights from and/or through the adopting parent if: 62 1. The relationship began during the child’s minority and continued through the joint lifetime; and 2. There is clear and convincing evidence that the foster parent (the party attempting adoption) would have adopted the child but for the legal barrier. -Once the child reaches the age of majority, there is no longer any legal barrier. -Therefore, there is no way to invoke this doctrine after the child turns 18. d. Posthumous Children: -This is a children born after the death of one natural parent (normally the father). -Common law: -If the father dies, the child is treated as “born” at the point of conception. -A rebuttable presumption that the child is the issue of the deceased father will arise if: 1. The mother and deceased father were married; and -If this is not the case, the doctrine will not apply and the burden is on the child to prove paternity. 2. The child is born within: a. Common Law: 280 days. b. Modern Trend: 300 days. -If this is not the case, the doctrine will not apply and the burden is on the child to prove paternity. e. Half-Bloods: -This is a situation where parents have a child, then divorce, and one parent remarries and has another child. -The two children would be considered “half-bloods.” -Issues with Half-Bloods arise when all the children are dead, and then one of the children dies without a spouse or issue. -Does the half-blood qualify as an issue of parent with respects to the decedent? -Common Law: No. Half-bloods could not inherit. -Modern Trend: Yes. Half-bloods have full inheritance rights. -California Applies the Modern Trend. f. Non-Marital Children: -Two questions in this section: 1. Can men devise their sperm? -Common Law: No 63 -Modern Trend: Yes -However, the devisee can only be a life-tenant. We don’t want people dealing in sperm! 2. If sperm can be devised, and children are created from that sperm, is there a parent-child relationship created? -If so, how long must probate be kept open in the event of the devisees’ death? Posthumously Conceived Children: -Common Law: Rule of Convenience -Once members of a class (heirs) are able to inherit, the property will pass to them and the class will close. -In this situation the children born by the use of sperm would not be able to inherit. -Exception: If they are able to qualify as issue under the Posthumous Child doctrine. -Modern Trend: -Unless expressly provided for in the Will, posthumously conceived children may not inherit from or through the deceased parent -New Rule being Adopted: -A posthumously conceived child, conceived within 1 year of the father’s death, will be able to inherit from and through. 7. Advancement: -These are situations where a gift is given inter vivos, and the question becomes whether we should take into account the value of the gift when determining intestacy disposition: -Advancement Doctrine: -Common Law: -There was a rebuttable presumption that the inter vivos gift would count towards the “equal” share. -Modern Trend: -There is a rebuttable presumption that inter vivos gifts will not count towards the “equal” share. -To “rebut” the presumption, there must be a writing displaying intent that the gift qualify as an advancement, but it does not need to be signed or qualify as a Will: -If the Donor wants to create the Writing: -It must be contemporaneous with the gift. 64 -Exception: If the donor creates a writing which qualifies as a Will, then they may create the writing at anytime displaying the proper intent. -If the Donee wants to create the Writing: -It may be created at anytime. -When you have determined that a gift should count as an advancement, you must create a Hotchpot: 1. You take what is actually in the probate estate; and 2. Then add in the value of the advancement; and 3. Then you take that total value and divide it amongst the heirs; and 4. Then you subtract what each heir received in advancement from what they would receive through the Hotchpot. -If the advancement exceeds the share to be received, that party will not have to pay back anything to the probate estate, but they will not be able to take from the estate through intestacy. -If the donee predeceases the donor, does the advancement count against the donee’s estate for purposes of his issue? -Common Law: -Yes it will because the issue steps into the shoes of the donee by representation. -Modern Trend: -The advancement does not count against the share of the donor’s estate going to donee’s issue. -Exception: If the writing displaying intent to create an advancement expressly provides that it will count against the issue if the donee predeceases. 8. Transfers of an Expectancy: -These are situations where heirs apparent attempt to transfer their expectancy under a Will/intestacy for valuable consideration. -Generally an expectancy is not a property interest because, in order to inherit, the donee must survive the donor. -Exception: In some circumstances the courts of equity will enforce such a contract if it appears fair and reasonable under the circumstances. 9. Managing a Minor’s Property: -These problems arise when a taking issue is not of the age of majority, and, therefore, lack capacity to take property. -Because of this, different possible arrangements: 65 1. Guardianship: -The job here is to guard the minor’s property and protect it until they reach the age of majority. -There are high costs of administration, because every time the guardian wants to do something with the property, they must receive a court order. -Common Law: This was the Default. -Modern Trend: This is turned into a conservatorship. -The conservator takes legal title as trustee for the minor and has all the powers a trustee would have over property. -They only have to provide the court with accounting once a year. 2. Custodianship: -Very similar to a guardianship, but the custodian has a greater power to work with the property. -The custodian may use the property as long as it is in the best interest of the minor, and there must be accounting once the minor reaches the age of majority. 3. Trusts -This is the most flexible way to take care of a minor’s property. -Both the Custodianship and the Trust must be expressed in writing. 10. Bars to Succession: -These are situations where an heir will be prohibited from taking. 1. Homicide Doctrine: -These are situations where an heir has intentionally and feloniously caused the death of the decedent. Can that heir still take? Different views: 1. Some jurisdictions follow the statute does not specifically address this, so the heir should take. 2. Some jurisdictions deem the heir to have predeceased the decedent, therefore, they do not take. -This is the California approach. 3. Some jurisdictions apply a constructive trust on the heir to be distributed to more equitable takers. -Remember, being acquitted at the criminal level does not relieve the heir, because intestacy requires a civil level of proof, not beyond a reasonable doubt. -What happens to Joint Tenancy? -Most jurisdictions will trans-mutate the property into a Tenancy in Common. 66 -What if the Killer is taking under a Will? -Lapsed Gift Doctrine: Where the beneficiary in a written instrument predeceases the transferor, the gift lapses and will be deemed as a failed gift. -Anti-Lapse Exception: -If the predeceased beneficiary is sufficiently related to the transferor, and is survived by issue, it is presumed that the transferor would want the gift to transfer to the surviving issue. -Exception: If there is something expressly written in the instrument that rebuts this presumption. -Cannot provide with extrinsic evidence. -Remember, the lapse and anti-lapse doctrine apply to non-probate transfers (except Joint Tenancy) as well. -What happens to the issue of the killer? -Intestate: -In the jurisdictions where the killer is deemed to have predeceased, the issue will be able to step into their shoes through representation and take as normal. -Testate: -The Lapsed Gift doctrine will apply. exception does NOT apply! -Therefore, the gift will fail. -If there is an Expressed Gift-Over Clause: -These are clauses that say: “To X, otherwise, to Y.” -These are clauses used expressly to prevent property from going intestate when a beneficiary predeceases. -If this clause is in existence, it will be given effect, even if the original beneficiary kills the decedent, and his issue are the other takers. 2. Elder Abuse: -A beneficiary will be deemed to have predeceased the decedent if they mistreat and elder who has diminished capacity. 3. Disclaimer: -These are situations where someone rejects a gift. -Basically it is a rebuttal of the presumption that someone will always accept a gift of value. -Scope of Disclaimer: 67 Moreover, the Anti-Lapse -You can disclaim any type of gift (testate/intestate/non-probate) -What happens when you disclaim? -You are treated as having predeceased the decedent. -If you disclaim under Intestacy, the Per Capita approach kicks in. -If you disclaim under Testate, the Lapsed Gift and Anti-Lapse doctrines will apply. -Once you disclaim, you cannot designate where it goes. -This would essentially be an attempt to accept the gift, then transfer it. -There are no gift tax consequences to disclaimer. -How does one disclaim? -A disclaimer must be: 1. In writing; and 2. Made within 9 months of the death of the decedent. -Relation Back Doctrine to Disclaimer: -Creditors cannot reach disclaimed gifts because the gift is deemed to have been disclaimed at the point of death of the decedent. -Exception: The Federal Government can reach disclaimed gifts to repay debts. -In this situation, the court will apply a constructive trust on the taker of the disclaimed gift. -California Exceptions to Disclaimer Doctrine: 1. When determining the distribution of the “equal” share, the disclaiming beneficiary is not treated as having predeceased the decedent for purposes of determining the first tier at which distribution should occur. -Remember the decedent with 2 child, one who had predeceased with one surviving issue, and the other child who is disclaiming because he has 9 children. -Trying to get them each 1/10 th of the property versus 1/18 th of the property. 2. When determining if the advancement doctrine should apply, the disclaiming beneficiary is not treated as having predeceased for purposes of determining advancement, but is treated as having predeceased for purposes of distributing their share. -Remember, the issue of a predeceased beneficiary will not be liable for an advancement unless the written instrument specifically addresses it. 68
"JP's Wills _ Trusts OUTLINE"