Page 1 of 38 WILLS & TRUSTS INTESTACY: AN ESTATE PLAN BY OPERATION OF LAW I. Intestate Successors: Spouse and Descendants A. Issue: Who gets decedent’s property when decedent dies? Depends B. Issue: Was the property (must go thru each asset) Non Probate or Probate? 1. Non Probate: who holds property at death without having to transfer title (whether the asset is non probate or probate—have to qualify for non) a. Joint Tenancy w/right of survivorship b. Trusts c. Life Estate—possessory estate and future interest (vested remainder in FSA) d. Life Insurance K—form of 3rd party beneficiary K 2. Probate a. Depends: b. Issue: Did the D die Testate or Intestate? 1) Testate: w/a Will a) Execution Reqs b) Construction, c) Revocation Reqs 2) Intestate: w/o a Will a) Who and How Much—CA Intestacy scheme Issue: WHO gets the D’s property thru intestacy? Issue: Is there a Surviving Spouse? i) Surviving Spouse: 1st taker Issue if YES: HOW MUCH does he/she get? (1) Community Property: 100% of D’s ½ share of their community property (2) Separate Property: any gifts (a) 100%: if NO Issue (no child), Parents, or Issue of Parents • *Child definition: child counted as alive if living OR if dead but survived by issue (b) 50%: if 1 *Child (or Issue of Pred. Child is surviving); OR no issue, but P, or Issue of P • Issue: All blood descendants of an individual (children—grandchildren— great grandchildren) (c) 33%: if More than 1 *Child If NO Surviving Spouse then: ii) Issue of the decedent If NO Issue: Was there a Pred. Spouse: If no, continue to P; if yes, we want to protect the heirs of the predeceased spouse. iii) Predeceased Spouse: look to see if have a Pred. Spouse that died Intestate or Partially Intestate, If YES, then apply: (1) Recapture Doctrine: recapture all qualifying prop that the 2nd spouse received by virtue of the 1st spouse’s death (All A’s prop goes to A’s parents and B’s prop goes to B’s parents) (a) Qualifying Property: Property attributable to the pred spouse—only applies of the decedent dies INTESTATE and it only matters if the decedent has recharaccterize the property. (i) Real Property: recapture it if the second spouse dies within 15 years of the pred spouse (ii) Personal Property: recapture it if • The 2nd spouse dies within 5 years of the pred spouse, AND • The personal prop has a written record or title or ownership, AND • The aggregate value must be at least 10K (b/c of cost of administration) Page 2 of 38 (b) Recapture and give to: (i) Issue of Pred Spouse (ii) Parent of Pred Spouse (iii) Issue of Parent of Pred Spouse (iv) Then go back to scheme of § 6402 if none of the above are surviving and pretend § 6402.5 never existed (return to D’s next of kin) iv) Parents of decedent If NO Parents: v) Issue of Parents If No Issue of Parents: vi) Grandparents, or Issue of Grandparents • 1st look for Grandparents • 2nd look for Issue of Grandparents if Grandparents are not alive vii) Issue of Predeceased Spouse viii) Next of Kin ix) Parents or issue of Parents of Pred. Spouse x) Escheats to the state if no one to give the property C. Survival Requirement: An Individual must survive decedent in order to take, absent an express provision otherwise. 1. Default Rule: to get out of it, must override it by: a. Must have a written instrument, AND b. An express provision in it—qualifying it. 2. Issue: by How long do you have to survive? a. CL: Any amount of time—even one breath 1) Problems: (i.e. Policy considerations for having a survival requirement) a) More Costs: costs and distribution from A’s estate go to B’s estate probate b) Want it to go to decedent b/c want her to benefit, but if she dies one second later, how much benefite will she get? c) Parents disagree: don’t want families litigating d) Risk of Simultaneous Death and Double Probating VS. b. Intestate: CA Survival Requirement and Modern Trend if Probate Intestate, no written instrument: 1) Clear and convincing evidence that the person survived the transferee by 120 hours (5 days) AND 2) Treat it as if the other predeceased the decedent (the party claiming they survived bears the burden, or otherwise treat them as if they predeceased). • Does NOT apply to probate property or where: (1) there is a provision dealing with the issue of simultaneous death, (2) There is a provision that the one person must survive the other for a stated period in order to take the prop. (a) If the right of the bene is conditional on survival, and it cannot be determined, then he is deemed as predeceased. (b) If 2 or more beneficiaries would have been entitled to the prop had they survived each other and it CANNOT be determined whether they did or not, then the prop shall be divided up into equal portions and distributed as if the beneficiary had survived the other. c. Testate or NonProbate: CA Survival Requirement if Probate Testate or Non probate, with a written instrument: 1) Clear and Convincing evidence that the beneficiary has survived the decedent, OTHERWISE 2) Claimant is deemed to have pred UNLESS 3) A written instrument provides for another survival requirement • Community prop is treated the same as non probate D. Descendants (Issues of Decedent): if the Parent takes, their Issue CANNOT also take. The shares must be calculated equally. 1. TRICK QUESTION: This scheme is based on blood relationships: spouses of Issue CANNOT take at all. 2. 3 different approaches to this scenario: Per Stirpes, or Per Capita, or Per Capita at each generation: 3. Issue: How will D’s Probate property be distributed? Page 3 of 38 a. Per Stirpes: Not the default in CA, however, when see the phrase “By Representation” or “By right of representation,” this means per stirpes in CA. Three issues: 1) Issue: Where to make first division? • Always divide at the 1st tier (even if No live taker) 2) Issue: How many shares at that tier? • 1 share for each living party, 1 share for each party dead but survived by issue (THE SAME IN ALL THREE METHODS) 3) Issue: How to treat dropping shares? • Drop by bloodline. Per Stirpes Example: (underlined means deceased) G /\ A B //\ /\ C D E F G /\ /\ H I J K L M (A,B,D,E,G dead) (H-1/8; I-1/8; D-1/4; F-1/4; J,K,L,M-1/16) b. Per Capita: CA uses this as default rule (Note: if you opt out of the Per Capita in you Will, but the language is confusing then it will automatically go to the default rule.) 1) Where to make first division? • 1st tier where there is a live taker 2) How many shares at that tier? • 1 for each living, 1 for each dead but survived by issue 3) How to treat dropping shares? • By Bloodline Per Capita Example: G /\ A B //\ /\ C D E F G /\ /\ H I J K L M (H-1/8; I-1/8; D-1/4; F-1/4; J,K,L,M-1/16) c. Per Capita Each Generation: 1) Where to make first division? • 1st tier where there is a live taker 2) How many shares at that tier? • 1 for each living, 1 for each dead but survived by issue 3) How to treat dropping shares? • Pool or add up the dropping shares and divide that number by the number of eligible takers in the dropping tier Per Capita Each Generation Example: (underlined means deceased) G /\ A B //\ /\ C D E F G /\ /\ H I J K L M (A,B,D,E,G dead) Page 4 of 38 (D-1/4; F-1/4—Pool together and divide equally for H,I,J,K,L,M—so: ¼ + ¼ = 2/4 =1/2. ½ divided by 6 = 1/12. = H,I,J,K,L,M each have 1/12) E. Ancestors and Collaterals: 1. Nex of Kin (No Surv Spouse, I, Pred Spouse, P, I of P, GP, I of GP, I of PS—go to next of kin) 2. Look at handout for example 3. 3 Approaches to determine Next of Kin: a. Parentelic: Line of descent from a GP, or GGP, or GGGP 1) If there is no one in the parents line, it is exhausted and go to the GP level and if no survivors and exhaust then go to the next level. 2) Find the top of the parentelic line the person is in, go there and count your way down 3) Give to the takers in the closest parantellic line to the decedent b. Degree-of-Relationship: Counting the people between you and that relative 1) Find common relative, count the steps b/w the individ who died and the individ who claims they can take 2) The closer person (the one with the lower degree of relationship number) takes. 3) Degree b/w you and Parent =1 4) Degree b/w you and GP = 2 c. Degree of Relationship with Paerntela Tie Breaker: CA uses this approach: go up the bloodline and distribute according to the degree of relationhip. If you have a tie in the degree of relationship then you go to the Parentelic to use as a tiebreaker. 1) Seminal Approach: if have tie in degree of relationship, go to this approach; a) Find a Common Ancestor b) Count the steps from the D up to the common ancestor c) Count the Steps down to the surviving issue under that ancestor. 2) In equal degree but where there are 2 or more collateral kindred, those who claim through the nearest ancestor are preferred to those more remote. II. Transfers to Children A. How to classify as Issue—First must establish a P/Ch Rltshp: 1. Tradional P/Ch Relationship: Married a. Natural Parents—M and D giv Birth to their Natural Child. b. Norm is that the Parents are Married 2. Out of Wedlock: for parent to inherit, he or a relative must acknowledge and support the child 3. Adoption scenario creates relationship as well. Others: 4. Half Blood Scenarios: CA says to treat them equally. (Modern Trend and majority rule). 5. Posthumously Born Children: CL Rule—children are considered being alive from the point of conception if it benefits them and they are born alive. B. Out Of Wedlock Births (Nonmarital Children) 1. Rule: If the child waits until the father dies to establish paternity, required to meet a “clear and convincing evidnece standard.” • Therefore, if a child wants to take from the father in a Nontraditional relationship, he better bring an action during the father’s lifetime (preponderance) 2. Rule: Nontraditional Relationship does NOT affect the ability of the child to inherit from the Parents. It DOES affect the ability of the Parents being able to inherit from the child. a. If a child is born out of wedlock, neither a natural parent nor a relative of that parent inherits from or through the child on the basis of the parent and child relationship between that parent and the child UNLESS both of the following requirements are satisfied: 1) The parent OR a relative of the parent acknowledged the child. AND 2) The parent OR a relative of the parent contributed to the support or the care of the child. C. Adopted Children 1. NPs CANNOT inherit from the Child: P/Ch Relationship with the NP is SEVERED and the adopted child now has a P/Ch Relationship with the adopted child and the adopting parents. 2. Child’s Right to Inherit from NP: Adoption severs UNLESS: a. Lived together as a family, AND EITHER b. Stepparent adoption, OR Page 5 of 38 c. The adoption is after the death of either of the natural parents • Then the adoption will NOT sever the P/Ch. Rltshp. And the child can still inherit from the NP (NP cannot necessarily still inherit from the child). 3. Adoption Rules restated: a. General Rules: Parents consenting to the adoption of their child, waive their right to inherit from the child. 1) Both Parents Must Decide to give up Child: One Parent CANNOT unilaterally decide to give up a child for adoption a) Even if the parents are NOT married b) If one wants to give the child up for A and doesn’t know where the father is then she must give Public Notice. 3) Consent: NP must CONSENT to an adoption b. Stepparent Scenario 1) If it is the stepparent who adopts: a) Had to live together as a natural family before the adoption b) Adopted by either the spouse (NP remain intact and the Stepparent steps in as a spouse) or after the death of either (one NP dead). i) DIVORCE: If the SP adopts after divorce Who can the Child inherit from or through? • Both Natural Parents and the SP (three arrows of prop down)—adoption does not SEVER the P/C relationship b/w the NP and the Child. • Child given greater inheritance rights if adoption was by a Stepparent or after the death of a natural parent Who can inherit from the Child? • The NP who didn’t give the Ch up for adoption and the SP (two arrows up) 2) When NP can inherit from or through the adopted child: a) when child is adopted by a Stepparent or b) by a surviving spouse (stepparent) of a natural parent. c) BOTTOM LINE: Adoption has to be by a stepparent. c. Post Death of NP ii) DEATH: Stepparent comes in after death of an NP Who can the Child inherit from or through? • Both NPs and SP Who can inherit from the Child? • NP still living and SP d. Same Gender Rule for Non Parent Adoption: Gender of adopting parent kicks out the same gender of natural parent. Doesn’t kick out the different gender. 1) Hypo P and G divorce. C wants G, and G moves in with C, but C wants to marry. C adopts the 4 kids and P consents. How many parents can the kids inherit from? 2, C and G b/c P has stepped out—not three b/c C was not a spouse. How many parents can inherit from the kids? 2, C steps into Ps shoes. C became the natural father. 3) Exception: Simultaneous adoption L and G adopt a kid—they are both women Courts have admitted simultaneous adoption by both partners even though not adoption by a stepparent. Otherwise, L would knock out G instead of P. P must consent to the adoption. e. Attempted Adoption: When foster parents want to adopt, but the NPs won’t consent OR when parents divorce and remarry, and a stepparent wants to adopt, but one of the NPs won’t consent. 1) Statute: For the purpose of determining intestate succession by a person or the person’s issue from or through a foster parent or stepparent, the relationship of parent and child exists between that person and the person’s foster parent or stepparent if both of the following requirements are satisfied: a) The relationship began during the person’s minority and continued throughout the joint lifetimes of the person and the person’s FP or SP. b) It is established by Clear and Convincing evidence that the FP or SP would have adopted the person but for a legal barrier. • CA split: some say that once child reaches the age of majority there is NO LEGAL BARRIER Page 6 of 38 2) How the statute effects the relationship: a) Permits the child to inherit from and thru the FP or SP, but for the legal barrier b) However, NP ONLY inherit from the child. c) The other NP who consents to adoption waives their inheritance rights. f. Equitable Adoption “that which ought to be done should be done”: this is a contractual agreement. It does NOT establish the issue of a P/Ch Relationship. 1) Elements of Equitable Adoption under a K theory: a) Agreement to adopt between “AP” and NP b) Performance by the parent giving up the child c) Performance by the child—child has to live in the home of the “AP” (if child moves in the NP have also performed, consented) d) Partial performance by “AP” (only partial b/c don’t follow through on the adoption paperwork)— “AP” take the child in and treat the child as their own e) “AP” must die intestate (i.e. intestacy) • Allows the child to inherit from the “AP”, but the “AP” can’t inherit from the equitably adopted child. ONLY FROM not THROUGH • There is much room for arguments Pro and Con in EXAM • O’Neil: invalid K, #1 of above is not met. • Dissent and Liberal Modern Trend: If a child was lead to believe they were adopted, Equitable adoption would apply 4. Half-blood and whole-blood: a. Issue: Do they inherit the same? b. CA Rule: Treat them equally 1) Example: G and P married (have 4 kids; K,J,P,C), G and P divorce P marries L (P & L have kid; S) G and P and L die, P jr. dies Should S get a half share or a whole share? In CA should be treated equally. 5. Case of rape AND sperm donors: not the natural father. D. Posthumously Born vs. Posthumously Conceived Children 1. Posthumously Born child is a child born in wedlock anywhere from 280 (C/L)-300(MT) days after conception and after Father’s Death. Full parent/Ch relationship 2. Artificial insemination of Sperm: where surrogacy occurs, or donor leaves sperm to person (Hetch Case and Posthumously Conceived Child)) a. Can only go to whom it is devised, and CANNOT be given away to anyone else even if there is a settlement of prop. b. Is a special type of prop, must be regulated carefully c. What type of P/Ch. Relationship does this create for kids born after death of father by way of sperm donation? 1) Have a natural mother 2) No parental relationship with father: b/c unfair to existing heirs d. Can the artificially inseminated children inherit from dead father? 1) No, the class of heirs closes b/c other living children inherit once father dies a. Exception: if born w/I 300 days of fathers 2) HYPO; to A for life, then to the children of B and their heirs. A dies, B has two children X & Y 3. Posthumously Conceived Children: a. Unless there is a written instrument reflecting rights of PCC, class closes the child is not considered child of the father for inheritance purposes b. They don’t get to inherit from nor thru NEW Law: they get to inherif from the father so long as conceived within one year of father's death c. Posthumously Born Children: Treated as a full P/Child Rltshp 1) Class Closing Doctrine: The open class closes upon the 1st person’s possession of an interest a) Example: Page 7 of 38 To A for Life, the to B’s children and their heirs. • A has LE, when A dies then B’s Children take. • B has one child, X. B’s children have a vested interest subject to open until A dies b/c B could still have more children. • B has another Child, Y. • A dies • B has 3rd child, Z, after A’s death • Who takes? Only X and Y— • Rule (3 requirements) • Written Consent /Some allow implied Consent • Within 1 year /reasonable time • Give Notice • Rule (CA) • C & C • Decedent has to specify in writing that his genetic material is to be used for posthumanously conception • 1 witness for the written doc + signature • Only revocable by a writing (1 witness + signature) • Notice requirement to the personal representative • Within two years child has to be conceived of death • Arrow (full /partial /both directions) • HYPO • Set up a trust • Life Estate w/Remainder Review: How to Qualify as an Issue P/Ch relationships: Posthumously born Natural Parent Tradional, OR Out-of-Wedlock Adoption General Rule Stepparent Post-Death of Natural parent Same Gender Rule Adoption by Spouse of Natural Parent Attempted Adoption (foster parent or stepparent) Equitable Adoption E. Managing a Minor’s Property 1. How to Qualify as an Issue? a. Assuming child entitled to receive property, what is the problem? b. Child is a minor and does not have legal capacity to hold property. 1) Guardianship: w/out express instructions, court will appoint & need a written instrument to opt out. a) Can only guard prop and use only at ct approval b) Can’t use the income from the prop to support the ward c) Can’t use the principal unless court order d) No legal title, minimal inherent powers over the prop e) High cost, much work—depleting the prop through administrative costs 2) Custodianship a) No court supervision; accounting to child at age of majority b) Can use the prop for any purpose, as long as it is for the child’s benefit 3) Trust a) Even greater flexibility b) Highest standard of care or duty—fiduciary duty c) Higher expenses, trustee must be paid. Page 8 of 38 c. Preferences: 1) If small gift: custodianship—must have written instrument 2) If large gift: trusteeship—must have written instrument 3) Worst: guardianship, but also the default F. Advancements: Only applies to Intestacy Three ways to lose what one could possibly be taking—EXPECTANCY: Advancement: Issue take equally, based in equity Homicide disclaimer 1. Can’t be an heir of a person before they die, you are an HEIR APPARENT a. Survival Requirement: makes one an heir apparent, b/c could die before the D and can’t therefore be an heir. b. Heirs Apparent Do NOT hold a prop interest, hold an EXPECTANCY. 1) CL: Expectancy is not* a prop interest BUT the court of Equity will enforce a K if equitable. a) *HYPO: sell expectancy in a singed K, ct in Equity will enforce 2. Doctrine of Advancement (Common Law): must calculate every gift the Parents gave to the child and add them up, put them into a hotchpot a. Gifts given to child inter vivos are presumed as advancements that the child was to get when parent dies 3. CA & Modern Trend of Advancement: a. WRITTEN PROOF of INTENT: The advancement doctrine does not arise unless written proof that the advancement was meant to be an advancement does not have to be signed 1) Decedent or Donor declares in a contemporaneous writing that it constitutes an advancement a) Must do it through document that qualifies as a valid Will 2) Heir acknowledges in writing that the gift is to be so deducted or is an advancement. 3) Writing can be made by either the Donor or the Donee. Different requrements depending on who does the writing a) If Donor (parent) makes the writing it needs to be contemporaneous b) If the Donee (child) does the writing, then it doesn’t need to be contemporaneous. 1. if Donee predeceases Donor, m/b express in writing for hotchpot b. Hotchpot: take anything that qualifies as an advancement, add it back in to create the hotchpot. H= actual probate estate plus advancements, then divide by # of heirs; this is the amount each heir is entitled to c. Scope: Advancement is a Probate Intestate Doctrine • If Testate could do the same thing under the Satisfaction Doctrine 1) Absent express language otherwise, if the recipient of the advanced prop fails to survive the decedent, the prop is NOT taken into account in computing the intestate share to be received by the recipient’s issue d. Advancement Example: P gave 100K to C and 50K to D. J and K got nothing Writings were made for both C and P, it said, “ we want kids to be treated equally.” • LOOK OUT when see “words of advancement,” only look for the intent in the writing (could lead to litigation if unclear) 1) P dies w/Probate estate of 250K, and dies intestate 2) How should the property be divided among the 4 kids? a) Assume all the requirements are met for Advancement for C and D. Intent was clear, contemporaneous writing, etc. b) C = 100K; D = 50K; J = 0; K = 0. Take the gifts that were advancements and add them together and put them in the Hotchpot = 150K total Advancements. c) Add together the Hotchpot amount with the Probate Estate amount = 150 + 250 = 400K d) There are 4 issue, and need to distribute equally. Combine the advancements back in to determine the true estate amount and credit. e) C gets 0K; D gets 50K; Jgets 100K; K gets 100K e. Opting Out Hypo: Page 9 of 38 C gets 200K, D gets 50K, J gets 0, and K gets 0K. There is 500K total in the Estate. Each should get 125 K, not including advancements. 1) How should the prop be divided? a) C got 75K more than she would have if she didn’t ever get the advancement. She cannot be forced to give back 75K, Most likely she will defer and not participate in the distribution of the estate. Sch can Opt Out. b) If supposed to take 125K and C opts out, then cut her share out completely and Count shares ONLY of people participating . . . c) Instead of total Hotchpot 500K, it wil be 300K (-200K of C). Can count in shares of child who opts out of participating. f. Debt owed to D by a beneficiary: 1) A debt owed to the D is NOT charged against the intestate share of any person except the debtor 2) If the debtor fails to survive the D, the debt is NOT taken into account in computing the intestate share of the debtor’s issue. G. More Bars to Succession 1. Homicide Doctrine: m/b intentional and felonious a. Always ask: How did D die? (Mahoney Case) b. Issue: Should you be allowed to take as a taker even if you killed the D? c. Jurisdictions Split 3 ways: 1) Title passes in spite of the crime b/c it is up to the leg: a) Leg punishes your crime with jail b) Don’t think it is fair to impose a 2nd punishment 2) CA Approach: Treat the killer as predeceased = constructive death 3) Hybrid: Title will pass BUT equity says you can’t profit by your own wrongdoing—set up “CONSTRUCTIVE TRUST,” which takes it away from the killer. a) Constructive Trust is a judicially created trust where the surviving spouse (i.e. killer) is the trustee who holds for the benefit of the beneficiaries—using it to prevent someone from being unjustly enriched d. CA Statute application scope: A person who Feloniously and Intentionally kills the D. • Matters if the murder is voluntary or involuntary in CA 1) The killer doesn’t take, treat the killer as predeceased a) Scope: statute covers intestacy, testacy, and Non probate; BUT one section of NON is not covered in the statute b) Covers: JT, LI K’s, Trusts . . . c) Doesn’t cover Possessory Estates and future Interests. Courts have to wrestle here. d) Do children of killer take? YES e. Right to Inherit Prop is a Civil Issue: if someone is acquitted in a criminal trial, it doesn’t dtermine the right to take. (i.e. OJ) f. Rule for JTs when one holder commits murder: It is severed and treat as predeceased, killer has NO right of survivorship, but the JT treat as a T in C and each party gets their separate halves. g. Effect on children of the killer taking: Depends on whether the victim died testate or intestate. 1) TESTATE: Victim died testate and Dad kills, do kids take? NO. Treat the killer as though he predeceased the victim and the property passes as such, meaning the gift would lapse “failed gift” (go to the kids) • Lapse: Person identified in a written instrument predeceases • Anti-Lapse: If person who predeceased is the appropriate degree of relation to the transferor and survived by issue (assuming no express gift) it says gift to issue of the predeceased beneficiary a) HOWEVER b) The statute specifically states that the Anti-Lapse doctrine does NOT apply in cases of HOMICIDE if murdered has will c) Kids get penalized because of the sins of their father; kids may take by express gift overclause if specified in will in the case where decedent predeceases 2) INTESTATE: Victim died intestate and Dad kills, do kids take? YES, if killer is 1st tier taker under Per Capita. 2. Disclaimers: a person voluntarily chooses not to take his/her inheritance. Page 10 of 38 a. If the party disclaims: treat that person as if the claimant pre-d the grantor b. Can disclaim any type of prop interest; any interest can be disclaimed (P, NP, T, or Intestste), good way to avoid double taxes. c. Statute: 1) Unless T provides an express provision in case of a disclaimer, the interest disclaimed shall descend, go, be distributed, or continue to be held a) As to a present interest, as if the disclaimant had preded the creator of the interest or b) As to a future interest, as if the disclaimant had died before the even determining that the taker of the interest had become finally ascertained and the taker'’ interest indefeasibly vested. 2) A disclaimer relates back to the date of death of the T or the determinative event 3) Protecting against these scenarios a) Designate person as live taker but can’t take b/c he is predeceased • Rule: Disclaimer Affects the Per Capita Analysis Rule: Treat person who disclaimed as alive for purposes of deciding where to make the division, then treat the as dead for purposes of distributing the shares (so that kids don’t get unequal shares) • Example: B disclaims. Per Capita: B=1/2, C=1/2 If B considered to pred because of disclaimer, then the split would be at D and D would receive 1/11, which is inappropriate use of the doctrine of disclaimer—policy; want the kids to take equally. A /\ B C /\\\\\\\\\\ D EFGHIJKLMN (B and C dead) b) Advancement Doctrine Rule Will Apply if party Disclaims: Cannot disclaim under advancement and if you do disclaim in conjunction with other doctrines, advancement will still apply against the issue • OTHERWISE: the party who received the advancement would pre-d the donor and the advancement would not count against the share going to the issue unless the written instrument expressly says the opposite. c) Disclaiming an interest under a will, will NOT transform an interested witness into a disinterested one. d) Creditors of the disclaiming party CANNOT reach property disclaimed! TESTACY III. Formalities of Wills: Mental Capacity A. INITIAL REQUIREMENTS TO OPT OUT OF INTESTACY B. Mental Capacity 1. Requirements for Mental Capacity: a. Must be at least 18 yrs old, AND b. Of Sound Mind—testamentary capacity 1) What constitutes sound mind (TESTAMENTARY CAPACITY)? a) Must have ability to understand the nature and extent of your property (low threshold for testamentary capacity, very strong presumption everyone has this) b) Must understand who are the natural objects of your bounty—intestate takers i) Who are the natural objects of your bounty? (1) People who would take if you didn’t have a will, your HEIRS APPARENT (2) Heirs apparent have an expectancy: can’t usually transfer expectancy. Page 11 of 38 c) Disposition the testator is making d) Must understand the nature of the testamentary instrument that one executes 2. The focus of the determination of Capacity is at the time of the signing; when will is executed must have lucid interval 3. Conservator for those who lack Capacity: a. Get conservator for person who is incapable of looking after their own interests. b. Even if get a conservator it doesn’t mean you lack testamentary capacitym/s more 4. Thresholds of capacity a. Highest = contractual capacity b. Middle = testamentary, execution of a Will—strong presumption for (high burden on those challenging a will) c. Lowest = marriage 5. Defects a. Insane Delusions b. Undue Influence c. Fraud C. Insane Delusion: false belief/mistake 1. To have a valid will need Mental Capacity, even if you suffer from an insane delusion you could have mental capacity. 2. Delusion and mistake are similar: mistake-is the belief susceptible to correction a. Cts don’t correct mistakes as a general rule 3. Insane Delusion Rule a. Standard: How much do you want to protect the T’s intent? 1) Reasonable Person—Majority Rule: Reasonable person in the T’s position could not have come to the same conclusion (using a totality of the circumstances approach). • This approach is more protective of the Heirs Apparent OR 2) Rational Basis—Minority Rule: If there is any factual evidence to support the belief, cannot be an insane delusion • This approach is more protective of the T’s intent b. CAUSATION: must show that the T’s belief actually affected the Will. 1) Issue: What is the standard of causation? 2) Options a) “But For” the insane delusion, the T would not have disposed of his prop otherwise (more protective of T) b) “Might have affected” T’s intent and the Will (less protective) 4. CA Standards: “rational basis (any factual support)” for the T’s belief AND “but for” the Insane Delusion, the T would not have left the prop as he/she did. • Most protective of the T in CA 5. Assuming there IS and Insane Delusion, what is the Remedy? a. Strike out the portion of the Will that is affected by the Insane Delusion b. Strike Suits: If see an Unnatural Disposition of property file a strike suit to get a percentage of the estate (10-20%) based on one of the doctrines of the Will. • Permitting a NCC stops Strike suits 6. Juries are much more likely to find Insane Delusion than not 7. If a gift or portion of will fails (strike out): falls to residuary, then intestacy, if whole will failsintestacy D. Undue Influence: 1. Undue Influence Doctrine: where coercion, duress (even if not physical) from a 3rd party is substituted for the intent of the T • Equity concerns: should not profit from own wrongdoing • Soft Doctrine, fact sensitive go through facts and show each element a. Elements 1) Unnatural Distribution 2) Look for coercion, duress, substituted for the intent of the T, manipulation Page 12 of 38 3) Causation: show that UI caused Decedent to give property away in a way she would not otherwise have done. 4) Four Factor Test of UI: (not necessarily controlling) (SMOKE) a) SUSCEPTIBILITY: Whether the T was susceptible to UI b) MOTIVE: disposition c) OPPORTUNITY: Influencer had opportunity d) CAUSATION: goes to the heart of undue influence, did this influence effect the will. • Example of NO causation: M mentioned that she was going to cut these people out and also that she had cut them out. Therefore, looks like it was not F’s influence, but was what she actually wanted. 5) Burden of Proof: is on the P, by a preponderance of the evidence 6) ATTY who drafts will cannot take under will unless related; question of loyalty and fiduciary duty • In order to rebut the presumption of undue influence in such a case, m/have independent counsel 2. Burden-shifting presumption approach to Undue Influence: putting the burden on the D to show that there was NO UI. a. If the P can show that there was: 1) A Confidential Relationship between the D (party accused of UI) and the T. • Goes to SUSCEPTIBILITY, opportunity, and motive 2) Party accused of UI was Active in the Procurement or Execution of the Will • Courts take a broad approach to this factor) 3) Show that Defendant Unduly Benefits • Goes to OPPORTUNITY, SUBJECTIVE The Burden Shifts if the above three are met & the D must rebut the presumption of UI. 3. No Contest Clause: deters P from suing b/c it says that if they contest the Will they will not get anything—will get something in the Will if they don’t contest (e.g. buying them off).testator m/offer something to make valid a. Policy: 1) BAD b/c can be used a s a shield to protect wrongdoers 2) GOOD b/c they preserve T’s intent b. How jurisdictions feel about No contest clauses: 1) Most: recognize them but construe them narrowly c. CA’s position on No Contest Clauses: more protective of T 1) CA will NOT enforce a No Contest Clause if those challenging the will have: a) Probable Cause to support their claim, AND b) The claim is limited is limited to one of the following situations: i) Forgery ii) Revocation iii) Interested drafter iv) Petition to remove a trustee v) Claim m/b against someone active in procurement or execution of will d. Alternatives for those challenging the No Contest Clause to collecting if NCC is held VALID: 1) Tortious Interference with an Expectancy (not subject to no contest clause) Benefits: a) SOL longer b) Punitive damages Interested Drafter Provisions: Every jx has a rebuttable presumption that there was UI 1. CA Statute: when an atty has drafted, or has caused to be transcribed, an instrument from which reaps a benefit, there is an almost irrebuttable presumption that there was UI.assume undue influence unless: 2. m/show • Confidential Relationship • Alleged Undue influencer was active in procurement or execution of the will Page 13 of 38 • Alleged Undue influencer unfairly benefited a. Exceptions: 1) If there is a certificate of independent atty review who counsels the client (not merely a scribe) 2) If the atty is related to the testator, OR 3) If the atty is a cohabitant with the testator. 4) Marriage or domestic partner b. This only applies to instruments that are executed before July of 1993 c. One CANNOT opt out of this provision by Will d. This provision also applies to NON-PROBATE property. e. BOP-rx cz Review of Undue Influence in CA: subjective approach 1. 4 factor approach where burden of proof on P 2. 3 factor approach where if 3 are met, then burden shifts to the D (start here) 3. CA Interested Drafter statutory provisions: a. Creates irrebuttable presumption of UI, UNLESS Exceptions: 1) Reviewed by 3rd party atty who counsels about the nature of intended transfer and signs and delivers to the Transferor 2) Related by blood 3) Cohabitant 4) Married or domestic partner E. Fraud: essence is misrepresentation: 1. Fraud in the inducement: Defendant misrepresents key facts to T, and the T relies upon the facts when formulating an estate plan 2. Fraud in the execution: tricking someone into signing something., may be in the will itself and T didn’t read 3. Elements to show Fraud: a. Misrepresentation with Intent to affect the testamentary disposition b. Causation c. Strike the part of the Will affected by Fraud, OR • Place it in a Constructive Trust 4. Only use UI or Fraud where 3rd party is involved-rules out insane delusion 5. Disinheritance: T must affirmatively give away all T’s property in order to disinherit someone—cannot write someone out of will in CA F. Tortious Interference with an Expectancy: an intentional interference with an expected inheritance or gift as a valid cause of action. 1. P must prove that the interference involved tortious conduct: fraud, duress, or UI 2. Not a Will contest but a suit for damages, a No Contest Clause does NOT apply 3. CANNOT use to contest Mental Capacity 4. Benefits: a. Longer SOL b. Punitive Damages c. No contest clause does not apply 5. Must bring probate claim 1st G. Strike Suit: 1. If there is an Unnatural Disposition of the T’s property, then bring a strike suit, under the belief that the jury will give the family something 2. If a Will totally cuts out the bounty of one’s estate, based on mental capacity, insane delusion, UI, or fraud; file a STRIKE SUIT a. P can likely receive at least 10% of the estate b/c the jury would only have to rule based on the preponderance of evidence standard. Page 14 of 38 b. Therefore, the D would probably give the claimant 10% just to settle instead of paying a lawyer 20% to defend the claim. IV. Formalities of Wills: Execution/Revocation/Components A. Attested Wills: 1. Wills Act Formalities (WAF): to properly execute a Will the T must comply a. Writing b. Signed at the bottom c. By T or proxy (in the T’s presence and at his discretion) d. Witnessed: in the presence of 2 or more witnesses at the same time of signing • Witnesses must sign and attest in front of the T. 2. Reasons for the Formalities: a. Protective Function: to show no UI, fraud, or duress (witnesses for this function) b. Channeling Function: creates uniformity in the document 1) Prefer Ts to get an atty b/c they have form documents which courts will recognize 2) Reduces administrative costs, effect of the Will will be honored c. Evidentiary Function: to increase reliability, and courts want the best evidence (require a writing for this function) d. Ritualistic Function: to impress upon the T the seriousness or finality of what he/she is doing (signing and witnesses for the formality of this function), protect intent 3. Common Law Rule: Strict Compliance as to each will requirement and function w/in the WAF. 4. Modern Approach: 1. Can use Strict Compliance 2. Substantial Compliance: keep same number of requirements but be more lenient 3. Reduce requirements saying ones left are important (Strict Compliance for those) 4. Could reduce both the number and be more lenient. 5. CA Requirements for Attested Wills: Strict Compliance Jurisdiction a. Writing b. Signed by T, OR 1) By another in T’s presence and at direction of the T, OR 2) By conservator pursuant to court order (no longer have to sign at the end) c. Witnessed 1) By 2 persons at the same time that the T signs or acknowledges the instrument AND 2) Must understand the significance of the T’s Will 3) Presence of the Witnesses at the Signing by the T: Witnesses still must be present, but don’t have to be together—can themselves sign separately, but when the T signs or acknowledges the instrument they must be . . a) In the Line of Sight • T can be seen (able to see the act of T signing the will), or b) CA: Conscious Presence (softening doctrine with Strict Compliance: more flexible totality of the circumstances approach) • Focus on Time Line to demonstrate: • Line of Sight—narrow • Conscious Presence: expanded and more flexible c) On EXAM for presence test: Slide back and forth b/w the two in analysis d) CA Presence Rule Summary: No presence req as to the Witnesses’ own signatures, HOWEVER, Witnesses must be present at the time of the T’s signature or acknowledgement of T’s Will. 6. Telephonic Witness: a. 1st—what is the function of the witnesses? b. 2nd—what about presence? c. Risks: 1) Erodes the Protective and Ritualistic functions Page 15 of 38 2) Potential for fraud 3) Increased risk of mistake 4) More Litigation and higher costs of Administration d. Modern Rule: Telephonic Presence is NOT presence 7. Video a. Under Strict Compliance: video is NOT allowed by ALL COURTS b. Writing is evidentiary. Video is like an oral will. 8. Bank Teller a. If there is no personal contact with the T, then NO 9. Order of Signing: does it matter who signs first; witnesses or T? a. CL: T always had to sign first b. Modern Rule: As long as no one leaves the room until the T has signed, doesn’t matter who signs first 10. Acknowledgement: of the signature or of the will a. Rule: The T does NOT have to be present when the witnesses sign 11. Signature: What constitutes a signature? a. Most Jurisdictions: any marking that the person intends to constitute their signature qualifies as their signature. b. CA Civil Code: where T signs attested instrument with an “X” one of the witnesses must print the name of the person who wrote the “X” and then must write their own name. 1) If pretyped ahead of time, b/c it is a civil code provision for the witness to write the name, and b/c we have a probate code provision, is good enough 2) Only time CA probate used Substantial Compliance is in the above scenario, with a pretyped signature. 3) CA always takes Strict Compliance, generally. 12. Provisions in the Will that come after or below the Signature: a. CA: 1) Doesn’t require that the signature be at the end, But 2) Temporal Requirement: can’t add a provision into the Will after the Will signed. 3) Bottom Line: if provision added temporally before the T’s sig, doesn’t matter if T’s signature is below or above the sig line—can probate it 13. Delayed Attestation by Witnesses: a. CA Rule: permits delayed attestation as long as it is within 6 months to one year after the T signed. 14. The Interested Witness Doctrine: ***DOESN’T INVALIDATE THE IW WILL*** a. CA Rule: Need 2 witnesses that are disinterested Witnesses. However, Doesn’t invalidate the Will b/c of an interested Witness. Just Purge the Witness of his excess interest. 1) Rebuttable Presumption that the witness engaged in wrongful conduct (UI or Fraud) 2) Burden of Proof is on the interested Witness to persuade the trier of fact that he didn’t take b/c of UI or fraud. b. If Interested Witness doesn’t overcome the presumption: REMEDY? 1) Purge the Interested Witness of his/her excess interest (as compared to an amount under a prior will or intestacy). a) If intestacy (and no prior Will): excess is any amount greater the intestate share of the heir in question. b) If prior will: excess is any amount in the 2nd Will greater than what the IW would have taken under the 1st Will. • Example of Purging Doctrine at work: Will 1 gave A 5K, and Will 2 gives A, 10K. If the A, the Interested Witness, cannot rebut the presumption of undue influence, she would get 5K Page 16 of 38 b/c the Court would use the Purging Doctrine (the amount the IW would have gotten had the 2nd Will not been executed). • Hypo: Mom leaves all estate to P (will)—residuary clause. Mom has 4 sons, P is one of 2 witnesses to the will. Problem: creates presumption that procured by undue influence. If can’t rebut this presumption then purge ¾ b/c taking under intestacy and P has 3 other brothers. Strike ¾ to fall to intestacy, but who will take under intestacy? All 4 sons, divide that ¾. Would P take his ¼ and his portion of the ¾ under the intestate scheme? Put in a constructive trust. Could also argue that it is an advancement. • Catch all if you see unjust enrichment is to argue that the ¾ should be placed in a CONSTRUCTIVE TRUST (e.g. homicide) 2) Don’t use if have definite guilty witness b/c it allows the witness to walk away with something, USE • Strike the gift that THAT person is getting—must assert UI under one of the other 3 ways. c. Two More Wrinkles in the IW Statute: CA construes this statute narrowly 1) If a Witness gets legal title as trustee or any fiduciary duty, then the IW statute doesn’t apply. 2) What if P is IW, but Will gives everything to P’s wife? No reference applies this statute to family members of the IWs. 15. REVIEW: How many doctrines that allow bringing a cause of action to show UI: a. UI b. Fraud in the execution c. Four Factor Test d. Three factor test e. Interested Drafter f. Interested Witness Remedy (purging) g. Strike suit B. Curative Doctrines for WAF in General: 1. THREE APPROACHES: a. Strict Compliance b. Substantial compliance: CA—valid (a judicial doctrine that can be argued in court: 1) Clear and convincing evidence that the T intended this to be his will 2) Clear and convincing evidence that the T substantially complied with the WAF requirements. • Use if the Will fails to satisfy the requirements for a proper WAF under strict compliance, don’t end there, and try substantial compliance • Example: Witnesses signature which were only on a self-proving affidavit were challenged as not literally complying with the WAF. The court held that the signatures substantially complied, and that was enough to probate the will. c. Dispensing Power (differs from Sub Compliance—softer) 1) Clear and convincing evidence that the T INTENDED it to be his Will, AND 2) NO evidence of FRAUD involved, • Then can dispense of virtually all Wills Act Requirements • Must still have a WRITING • Courts most willing to overlook witnessing 1. Self Proving Affidavit: under Strict Comp, not part of the Will, under Substantial Com it would be. 2. Writing “void” across a xerox copy: Not valid revocation b/c it is not the Will, only the copy 3. T executes 3 page will, T removes 1st page and substitutes new page: Can substituted 1st page be probated? NO, not under Strict Com. Ripe for fraud. OK under Dispensing power, but do we want to go that far? Page 17 of 38 4. Approaches for dealing with incorrect signatures on will—arguments to make to courts to try to get them to probate: a. Traditional Outcome: Strict Compliance b. Modern Approach: think of the execution ceremony as one ceremony 1) Testamentary intent is derived by looking at BOTH instruments 2) Treat the 2 documents as one and let it slide c. False Discription Doctrine (exception to the rule on mistakes): Correct the mistake by ONLY striking the misdescription. CAN strike, CANNOT rewrite. 1) Must see if you can still gift the gift after striking the provision 2) Problem: if T owns more than one piece of land. d. Academic Approach (no court has adopted it): takes a cynical view of the lawyer’s role—he intentionally wanted the will to go thru probate intestate 1) Atty intentionally switched the will—fraud in the execution = a constructive trust C. Holographic Wills: A Will written by the T’s hand and signed by the T. There must be an expression of the T’s intent. ELEMENTS: 1. Must have a Writing 2. Material provisions must be in T’s handwriting (not everything) a. Who takes what? Must be in T’s handwriting 1) Who 2) What property do they take 3. Must be signed by the T 4. *Must adequately evidence Testamentary Intent* 5. Issue in Holo cases is “Whether the document has testamentary intent?” a. How much should be written? 1) CA: all of the material provisions (other jx need all in T’s handwriting) 2) Doesn’t have to be dated, HOWEVER a) If there is another Will with an inconsistent provision to the holographic Will, the holographic Will is invalid as to the inconsistency unless the time of its execution can be established to be after the execution of the other Will. b) If can establish that the T lacked capacity at any time during which the Will might have been executed then it will be presumed that the holographic Will was executed during that time. c) For both of the Above need only RELATIVE DATING (maybe only referring to an event) • Burden is on the party trying to prove the will Date not required, but potential problem in statute Approaches for finding Testamentary Intent in Holographic Will: 1. Strict Compliance: everything must be in writing, look at the writing. 2. Contextual Approach (more flexible approach to Strict Compliance): expression of T intent can be in preprinted material, and the material provisions have to be in the T’s handwriting. a. Cannot give effect to material provisions that are NOT in the T’s handwriting, but can find Testamentary intent in the typed portion b. When see Form Will, use Strict Compliance and Contextual Approach to analyze c. Interlineation: 1) General Rule: Any subsequent changes have to qualify as a valid will. A handwritten change to an attested Will is not a valid attested Will. 2) CA Rule for Form Will Interlineation: if it is a commercially printed Will, then it can qualify as valid if interlineation performed on it. Page 18 of 38 3) But if is a change to a subsequent Will (non-attested change), then it is not a writing on a commercial form and would this be valid? • This is a question of 1st impression—argue YES under the contextual approach, NO under Strict Compliance. D. Conditional Wills: a. Example: L and P take a cruise. “in the even I die on my cruise, I leave my prop to Pepperdine” and sign it. Go on the cruise and P dies on the way home. b. Issue: is this a conditional will (a will that has a condition precedent to it being effective)? 1) One side: YES—property doesn’t go to Pepperdine b/c the condition precedent was not met 2) Counter: NO—it is merely an explanation as to why finally got around to writing the will • This explanation is preferred: strong presumption that individs want testacy rather than intestacy. Presumed to be an explanation rather than a condition precedent. E. Revocation of Wills by Writing or Act: 1. By writing—Subsequent will can revoke a prior will in 2 ways: a. Revoking the will expressly “I hereby revoke my prior will” b. With Inconsistent provisions 1) The writing must qualify as a valid will a) Traditional Attested b) Holographic 2) Must have capacity at execution 2. By Physical Act: a. Must have capacity b. Must have act by the T or someone in the T’s presence, coupled with the Intent to revoke (e.g. mutilating, defacing, burning, ripping) 1) CL: Act must affect the written words of the will 2) Modern Trend: if the act w/appropriate intent is performed on the will, it doesn’t have to affect the printed words. 3. Presumption Doctrine (comes under the revocation by ACT heading): Requirements: a. Will is last in the T’s Possession, AND b. T was competent until death, AND c. After the T’s death, neither the will nor duplicate original can be found, OR d. *Even if the will is found; whatever is done to the will is presumed to have been done by the T (e.g. defacing, lines)—permits partial revocation by act. • Presume that the T destroyed the will by ACT • Rebuttable presumption: fact sensitive 4. Partial Revocation: partially destroyed, defacing the will a. *Presumption Doctrine: If the will is found in the T’s possession, then it Will be assumed that the T made the marking. b. Example: Valid Will: I give total of 10K to S and J. The rest to T. 1) S gets ½ 2) Later decides to cross J out with pen 3) Issue: Whether revocation was valid? 4) Issue: Act or writing? ACT 5) Partial Revocation? Yes 6) Intent with pen? Yes 7) How much does S get: increased gift from 5K to 10K. • If Jx. Recognizes partial revocation by act, can it increase a gift outside of the resid clause? Depends a) Strict Comp Minority: 5K to intestacy and if want to opt out, should have a codicil. b) ***Residuary of the Residuary/Modern Trend (majority): any gifts that fail fall to the residuary clause*** Page 19 of 38 c. What if T marked out the 10K and put in 5K? 1) Don’t have enough material provisions written 5. Lost Will Doctrine: can’t find the will so we presume it was NOT revoked a. Legally the Will is still in existence. b. Testimony from the atty and secretary who were both involved in tearing the will could be admitted. c. If will is NOT revocable and cannot be found, the use Extrinsic evidence to prove it up and probate it—what it said. • Distinguish between the Lost Will vs. Presumption doctrine (that T destroyed the will) • Probate a will unless it is properly revoked 6. Codicil: a. Has to qualify as a valid will b. Has to supplement or amend the will to some degree c. Limited affect 1) If codicil can be read as consistent then do it 2) If codicil is knocked out, original will could be given effect, BUT 3) If Will is revoked then codicil is too (unless argue it is not a codicil, but a Will) 7. Multiple Wills: rare, but allowed. a. Example: Execute a valid Will giving car to A. One month later you execute a 2nd valid will, giving coin collection to B. The 2nd is a free standing will. b. Rule: Multiple Instruments as Multiple Wills usually occur in cases where the underlying Will doesn’t have residuary Clauses. c. Duplicate Originals: 2 or more original wills executed by the T and the witnesses 1) Key is how the revocation is achieved? a) If revocation by act or subsequent will, ALL duplicate originals revoked b) If revocation by presumptions, NO revocation of all duplicate originals if any can be found. Probably just lost the will. • Presumption Doctrine will NOT revoke duplicate originals, if one can be found, then T dies probate, BUT if there is revocation by ACT, then revokes all of the wills and duplicates 2) CA Case Rule Exception: if there is a good reason why the T would not want to ask for the duplicate original from the person holding it then the presumption doctrine might revoke all the duplicate originals. F. Revival and Dependent Relative Revocation: 1. REVIVAL: under certain circumstances you can revive a revoked Will that has been revoked by a subsequent Will. a. CRITICAL QUESTION: How was the SECOND Will revoked? b. Only applies when you have AT LEAST TWO VALID WILLS. Factual Scenario: 1) W #1 revoked by W#2 2) How was W#2 revoked? 3) Was there intent to revive and where can we look for it? • REVIVAL: Have 2 wills, and revoke W2, when you revoke the W2, do you revive W1? Can Revoke the Revoking Will (W2) either by: 1) 2nd Will is revoked by Act • Take any evidence to show intent to revive 2) 2nd Will revoked by Subsequent Will (by a 3rd Will) • Intent to Revive must be EXPRESS in the revoking W(Will3). 3) Note: A 3rd instrument is like a codicil to the first instrument, which republishes W1. 2. Doctrine of Dependent Relative Revocation (DRR): Ignoring the revocation b/c it was induced by mistake. Page 20 of 38 ELEMENTS: a. Valid revocation b. Based upon a Mistake of Fact or Law (evidence of mistake depends on how Will revoked): Scope of DRR: depends on how you revoke the first will 1) Where the Revocation is by ACT: a) The revocation must be coupled with a failed alternative scheme (i.e. a new will) [not all jx require this element] 2) Where the Revocation is by Writing a) The mistake must be express in the revoking instrument, AND b) The mistake must be beyond the knowledge of the T • Revocation by act is broader c. The T would not have revoked if the T in fact had known of the mistake d. Example: Clause 5 of T’s typewritten will provides: “I bequeath the sum of 1K to my nephew, CB.” T crosses out the 1K and substitutes therefore 1.5K. T then writes her initials and the date in the right hand margin opposite this entry. After T’s death some years later, her will is admitted to probate. CB contends that he is entitled to 1.5K or 1K. 1) Is the interlineathion valid? It is a new gift. a) Must qualify as a valid codicil, not a traditional will b/c not according to the WAF. b) Could it be a valid holo codicil? i) Need material provisions in the T’s handwriting and intent ii) To find out who, look at typewritten material. • Under contextual approach this still won’t work b/c this approach only says it is OK to look at the typewritten part to get T intent, not to get material provisions. • Not a valid holo codicil. c) DRR? Elements met Her true intent was to give more $, we either imply revocation and give effect to it (meaning heir would get 0K) or ignore it (meaning heir would get original amount in the will) i) The 1.5K she wrote in is closer to 1K ii) If T had known the truth, T would not have revoked. iii) Effect of 2 outcomes—see which of the 2 options is closer to the T’s intent? 1K. G. Revocation By Operation of Law: 1. Dissolution of marriage: only cut out the ex-spouse, and only cuts them out as to probate property, not to non-probate property. • A separation is NOT a dissolution 2. Only applies to Will, no reference to non probate instruments. • Non probate is a form of contract. 3. Irrebuttable presumption that T intended to cut former spouse out UNLESS T executes a new W post-divorce 4. Revival by Remarriage: Any provision revoked by Operation of Law is revived by T’s remarriage to the former spouse V. Components of a Will A. Doctrine of Integration 1. All papers physically present at the time of execution (most important reqmt), AND 2. Intended to be part of T’s W, are integrated as one instrument. B. Incorporation by Reference Requirements: 1. Document to be incorporated is in existence at the time the W is executed 2. The document to be incorporated is identified in the Will with reasonable certainty 3. T’s intent to incorporate the document/writing. • Example: Typed Will, which was not dated, signed, or witnessed had a written codicil on the bottom which was held to validate the ype writeen portion and enabled to be probated. 1) Integration: make it one document, thus a page of the Will—this would not work b/c you cannot integrate type written material into a holographic Will, it would be allowing material terms that are not in the T’s handwriting. Page 21 of 38 2) Incorporation by Reference: does not make it a page of the instrument. You CAN incorporate typed material into a holographic Will. a) The difference between republication and incorporation is that for republication by codicil the first document has to be a validly executed Will b) For Incorporation by reference the first paper does not have to be a valid Will, but what you are incorporating it into has to be a validly executed Will (1) Therefore, if it is a valid will then look to republication, if it is not, treat the second Will as valid and incorporate the 1st. (2) Republication by codicil can clear up problems of interested witnesses or UI (these create a presumption, do not invalidate) • Writing to be incorporated does NOT have to be a valid W, but the document into which you are incorporating MUST be a valid W • Rationale: labor saving device; if the document was already in existence, save labor and don’t type it in, rather incorporate it by reference. • Cannot integrate typed material into a holographic W, it violates the holographic Tangible Personal Prop List Doctrine: Can incorp. by reference a list that disposes of tangible personal prop, even AFTER execution of the W as long as the W expresses the intent that the tangible prop will be disposed of by that means. • CA does NOT adopt the tangible personal prop list doctrine C. Republication by Codicil 1. Signing a valid codicil to a will republishes, or reexecutes the Will as of the date of the codicil • The underlying Will needs to be a VALID instrument IN EXISTENCE at the time the codicil is made. 2. There is a strong presumption of republishing the W, which redates the W. • The presumption can be rebutted if the codicil is inconsistent with the T’s intent 3. If you re-execute a codicil to a 1st W, which was revoked by the 2nd W, you revoke by implication the 2nd W and re-execute the 1st W. a. Example: W produced in 1977 Notebook produced in 1979—How will the Notebook get in? • Republication by Codicil. If a codicil is made in 1980, the 1977 W is redated to 1980, making the 1979 notebook admissible, or incorporated by reference. • Use the two doctrines together: Republication by Codicil & Incorporation by Reference D. Acts of Independent Significance: this doctrine refers to events or things that occur in the future • The above 3 doctrines (integration, incorporation by reference, and republication by codicil) look backward in time. • There is a potential overlap between Incorp by Ref and Acts of Independent Significance 1. Doctrine permitting extrinsic evidence to identify the Will beneficiaries or property passing under the Will. 2. Identify the Act a. Does that act have lifetime motive? b. Does that act have significance apart from the affect it has on the T’s will? (significance apart from the testamentary intent) • If so, the gift will be upheld 3. Must have a provision in the W which makes express reference to an ACT: that act will have control over who takes the gift, or the size of the gift the identified beneficiary takes. 4. Example: I leave everything in my right hand desk drawer to A. Validly executed W. 5. Other Examples: a. Leave A everything in the right hand desk drawer. I put things in to store and take things out to use. There IS independent significance from testamentary intent 1) Concern for fraud 2) Constant change of T intent b. Safe Deposit Box: potential for fraud is low Concerns 1) Fraud: safe dep box will have less potential for fraud than in the drawer • If there is a potential for fraud, use Strict Compliance outlook on the issue Page 22 of 38 2) Independent motive here, most courts agree E. Contracts Relating to Wills 1. A K to make a W or devise OR not to revoke a W or to die intestate is valid ONLY if: a. Provisions of the Will states the material provisions of the K b. There is an Express Reference to the K in the Will, OR c. There is a writing signed by the decedent with extrinsic evidence proving the K. • Must have consideration (not a preexisting legal duty) • Ex. Mom is sick. D, her husband says he’ll care for M if she agrees to leave her estate to him. D will NOT have a breach of K claim b/c spouses have a legal obligation to care and can’t contract for thing you already have a legal obligation to do—kids don’t have that legal obligation. • Exception to consideration: POD Ks involving a 3rd party beneficiary, the spouse can give the consideration, not the benes 2. CA courts: can still bring cases of oral agreements (especially if family member involved) if can show clear and convincing evidence of intent. 3. Common settings in which K arises: a. K to make a Will (that Decedent would leave prop to someone) • Example: If A contracts with B to leave A’s estate to B if B takes care of him for the rest of life. The will is executed and B decides not to perform his duties under the K. A then rescinds the K, then dies. B will still take under the Will. b. K NOT to revoke a Will (should be in writing, but unclear if CA would force that) Classic scenario where K not to revoke occurs: Joint Wills 1) Joint Wills: one W signed by both and probated twice (only produce one instrument for 2 different individuals) a) IN CA: NO presumption arises that a joint W gives rise to a K not to revoke b) Can still probate a new (2nd) will, even though it is in breach of K: different remedies available • Example: Joint Will scenario with K not to revoke. Once the 1st wife dies, the hubby does not change his Will, b/c if he did the beneficiaries would become creditors under the 1st K not to revoke. Therefore, he didn’t change b/c his new wife would take a forced share before the beneficiaries would take under the Will. 2) Mirror Wills: 2 separate W where spouse leaves everything to one another and if she predeceases then to a 3rd person whom they both agree upon in their Ws. 4. Who takes first? a. Creditors b. Spousal protection scheme—elective share (pretermitted spouse doctrine) c. Beneficiaries 5. Beneficiary Interest Rule: beneficiaries’ interest is still good under K law if the B dies before T, BUT interest is NO good under Wills law. 6. Dual Status if K: Beneficiaries are either beneficiaries or they are K claimants (creditors) a. Example of the dillema: T into a K with A, that will leave prop to A. T executes a W, that leaves T’s prop to A If T dies, no problem, HOWEVER If A dies: A is not like any other beneficiary under a will, also a K here—courts have not resolved the issue If now T gives all to X If K, then it breaches K. Counter: only a breach if can show damages. If T Ks with a to leave all, and T then reexecutes giving all to X, the A dies before T. Not necessarily T’s last will and testament. Could have reexecuted. 7. CA: apply most of the Ws related rules to non probate transfers (i.e. POD Life insurance Ks) Page 23 of 38 VI. Wills: Construction Problems A. Admitting Extrinsic Evidence: Ambiguity, Mistake, and Omission 1. CL Plain Meaning Rule applied to Construction: take the words of the W on their face • Start with this rule, but still look for ambiguity (SEE personal Usage Exception a. Personal Usage Exception: Even though the writing on its face given plain meaning is clear, if the T used writing in its phrase to mean something else the court WILL take Extrinsic Evidence to determine what it really means. • Example: Cigar shop T called woman behind counter, Mrs. Moseley even though that wasn’t her real name. The owner of the store’s wife was really named Mrs. Moseley, whom T never met. T left Mrs. Mosely money in his W (referring to the nicknamed woman, not the real one) • Plain meaning would give the money to the wife, but • Personal Usage Exception admits the extrinsic evidence • Generally, Courts would rather construe the words written in the W versus rewriting the instrument • Rule: Court doesn’t correct scrivenor’s errors 2. Extrinsic Evidence OK for determining Execution: Courts will take extrinsic evidence going to the EXECUTION (validity) of the W, BUT not going to construction of the will a. Execution: if the question is “is this a valid will” then will take any extrinsic evidence as needed to find T’s intent in executing the W. b. Construction: Will not take extrinsic evidence if have a valid will and want to see if will should be altered, construction issue (if a question of construction then w-ould not be honoring T’s intent, the court may be rewriting. 3. CA Rule—resolves the tension b/w W and Non Probate by treating them the same and apply W doctrines to the W substitutes, unless provision or context otherwise requires.: a. Ordinary Grammatical Meaning: Give the words of an instrument their ordinary grammatical meaning UNLESS the intention to use them in another sense is clear and their intended meaning can be ascertained. b. Technical Words: are not necessary to give effect to a disposition in an instrument. They are to be considered as having been used in their technical sense unless: 1) Context clearly indicates a contrary intention, or 2) It satisfactorily appears that the instrument was drawn solely by the transferor and that the Transferor was unacquainted with the technical sense. 4. Ambiguities: Patent v. Latent a. In construing an instrument and need to decide whether to let in extrinsic evidence, first ask: what kind of ambiguity is it? Latent or patent? b. CL: 1) Patent: if patent ambiguity, the court didn’t need extrinsic evidence to help construe the meaning b/c they could see it on its face. 2) Latent: if latent would nee extrinsic evidence to show the court that there was an ambiguity in the first place, then since already let it in, the court would use it to prove up the ambiguity (resolve the ambiguity) c. Review and bringing up to date: CL: 1) Latent v. patent 2) Personal Usage Exception 3) Misdescription Doctrine: could cure by striking out the misdescription (usually latent ambiguity) 4) Equivocation: • Example: B leaves car to cousin Alicia. B has 3 cousins named Alicia. This is an equivocation. A Latent ambiguity. Will let in extrinsic evidence ***CA RULE on admitting extrinsic evidence***: (rejects the Latent/Patent ambiguity rule and the Plain Meaning Rule): instead 1) There is an ambiguity Page 24 of 38 • RULE: When the words could have two or more meanings and uncertainty arises upon the face of the Will, evidence which is relevant to prove the meaning is admissible. 2) Are there two or more meanings 3) Only take extrinsic evidence that is Consistent with one of the rx constructions or interpretations of the express language of the instrument. a) Courts prefer evidence regarding the circumstances surrounding the T at the time of execution b) The court will not usually take alleged oral declarations of the T, UNLESS; i) It is an equivocation scenario, AND/or j) The alleged oral declarations were made to the scrivener. • Example: T leaves Saturn to I b/c I is T’s favorite student. There is an ambiguity. We can admit extrinsic evidence into the court. Then B runs in and says that B was T’s favorite student. B’s extrinsic evidence is NOT consistent with the interp of ambiguity so it is INADMISSIBLE B. Gifts in a Will: 1. Specific: specifically named and and arguable one item can meet the description (“my gold watch” only one item that matches that description) a. If the sp gift fails it goes to the residuary clause, and if ther is no resid clause, then falls to intestacy 2. General: giving a general pecuniary value (e.g. 100 of stock to D) a. If general gift fails, it goes to resid clause, if no resid, then falls to intestacy. 3. Demonstrative: a general gift from a specific source. a. This is a subset of a general gift, and doesn’t matter from where it comes, it will just come out of the general assets b. Example: “I give Bob 10K from my checking account.” 4. Residuary: whatever T doesn’t give away as specific or general, falls to the residuary, anything that gives away all of the T’s prop. a. If Residuary fails: 1) If only 1 taker in the RC and the gift fails then falls to intestacy 2) If multiple takers a) CL: gift falls to intestacy b) CA and Modern Trend: Residuary of the Residuary—treat every residuary as a class gift and divide amongst the remaining residuary members. 5. Class Gifts: multiple takers who meet the requirements of the class a. If the CG fails then the failed portion is divided equally between other members of the class C. Death of Beneficiary Before Death of T: LAPSE 1. Lapse: if Beneficiary is alive at execution but dies before the T dies, the gift fails Lapse applies to those who: a. Actually predecease the T AND b. Those treated as predeceasing the T by 1) Operation of law—divorce 2) Disclaimer 3) Homicide 2. AntiLapse a. Lapse gift: beneficiary is alive at execution but dies before the T’s death b. Void gift: beneficiary is dead at the time of execution. • CA: Antilapse applies to both void and lapse gifts c. Where to Apply the Antilapse Doctrine: applies to the who, in who takes 1) Where there is a . . . Page 25 of 38 a) Lapsed gift or Void gift (*unless class) and the beneficiary is b) Related to the T in the proper degree • What is the requisite degree of relationship in CA? • Next of Kin of the T, OR • Next of Kin of the Surviving or Former Spouse • Rule: Spouses are NOT covered by Antilapse AND c) Survived by Issue . . . The issue take rather than having the gift lapse. THEREFORE, APPLY ANTILAPSE . . . UNLESS 2) There is express contrary intent (express language in the instrument expressing that antilapse NOT apply) • Intent: can be implicit in the overall testamentary scheme as well as in the express words a) CL view: “if he survives me” lang means there is a contrary intent to Antilapse b) Modern Trend: “if he survives me” is NOT contrary intent to Antilapse and you could apply it. c) CA: Go along with the CL view, but you could argue Modern trend • Rationale for Antilapse: Presumed Intent—strongest b/c the intended beneficiary meets the degree of relationship requirement. Keeps it within the family d. *Class Gifts: can save them by antilapse 1) CA: Antilapse applies to both Class Gifts and Void Gifts, UNLESS a) It is a class gift that is void gift to one or more members of the class AND b) The T knew the member(s) was dead at the time of execution. • This is an irrebuttable presumption CLASS GIFTS: 2) Issue: Is this a Class gift? It is a question of T’s Intent . . . FACTORS: who and what (the gift) a) How the Beneficiaries are Identified i) Individually (specific, general), OR ii) Collectively (class) b) How the Gift is Identified i) Specific Shares (favoring non-class, OR e.g. I give 10K to each of the following . . .), OR ii) In the Aggregate (favoring class, e.g. I give the total of 10K to the following) [However, class members don’t have to take equally—it is only one factor] c) Common Characteristic—that ties or connects the people in question. i) if NO—individuals ii) if YES—class • If find a common characteristic look for evidence of any other members of the potential class that were excluded (if there were, argues against the class) d) Testator’s Intent of the “Overall Testamentary Scheme” • Is it consistent with the overall testamentary scheme the T had in mind when he/she made the gift. 3) If it is a Class Gift, implicitly it is like a JT with a built in right of survivorship—gift is split equally between the suriving members of the class, class is only set when see who survives the T. 4) Children are not included in Class Gifts D. Post Execution Changes in Property: Specific vs. General Devises 1. Ademption by Extinction: a. Where there is a specific gift (ademption does NOT apply to residuary gift) b. Given after the T’s death, AND c. The item cannot be found . . . the gift is revoked. • Irrebuttable presumption for ademption—no extrinsic evidence allowed to show T’s intent Page 26 of 38 • Court takes IDENTITY THEORY: ascertain the identity of the item from the written instrument and ask “does the T still own this?” • Harsh Doctrine: efficiency is more important than intent • Can execute a codicil to remedy 2. Some Avoidance Doctrines: How to avoid Ademption a. Try and classify the gift as general or demonstrative rather than specific. • “100 shares of Bellig stock,” if this is widely held, argue it’s general and should be bought for you. b. Gift is a Change in form not substance. • Giving a CD from Wells Fargo, then close the account and shift to Washington Mutual. Although the gift gave away the Wells account, argue that it is not a change in the item (substance), but merely a change in form. c. Construe the Will at the time of death rather than the time of execution • Kind of overlaps with acts of independent significance • The language in the instrument is key in how the court will classify the devise. 3. CA Ademption Softening Doctrines a. If there is a specific gift (that is not there) then that recipient has the right to the remaining property: 1) You get any of the remaining specific gift AND 2) Any of the outstanding proceeds (not the money that has already been paid). b. If the conservator sells the property then it is free from ademption. 1) Basically changes the gift to general (full value owed to the bene) 2) This doesn’t apply if, after the sale, the conservatorship is terminated and the transferor survives for a year thereafter. c. Specific gifts of stock (Ca). • When there is a specific gift of stock then the beneficiary will get: (1) The remaining stock not sold by the T and any outstanding payments due on the stock sold. (2) DOES NOT get what has already been paid a) Example: In Will T gives 100 shares of Amgen stock to B. T sells 50 shares to P. If some of the specific gift is still in the T’s possn then B gets the specific gift and also the outstanding payment due on the shares sold. b) Softening doctrine: any change initiated by the Company or someone other than the T, then it is just a change in form and not substance. • Example: 100 shares of Amgen to B. Abbott Labs takes over Amgen and issues 2 shares for every 1 of Amgen. T now holds 200 shares. Amgen stock is gone. Specific gift to B of Amgen. What does B get? 1. Ademption, OR 2. Counter: change initiated by Co and not the T, form not sub. d. ABATEMENT: insufficient assets to pay the debts: (a) Could occur if the estate is not as large as the testator believed or the creditors or pretermitted issues or spouse got to the pot first. (b) Order of reductions in CA: 1. Residuary 2. general gifts to non-family members 3. general gifts to family members 4. specific gifts e. Exoneration-specific gifts pass subject to any mortgages, deeds or trusts, etc. (no right of exoneration). 1. If there is a provision saying to pay off the liens and debts, this doesn’t matter. 2. Bottom Line: Presumed intent that the B takes subject to the Debt. 3. CL: exonerated—takes w/out the debt attached Page 27 of 38 f. Satisfaction: if you give money in Will and then givt it intervivos. If entitled to tak under Will but you take intervivos instead, you can credit estate. Modern Trend: 1. does not apply unless there is a writing, by the transferor or transferee. If it is by the or then it has to be a contemporaneous writing. 2. If the writing is by the transferee then it can be any writing. VI. WILL SUBSTITUTES: AVOIDANCE OF PROBATE A. CONTRACTS WITH PAYABLE-ON-DEATH PROVISIONS 1. CA does not invalidate non-probate transfers on death simply b/c they do not comply with the requirement of the execution of wills. a. Any K which includes a payment on death (POD) clause AND a includes payment to a 3rd Party Beneficiary is a valid POD K. (apply Wills law to POD clauses) • If there are only 2 parties then there is some gray area. 1) At common law only insurance policies were valid. 2. Blockbuster: will controls all (no jurisdiction recognizes)—if contradictory clause in the Will subsequent to the POD K. a. The subsequent Will does NOT override the POD as a Blockbuster Will. b. Reasoning: If you allow the block buster will, then you negate all of the benefits of the will substitutes, like fast payment, etc. This will be b/c the people that control the distribution of funds would have to wait until probate to find out who properly gets the funds. B. MULTIPLE-PARTY BANK ACCOUNTS A. Ca presumption of inter vivos rights of the parties with a multiple party bank account: 1. Each party owns in proportion to their contributions, and 2. When one dies all of the others have a right of survivorship. a. Modern trend presumption is that the account works like a POD K, unless there is clear and convincing evidence of a contrary intent to either of the above two. B. Analysis: 1. Start with the presumption (modern trend, above) 2. Need clear and convincing evidence that the testator intended one of the *other accounts. C. *Other Accounts: 1. Joint tenancy bank account has all of the characteristics of a joint tenancy 2. Agency or convenience account: B has the power to withdraw on the account during D’s life but is not entitled to the balance at death. a. The power for the agent to draw ends at D’s death, but the banks might not know that D died and would be liable for allowing A to continue to withdraw. 3. P.O.D. Account: B does not have the power to draw on the account during D’s life, but gets the balance upon D’s death. D. Key: Banks tend to steer people toward the depositor’s card for joint tenancy. B/c at CL the payment on death provision is invalid. 1. Therefore, courts will look at extrinsic evidence to determine the depositor’s intent at the time of the creation. a. This is used for personal property (pension plans and stocks) where you can show that you were not given a choice by the bank. b. Real Property: extrinsic evidence is not allowed b/c in real property you are not forced into JT you elect to take as a joint tenant. C. JOINT TENANCIES IN LAND A. Characteristics of a Joint Tenancy 1. Equal interest (right to possess the whole) upon creation, 2. The right of survivorship, at death the interest expires and the other tenant solely holds it, a. Therefore, you cannot devise it by will. This would not sever it into a tenancy in common, permitting this would allow a Blockbuster will. b. You can convert the interest to a tenancy in common. 3. Creditors of a joint tenant must seize the joint tenants interest during life. Because at death the JT’s interest vanishes and it is too late. Page 28 of 38 D. REVOCATION DEEDS OF LAND: Possessory Estates and Future Interests A. If it is functionally identical to a will should we make it pass all of the formalities of a will? The problem is when the grantor retains the power to revoke. 1. Modern trend is to emphasize testator’s intent, there is no greater potential for fraud. If you have a revocable deed, it is OK (all vested remainders are contingent remainders until the T dies). 2. Common law courts said this was invalid, this is too testamentary in nature. VII. RESTRICTIONS ON THE POWER OF DISPOSITION: PROTECTION OF THE FAMILY 1. RIGHTS OF SURVIVING SPOUSE TO SUPPORT A. Generally: 1. Separate property takes effect at death (community property is at the time of acquisition) and the elective share is only a third of the probate estate. Now states have moved to looking at the augmented elective estate which goes after the non-probate estate. B. Spouses can claim 5 other categories in addition to CP: 1. Social security: public pension plans a. The surviving spouse can claim social security 2. Private pension plans: a. Under ERISA a surviving spouse has to have survivorship rights, but can be waived. 3. Homestead: a. The surviving spouse and maybe family members can claim the family home for his or her lifetime. Can be only an exemption, sometimes small or large (varies from jurisdiction to jurisdiction). 4. Personal property set-aside: a. The surviving spouse (and possibly minor children) to have set aside certain tangible personal property of the decedent up to a certain value (homestead for personal property); set aside from the decedent and from the creditors. 1) Sometimes a list 2) Sometimes a lump sum amount 4. Family allowance: a. Authorize the probate court to award a family allowance for maintenance and support of the surviving spouse (maybe dependent children). b. Only during probate c. What standard of living will the allowance support? 1) Lifestyle used to, OR 2) Reasonable standard of living 2. RIGHTS OF THE SURVIVING SPOUSE TO SHARE OF DECEDENT PROPERTY The elective share—can either take what they take under the Will, or elected share based on statutory amount (1/2 of the probate prop, or sometimes 1/3) 3. RIGHTS OF SURVIVING SPOUSE IN COMMUNITY PROPERTY: CA instead of Elective share Putting a spouse to an election: trying to give away property that another spouse owns, in essence saying, “if you want to take anything under my will you have to let me give away some of your property, if you don’t then you will not take under my will.” Therefore, putting the surviving spouse to an election. a. Anytime the deceased spouse intentionally or unintentional is giving away the property of the surviving spouse you have the potential of putting that spouse to an election. If the surviving spouse asserts his or her right then they are in danger of forfeiting their right they take under the will. b. This is a Ca doctrine, when the spouse tries to give away something that they do not own. In essence it is a condition gift. Now this is looked down on, and an ambiguity will presumptively be construed NOT to be an election. 4. MIGRATING COUPLES AND MULTISTATE PROPERTY HOLDINGS Property is characterized by the laws of the jurisdiction where you are domiciled at the time of acquisition. Page 29 of 38 1. Quasi-community property is property owned by the husband or wife acquired while domiciled in a separate property jurisdiction, which would have been characterized as community property if the couple had been domiciled in the community property state when the property was acquired (HOWEVER—not all CP jx recognize QCP—be careful). 2. Rule: Prop characterized depends on Jx where you reside at the time the prop is acquired, BUT spousal protection scheme used to distribute the prop depends on the Jx where you reside at the time of death. • Run the risk of falling through the cracks—should transmute the prop before leave • Example: P and G live in AZ. P dies with a Will leaving everything to L. 100K made in MO. • AZ doesn’t have quasi comm prop, so separate prop keeps its character whn move into a comm prop jx. • Spousal protection in AZ is CP, but P and G have no CP, only 100K in separate prop = G gets NOTHING. 3. Migrating from community property to a separate property. The surviving spouse gets to double dip. a. EXAMPLE: move from Ca to Missouri with $100,000 in cash. H dies and wills all of it to Pepperdine. W gets to take $50,000 (under community property), then the other half goes to probate and, depending on the jurisdiction, the wife can take an elective share of the probate estate. (1) Now there are laws in some jurisdictions that say if you move, the decedent half of the community property is not subject to the elective share. 5. SPOUSE OMITTED FROM PREMARITAL WILL Pretermitted Spouse: you assume that when someone executed a Will then gets married they intend to give their new spouse a share but they just didn’t get around to it. Give the spouse their intestate share. 1. Basic requirements: (1) There is a valid testamentary instrument (a) If the soon to be wife is provided for, but not as a wife, then they can still take as a pretermitted spouse (2) a marriage after the execution of all of the testamentary instruments (a) Therefore, if the spouse executes or amends any testamentary instrument after the marriage, then pretermitted spouse will apply. (3) death without including the wife 2. Exceptions a. Intentionally left out of the testamentary instrument • EXPRESS on the face of the will b. Otherwise provided for outside the Will and the intention is shown by statements, the amount, or other evidence, OR • Otherwise provided for and the T intended that gifts outside the Will are in lieu of the Will • Amount may be Relevant c. Agreement where spouse EXPRESSLY waives their right. 3. Share of the omitted spouse (like intestate) a. ½ of the community property b. ½ of the quasi-community property c. An intestate share of the separate property, not to exceed ½ of the value of the separate pro perty in the estate. 4. Policy/Reasoning (a) Spousal protection • EX: case took an extreme view of this rational by finding a pretermitted spouse where there was not specific wording of an intention otherwise. (b) Accidental omission, presumed intent of the testator RIGHTS OF ISSUE OMITTED FROM WILL A. Pretermitted child: same as above, will executed then the birth of a child, same presumption arises. 1. Basic requirements: a. There is a valid testamentary instrument b. A birth or adoption of a child c. Death without including the child (a) Exceptions i. Intentional omission EXPRESSLY stated in the Will Page 30 of 38 -Evidenced in the testamentary instrument ii. Otherwise provided for and intended that to be lieu of taking under the testamentary instrument i. Gave substantially all of the estate to other parent of the omitted child and at the time the decedent had 1 or more children -Is the fact the other parent gets a life estate enough to qualify as “substantially all” of the estate? -If this doctrine applies then the pretermitted child would get their intestate share. What if that is more than the other children get this? Or the pretermitted would get outright while the others get in trust? B. CA Rule: Child will get their intestate share if the D fails to provide for child for 1 of 2 reasons—Erroneous belief (applies to all testamentary instruments): 1. Belief that the child is dead, OR 2. D didn’t know the child was D’s C. Who can sue for malpractice 1. CL: Have to be in privity with the atty to sue for malpractice (client and the client’s estate) 2. CA and Modern Trend: Allow 3rd party beneficiary claims, anyone can sue atty for malpractice—Privity abolished. VIII. TRUSTS: CREATION, TYPES AND CHARACTERISTICS A. INTRODUCTION 1. Settlor puts the property in the trust, the Trustee holds legal title, and the Beneficiary holds equitable title. a. Someone can where all three hats if there is at least another trustee or another beneficiary. If not, then there is not two different people holding the legal and equitable interest. 2. Duty of a Trustee a. The trustee owes fiduciary duties to the beneficiaries. (1) the trustee has to produce income (2) the beneficiaries interest will be split, between the life estate and the remainder beneficiary (look to the intent of the settlor in the document). (a) The trustee must preserve the property, make it productive, and, where required by the trust instrument, pay the income to the beneficiary. (b) In investment decisions the trustee owes a duty of fairness to both classes of beneficiaries: the income beneficiaries and the remaindermen. b. If the trustee dies another trustee will be appointed. A trust will not fail for want of a trustee. (1) Exception: if it is clear that the provisions of the trust are personal to the person named as trustee, then the trust will be terminated. (a) This is very rare and the intention must be clear. 3. Key question with trusts: What rights do the beneficiaries (LE and REM) have in the principle and/or the income from the trust? a. The purpose of the trust is whatever the settlor wants it to be. A trust is the most flexible legal instrument available. (1) So ask what is the purpose of this trust (2) The purpose of why you would want to make a trust is unlimited. We can’t analyze the trust until we see the purposes of the trust. B. CREATION Requirements 1. Intent to Create 2. Property (must be funded) 3. Ascertainable Beneficiaries 4. Deed or Statement of Trust—requirement of a writing 1. INTENT TO CREATE A TRUST a. Whenever one party transfers property to another party for the use and benefit of a third party, there is a valid trust. Page 31 of 38 1) Not a high threshold to find intent to create a trust 2) Where Settlor is the trustee, the evidence to set up a trust is higher b. Must create the recepticle Trust is the recepticle: the terms and conditions of the trust Instrument that creates the recepticle is the . . . 1) Declaration of trust: Settlor is the trustee a) Implies Oral trust b) Exceptions: i) Testamentary Trust: settlor is the trustee and wouldn’t make sense ii) Real Prop: has to be in writing OR 2) Deed of Trust: settlor does not have to be the trustee a) Can be oral, but usually not b) Exceptions i) Real Prop ii) Testamentary trust: WAF must be met (1) Issue: was there intent to impose a moral or legal obligation? (a) Precatory trust: not a trust but a moral obligation unenforceable at law. Basically the gift to a donee with the hope that they will use it for a specific purpose. There has to be some ambiguity that there was not truly an intent to create a trust. Another argument against claim that trust has been created: (b) Doctrine of merger: there exists no split between legal and equitable interest, if it is merged there is NO trust. • Merger only occurs where there is an absence of another party who could enforce the fiduciary duty. (2) JUDICIAL TRUSTS: Remedies if the trust fails: these are equitable remedies and will not apply in the case of unclean hands. (a) Resulting trust: use any time a trust fails in whole or in part 1) Property is given back to the settlor (goes backwards). Then the property goes into probate and then it matters whether there is a will (then to the residuary taker) or intestacy (falls normally). See Oral Inter vivos Trusts below in writing requirement: 2) Purchase Payment Resulting trust: items should have been in writing but they were NOT, so look at the relationship between the 2 parties: a) If the receiver is a natural object of bounty: Gift if presumed and burden on giver to establish otherwise b) If NOT natural object of bounty: trustee presumed and failed trust. HOWEVER, then resulting trust is imposed and order G to give P the prop. • Example: P puts downpayment on real prop. Deed from P to G, but P has put up all the money. Why on would put up all the money and put title in someone else’s name? Either: 1) Gift Trustee (b) Constructive trust: you give the property to the failed beneficiaries, to prevent unjust enrichment. Requirements to show unjust enfichment for constructive trust: 1) Confidential Relationship 2) Promise 3) Transfer of property in reliance of the promise 4) Unjust enrichment of the transferee h. Court WILL NOT grant relief where there is a possibility of UNCLEAN HANDS (fraud upon the court) (c) Re-characterize the gift as a present declaration of trust. Page 32 of 38 (1) When you see a scenario where there is an attempt to give a gift in the future and the giver dies, the taker would not be able to take under the gift analysis b/c of failure of delivery. -If in writing argue that when the giver was writing a piece of paper with the promise on it he made a trust where he was the trustee (b/c of the no redelivery requirement). -Therefore, when the giver died there should be a new trustee appointed and then the gift should not fail. (2) The counter argument is that this is abolishing the delivery requirement. 2. NECESSITY OF TRUST PROPERTY 1. Any property qualifies, as long as someone would generally except it as property (called trust res). 2. Trust only arises when it is properly funded by the settlor and only applies to the property properly placed in the trust. a. Issue: Are future profits sufficient to fund a trust? (1) The general rule is no, future profits are not a sufficient property interest, HOWEVER . . . (a) If you have these criteria then the future profits will be a sufficient property interest b/c it would meet the requirements for a gift: Tax fraud, oral vs. written, and currently holding the means of creating. • If they are then the properly funded oral trust (b/c can orally declare the trust b/c he was the T), this would allow the settlor to fraudulently say that a trust created at an earlier time and then the profits would be taxed at a lower bracket and if he takes a loss then he can deduct it. (2) Rule: Person can assign future earnings from an existing contract. (b) Resulting trust: when you have failed trust you impose a resulting trust (a judicial remedy like the constructive trust), which gives the property back to the settlor. Then the property goes into probate and then it matters whether there is a will (then to the residuary taker) or intestacy (falls normally). i. Constructive trust: you give the property to the failed beneficiaries, to prevent unjust enrichment. ii. Look to the unclean hands doctrine to see if either of the aboce will be applied. (c) Re-characterize the gift with failed delivery into a present declaration of trust. i. When you see a scenario where there is an attempt to give a gift in the future and the giver dies, the taker would not give under the gift analysis b/c of failure of delivery. Say that when the giver was writing a piece of paper with the promise on it he was making a trust where he was the trustee and when he died there should be a new trustee appointed and then the gift should be given. ii. The counter argument is that this is abolishing the delivery requirement 3. NECESSITY OF TRUST BENEFICIARIES a. Private Trusts (1) Must be ascertainable, by personal name (2) Must be able to determine who they are to determine who can come into court and enforce the fiduciary duty. Way to get around the fact that NO beneficiary is ascertainable and the trust would normally fail: (3) Honorary Trust: although there are no ascertainable beneficiaries, this trust is set up for an honorable purpose (care for a tombstone or an animal). The general rule that a trust will not fail for want of trustee does not apply to honorary trusts. These trusts last only as long as the trustee ill perform the duty then the property will go into a resulting trust or a constructive trust. Honorary Trust Elements: arises when a real trust fails for want of ascertainable beneficiaries 1. Purpose must be definite 2. Purpose must be honorable 3. Trustee voluntariloy accepts the wishes of the Testator. (a) Honorary trust scenarios (1) Person who cares for a grave (2) Person who cares for a pet (b) CASE: a dog cannot enforce a fiduciary duty so the trust would fail, we would impose a resulting trust and the property would go back to the settlor. However in the case the court found an Honorary Trust. b. Public Trusts: don’t need ascertainable beneficiaries b/c Public. Page 33 of 38 (1) Charitable trusts: trusts set up for a charitable purpose 4. POSSIBLE REQUIREMENT OF A WRITTEN INSTRUMENT A. Inter Vivos and Testamentary Trusts 1. Depends on when the trust was created, was it funded, or was it funded at death? a. TESTAMENTARY TRUST is only funded when the settlor is dead. Then, typically the terms of the trust are in the will. (1) All testamentary trusts must be in writing. (2) This is not a will substitute. (3) If NOT completely in Writing (only in Testamentary Trusts) Secret and Semi-Secret Trusts: only arise if the real trust is failed: 1) What is the difference between the two: a) Secret Trust: Where T states in Will that he is giving prop to specific person and then orally tells that person that he is to distribute it. The Will does not indicate a trust. (1) Get a Constructive Trust: • Latent ambiguity in the instrument: take extrinsic evidence to prove the ambiguity b) Semi-Secret: intent of trust apparent on the face of the instrument, but don’t know the intended beneficiary. (1) Get a Resulting Trust: • Patnent ambiguity in the instrument: no extrinsic evidence 2) Modern Trend: Argue that Ca throws out the distinction between latent and patent and we should accept extrinsic evidence in both situations. • If have evidence and know who beneficiaries are, then impose a constructive trust. b. INTER VIVOS: To be a valid will substitute is has to be a valid inter vivos trust (1) The only property that that avoids probate is the property in this trust at the time of death (*See UTATA for exception). (2) Oral Inter Vivos Trusts: Personal Property (a) The transfer of personal property into the trust DOES NOT have to be in writing (but if it is a deed of trust situation then there needs to be delivery). (3) Inter Vivos that MUST be in Writing: Real Property (b) The transfer of real property MUST be in writing. i. The court cannot look at the oral evidence b/c the SOF states that these transactions have to be in writing. ii. When imposing an equitable remedy (constructive or resulting trust) watch for unclean hands. 1) Purchase Payment Resulting trust: items should have been in writing but they were NOT, so look at the relationship between the 2 parties: a) If the receiver is a natural object of bounty: Gift if presumed and burden on giver to establish otherwise b) If NOT natural object of bounty: trustee presumed and failed trust. HOWEVER, then resulting trust is imposed and order G to give P the prop. • Example: P puts downpayment on real prop. Deed from P to G, but P has put up all the money. Why on would put up all the money and put title in someone else’s name? Either: 1) Gift 2) Trustee B. Statement of trust: by Declaration (the trustee is the settlor), or Deed of trust (trustee a person other than the settlor)— goes to intent element. 1. Either can be oral or in writing, at common law. a. Real Property: If it is real property it has to be in writing (SOF), to transfer ownership of the object in the trust. (1) Both for Declaration and Deed of trust statements Page 34 of 38 (2) B/c at the time of death the trust owns the property. (3) If it is a deed of trust (3rd party Trustee) then the deed must be transferred to the trust. b. Personal Property: To transfer personal property into a trust only an oral communication is needed, no written instrument (1) Declaration: When the settlor is the trustee and it is personal property there is no redelivery requirement and the trust is properly funded without a writing. (2) Deed of Trust: If the trustee is a 3rd party then there has to be delivery of some kind. (a) A written deed of trust and the property to be included, or (b) The actual personal property a. Might need a writing if there is a written record of ownership ASSUME A VALID TRUST HAS BEEN CREATED; NOW . . . C. REVOCABLE TRUSTS 1. Allowed in ALL jxs., meaning someone can wear all three hats (settlor, trustee, and life beneficiary) with the power to revoke and have someone hold only a remainder interest—put condition on survivorship. a. Argument #1: something really passes (a contingent remainder), although if the remaindermen ever sues on a breach of the fiduciary duty the trustee will simply claim that he revoked. b. Argument #2: because of the writings involved are similar to a will, this does apply to the underlying wills act formalities. 2. Inter vivos revocable trust for personal property could theoretically be created although it would be difficult to prove that someone held a remainder interest. 3. Farkas v. Williams a. F was the settlor, the trustee, and the life beneficiary, with the remainder to Williams, with F also retained the power to revoke. Williams really didn’t take anything b/c Farkas can do whatever he wanted with the property. (1) Held, the revocable trust was valid even though it doesn’t comply with WAF. 4. Presumption: Revocable or Irrevocable. a. Default Rule when a trust is SILENT as to revocability (know both): (1) Ca: Presumed to be Revocable (a) Assume that because virtually every settlor puts in a clause stating that the trust is revocable, it is more likely that the clause has been left out by mistake rather than intentionally. (2) CL: presumption is that the trust is irrevocable. (a) Assumed that the settlor did not expressly say it was revocable then it should not be. 5. If the trust is lost apply the lost trust doctrine, like a will. A valid trust is lost, extrinsic evidence is allowed to determine the terms of the will. D. POUR-OVER WILLS/UTATA TRUSTS 1. Will with a pour over clause to a trust. The property that being poured over is controlled by the trust instrument, and this instrument is allowed to control the disposition of probate property. 2. UTATA: gives the testator/settlor the best of both worlds. a. If you set up the trust shell inter vivos and have a pour-over clause in your will, even if the trust is not funded, it will be held to be a testamentary/inter vivos hybrid trust (look at the doctrine to be applied to determine which one). b. Subsequent amendments to the trust will be given full effect, even if you don’t amend the will. c. Requirements: (1) The will references the trust, (2) the trust terms are in existence in a separate written instrument, and (3) the trust instrument has to be executed (signed) prior to or concurrently with the execution of the will. Page 35 of 38 d. For the purpose of applying revocation by operation of law do we treat it as a testamentary trust or an inter vivos trust? This is important b/c property from at (1) Inter vivos: as far as probate administration it falls under here, which would be non-probate and would not be a revocation. (2) The settlor believes that the will and the trust are a part of one testamentary scheme. Therefore, it is treated as such and a former husband is not allowed to recover under the probate property doctrine of operation by law. 3. Common Law: default to the common law pour over doctrines in the event that the UTATA fails (for reasons such as the execution requirement) to try and save the trust. a. Incorporation by reference: the trust must be in existence at the time of execution of the Will, and the other requirements. (1) This will be a testamentary trust. (2) Subsequent amendments to the trust are not valid unless you re-execute the Will. b. Acts of independent significance: a writing, other than the will can control the probate property as long as it has its own motive. Its own motive will mean that the trust already is funded with property. (1) Should permit both the property funded before death and after death to be considered as inter vivos b/c of UTATA. E. DISCRETIONARY TRUSTS • There are 3 types of trusts: inter vivos, testamentary and UTATA—focus on the creation • The other distinctions focus on the trustee’s obligation: SEE BELOW • It is best to focus on the language of the trust w/respect to how it tells the trustee to distribute the income. 1. Property can be bifurcated in Income and Principal a. So the question arises, what are the life beneficiaries and the remainder beneficiaries entitled to? 2. Duty of the Trustee a. Mandatory: the trustee must distribute all the income (if mandatory w/respect to the principle, it’s NOT a trust— focus on income 1st) (1) “shall pay the income” (2) Not a support trust—b/c beneficiaries can transfer their interest b. Discretionary: the trustee has discretion over payment of either the income or the principal or both (typical situation: mandatory payment of income and discretionary regarding the principal) Duties of Discretionary Trustee: 1) Duty of Inquiry: must check on bnen to see how they are doing 2) Duty of Good Faith and Reasonableness a) Trustee has to act in good faith (subjective) in regards to the terms of the trust, AND • Courts focus on good faith element • Therefore, can qualify it by “sole and absolute discretion,” but can’t get rid of both elements, therefore, good faith remains as an element. b) Trustee has to act reasonably (objective) i) Standard for reasonableness (a) Trustee supposed to make sure that beneficiary has reasonable “comfort maintenance and support”: i. Look to the standard of living at the time of the settlor’s death ii. The trustee must inquire as to status of the beneficiaries iii. The court will only step in if there is an abuse of discretion (b) Trustee CANNOT have “sole and absolute discretion” b/c would be a precatory trust i. Really absolute discretion would be a precatory trust ii. This is not truly absolute discretion it is just a high standard Page 36 of 38 iii. Courts focus almost absolutely Good Faith • May the trustee consider the beneficiary’s other sources of income when they are not specifically covered in the instrument? • Majority: There is a presumption that the settlor intended the beneficiary to receive the benefits regardless of the beneficiaries other sources of income -The purpose of the trust was to keep the beneficiary at the same standard of living -Argue that they are beneficiaries and should take something Exculpatory Clauses i. Courts do not like these clauses ii. These WILL BE ENFORCED if there was no UI involved in the drafting of the instrument (at times the trustee is present or actually drafts the instrument) c. Hybrid (Discretionary/Mandatory) (1) Spray (or sprinkle) trust (a) Mandatory that the funds be paid out, but discretionary as to who gets the property. (b) Can be discretionary as to invading the principal F. CREDITORS RIGHTS Voluntary Alienation 1. General Rule: Beneficiaries of a trust can voluntarily transfer their equitable interest to a third party. a. Beneficiaries who have a stream of income for a number of years can sell the right to this income because this is a property interest. HOWEVER, Involuntary Alienation b. Creditors Rights (1) General Rule: Creditors can reach debtors property to the extent that the debtors can transfer it (2) The creditor stands in the shoes of the beneficiaries: The creditor could not invade the principal to the extent that the beneficiary could not. (3) Alienability of different types of Trusts: a) Mandatory: creditor can reach the mandatory part of the trust once the mandatory trust is distributed to the bene • B CAN voluntarily transfer interest b) Discretionary: Creditors can’t force the trustee to make a pymt under the discretionary trust unless the trustee is abusing his discretion. c) Support Trust: a trust that requires the trustee to make pymts of income (or, if specified, principle) to the B in an amount necessary for the education or support of the beneficiary in accordance with any ascertainable standard • B CANNOT voluntarily transfer Interest • Support Trust General Rule: Creditors’ of the B of a support trust CANNOT reach the B’s interest, except in case of the 4 below exceptions. SPENDTHRIFT TRUSTS: 2. Spendthrift Clause: clause stating that the beneficiaries CANNOT voluntarily transfer their interest, NOR can creditors reach their interests. a. Created by imposing a disabling restraint upon the beneficiaries and their creditors. b. Spendthrift Trust Must bar both voluntary and involuntary (creditors taking) transfers • Against public policy to allow voluntary and not involuntary; b/c then it would violate the basic rule that creditors can reach any interest the debtor can alienate. Creditors Rights when there is a Spendthrift Provision: Page 37 of 38 CL: where there is a spendthrift provision, most courts recognize it UNLESS . . . (1) Settlor is the beneficiary of the trust: a) CL: If so, Settlor’s creditors CAN then reach the income and the principal to the extent that the settlor can during the life of the settlor. b) Upon death the creditors go to the probate court for the payment, but cannot go after the life beneficiary’s interest because it is expired. • Modern Exception: Where the settlor is also the life beneficiary under a revocable trust, this looks like a Will and the creditors can reach the assets even after death. (2) The trustee puts the prop in the beneficiary’s hands: then the creditor CAN attach it, AND (4) Creditors can reach a trust despite the valid spendthrift provision if they are: (a) Children (b) Alimony—for ex-spouses (c) Government for tax purposes (d) Providers for basic necessity (i.e. Doctors for necessary care) (e) Maybe—tort creditors G. MODIFICATION AND TERMINATION OF TRUSTS 1. General Rule: A trust ends when the settlor says it ends. a. Limitation: Rule Against Perp. Here we deal with the premature modification and termination of trusts. 2. Modification of trusts a. Common Law: (1) If all of the beneficiaries consent, and (a) Can include the settlor if he retains a beneficial interest (right to revoke, etc.) (b) Problem if there are some beneficiaries that are unascertainable, (c) or if they are minors i. Guardian might not want to consent. Now guardians are allowed to take into account family considerations not just the property going to the minor. (2) There is an unforeseen change of circumstances which substantially impairs the settlor’s intent. 3. Termination of the Trust: CAN be terminated when everyone that has an interest in the trust consents (if the trust is revocable then you need the settlor’s consent). a. If it is before the death of the settlor (who does not have the right to revoke) and all consent but the trustee b. If the settlor is dead the trustee CAN block the premature termination of the trust if the trust has an unfulfilled material purpose. (1) Material purpose has to be something more than a sequence of beneficial interest (2) Trusts found to have a material purpose (a) discretionary trusts (b) spendthrift trusts (c) trust which provides that the beneficiaries are not to receive their interest until they reach a certain age (d) Support trust: says that the settlor gives the beneficiary to use as much of the income as necessary the principal as necessary for the support, maintenance and comfort of the beneficiary. i. Two prongs: How much and for what the purpose? ii. The extent of the property which the person gets is controlling in determining if it is a support trust. • Courts focus on the how much: has to be “as much income and as principal if necessary.” So the phrase “for support,” is not controlling. • A de facto spendthrift clause 4. Powers of Appointment A. Power of Appointment: giving the power to revoke to someone other than the settlor. Completely discretionary and the appointed do not have to do anything unless they so choose. Page 38 of 38 1. When can it be exercised? 2. In who’s favor can it be exercised? a. General power of appointment: can theoretically be almost anyone (1) if it can be assigned to the person doing the assigning then it is general b. Special power of appointment: has to be a specific person or class of person