wills outline3

WILLS & TRUSTS I. TERMINOLOGY & INTRODUCTION: A. NON-PROBATE: Property that is not subject to probate policies. Nonprobate: Life Insurance/K w/ POD Joint Tenancy Poss. Estates & Future Interests (LE/REM) Intervivos Trusts 1. Who gets probate property? a. b. Decedent dies Testate: Given pursuant to will. Decedent dies Intestate: Intestate distribution. 2. B. C. PROBATE: Property in which decedent transfers title. SPOUSAL PROTECTION SCHEME: Depends on domicile of the parties. 1. 2. II. INTESTACY: A. Who gets the decedent’s property when he/she dies? It Depends. In CA, the scheme is community property. Elective or Forced Share: Non-community property scheme. Probate or Non-Probate Testate: Probate Intestate CP: 100% of decedent’s ½ share Who Gets What: 1. Surviving Spouse 2. Issue ** 3. Parent 4. Issue of Parent 5. GP/Issue of GP 6. Issue of Predeceased Spouse 7. Next of Kin – Degree of relationship w/ parentelic tie breaker 8. P/Issue of Parents of predeceased spouse 9. Escheats to State B. SP: 100%: if no issue, parents, or issue of parents. 50%: if one child (i.e., child alive or issue of 1 deceased child) or no child, but parent or issue of parent 33%: if more than one child (special definition). Execution Requirements Construction Requirements Revocation Requirements ** Recapture Doctrine: If there is no surviving spouse and no surviving issue, before parents take, you must consider the Recapture Doctrine. Page 1 of 51 1. Rule: We will recapture all of the qualifying property that the second spouse received by virtue of the first spouse’s death. a. Recapture Doctrine only applies to probate assets which drops to intestacy. 2. Qualifying Property: a. Real Property: Real property qualifies for recapture if: (1) b. Predeceased spouse did not die more than 15 years before the 2nd spouse dies. Personal Property: Personal property qualifies for recapture if: (1) (2) (3) Spouse did not die more than 5 years before the 2nd spouse dies; Must have a written record of title/ownership; AND The aggregate value must be at least $10,000. 3. Who Gets Recaptured Property: a. Issue of predeceased spouse; b. Parents of predeceased spouse; c. Issue of parents of predeceased spouse d. Next of kin of decedent & goes back to the regular scheme. C. Spouse: 1. Must go through marriage ceremony, or good faith belief in valid marriage. 2. Not considered a spouse if it is just a significant other. 3. You are a spouse until a final court order of divorce is satisfied. What Does It Mean to be a Surviving Spouse? 1. Common Law: Only need to survive by one breath. a. 2. Preponderance of the evidence. D. Statutory Law: a. b. Intestacy: Must survive by 120 hours and evidenced by clear and convincing evidence. Testate/Non-Probate: 120 hours by clear and convincing evidence, unless instrument requires longer. 3. 4. Modern Definition of Death: Irreversible cessation of brain activity. Note: Survival requirements apply to every category of intestate succession, not just surviving spouse. CA approach: If you cannot establish by clear and convincing evidence that one person survived the other then treat it as if the decedent survived the other. The party claiming they survived bears the burden, or otherwise treat them as if they predeceased. Probate Testate or Non Probate: If you die with a written instrument, then the requirement is clear and convincing evidence only. Otherwise claimant is deemed to have predeceased, unless a written instrument provides for another survival requirement. Page 2 of 51 5. 6. 7. What happens to joint tenancy property when both spouses die simultaneously: a. There is no surviving spouse, so transmute it from a JT to a Tenancy in Common and each ½ is treated as each spouse’s separate property. The JT in essence becomes probate property. Just go down the scheme: no surviving spouse, are there issue, no predeceased spouse, are there parents, etc. b. c. E. Descendants: 1. Rule: After the spouse’s share is set aside, children and issue of deceased children take the remainder of the property to the exclusion of everyone else. If the parent takes, the parent’s issue cannot also take. a. 2. Issue does not include spouses of issue 3 approaches to determine which descendants get what share of intestate property. a. Per Stirpes: (1) Divide at first tier (even without a live taker); (2) 1 share for each party alive and 1 share for each party dead, but survived by issue; (3) Treat dropped shares by bloodline. Per Capita: (1) Divide at first tier where there is a live taker; (2) 1 share for each party alive and 1 share for each party dead, but survived by issue; (3) Treat dropped shares by bloodline. Per Capita at Each Generation: (1) Divide at the 1st generation there is a live taker; (2) 1 share for each party alive and 1 share for each party dead, but survived by issue; (3) Treat dropped shares by pooling: Pool together and divide equally – treating everyone at that generation level equally. b. c. 3. California’s default approach is the per capita approach: a. b. If you have a Will that opts out of Per Capita and favors a different approach, then that express intent will control over the Default Rule. Note: If you opt out of the Per Capita in your Will, but the language is confusing, then it will automatically go to the default rule. (1) Example: Will says, I want my property to go to my issue “by representation” and this term is coupled with Per Capita. But in CA, this means “Per Stirpes.” (2) Under California statute, the phrase “By Representation” or “By Right of Representation” means “Per Stirpes.” (3) If the Will says “Per Capita by representation,” it is pretty clear you mean Per Capita. Page 3 of 51 F. Ancestors and Collaterals: 1. 3 Basic Approaches: a. Parentela: (1) Line of descent from a Grandparent, Great Grandparent, or Great Great Grandparent (2) If there is no one in the parents line, it is exhausted and go to the Grandparent level and if no survivors and exhaust, then go to the next level. (3) CA starts out with a parentela approach, in early steps – before we get to next of kin. (4) Find the top of the parentla line the person is in, go to the top and count your way down. Degree of Relationship: (1) Counting degrees of kinship. Counting the people between you and that relative. (2) Degree between you and parent = 1 (3) Degree between you and grandparent = 2 (4) How many people do I have to go through to get to that person? (5) Count the steps between the individual who died, and the individual who claims they can Take. (6) The closer person (the one with the lower degree of relationship number) takes. Degree of Relationship with Parentela Tie Breaker: (1) If you have someone in the GGP line, at the 7th degree and in the GGGP line at the 7th Degree, The GGP is closer so use parentela as the tie breaker. (2) California uses this approach. This is the default rule in the absence of Testator’s express intent. (3) § 6402: 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. Key Approach: (1) (2) Make sure you go all the way up to the common ancestor (and even circle them). Identify the head of the appropriate parentelic line and then count the steps from the decedent up to the common ancestor and then count down. On the left side, count the Mom, the Grandma, count the people not in the lines. Then on the right side, count the men. b. c. d. (3) (4) G. Posthumous children: 1. Children are considered alive for inheritance rights from the moment of conception, if they are born alive (if married & child born w/in 300 days of husband’s death assumed his child, no need to prove paternity). Page 4 of 51 a. H. This is a soft test, fact sensitive (note case said 328 days was o.k.). What does it mean to be an issue? Descendants = issue. Marriage Out-of-Wedlock Court Order Classic Stepparent After Death Same Gender Attempted Adoption Naturally How to qualify As an Issue? Adoption Equitable Adoption 1. 2. Line of descendants is a series of parent/child relationships. How does one create a parent/child relationship? a. Traditional: Natural Mother donates the eggs and Natural Father donates the sperm and NM & NF are married. (1) Presumption: Because the couple is married, the husband is the natural father. Inheritance: (a) Child inherits from parent and through parent. (b) Parents inherit from child and through child. (2) b. Out of Wedlock: Non-marital children. (1) Inheritance: The child can inherit from and through the natural parent, but the natural parent nor a relative of that parent cannot inherit from and through the child unless the parent or relative of that parent: (a) (b) (2) Acknowledged the child; AND Contributed to the support or the care of the child. Hypo: Father doesn’t acknowledge his child, but the father’s brother (uncle) does. Child dies. Who inherits? The father inherits b/c the statute only requires acknowledgment from either the parent or a relative of the parent. c. Adoption: (1) California Rule: Adoption severs the relationship with the natural parents & child unless: (a) The natural parent and the adopted person lived together at any time as parent & child, or the natural parent was married to or Page 5 of 51 cohabiting with the other natural parent at the time the person was conceived and died before the person’s birth; and (b) The adoption was by the spouse of either of the natural parents or after the death of either of the natural parents. (2) Therefore, if the above conditions are met, the adopted child can take from: (a) (b) (c) the stepparent who adopted the child; the natural parent who married the adoptive stepparent; and the natural parent who is either dead or consented to the adoption. Stepparent (adopted child) Natural Parent (Married to stepparent) Natural Parent (dead or agreed to adoption) Child  The natural parent of the opposite sex from the adoptive parent can only inherit from or through the adopted child, if the child is adopted by a stepparent or by a surviving spouse of a natural parent. (3) Same Gender Rule: Gender of the adopting parent kicks out the same gender of the natural parent. (a) However, if a lesbian couple have a child through artificial insemination, if they both adopt at the same time, no gender gets kicked out. (4) Attempted Foster Parent or Stepparent Adoption: Could be considered a parent/child relationship if: (a) (b) (c)  relationship began when child was a minor; continuing relationship throughout the joint lifetimes; and clear and convincing evidence that the foster parent or stepparent would have adopted but for a legal barrier. Here, the child can only inherit from and through the adoptive parents, BUT the adoptive parents cannot inherit from and through the adopted child. The natural parents can only inherit from & through the child. (5) Equitable Adoption: Requires (a) Requirements:  Informal agrmt between “adoptive parent” and natural parents or tech defect b/c NP afe not guardians;  Child moves into home of “EAP” Page 6 of 51   (b) (c) “EAP” takes child in and treat as their own (this is not full performance b/c “EAP” never officially adopted the child); and “EAP” dies intestate (does not apply to testate scheme) If all four requirements are satisfied, treat as if child was adopted. Dissent in O’Neal case argues that even if NP never agreed to “EAP” adopting the child, if the child is led to believe that he/she is adopted, then equitable adoption should apply SITE ON TEST!!!! Equitable Adoption Doctrine in CA: Based more on a contractual theory rather than a parent/child relationship “doing that which ought to have been done” Under Equitable Adoption:   Child can inherit from “AP”, but not through “AP”. “AP” cannot inherit from or through child. Child can inherit from NP & “AP”, and the NP have the right to inherit from child. EAP (d) (e) NP NP Child d. Court Order: Court order to determine paternity. (1) Alleged Father Alive: Standard for establishing paternity is preponderance of the evidence. Alleged Father Dead: Standard for establishing paternity is clear and convincing evidence. (2) 3. Half Blood Scenarios: a. In California, treat whole blooded and half-blooded siblings the same. (1) (2) This is the modern trend and majority rule. You could opt out by using a written instrument. 4. Artificial Insemination: a. Rule: Donor of sperm does not have a relationship to the child in an artificial insemination. Exceptions: (1) Husband/Wife Scenario: If there is a medical procedure with all the proper paperwork, H is not the donor, but H consents, H is the natural father. Turkey Baster: No proper paper work and the parties did not go through a medical procedure, so H is not the natural father. b. (2) c. Rape: Do not recognize the male rapist as the natural father. Page 7 of 51 d. Devise of Sperm: 1. It can only go to the person to whom it is devised, and cannot be given away to anyone else even if there is a settlement of property. This is a special type of property, something unique about frozen genetic make-up and is to be regulated carefully. 2. e. Posthumously Born Children vs. Posthumously Conceived Children: (1) Posthumously Born Children: A child born anywhere from 270-300 days after conception and after the father’s death. (a) (2) Treated as a full parent/child relationship. Posthumously Conceived Children: A child who was conceived after the death of the person who donated the genetic material. (a) (b) The child has a natural mother. Uniform Status of Children of Assisted Conception Act: Unless provided for in a Will, a posthumously conceived child, does not inherit from the decedent.   Basically, this statute adopts the class closing rule. The class closes to those children conceived after the donor’s death. Class Closing: An open class closes upon the first person’s possession of an interest. I. Managing a Minor’s Property: Guardian If Minor Takes Custodian Trustee 1. 2. Problem: Minors do not have legal capacity to hold property. Three types of appointments: a. Guardian: Without express instructions, the court will appoint a guardian. (default) (1) (2) (3) (4) (5) (6) (7) Time consuming Expensive Closely supervised by court Very conservative Most Protective Use this if not concerned with growth of property Default appointment: You will get a guardian if you don’t opt out, and to opt out you need a written instrument. Page 8 of 51 b. Custodian: (1) Not subject to court supervision. (2) Custodian can do anything with property for the minor’s benefit. (3) Custodian preferred for small gifts to minors. Trustee: (1) Most flexible and accounting obligations are reduced. (2) Trustee holds legal title to property. (3) Minor holds the equitable title. (4) Must set forth all provisions of the trust in a written instrument. (5) Trustee preferred for large gifts to minors. c. J. Advancements: Probate/Intestate Doctrine. [This is also a bar to succession.] 1. Common Law: You must calculate every gift the parents gave to the child and add them up and put them into a hotchpotch. a. b. 2. Gifts to a child inter vivos are presumed as advancements that the child was to get when the parent dies. Problems: High cost of administration (accounting nightmares), family feuds, Modern Trend/California Law: If a person dies intestate as to all or part of his estate, property the decedent gave during lifetime to an heir is treated as an advancement against that heir’s share of the intestate estate only if: a. There is a writing indicating an intent that the gift constituted an advancement; (1) Decedent’s writing: Must be a contemporaneous writing (if decedent declares his intent in a subsequent writing, it must be in the form of a Will); Donee/Heir Apparent’s writing: does not need to be contemporaneous. (2) b. Advancement doctrine applies to any individual who qualifies as an heir, not just a child. 3. Advancement does not apply against the portion of the estate taken by the issue of the predeceased child of the decedent, unless there is a writing that specifies that advancement be counted against the donee and the donee’s issue, if donee predeceases donor. On Exam: Don’t look for the words advancement. Decedent’s intent to trigger advancement can come in the form of a statement which says “I want my kids treated equally.” If Decedent gave child 1 & 2 some money inter vivos for school, but not to children 3 & 4, then argue that this is Decedent’s intent to apply advancement. a. Fact sensitive, intent based analysis. 4. K. Bars to Succession: 1. Homicide: 3 approaches: a. Title passes to the killer b/c it is up to the legislature to punish killers: Page 9 of 51 (1) (2) b. Legislature punishes your crime with jail; and Don’t think it is fair to impose a 2nd punishment. California Approach: Treat the killer as predeceased = constructive death. (1) Rule: A person who feloniously and intentionally kills the decedent is not entitled to any of the decedent’s property regardless of the type of property (i.e., testate, intestate, probate, non-probate, except for JT). (a) (b) (c) (d) Treat the killer as predeceased = Constructive Death. Murder must be intentional: murder in the 1st and 2nd degree, voluntary manslaughter. Involuntary manslaughter, self-defense: There is no intent and therefore, the killer gets to take. NOTE – IN CA WE HAVE STATUTES THAT SAY (INTENTIONAL KILLER DOES NOT GET TO TAKE) (2) (3) Joint Tenancy Property: turns into T in C Acquittal: If killer is acquitted in a criminal trial, he may still be unable to take b/c the right to inherit property is a civil issue where the standard is only a preponderance of the evidence. (a) Therefore, there must be a civil trial to determine if the person is guilty or innocent of the crime. c. Constructive Trust (a hybrid): Don’t like what killer did, so say title will pass and we can’t override statute, BUT equity says you can’t profit by your own wrongdoing, so we give you a Constructive Trust and that takes it away from you. Can the issue of a killer take? (1) Decedent dies intestate: a. The California statute does not expressly say it applies to per capita. Therefore, Killer treated as if he predeceased decedent and the killer’s share is divided among the killer’s issue. d. (2) Decedent dies testate: Killer’s issue are penalized and cannot take. (a) If there is a will, the killer is treated as predeceased and the gift to the killer lapses. However, issue of killer cannot invoke the antilapse statute b/c it doesn’t apply in the case of homicide. Exception: Where Will expressly provides “to my sons equally, and if any of my sons predecease me, his share goes to his issue.” Here, the issue would take through an express provision of the will. (b) 2. Disclaimer: When a person voluntarily renounces any interest in property. a. b. c. d. Treat party as predeceased. You can disclaim any type of property interest (i.e., testate, intestate, probate). Property is passed on to the next of kin after the disclaimer. In California: Page 10 of 51 (1) Treat the disclaiming party as alive for dividing the interest and then predeceased when distributing the share (i.e., per capita analysis). You cannot disclaim an interest to avoid advancement. (a) A person who receives an advancement and then disclaims the interest is not treated as predeceased. This is to prevent the disclaiming party from getting more property for his/her issue. (2) III. BASIC REQUIREMENTS TO MAKE A WILL: A. B. The decedent must be age 18 or over AND The decedent must be of sound mind Mental Capacity Reqm’t - The decedent understands or has the ability to know 1. The nature and extent of their property a. Refers to the capacity to understand if the decedent investigates, not whether the decedent is aware of all the details on a daily basis 2. The persons who are the natural object of the decedent’s bounty a. Refers to the heirs apparent- persons who would take if the decedent did not execute a will) 3. The disposition the decedent is making a. Refers to the nature of the testamentary act 4. AND how these elements relate so as to form an orderly plan for the disposition of the decedent’s property C. This is a very soft, fact sensitive test for determining testamentary capacity 1. Presume the testator is mentally capable to make a will. 2. The burden is on the person challenging the will to prove the decedent was not mentally capable. 3. The focus when determining mental capacity is at the time the decedent executes the will. a. Evidence of a decedent’s capacity immediately preceding and after execution of the will may be relevant. b. However, the focus is on the time of execution. D. Lack of Mental Capacity v. Insane Delusion: 1. Lack of capacity: unable to enter into transaction. Entire will is void. 2. Insane Delusion: a belief the testator holds on to against all evidence and reason to the contrary. Only the part of the will caused by the insane delusion will fail. If the entire will is caused by an insane delusion, the entire will fails. E. A Standard for Determining Whether a Delusion is Insane: 2 approaches Page 11 of 51 1. A delusion is insane if a rational person in the testator’s situation could not have drawn the same conclusion. 2. If there is any factual basis for the testator’s belief, it will not be deemed insane. F. Causation: Strike only the part of the will caused by the insane delusion. Two Approaches to Causation: 1. Whether the inane delusion “might have” affected execution of the will 2. “But for” the insane delusion, the property would have been treated differently. G. California Approach: 1. To determine insane delusion: any factual support. 2. To determine causation: but for the insane delusion. IV. WILLS ACT FORMALITIES – ATTESTED WILLS: A. California requirements for the execution of a valid will. 1. The will must be in writing; 2. The will must be signed by either a. the testator; b. in the testator’s name by some other person in the testator’s presence and at the testator’s direction; OR c. A conservator at the direction of the court to make a will. 3. The will must be witnessed and signed by at least two witnesses AND a. The witnesses must be present at the same time, witnessing the testator’s signing of the will OR the testator’s acknowledgement of the signature OR testator’s acknowledgement of the will. b. AND each witness must understand that the instrument the witness signed was the testator’s will. B. What does it mean for the witnesses to be “present”? 1. Conscious presence test (adopted in CA): Witness is in the presence of the testator if the witness, through sight, hearing or general consciousness of events, comprehends that the testator is in the act of signing the will, testator is acknowledging the signature, or the testator is acknowledging the will. C. Telephonic presence is not presence (hypos on p. 215) D. Order of signing: As long as it is all in one execution ceremony, the order of signing does not matter. Page 12 of 51 E. Signature: 1. What is necessary to qualify as a valid signature? a. anything the testator writes which the testator intends to be the testator’s signature b. but, if the testator intended to write their whole name, and the testator did not write their whole name, then it is not a valid signature regardless of the circumstances 2. Where an individual signs an attested instrument with an “X”, one of the witnesses must print the persons name who wrote the “X” and the witness must sign the witnesses name F. Additions after the signature: 1. In California there is no requirement that the signatures be at the end of the instrument. 2. However, there is a temporal requirement: a. if the additions are added temporally before the signature, then the additions are valid; b. If the additions are added after the will is signed, then the additions are invalid. G. What is considered a signed writing? 1. A videotape is not considered a signed writing because it does not satisfy the channeling, ritualistic, evidentiary functions. H. Delayed Attestation: If the witness does not sign the will until after the testator dies, the will is valid as long as the witness signs within a reasonable period of time. 1. A reasonable period of time is considered 3-6 months I. Interested Witness: A witness to the will who receives a devise under the will. Assess if they are an interested witness at the time of execution. 1. A will is not invalid if there was an interested witness. 2. Purging Doctrine: purge the interested witness of their excess (contrast with what would take if instrument not valid by either a prior will or intestacy) if: a. The interested witness cannot rebut the presumption of duress, menace, fraud, or undue influence; OR b. There are less than two disinterested witnesses. 3. If the presumption cannot be rebutted, only purge the excess by contrasting what would be taken if the instrument is not valid (i.e., Prior will or intestacy). 4. Use the constructive trust doctrine to make sure the interested witnesses share does not exceed the share of the estate the interested witness would receive if the will was not valid. 5. What is the scope of the interested witness doctrine? Page 13 of 51 a. The interested witness doctrine applies only to devises given to the interested witness. Does not matter if the spouse or other family member of the witness inherits under the will as long as the witness does not; b. If a witness gets legal title as trustee or fiduciary, then the interested witness statute does not apply because the way in which the witness takes is critical in determining if the witness is an interested witness. Under this scenario, there is no problem because the witness must earn their interest. V. CURATIVE DOCTRINES: Approaches to deal with a mistake in the execution of the will (ex. H & W both make wills. Each signs the other person’s will by mistake). A. Strict Compliance Approach: Court cannot rewrite the testator’s will. If the testator fails to comply with the wills act formalities, the instrument will not be probated. B. False Description Doctrine: A mere false description does not make the instrument invalid. The court can correct the mistake ONLY by striking the misdescription and then determining if there is enough left to give effect. 1. Examples of Misdescription: Writing the wrong address on a piece of property or bequeathing the estate equally to the testator’s “nephew Raymond Schneikert and Mabel Schneikert his wife” and Raymond’s wife is named Evelyn. 2. A problem may arise in the ability to give effect to the provision after striking the misdescription if the testator, for example, owns more than one piece of property because you will not know which piece of property was intended to be devised after striking. 3. The misdescription doctrine is a doctrine of construction, it is only applied after a will is deemed valid. C. In re Snide approach: When the two wills mirror each other and each person signs the wrong instrument, combine the two wills into one instrument and treat it as a valid will. D. Academic Approach: (so far has not been adopted by any jurisdiction) treat the mistake as fraud and impose a constructive trust to ensure the heirs receive what the testator intended. E. Substantial Compliance: The will is probated if it substantially complies with the wills act formalities. Under the substantial compliance doctrine, there must be clear and convincing evidence that: 1. The testator intended the instrument to be the testator’s will; AND 2. The testator substantially complied with the execution requirements. a. the writing is the most important requirement to comply with; b. the witnessing is the least important requirement to comply with; F. Dispensing power: Similar to the substantial compliance doctrine, but the dispensing power doctrine only requires clear and convincing evidence of the testator’s intent that the instrument be the testator’s will (and no suggestion of fraud). If this is satisfied, dispense with as many of the formalities as necessary to make the will valid. Page 14 of 51 G. California applies the strict compliance standard with a softening approach by making fewer requirements to comply with the wills act formalities. However, on the test you can argue that the court should apply one of the other doctrines. VI. HOLOGRAPHIC WILL: Different requirements for a handwritten will. A. California Statute: Recognizes the validity of holographic wills. A valid holographic will requires the following: 1. All material provisions must be in the testator’s handwriting and signed by the testator 2. There is no date of execution requirement for holographic wills. However, if a holographic will does not contain the date of execution AND a. If the omission results in doubt as to whether its provisions or the inconsistent provisions in another will are controlling, the holographic will is invalid to the extent of the inconsistency unless the time of execution of the holographic will is established to be after the date of execution of the other will. (1) What if the “other will” is also an undated holographic will? Strike the inconsistent clauses in both wills. b. If the testator lacked capacity at any time during which the will might have been executed, presume the testator executed the will when incapacitated and the will is invalid unless you can establish the will was executed when the testator had capacity. c. Can establish the date of execution of the holographic will through relative dating. You do not need to establish an exact date, you only need to establish that the holographic will was executed later. (1) Example: attested will dated 1980. Holographic will says, “in light of Clinton’s affair with Monica, I leave all of my money to the republican party”- relative dating is satisfied by reference to an event. 3. Any statement of testamentary intent contained in the holographic will may be set forth in either the: testator’s own handwriting OR as part of a commercially printed form. Must have a statement of testamentary intent. a. Hypo: A has a valid attested typed will. The will states, “I give $100,000 to Pepperdine.” A strikes out “$100,000 to Pepperdine” and handwrites “$200,000 to UCLA” and signs the will. Does this meet the requirements of a valid holographic will? No because the testamentary intent is not in the testator’s handwriting and the previous will’s statement of testamentary intent cannot be used to illustrate intent because it is not a commercially printed form. B. What constitutes “Material Provisions” in the testator’s handwriting? Who takes what (i.e. identify the beneficiaries and the property you are giving each of them) C. Conditional Wills: 1. Example: testator writes, “In the event I die on the cruise, I give my property to X.” the testator goes on the cruise, comes back and then dies. Is the will valid if the testator did not die on the cruise? Yes Page 15 of 51 2. Presume the condition is not meant to be a condition precedent but merely an explanation for the inducement to execute a will (i.e. testamentary intent). The will should be probated unless it is clearly indicated in the will that the condition is meant to be a condition precedent. VII. REVOCATION OF WILL A. Revocation by Writing: The subsequent writing must qualify as a valid attested or holographic will to be sufficient to revoke the prior will. How can a will revoke a prior will? 1. Express Revocation: The subsequent will states, “This will hereby revokes all previous wills” 2. Implied Revocation: The provisions of the subsequent will are inconsistent with the prior will B. Revocation by Physical Act: the will must be burned, torn, canceled, obliterated, or destroyed, with the intent and for the purpose of revoking the will, by either (1) the testator or (2) another person in the testator’s presence and by the testator’s direction. 1. 2. Common Law: The act must affect the printed word. Modern Trend: The act only needs to be done on the face of the instrument whether or not it affects the printed word. Know both approaches for exam! C. Presumption Doctrine: If the testator was last in possession of the will before the testator’s death and after the testator’s death, the will cannot be found, the presumption arises that the testator destroyed the will with the intent to revoke. 1. Rebuttable Presumption: The presumption doctrine is a rebuttable presumption. This is a soft test that is fact-sensitive so look to the surrounding circumstances. 2. Lost Will Doctrine: If the presumption of revocation is rebutted and it is determined that the will is simply lost, can still probate a lost will as long as you can prove with extrinsic evidence the contents of the will through testimony, a duplicate copy, etc. D. Effect of Duplicate Originals: 1. The presumption doctrine will not revoke a duplicate original if any duplicate original can be found. a. Exception: where you have duplicate originals- one of which cannot be found- and there is a good reason why the testator may not have asked for the other duplicate originals back, then the presumption doctrine may still be applicable to revoke. b. Example where the exception may apply: the attorney has a duplicate original of the testator’s will. The attorney is the sister of the testator’s wife. The testator is cheating on his wife and is leaving all of his property to his mistress. 2. If revocation is by act or writing, then all duplicate originals are considered revoked. E. Partial Revocation by Act: If the will was last in the Testator’s possession and after the testator dies it is discovered that there is a line through one of the beneficiaries or gifts in the will, presume the testator made the line with the intent to revoke that specific devise. [Apply presumption doctrine]. But rebuttable Not all jurisdictions accept it Page 16 of 51 1. Example #1: will says, “I give $100,000 to Ms. Weiss, I give the rest, residue and remainder to Mr. Forester.” After the testator’s death, it is discovered that there is a line through the gift to Weiss. a. General Rule: falls to the residuary clause and Mr. Forester would get the $100,000. b. Minority View: Any partial revocation must fall to intestacy because of the potential for fraud. 2. Example #2: will says, “I give a total of $10,000 to Mr. Brown and Mr. Black; the rest to Ms. Kim.” There is a line through Mr. Black. a. Majority View: This is a partial revocation and therefore, a partial gift and a new gift which requires WAF. Mr. Brown gets $5,000 and what happens to Mr. Black’s share: (1) Strict Compliance: Mr. Black’s share goes to intestacy b/c a new gift requires WAF. (2) Ca & Modern Trend: Mr. Black’s share (50K) goes to the residuary and Brown gets 50K (3) UPC: Mr. Brown gets the whole thing (100K) F. Revocation by Operation of Law: Dissolution or annulment of marriage; provisions revoked; other changes in circumstances. 1. Unless the will expressly provides otherwise, if after executing a will the testator’s marriage is dissolved or annulled, the dissolution or annulment revokes all of the following: a. any disposition or appointment of property made by the will to the former spouse; b. any provision in the will conferring a general or special power of appointment on the former spouse; c. any provision in the will nominating the former spouse as executor, trustee, conservator, or guardian. 2. This is an irrebuttable presumption unless the testator executes a new will post-divorce indicating an intent to give the ex-spouse a gift under the will. 3. The presumption does not apply if the testator and ex-spouse subsequently remarry. 4. Scope of Operation of law statute: a. Statute does not apply to non-probate property; b. Modern Trend: apply operation of law to both probate and non-probate; c. California: applies to probate as well as non probate (but not Life Ins.) *treat as predeceased *doesn’t apply to relatives of X spouse 5. Hypo: H will gives property to W and W son from a previous marriage. H and W get divorced. H dies. Who gets H property? W son. Under the California statute, only cut out the ex-spouse. G. Dependent Relative Revocation: If the testator revokes their will based on a mistaken assumption of fact or law, the revocation will be ignored if it may be concluded that the testator would not have revoked the will if the testator had known of the mistake. If DRR applies, the revoked will is treated as valid. Page 17 of 51 1. Factors to consider when applying the dependent relative revocation doctrine if the revocation was by WRITING include: a. b. c. d. e. valid revocation; revocation was based on a mistake of law or fact (usually a mistake of fact); must be evidence of the mistake expressly made in the subsequent writing; The mistake must be beyond the testator’s knowledge; AND testator would not have revoked had the Testator known of the mistake. (1) Hypo: Testator bequeaths $5000 to Judy and the residue of his estate to Mark. T later executes a codicil to the will as follows: “I revoke the legacy to Judy because she is dead.” Judy is still living and survives the testator. (a) Valid revocation? Yes, revocation by a subsequent writing (codicil) which qualifies as a will. (b) Revocation based upon a mistake of fact or law? Yes, Judy is not dead. (c) Testator would not have revoked the gift had testator known of his mistake. (d) Evidence of the mistake is in the subsequent writing because the codicil expressly revokes the gift to Judy based on the mistaken assumption that Judy is dead. (e) The mistake is beyond the testator’s knowledge. (f) DRR applies and Judy receives $5000 (2) Hypo 2: Suppose the codicil read: “I revoke the legacy to Judy because I have already given her $5000.” In fact, the testator did not give Judy $5000 during testator’s life. (a) Same analysis as above for (1)-(3). (b) Evidence of the mistake is expressly made in the subsequent writing because the codicil expressly revoked the gift based on the mistaken assumption of fact that the testator had already given Judy $5000. (c) The mistake is NOT beyond the testator’s knowledge because the testator should know if he gave Judy $5000. (d) DRR does not apply and the gift falls to the residuary clause (majority view) or to intestacy (minority view). (3) Hypo 3: Suppose the codicil read: “I revoke the gift to Judy.” Evidence is offered that shows that three weeks prior to execution of the codicil, the testator was told that Judy had died, believing it to be true. In fact, Judy survives the testator. (a) Same analysis as first Hypo (1)-(3). (b) Evidence of the mistake is not expressly made in the subsequent writing, but rather on the basis of extrinsic evidence. (c) DRR does not apply. 2. Factors to consider when applying the dependent relative revocation doctrine if the revocation was by ACT include: a. b. c. d. valid revocation; revocation was based on a mistake of law or fact (usually a mistake of law); there must be a failed alternative plan of disposition; AND testator would not have revoked had the Testator known of the mistake. (1) Hypo: Clause 5 of the Testator’s typewritten will provides: “I bequeath the sum of $1000 to my nephew, Charles Blake.” T crosses out the “$1000 and substitutes “$1500.” Testator then writes her initials and the date in the right-hand margin opposite the entry. Page 18 of 51 After Testator’s death, her will is admitted to probate. Blake contends that he is entitled to $1500, or in the alternative, $1000. (a) Does this qualify as a valid holographic will? No, because all material provisions must be in the testator’s handwriting. Although the amount of the gift is in the testator’s handwriting, who the gift is to is not in the testator's handwriting. When analyzing holographic wills, cannot give effect to the printed portions, only the handwriting. (b) Valid revocation? Yes, partial revocation by act under common law (because cross out affects the printed words) and under the modern trend (because the defacement is on the face of the written instrument). (c) Revocation based on a mistake of fact or law? Yes, revocation based on a mistake of law because there is a failed alternative plan of disposition. (d) Testator would not have revoked had the Testator known of the mistake because wanted Blake to get some money. (e) How much does Blake get? Dependent Relative Revocation applies and Blake gets $1000. (2) Hypo 2: Same facts as above, except $1000 is crossed out and $300 is written. (a) Same analysis as above except Dependent Relative Revocation should not be applied because Blake receiving nothing is closer to the testator’s true intent (i.e. Blake receiving $300) rather than giving Blake $1000. (b) Key: look at the spectrum to determine whether applying Dependent Relative Revocation or allowing the gift to fail is closer to the Testator’s true intent. (3) Hypo 3: Same facts as above, except $1000 is crossed out and $500 is written in. (a) Same analysis as above, however if you look at the spectrum, $500 is right in the middle. (b) Solution: give Blake $1000 because it is better to give the benefit of the doubt that the testator would rather Blake receive $1000 instead of nothing. H. Revival Doctrine: Under certain circumstances you can revive a will which has been revoked by a subsequent will. 1. The revival doctrine typical arises when Testator executes will #1. Subsequently, testator executes will #2 which revokes will #1 either by an express clause or by inconsistency. Later, Testator revokes will #2. Is will #1 revived? 2. If will #2 was revoked by act, then will #1 is revived if there is any evidence that the Testator intended to revive will #1. Revocation by act- intent of revival can be by any evidence. a. Example: Will #1 executed in 1955. Will #2 executed 1959. Will #2 expressly revokes will #1. Testator subsequently destroyed (i.e. Revocation by act) under the belief the Testator could revive will #1. Revival doctrine would apply to revive will #1 because will #2 was revoked by act and there is evidence the Testator intended to revive will #1. 3. If will #2 was revoked by writing (i.e. codicil or will #3), then will #1 is only revived to the extent the third will expressly indicates that the Testator intended will #1 to take effect. Revocation by writing- intent of revival must be in the writing. VIII. COMPONENTS OF A WILL: Page 19 of 51 A. Integration of Wills: All pieces of paper physically present at the time of execution and intended to be part of the will. B. Incorporation by Reference: Any writing may be incorporated by reference into a will if the following requirements are met: 1. The writing must be in existence at the time the will is executed; a. This is most important requirement. b. The burden of proof is on the party trying to incorporate by reference to establish the document was in existence at the time the will was executed. 2. The language of the will manifests an intent to incorporate the document into the will; 3. AND the will describes the writing sufficiently to permit its identification. C. Republication by Codicil: The execution of a codicil to the will republishes the underlying will (i.e. changes the date of execution of the underlying will from the original date of execution to the date the codicil was executed). 1. Republication by Codicil is important when trying use Incorporation by Reference when the writing was not in existence when the will is executed because you must establish the writing was in existence at the time the will was executed. 2. Example: 1977 Testator executed a will that stated, “I give everything to X, except those things I designate in a memorandum left by me and known to X.” In 1979, testator wrote a list of things to be given to B in testator’s notebook. Testator executed a codicil to her will in 1980. a. Incorporation by Reference? Cannot be applied because the writing (1979) was not in existence when the will was executed (1977). b. Republication by Codicil? Can be applied because a codicil was executed in 1980 and the will is treated as being republished as of the date of the codicil. In 1980, the writing was in existence. Therefore, incorporation by reference may now be applied to give effect to the devise. 3. Republication by Codicil v. Incorporation by Reference: a. Republication by Codicil: Applies only when there is a prior validly executed will and a subsequent codicil which itself must constitute a validly executed will. b. Incorporation by Reference: Applies to incorporate into a will instruments that have never been validly executed but are in existence at the time the will is executed D. Acts of Independent Significance: A will may dispose of property by reference to acts and events that have significance apart from their effect upon the will, whether the acts and events occur before or after the execution of the will or before or after the testator’s death. The execution or revocation of a will of another person is such an event. 1. Example: Provision in Testator’s will states, “I leave everything in the right-hand drawer of my desk to A.” In the drawer at T’s death are a savings bank passbook in T’s name, a certificate for 100 shares of General Electric stock, and a diamond ring. Does A get all of these items? a. Act: putting the items in the drawer Page 20 of 51 b. Independent Significance: Put the items in the drawer to store them and keep them safe. The passbook and stocks fit this purpose. However, people do not usually store diamond rings in a desk drawer to store it. Therefore, the gift of a diamond ring may not be valid because it does not have independent significance. (1) Common law: Look at each item to see if it has independent significance or if the only reason the act was done was to give the item to A. Modern Trend: Look at the potential for fraud. Where was the taker? If the taker has access to the drawer, then take the common law approach and look at each item. If no potential for fraud, then presume there is independent significance. (2) 2. Example 2: Will states, “I give all of my sons-in-law $1000.” At the time the will is executed, none of the testator’s daughters are married. Two daughters subsequently get married. T dies. a. Act: Marriage which has independent legal significance b. The act of independent significance can refer to a future event. Therefore the gift of $1000 to each son-in-law is valid. E. Contracts Relating to Wills: 1. A person may enter into a contract to make a will, a contract not to revoke a will, or a contract not to die intestate only if the contract can be established by one of the following: a. Provisions of a will stating material provisions of the contract b. An express reference in a will to a contract and extrinsic evidence proving the terms of the contract c. A writing signed by the decedent evidencing the contract. 2. Oral Contracts: California courts allow you to bring an oral contract claim relating to the will under the doctrine of equitable estoppel (one party changes position in reliance on the other party) if there is clear and convincing evidence of an oral contract. a. Usually only applied in a family situation where one member of the family agreed to care for decedent in exchange for estate and decedent does not give property under will as agreed. Where does the property go? Into a Constructive Trust (when unjust enrichment) b. Example: Father tells son, “If you go fishing with me every week until I die, I will give you my estate."” Son goes fishing with father every weekend. Father dies and will leaves estate to Pepperdine. Son can claim breach of oral contract and court may apply doctrine of equitable estoppel. c. Example 2: W is sick. H agrees to care for wife if she agrees to give H all of W estate. H cannot bring a breach of contract claim if W fails to give H all of W estate in will because spouses have a legal obligation of care and you cannot contract for something you are legally required to do. *make sure there is still Consideration 3. Joint Wills and Mirror wills: The execution of joint wills or mirror wills does not create a presumption that the wills are irrevocable. Page 21 of 51 a. Joint wills: one will typically by H and W, signed by both and probated twice. Only produce one instrument for two different individuals b. Mirror wills: two separate wills that have subsequently identical provisions. (Example: H and W have two separate wills but each will leaves the other spouse all of the property) c. Parties can agree to an express provision of irrevocability in a joint or mirror will and the court will uphold such a provision. 4. If a party executes a will that is not in compliance with the contract relating to the will, you still probate the will. The will is not invalid. However, the estate will be subject to a breach of contract claim. 5. There are no survival requirements to bring a breach of contract claim. Even if a party to the contract dies before the decedent, the party’s estate has a breach of contract claim because they are treated as a creditor, not a beneficiary for contract purposes. IX. CONSTRUCTION OF WILLS TRUSTS & OTHER INSTRUMENTS: A. Admitting Extrinsic Evidence: Ambiguity, Mistake and Omission. 1. Plain Meaning Rule: A plain meaning in a will cannot be disturbed by the introduction of extrinsic evidence that another meaning was intended. 2. Valid Will v. Construction of a Will: a. Valid Will: when determining whether a will is valid, should admit all extrinsic evidence relating to the execution of the instrument (1) Example: T wrote a will leaving all property to A. Plaintiff seeks to admit extrinsic evidence that T did not intend the will to be a valid will and only executed the will to induce A to sleep with T. Extrinsic evidence admissible? Yes, it goes to the validity of the will because it shows that T did not have the requisite testamentary intent to execute a will. b. Construction of the Will: when determining how to construe the words written in the will to give them effect, the court must only look at the words on the face of the instrument and cannot admit extrinsic evidence. (1) Example: In 1960, T executes a will leaving property to seven different charities. Codicil #1- subtracts six charities and adds eleven new charities. T asks attorney to execute a new codicil to comply with the tax act. Codicil #2- substitutes original seven charities and deletes eleven charities in codicil #1. T did not authorize these changes. Is extrinsic evidence of T intent admissible? No, T intended codicil #2 to be a valid codicil. Because the problem is between the content of the codicil, not the validity, this is a construction issue and extrinsic evidence will not be admissible. (2) General Rule: Scrivener’s error goes to construction of a will, not validity. Therefore, extrinsic evidence is not admissible. 3. Exception to inadmissibility of extrinsic evidence for construction issues: If there is an ambiguity in the will, extrinsic evidence is admissible to resolve the ambiguity. a. What constitutes an ambiguity? An express provision in the will which is susceptible to more than one interpretation: Page 22 of 51 (1) Latent ambiguity: an ambiguity that is not apparent on the face of the instrument and only becomes apparent when extrinsic evidence is admitted to resolve the ambiguity. (a) Example: T leaves estate to Roxy in T’s will. Extrinsic evidence is admitted to show Roxy is a dog. (2) Patent ambiguity: an ambiguity which is obvious on the face of the instrument. b. In California, extrinsic evidence is admissible to resolve either a latent or patent ambiguity. c. Scope of admissible extrinsic evidence: Only extrinsic evidence that is consistent with one of the reasonable constructions or interpretations of the express language in the will is admissible. (1) The most reliable extrinsic evidence the court will consider is the circumstances surrounding the T at the time of execution. (2) Courts will only use extrinsic evidence to construe the ambiguous meaning, they will not use it to add words or rewrite the will. (3) Written evidence is preferred over oral evidence. Court is particularly wary of oral declarations. (a) Oral Declarations are ONLY allowed if:   The oral declaration was made to the scrivener; and If there is equivocation. (4) Example: Will states, “I leave $1000 to my favorite student Newman.” Extrinsic evidence reveals there are two students named Newman. Evidence that T spent a lot of time with Newman #1 would be admissible because goes to surrounding circumstances. Newman #2 testimony “T told me he liked me best” would be an inadmissible oral declaration. d. Review Approach for Test: (1) Show an ambiguity exists; (2) Evidence must be consistent with one of the reasonable interpretations; AND (3) The evidence must be regarding the circumstances surrounding the T at the time of execution not testimony (i.e. no oral declarations). 4. Personal Usage Exception (a latent ambiguity): Even if the language in the will has a plain meaning and is clear, if the testator used language which has a different personal meaning to the testator, the court will admit extrinsic evidence to determine what the language really means. a. Example: Testator has three brothers, Gary, Bob and Paul. T will gives $1000 to Larry. Who is Larry? Larry is Bob’s nickname. Because T is referring to person by nickname, extrinsic evidence is admissible to determine T’s personal usage of the name Larry. 5. Equivocation: Where you have a word in a will which meets the description of more than one person or piece of property. B. LAPSE: Beneficiary is alive at the time of execution and predeceases the testator/transferor. Page 23 of 51 1. All gifts made by will are subject to the requirement that the devisee survive the testator unless the testator specifies otherwise 2. If a devisee does not survive the testator, the devise lapses (i.e. fails). a. Lapse applies to devisees who actually predecease the testator b. AND devisees who legally predecease the testator (1) Examples: Devisee murders T, devisee disclaims interest 3. Definitions of types of gifts: a. Specific Gift: specifically named and arguably one item can meet the description. (1) When you see the word “my” it indicates specific gift. If you do not see the word “my” err on the side of general gifts. (2) Example: I give my 1,000 shares of Amgen to A- specific. (3) A general gift of privately held stock is treated as a specific gift (i.e., 100 shares of Nabisco stock which is a privately held company) b/c the company can charge as much as it wants for the shares of stock. b. General Gift: usually money or gift without the word “my.” c. Demonstrative Gift: general gift payable from a specific source (1) Example: give $1000 to A from the proceeds of the sale of GM stock. (2) Example 2: “I give a Volkswagen Beetle to B.” T does not own a Volkswagen Beetle at his death. Places the burden on the administrator of the estate to buy VB from general funds of the estate to give the car to B. (3) Treat demonstrative gifts as general gifts. d. Class Gift: multiple takers who meet the requirements of a class. (1) Factors considered when determining whether T intended to make a class gift: (a) How are the beneficiaries identified? (i) (ii) The instrument names the individuals specifically (goes against finding of a class); or The instrument refers to a generic identification with common characteristics among the group (finding in favor of a class gift). (b) Are there common characteristics among the group which tie or connect the people? (i) If there are other members who also share the common characteristic who were not included, then goes against a finding of class gift. (c) How is the gift identified? (i) The gift is described in the aggregate (class); OR Page 24 of 51 (ii) The gift is described as individual said shares to multiple individuals (specific, general gift). (d) Consider the testator’s intent in the overall testamentary scheme: (2) Hypo: W will states, “I give my 1/5 interest of the farmland to my late husband’s side of the family as follows: ½ to Gene, a nephew, and ½ to Stewart, a nephew.” Does this constitute a class gift? (a) The beneficiaries are named specifically- goes against the construction of a class gift. (b) There is a common characteristic among the group because both Gene and Stewart are nephews. However, there were other nephews who were not included. Therefore, if it was a class of nephews, all who share the characteristic should be included to be considered a class. Goes against the construction of a class gift. (c) The gift is described in individual said shares- ½ to Gene and ½ to Stewart- goes against the construction of a class gift. (d) Overall testamentary scheme is in favor of a class gift because the testator intended the farm to go to the husband’s side of the family. (e) Analysis of the factors weighs against the finding of a class gift. (3) Hypo 2: T will states, “I give all of my Daily Telegraph stock to my wife for her life, and after her death to E.J. Fowler and the children of my sister Emily Walters to be equally divided.” Class gift? (a) Two individuals are specifically named (wife and E.J.) but some (children of sister) are generically named- mixed and does not clearly support construction of class gift nor go against such a construction. (b) Common Characteristic: E.J. and children of sister are all nieces or nephews of the testator. Therefore, supports the construction of a class gift. (c) The gift is described in the aggregate because the stock is to be divided equally among multiple takers and, therefore, supports construction of a class gift. (d) The overall intent of the testator was to give remainder interest in stock to all of his nieces and nephews. Favors a class gift. (e) Analysis of the overall factors weighs in favor of finding a class gift. 4. Common Law rules regarding Lapsed Devises: a. Specific or General Devises: If a specific or general devise lapses, the devise falls to the residuary. If there is no residuary clause, the gift falls to intestacy. (1) Hypo: T’s will bequeaths her watch (specific gift) to A and $10,000 to B. The residuary devise is to C. A and B predeceased T. The watch and $10,000 goes to C. b. Residuary Devise: Page 25 of 51 (1) If the entire residue lapses, because the sole residuary devisee or all of the residuary devisees predecease the testator, then the residue falls to intestacy. (2) If a share of the residuary lapses (ex- two residuary beneficiaries and only one predeceases), then the lapsed residuary share either: (a) (b) Common Law: share falls to intestacy. No Residue of the Residue Rule. Modern Trend: share is divided among the surviving residuary devisees. Residue of the Residue Rule (a de facto class gift). (3) California adopted the Residue of the Residue Rule. c. Class Gifts: If the devise is to a class of persons, and one member of the class predeceases the testator, then the surviving member of the class divide the gift d. Void devises: If a devisee is dead at the time the will is executed, the devise is void and the same general rules governing the disposition of lapsed gifts applies to void gifts. 5. California’s Anti-Lapse Statute: Issue of the deceased transferee takes the gift in the deceased transferee’s place and the gift does not fail. Anti-lapse applies to wills, trusts, deeds and any other non-probate property (except JT and LE and remainder). 6. Requirements for Anti-lapse to apply in California: a. Lapse or void gift; b. The deceased beneficiary meets the “degree of relationship” test; (1) Degree of relationship test: the deceased beneficiary must be kin of the testator/transferor OR kin of the testator/transferor’s surviving, deceased, or former spouse. (2) The surviving spouse of the transferor does not meet the degree of relationship test because not “kin” of the transferor. c. Beneficiary who predeceased transferor/testator is survived by issue; AND d. There is no express contrary intent by the transferor that anti-lapse should not apply. (1) Evidence of express contrary intent can be in the words of the instrument; OR (2) The overall testamentary scheme reflected in the instrument. 7. Hypo: Will states, “I give X $100,000 if X survives me.” X predeceases T. X meets the degree of relationship test and has issue who survives T. Does anti-lapse apply? a. Common Law: The words “if X survives me” indicate an express requirement of survivorship and states an intent that anti-lapse should not apply. Modern Trend: UPC rule states that words of survivorship such as “if he survives me” or “my surviving children” are not, in the absence of additional evidence, sufficient to indicate an intent that antilapse should not apply. California has not adopted the UPC provision, but since it is a judicial doctrine and there is no contrary statutory provision in California, you can argue UPC rule should apply. Page 26 of 51 NEXT OF KIN: Blood relative. b. c. 8. Anti-Lapse Doctrine applies to both void and lapsed gifts (i.e. specific, general, residuary). 9. Does Anti-Lapse apply to class gifts? Split in the jurisdictions: a. California’s Statutory Approach: (1) General Rule: Anti-lapse applies to class gifts. (2) Exception: Anti-lapse does not apply if a transferee of a class gift dies before the execution of the instrument VOID GIFT AND the transferor knew of the death before execution. If the transferor does not know of the death, then anti-lapse does apply. C. Post Execution Changes in Property: Specific v. General Devises  DOCTRINES APPLYING TO SPECIFIC GIFTS: 1. Ademption: When the testator disposes of a specific gift during testator’s lifetime, the gift is held to be adeemed (i.e. taken away). Applies only to specific gifts. a. Can extrinsic evidence be admitted to rebut the presumption of ademption? No, not under the identity approach. b. Identity approach: Ascertain the identity of the item and see if T still owns it. If the item cannot be found, there is an irrebuttable presumption that the gift has been revoked and no extrinsic evidence is allowed. c. California applies the identity approach. d. Avoidance Doctrines: Ways to avoid the harsh application of ademption under the identity approach: (1) Convince the court that the devise is a general or demonstrative gift, not a specific gift: (a) If there is any ambiguity in the language, the courts will construe the gift as a general gift. Consider the following examples:    “A Saturn”- general “My Saturn”- specific “The Saturn”- probably can argue general gift (2) Change in form, not in substance: Classify the disposition in this manner. (a) This is a very fact sensitive approach: The greater the discrepancy (i.e., price difference) between the old and new, the more likely it is a change in substance. (b) If change in form, not in substance doesn’t work, try Acts of Independent Significance. (c) Hypo: change Saturn to Jaguar. Can argue this is a change in substance because different cars, rather than a change in form because they are both cars. (d) Hypo 2: “I give my 100 shares of Amgen stock to A.” The stock splits and T now owns 300 shares. How many shares does A get? A gets 300 shares. Page 27 of 51 (e) Stock split rule: treat a split in stock as a change in form, not substance and the beneficiary is entitle to the additional shares received by T as a result of a stock split. (3) Construe the meaning of the will at the time of death, not the time of execution: (a) Example: The will states: “I give my car to A.” At the time the testator executed the will, T owned a Saturn. At T’s death, T owned a Jaguar. Construe “my car” as referring to the Jaguar. e. Hypo: T gives “100 shares of RJ Nabisco stock to A.” Nabisco is a privately held stock. T dies and does not own 100 shares of Nabisco. What does A get? (1) (2) (3) (4) First examine if the gift is general or specific- the gift is a general gift. The personal representative must go out and buy the stock. Problem: the representative cannot buy the stock because it is privately held. Solution: treat the privately held stock as a specific gift and apply ademption. 2. Softening Doctrines (a compromise): If you cannot avoid the application of ademption, California has adopted two statutory provision which may apply to give the recipient of a specific gift some rights. Statute applies to wills, trusts, and other instruments: a. 21133: Outstanding balance Doctrine b. Specific gifts; recipient rights: A recipient of a specific gift has the right to the remaining property specifically given and all of the following: (1) Any balance of the purchase price (together with any security interest) owing from a purchaser to the transferor at death by reason of the sale of the property; (2) Any amount of an eminent domain award for taking of property that is unpaid at death; (3) Any proceeds unpaid at death for fire or casualty insurance on the property; (4) property owned by the transferor at death as a result of foreclosure, or obtained in lieu of foreclosure, of the security for a specifically given obligation; c. 21134: Conservatorship exception d. Specifically given property sold by conservator; beneficiary’s rights: (1) if specifically given property is sold by a conservator, the beneficiary of a specific gift has the right to a general pecuniary gift equal to the net sale price of the property; (2) if an eminent domain award for the taking of specifically given property is paid to a conservator, the recipient of the specific gift has the right to a general pecuniary gift equal to the eminent domain award or the insurance proceeds; (3) this section does not apply if, after the sale, condemnation, fire, or casualty, the conservatorship is terminated and the transferor survives the termination by one year b/c the transferor can fix the damage if he wants; (4) The rights of the beneficiary of the specific gift shall be reduced under this section by any right the beneficiary has under section 21133. 3. Specific gifts; no right of exoneration: a specific gift passes the property transferred subject to any mortgage, deed of trust, or other lien existing at the date of death, without right of exoneration, regardless of the general directives to pay debts contained in the instrument of transfer. a. Hypo: what if the will has a provision instructing the executor to pay any just debts? This does not rebut the presumption that a specific devise passes subject to any mortgage interest. It is simply a generalized provision authorizing the executor to pay creditors. Page 28 of 51  DOCTRINES APPLYING TO BOTH SPECIFIC AND GENERAL GIFTS: 4. Satisfaction: Applies when the testator makes a transfer inter vivos to a devisee after executing a will and the testator intends the transfer to be in satisfaction, in part or in whole, of a testamentary gift if: a. A written instrument provides for deduction of the lifetime gift from the testamentary gift; (1) Instrument refers to T’s will, trust, etc. (2) Does not need to be contemporaneous. b. The transferor declares in a contemporaneous writing that the transfer is to be deducted from the testamentary gift or is in satisfaction of the testamentary gift; OR c. The transferee, at anytime, acknowledges in a writing that the gift is in satisfaction of the testamentary gift. (1) No contemporaneous requirement. d. If a codicil states that money paid before death is in satisfaction, then satisfaction applies. 5. Abatement: Arises when estate has insufficient assets to pay debts as well as all devises. a. Shares of the beneficiaries abate in the following order: (1) (2) (3) (4) (5) Residuary gifts. General gifts to persons other than relatives. General gifts to T’s relatives. Specific gifts to person’s other than T’s relatives. Specific gifts to T’s relatives. b. A relative is a person to whom property would pass from the transferor under the intestacy succession scheme if the transferor had died intestate and there were no other persons having priority. c. Within each tier, the gifts are either abated or reduced pro rata. d. Exception: CA if T’s contrary testamentary intent is shown, abate in a different order. X. WILL CONTESTS: A. Undue Influence: Some form of coercion, force, etc. Very fact-sensitive test. Four approaches in California: 1. 4 factor test for determining whether undue influence existed: a. b. c. d. whether the testator was susceptible to undue influence; whether the influencer had the motive to unduly influence; whether the influencer had the opportunity to influence; AND whether the undue influence caused the testator to execute the will the way it was done. 2. California – 3 factor presumption-shifting burden: a. Plaintiff must prove: 1. Confidential relationship between the testator and the defendant; Page 29 of 51 2. The party accused of undue influence was active in the procurement/execution of the will (broad approach); AND 3. The party unduly benefits (fact sensitive approach). Objective approach: intestacy is the measure Ca approach: look at relationship b/w the parties b. If the plaintiff can prove all three factors, then a presumption of undue influence arises and the burden of proof shifts to the defendant to prove, by a preponderance of the evidence, that there was no undue influence (causation). 3. Interested Witness: Presumption of undue influence arises when a witness to the will receives a devise under the will. a. A will is not invalid if there was an interested witness. b. Purging Doctrine: purge the interested witness of their excess c. Measure: contrast with what would take if instrument not valid by either a prior will or intestacy) if: (1) The interested witness cannot rebut the presumption of duress, menace, fraud or undue influence; OR (2) There are less than two disinterested witnesses. d. If the presumption cannot be rebutted, only purge the excess by contrasting what would be taken if the instrument is not valid (i.e., Prior Will or Intestacy). e. Use the constructive trust doctrine to make sure the interested witness’s share does not exceed the share of the estate the interested witness would receive if the will was not valid. f. Whether interested applies only to the witness? Does not matter if the spouse of the witness inherits under the will as long as the witness does not. 4. Interested Drafter: Presumption of undue influence arises when a drafter receives a devise in the instrument drafted. a. No provision or provisions of any instrument shall be valid to make any donative transfer to any of the following: 1. The person who drafted the instrument; 2. Any person who is related by blood or marriage to, or co-habitant with or employee of the person who drafted the instrument. The term “any person who is related by blood or marriage” includes: a. the drafter’s spouse or pre-deceased spouse; b. relatives of the drafter or the drafter’s spouse within the third degree; c. spouse of any person described above. 3. Any partner, shareholder or employee of the drafter’s law firm (drafter must have an ownership interest); 4. Any person who has a fiduciary relationship with the testator who transcribed the instrument or causes it to be transcribed (i.e. dictates to person, etc.); Page 30 of 51 5. Any person who is related by blood or marriage to, or co-habitant with or employee of the person who transcribed or caused the instrument to be transcribed. The term “any person who is related by blood or marriage” includes: a. the transcriber’s spouse or pre-deceased spouse; b. relatives of the transcriber’s or the transcriber’s spouse within the third degree; c. spouse of any person described above. 6. OR a care custodian of a dependent adult. b. The presumption does not apply if: 1. The interested drafter is related to the testator by blood, marriage, or co-habitation. The term “a person related by blood or marriage” includes: a. The testator’s spouse or pre-deceased spouse; b. Relatives within the seventh degree (and the relatives’ spouses) of the testator or the testator’s spouse; 2. The instrument is reviewed by an independent attorney who counsels the transferor regarding the legal consequences of the instrument and the independent attorney signs the certificate. c. The presumption of undue influence can only be rebutted by clear and convincing evidence that there was no undue influence 5. How to approach undue influence on the exam: a. First look to see if there was an interested witness or an interested drafter, if that does not apply; b. Use the presumption shifting doctrine; c. Apply the four factor test; d. Look for a no-contest clause to stop a strike suit (A suit based on the fact that there is an unnatural disposition of property). B. Fraud 1. 2 types: a. Fraud in the Inducement: Person misrepresents facts, thereby causing the testator to execute the will. b. Fraud in the Execution: Person misrepresents the character or content of the instrument signed by the testator. 2. Misrepresentation: Element required for fraud. a. Must have intent to misrepresent; and b. Intent that the misrepresentation will alter the testator’s execution of the will. 3. Strike the part of the will affected by fraud or impose a constructive trust. Page 31 of 51 C. No-Contest Clause: 1. Example of a no-contest clause: “I’ll give you x amount of money if you do not sue, and if you do sue and you lose, then you will receive no money at all 2. California recognizes the validity of no-contest clauses but they should be construed very narrowly (i.e. an action to construe a will is not considered a contest action and the no-contest clause will not apply) 3. Narrow Exception: California will enforce a no-contest clause unless there is probable clause to support the beneficiary’s contest claim AND the contest involves: (benefits any of the following) a. Challenging any gift to a person active in the execution/procurement of the will (i.e. fraud, undue influence). (i) anyone who drafted the instrument (ii) person gave direction to drafter concerning content (iii) witness to the instrument OR Reasonable Cause to Show: a. Fraud b. Revocation c. Interested drafter D. Tortious Interference with an Expectancy: Interference by a 3rd party through undue influence or fraud, not by insane delusion b/c there is no 3rd party involved. 1. Tort action is not subject to the no-contest clause. 2. SOL is longer for a Tort vs. Probate. 3. can ask for punitive damages XI. WILL SUBSTITUTES: AVOIDANCE OF PROBATE. A. Contracts with Payable on Death (POD) Provisions: Any contract with a POD clause is valid and is not subject to the Wills Act Formalities as long as the payment is made to a third party beneficiary. [In CA, all POD designations are valid even if it is not a contract]. 1. Apply wills related laws to POD contracts b/c POD clause jumps out of K law and into will’s law. 2. Hypo: H gets a life insurance policy with POD clause. W is the designated beneficiary. H & W get divorced. H marries W#2. H makes will giving all insurance proceeds to W#2. H dies. Who is entitle to the insurance proceeds? W #1 because she is the designated POD beneficiary. 3. General Rule: A will cannot revoke a will substitute. a. Blockbuster Will: A will that substitutes a will substitute (no state has adopted this). 4. Exception: If in the POD contract it is expressly stated that the designated beneficiary can be changed by will, then the will can change the name of the designated beneficiary. However, absent an express provision in the POD instrument, then cannot. Page 32 of 51 B. Multiple Party Bank Accounts: A, a bank depositor, may open a joint account with B intending that the account be either: (1) a true joint tenancy, (2) an agency account; or (3) a POD contract. 1. Three types of accounts: a. Joint Tenancy: Depositor intends that either A or B has the power to draw upon the account and the survivor owns the balance of the account. b. Agency Account: Depositor intends that B is to have power to draw upon the account during A’s life for A’s benefit (not for B’s benefit) but is not entitle to the balance at A’s death c. POD Account: The depositor intended that B is not to have power to withdraw on the account during A’s life, but is entitle to the balance of the account upon A’s death 2. Banks have resisted efforts to allow depositors to choose among the three types of accounts and depositors are often forced to open a multiple party bank account in joint tenancy even though joint tenancy may not reflect the depositor’s true intent. 3. Common law approach to multiple party bank accounts: a. b. Start with the presumption the account is a true joint tenancy Allow the introduction of extrinsic evidence to rebut the presumption by clear and convincing evidence of the depositor’s true intent (1) Focus on the moment the depositor enters the other party’s name on the account to determine what type of account the depositor intended; (2) Subsequent actions by the depositor can be analyzed, however, because these actions are reflective of the depositor’s intent at the time of the execution. 4. Modern trend and California approach: a. Multiple party bank accounts Section 5301: (1) An account belongs, during the lifetime of all parties, to the parties in proportion to the net contributions by each to the sums on the deposit, unless there is clear and convincing evidence of a different intent. (2) In the case of a POD account, the POD payee has no rights to the sums on deposit during the lifetime of any party, unless there is clear and convincing evidence of a different intent. (3) In the case of a Totten Trust account, the beneficiary has no rights to the sums on deposit during the lifetime of any party, unless there is clear and convincing evidence of a different intent. If there is an irrevocable trust, the account belongs beneficially to the beneficiary. (a) Totten trust functions as a POD account and is considered a savings account trust. b. Summary of the basic CA approach: Presume the depositor intended to create a POD account. (1) Intervivos: Each party owns the portion of the account in proportion to the contributions they made during life. Page 33 of 51 (2) At Death: The surviving party takes all of the account. (3) If there is clear and convincing evidence to overcome the presumption, then treat the property as the depositor intended the property to be treated. Once we determine what type of account it is what do we do? a. convenience account -b. Joint Tenancy -c. POD goes into proabate non probate C/L: probate MT: non probate 5. Joint tenancy in Personal Property v. Real Property: a. Personal Property: Generally allows admission of extrinsic evidence because forced into joint tenancy: (1) Example: H has a pension plan with his company. When you want to name a beneficiary must put name in joint tenancy. H names W as a beneficiary and the property is held in joint tenancy. H and W get divorced. Extrinsic evidence admissible that H did not intend pension to be held in joint tenancy? Yes as long as the H can show that the use of joint tenancy language was not voluntary (i.e. only given JT option). b. Real property: (1) General Rule: do not allow the admission of extrinsic evidence because you have a real choice and are not forced into a joint tenancy deed. (2) Exception: if forced into taking property in joint tenancy (i.e. joint tenancy is only option) then will allow extrinsic evidence to determine true intent. (3) Example: H and W own Greenacres as joint tenants. H makes all payments with separate property. H and W get divorced. Extrinsic evidence that H and W took title in JT to avoid probate admissible? No because H and W voluntarily took title as JT. C. Joint Tenancy in Land: Common and popular method of avoiding the cost and delay of probate. Features of joint tenancy include: 1. The creation of a joint tenancy in land gives each joint tenant an equal interest upon creation; 2. A joint tenant cannot devise his or her share by will; 3. A creditor of a joint tenant must seize the joint tenant’s interest during life. At death the joint tenant’s interest vanishes and there is nothing for the creditor to reach. Right of survivorship. D. Revocable deeds of land: Possessory Estates and Future Interests: 1. Hypo: A makes a deed conveying property to A for life and then to B and his heirs in fee simple absolute. A has a life estate and B has a remainder interest. The deed states that A has the absolute power to revoke or sell the land during A’s lifetime. a. Problem: If the grantor retains the power to revoke, the grantee has no interest until the grantor dies. Page 34 of 51 2. Common Law: A revocable deed is too testamentary in nature, makes it a will and should be subject to Wills Act Formalities: 3. Modern trend and California Approach: To determine whether a deed is really a will, must look at the intent of the grantor at the time the grantor makes the deed. If the grantor intended to create a revocable deed it is valid and is not subject to the Wills Act Formalities. XII. RESTRICTIONS ON THE POWER OF DISPOSITION: A. RIGHTS OF THE SURVIVING SPOUSE: 1. Rights of Surviving Spouse to Support: In addition to main spousal scheme there are other probate administrations and other spousal and family protective mechanisms. a. Social Security: (1) Right of survivorship only in surviving spouse. (2) Worker has no right to shift the survivor’s benefit. (3) A public pension plan which is difficult if not impossible to defeat. Private Pension Plan: (1) Non-employee spouse can waive survivorship. (2) Governed by ERISA law and spouse is protected/ Homestead: (1) Surviving spouse has a right to occupy the family home. (2) Decedent has no power to dispose of a homestead so as to deprive the surviving spouse of his/her statutory rights therein. Personal Property Set-Aside: (1) Personal property set aside that is protected from decedent and creditors. (2) Varies from jurisdiction to jurisdiction, but there is a limit. (3) Testator will most likely have tangible personal property that he or she can dispose of Family Allowance: (1) Money surviving spouse needs to survive on. (2) Lasts for as long as probate continues. (3) Some jurisdictions set time as one year. (4) Depending on the jurisdiction, the surviving spouse is given: (a) Enough to maintain a reasonable standard of living; or (b) Reasonable amount to maintain the standard of living you are accustomed to. b. c. d. e. 2. Rights of Surviving Spouse to Share of Decedent’s: a. The Elective Share: (1) (2) Spouse can claim 1/3 or up to ½ of the decedent’s estate. Elective share only applies to probate property so if testator wants to cutoff a spouse, the testator can change property from probate to nonprobate. Augmented Estate: UPC elective share applies to probate and nonprobate items. UPC also implemented a sliding scale for elective share. The longer you are married, the more you get. Page 35 of 51 (3) (4) 3. Rights of Surviving Spouse in Community Property: a. Putting Spouse to an Election: Not an elective share doctrine, but a Community Property Doctrine. (1) Testator tries to give away property that the other spouse owns. (a) If you (surviving spouse) want to take anything under my Will then you can’t object to me giving away your property. (b) If you do claim your property, then I, as deceased spouse will not give you anything under my will. (c) You as the surviving spouse must make an election: Either you take your property and forfeit your right to take under the decedent’s will, or take according to the will. If surviving spouse gets residue and takes her property so she is crossed out of the residue then gift fails and goes to intestacy and she would end up with it – this doctrine depends highly on the drafting of the instrument. Available in California. Not limited to Community Property assets. Applies to any assets that spouse has an interest in. Historically, H’s mistaken belief that property was all his own property could be enough to put the wife to an election – Implicit intent. Modern Trend (CA): You can no longer implicitly put a spouse to an election, but you can expressly put your spouse to an election. Look for CLEAR INTENT Be Aware: Some jurisdictions still allow decedent to put a spouse to an election without expressly stating an intent to do so (unclear) (2) (3) (4) (5) (6) (7) Action to construe is not cahllange or breach of No Contest Clause (asking to bring in extrinsic evidence of what was meant when they said they are giving away whatever) (a) In these jurisdictions, anytime a deceased spouse gives away property of the surviving spouse, you have to put the spouse to an election. If language is ambiguous as to whether the spouse is giving away both their property, then construe it narrowly and assume he only meant his share of the property. (b) 4. Migrating Couples and Multi-State Property Holdings: a. Assets are characterized at the moment they are acquired by the laws of the state you were domiciled at the time of acquisition. Spousal protection depends on your residence at the time of death. Some spouses run the risk of falling through the cracks if property is acquired in one spousal protection jurisdiction and then the spouse dies in another spousal protection jurisdiction. Quasi-Community Property: If property would have been CP if you were domiciled in CA (a quasi-CP state) at the time of purchase, we’ll treat it as quasiCP. Page 36 of 51 b. c. d. e. On Exam: Know that the risk of falling through the cracks is out there and you should transmute before you leave the jurisdiction or the moment you arrive. Moving From SP state to CP state: (1) If H & W lived in a SP jurisdiction and accumulate money during their marriage and put it in H’s account under his name only, then the money is H’s SP. H & W then move to Arizona (a CP jurisdiction that doesn’t recognize Quasi-CP) and H dies and leaves everything to Lulu. (a) (b) (c) (d) SP keeps its character when H & W move to a CP jurisdiction. Spousal protection in Arizona is CP, but H & W have no CP, and only H’s SP and therefore, W gets nothing. Here, W falls through the cracks. Quasi Community Prop: helps protect but the wage earning spouse must die first; so the owner of the property you are trying to make into quasi community must die first or else if they die second they own the property outright f. g. Moving From CP state to SP state: (1) H & W acquire $100,000 in CA. It is CP b/c it was acquired during marriage. H & W move to Missouri (a SP state) and H dies and wills everything to Lulu. The money is still considered CP, so how much does W get? (a) W gets ½ of her share in the CP and H’s ½ goes to probate and probate property in Missouri is subject to the elective share. Therefore, W could get 1/3 to ½ more so W gets to double dip. In this situation, CP to SP state, the spouse could get to double dip. Uniform Disposition of CP Rights at Death Act: CP brought into a SP state is not subject to elective share.   This was created b/c double dipping is unfair. Not all SP states have adopted this doctrine. (b) (c) 5. Spouse Omitted from Premarital Testamentary Instruments: a. California’s Pretermitted Spouse Rule: (1) Testator executes all of his testamentary instruments (will or will substitutes) (inter vivos revocable ok)(intervivos irrevocable not ok); Testator Marries after will is executed; Doesn’t provide for his spouse Testator dies Then spouse gets ½ CP, ½ Quasi-CP and SP share equal to intestate share, but in no event to exceed ½ of the SP. Pool the probate property and IV revocable trust property and take from their (2) (3) (4) (5) Page 37 of 51 b. Exceptions to Pretermitted Spouse: Spouse shall not receive a share of the deceased spouse’s estate if the person who is trying to show that the spouse should not take can prove: (1) Intentional omission shown on the face of decedent’s testamentary instruments; (a) This intent must be made with the mindset that the person is your perspective spouse. (2) Decedent provided for the spouse by a transfer outside of the decedent’s testamentary instruments and intended that the transfer be in lieu of a testamentary provision; (a) (b) (c) evidenced by decedent’s statements; from the amount of the transfer; or by other evidence. (3) c. Express waiver by the surviving spouse. If Testator executes any testamentary instrument after marriage, the surviving spouse is NOT a Pretermitted spouse. Rationale for Pretermitted Spouse: (1) (2) Spousal Protection; Accidental Omission;  It was an oversight;  Presumed Intent: Testator would have wanted to provide for his spouse. d. B. RIGHTS OF ISSUE OMITTED FROM TESTAMENTARY INSTRUMENTS: 1. California’s Rule for Pretermitted Child: a. b. c. d. Decedent executes all of his testamentary instruments; Then child is born or adopted; Decedent dies without changing the testamentary instruments. (if you executed a codicil after child's birth doesn’t work) Pretermitted child gets the INTESTATE SHARE (depends on the family situation). 2. 3. Presumed intent that Decedent would want to provide for child. Exceptions to Pretermitted Child: a. b. c. Intentional omission express on face of testamentary instruments; Transfer outside of the testamentary instrument and must have intention that the transfer be in lieu of the testamentary instrument; or Decedent had one or more children and devised substantially all of the estate to the other parent of the omitted child. [Different from Pretermitted spouse exception]. Page 38 of 51 (1) Presume Decedent’s intent to have other parent provide for the children by giving the other parent substantially all of the estate. 4. Ommited Child Doctrine: Decedent’s erroneous belief or lack of knowledge: California Statute. a. Give child an intestate share if decedent fails to provide for the child either: (1) (2) b. If decedent believes the child to be dead; OR Decedent doesn’t know the child is his. Sounds like the statute is fixing a mistake. C. PROFESSIONAL RESPONSIBILITY ISSUES: 1. Modern Approach: California Law. a. b. No privity required to bring an action against the attorney. A third party beneficiary can claim under negligence & breach of contract. XIII. TRUSTS: For trusts always lead with the common law and get bonus points for the modern trend. A. INTRODUCTION: 1. 2. Function of a Trust: To hold and manage property. How long can a trust last? a. Limited by rule against perpetuities: Future interests must vest, if at all, within any life in being at creation of the instrument + 21 years. 3. Purpose of a trust: No one purpose for a trust, but it is the most flexible legal instruments. Three Parties to a trust: a. b. c. Settlor Beneficiary: Holds the equitable title to trust property. Trustee: Holds legal title to the trust property. (1) (2) (3) Owes a fiduciary duty to the beneficiary. Holds and manages trust property for the benefit of the beneficiary. A trustee cannot quit unless: (a) (b) The court approves; or Another trustee is appointed. 4. 5. Trust Res/Corpus: The principal and interest income. a. Settlor’s intent determines who gets the principal and who gets the income interest and how much each beneficiary gets. B. CREATION OF A TRUST: Page 39 of 51 1. How do you create a trust? a. Intent to Create a trust: A transfer from A to B for the benefit of C. OR if the trustee is the settlor, then you better have good evidence of the intent. Trust Property/Funding: (1) (2) c. d. Create a Receptacle: Establish the terms and conditions which regulate the trust; and Transfer property into the trust. b. Ascertainable Beneficiary. Writing: Goes to creation of receptacle. 2. Statement of Trust: a. Declaration of Trust: (1) (2) b. When the trustee is the settlor and he declares that he holds certain property in trust. Statement may be in writing, but could be oral. Deed of trust: (1) (2) Trustee is a 3rd party (i.e., anyone other than the settlor); Statement may be oral, but usually is in writing. 3. Personal Property in a Trust: a. b. Don’t need a written instrument. If you have personal property with written records of ownership (i.e., bank account), then to change ownership to the trust, you need to change the name of the card. Common Law: If you are just transferring personal property to a trust, then to transfer title, you only need: (1) (2) INTENT; and DELIVERY to the trustee. (a) If the trustee is a third party, then the settlor must deliver to the trustee either the personal property, or a writing listing the personal property. c. 4. Real Property: a. A trust conveying real property requires a written instrument b/c of the statute of frauds. 5. Testamentary Trust: A trust which is established in a will and is funded at the Settlor’s death. The settlor cannot be a trustee in a testamentary trust. Inter Vivos Trust: A trust which is created and funded during the settlor’s life. Page 40 of 51 6. 7. Precatory Trust: Not a trust, but a mere moral obligation which is unenforceable at law. a. Examples of Precatory Language: (1) (2) To A with the hope that A will care for B; or To C and it is my wish and desire that D should be able to live on the land during her life. 8. Doctrine of Merger: A trust is not valid if there is an absence of another party who has a fiduciary duty (the other party involved can be another beneficiary or a trustee). Duty of Trustee: to maintain and render accurate accounting: a. Very strict duty; b. All doubts resolved in favor of the beneficiary. First Requirement for a Trust: a. Settlor must intend to create a trust: (1) (2) Intent is shown if there is a transfer of property to a 2nd party (trustee) made with the intent to vest beneficial ownership in a 3rd party. Trustee cannot unilaterally transform a gift: The intent of the settlor controls whether a person will be a trustee, a guardian, or a custodian. 9. 10. b. 11. Standards to create a trust is very low, unlike the high threshold for wills. Necessity of Trust Property: a. Trust Context: Future profits are not an adequate property interest. (1) However, the moment the future profits are earned, they are adequate property to fund the trust. If you currently own the means of producing the future profits, then it will probably be held ok for a trust to be created. (2) b. 12. Gift Context: Future profits are an adequate property interest. Necessity of Trust Beneficiaries: a. In a private trust, beneficiaries must be ascertainable: (1) Must be a sufficient degree of definiteness to be able to name beneficiaries/identify them by personal name. (a) (b) (2) “My friends” not sufficiently ascertainable. Heirs, children, issue are sufficiently ascertainable. Beneficiaries must have standing to go to court to enforce the trust. 13. Necessity of Written Instrument: a. Inter Vivos Trusts: There is no requirement that it be in writing unless it is a trust giving away real property (under traditional CL rules). Page 41 of 51 (1) Exception: (Modern Trend) An oral trust funded with real property will be given effect either through a constructive trust or resulting trust, if equity demands. Therefore, the statute of frauds requirement is eroded. Common Law View: If the deed giving real property has no condition of giving property back, then evidence of an oral trust is barred and person who owns deed to the property keeps it. (2) b. Testamentary Trusts: Must be in writing either in a Will or it can be incorporated by reference regardless of whether it is funded with personal or real property. Must follow the wills act formalities. Secret Trust: A secret trust arises when there is an oral understanding outside of the Will to create a trust. This is a latent ambiguity and we take extrinsic evidence to determine who is to benefit. (1) (2) This is not a real trust b/c it is a failed trust. Usually, results in a constructive trust. c. MODERN TREND: Extrinsic evidence is allowed for latent and patent ambiguities, so constructive trusts are preferred b/c we will know who the intended beneficiaries are based on the extrinsic evidence. d. Semi-Secret Trust: A semi-secret trust arises when there is a Will that creates a trust, but does not indicate the terms of the trust. This is a patent ambiguity. (1) (2) This is not a real trust b/c it is a failed trust. Usually, results in a resulting trust. C. FAILED TRUSTS: If a trust fails, then the court can order a: 1. Resulting Trust: a. b. c. d. 2. Not a real trust, but a judicial remedy. Court orders the trustee to give the property BACK TO THE SETTLOR. Property goes back to probate. If there is a residuary clause then to residuary, if not, then to intestacy. Use when a trust fails in whole or in part. Constructive Trust: a. b. c. d. e. Not a real trust, but a judicial remedy. Generally, constructive trusts gives to whomever equity demands. As a general rule, the property goes forward to the beneficiary. Constructive trusts are found only where you don’t want unjust enrichment. Requirements: (1) (2) (3) (4) f. Confidential Relationship; Promise, express or implied; Transfer of property in reliance on the promise; and Unjust enrichment of the Trustee (This is the most important factor). Defense of Unclean Hands: No constructive trust is granted if the plaintiff comes with unclean hands (i.e., transfer of property to avoid creditors). 3. Honorary Trust: a. Not a real trust, but used when the beneficiary is not ascertainable. Page 42 of 51 b. Arises when: (1) (2) (3) Trust must be for a specific purpose; Not illegal or capricious – For a worthy or honorable purpose. Trustee voluntarily agrees to carry out the purpose. [Cannot appoint another trustee under honorary trusts.] c. 4. Used for trusts that care for animals and gravesites. Purchase Money Resulting Trust: Where one party puts up money and another party is the title holder, look at the relationship between the parties to determine whether the money paid was a gift or attempt to create a trust: a. b. Gift Presumed: If the party with title is the natural object of the purchaser’s bounty. Trust (Purchase Money Resulting Trust) Presumed: If the party with title is not the natural object of the purchaser’s bounty. (1) Here, the title-holder must give the property back to the party who purchased the property. D. REVOCABLE TRUSTS: 1. Common Law: Trusts cannot be revoked. a. Presume it is an irrevocable trust unless the trust instrument expressly states that the trust is revocable. 2. CA Modern Trend: Trusts can be valid even if revocable. a. Presume it is a revocable trust unless the trust instrument expressly states it is irrevocable. 3. Where a trust sets forth a specific method for revocation, that method of revocation is the exclusive method b/c the settlor’s intent controls. a. Therefore, the presumption doctrine does not apply. If the trust is last in the hands of the settlor, and the trust instrument sets forth a specific method for revocation and it cannot be found after the settlor’s death, then you cannot presume that the trust was revoked. If there is no specific method of revocation set forth in the trust and the trust is lost, the presumption doctrine should apply (i.e., Wills related doctrine applies). b. 4. HYPO: There is a will and a trust. The trust has a specific method of revocation. A codicil to the will revokes the trust. Does the codicil revoke the trust? Depends: a. b. Settlor is Trustee: the trust is revoked. Trustee is a 3rd Party: the trust is not revoked unless the specific method of revocation is satisfied. E. DISCRETIONARY TRUSTS: Page 43 of 51 1. You must look at the express language of the trust instrument to determine what the beneficiary gets and when. Two ways to determine what a beneficiary gets and when: a. Mandatory Trust: Trustee must distribute all the income. (1) b. Example: Trust instrument says, “Trustee shall pay . . .” 2. Discretionary Trust: Trustee has the discretion over payment of income interest or principal, or both. (1) Example: Trust instrument says, “Trustee may pay . . .” 3. Trustee’s Duties under a Discretionary Trust: a. Duty to Inquire: To exercise discretion. (1) A good trustee would send the beneficiary a survey every 6 months and if survey answers were ambiguous, trustee should follow up. b. Trustee must act with good faith (subjective), proper motives, and reasonably (objective). (1) If trustee has “sole and absolute” discretion, then primary focus in on whether the trustee acted with good faith. If trustee has discretion relative to a standard for comfortable support & maintenance, then trustee must act reasonably to keep the beneficiary at a standard of living that the beneficiary has come to know at the time the beneficiary became a beneficiary of the trust. (a) If trustee fulfilled duty to inquire, but refused to give the beneficiary money and the beneficiary needed the money for support and maintenance, then the trustee would be liable to the beneficiary. (2) c. Absent express language for a trustee to look at a beneficiary’s other sources of income, there is a presumption that the settlor intended the beneficiary to receive support from the trust estate regardless of the beneficiary’s other financial resources. (Therefore, the trustee cannot consider outside income when determining whether beneficiary is kept in a lifestyle he became accustomed to). F. SPENDTHRIFT TRUSTS: 1. General Rule: A creditor can reach a beneficiary’s interest in a trust b/c the creditor steps into the shoes of a beneficiary. a. A beneficiary can transfer trust assets: (1) (2) Voluntarily: Involuntarily: Creditor’s take. (a) Mandatory Trust: Creditor can force the beneficiary to pay out. Page 44 of 51 (b) Discretionary Trust: Cannot force the beneficiary to give money unless the trustee abuses his discretion. 2. Spendthrift Trust: A trust where the beneficiary cannot transfer his interest. Doesn’t allow creditors to step into the beneficiary’s shoes. a. b. c. d. Trustee is only allowed to give property to the beneficiary. Settlor can prohibit voluntary transfers and not involuntary transfers. BUT a settlor cannot prohibit involuntary transfers only. All jurisdictions recognize spendthrift trusts, BUT put a ceiling on how much can be protected. 3. Creditors not subject to spendthrift clauses: a. b. c. d. Alimony; Child Support; Government (Tax purposes); Providers of basic necessity; 4. Where the settlor is the beneficiary: a. Settlor Alive: Where a settlor creates a trust for his own benefit, if the settlor is alive, the settlor’s creditors have a right to all of the property in the trust. (The maximum amount which the trustee could pay to the settlor or apply for his benefit.) (1) (2) b. Spendthrift Clauses are inapplicable in a case where the beneficiary = the settlor. Want to prevent settlor from creating a trust to avoid creditors. Settlor Dead: (1) Modern Trend (California Rule): Permits creditors of a settlor who is the beneficiary of a revocable trust to still go after the trust assets after settlor/beneficiary is dead. 5. Spray/Sprinkle Trust: A hybrid between mandatory and discretionary trust. a. Creditor can step into the shoes of the beneficiary, but you must look at whether the trust is mandatory or discretionary. (1) (2) Mandatory: Creditor entitled to take in the place of the beneficiary. Discretionary: Creditor not entitled to take, unless the trustee abuses his discretion. 6. Support Trusts = De Facto Spendthrift Trust: A beneficiary of a support trust cannot transfer his interest. a. What is necessary for a support trust: Page 45 of 51 (1) Amount Paid: Trust should say “all of the income & whatever portion of principle that Trustee shall deem appropriate for the support of the beneficiary.” (a) There must be a restriction on the amount dispersed to amount necessary for support. (2) G. Intent is not controlling; MODIFICATION AND TERMINATION OF TRUSTS: 1. General Rule: A trust terminates when the trust says it ends. a. b. Settlor’s intent tells you when a trust ends. Exception: If the settlor and all the beneficiaries agree, an irrevocable trust may be modified or terminated early. (1) c. A trustee’s consent is not required. Revocable Trusts: Settlor can terminate at any time without the beneficiary’s consent. 2. After Settlor’s Death: a. Modification: (1) Common Law: Modification requires: (a) Unforeseen change in circumstances;  Courts use a low threshold for determining unforeseen change. (b) (c) Which frustrates the settlor’s intent (materially/substantially); and All the beneficiaries consent to the modification. (No matter how remote his interest). (2) Modification is furthering settlor’s intent, while termination is frustrating the settlor’s intent. A way to get around a modification problem is to give a power of appointment. Modern Trend: Narrowed the group of people who must consent to modification. (a) (b) If a beneficiary is too remote, then no consent is required. In California, a single beneficiary acting alone can ask a court to modify a trust. (3) (4) (5) Who Represents Unborn/Unascertained Beneficiaries – Two Judicial Doctrines: Page 46 of 51 (a) Guardian ad litem: Court appoints a guardian.  Modern Trend: A guardian ad litem should take into consideration familial situation. (b) Virtual Representation: Other kids already born can represent the whole class of children. 3. Termination of Trust: The interested parties once the settlor dies is the trustee and beneficiary. a. b. Concern that a trustee would always vigorously oppose early termination b/c loss of trustee’s fees, therefore, there is the Claflin Doctrine. Claflin Doctrine (Common Law): A trust cannot be terminated prior to the time fixed for termination even if all the beneficiaries consent if: (1) (2) Termination would be contrary to a material purpose of the settlor. At Common Law, there are 4 Material Purposes: (a) (b) (c) (d) (3) Spendthrift Trust; Discretionary Trust (primarily to income proponent); Support Trust (de facto spendthrift); Principal can’t be taken until beneficiary reaches a certain age. Modern trend in CA: A court can terminate a trust early upon petition of one beneficiary as long as the other beneficiaries are not adversely affected. (a) (b) Court determines whether to terminate or not. Court uses the totality of the circumstances test. H. POUR-OVER WILLS: How do you integrate wills and trusts? 1. Two types of trusts: a. Inter Vivos Trusts: Not subject to probate court supervision and therefore, is generally preferable. Testamentary Trusts: Subject to probate court supervision. b. 2. Can you give the rest, residue and remainder of your estate to the Trustee to distribute via the trust instrument? Here, the trust instrument controls who gets property, but what about the wills act formalities? Two Common Law doctrines: a. Incorporation by Reference: Incorporate the trust instrument into the will. (1) Three requirements for incorporation by reference: (a) Trust instrument has to exist before the will is executed: Declaration or Deed of Trust must be in existence (the terms of the trust) before the will is executed; Page 47 of 51 3. (b) (c) (2) (3) b. Will must express the intent to incorporate by reference, the trust instrument; and The document must be described with reasonable certainty. This is a testamentary trust b/c the trust isn’t funded until death. Use Incorporation by Reference when there is a receptacle and no funding inter vivos. Acts of Independent Significance: Act or writing has to have significance separate from the will/probate process. (1) (2) (3) (4) (5) Trust must be funded with some property inter vivos. Independent significance would be the trustee managing the trust property. No requirement that the trust be in existence at the time the will is executed. Poured over assets from the will after death is treated as testamentary trust property. Property transferred inter vivos is considered inter vivos trust property. 4. What happens if you execute an amendment to a trust after the will is executed? a. Under Incorporation by Reference: You would have to execute a new will every time you amend the trust. Under Acts of Independent Significance: No requirement that trust be in existence at the time the will is executed, so the amended trust takes effect. b. 5. UTATA (Uniform Testamentary Additions to Trusts Act): Modern trend. a. 3 benefits: (1) (2) (3) b. Trust can be totally unfunded until death; Treated as an inter vivos trust (not subject to probate court supervision); and Subsequent amendments to the trust given effect even if will isn’t reexecuted. 3 Requirements for a valid UTATA Trust: (1) (2) (3) Trust instrument in writing and terms must be in a separate document from the will; Trust must be referenced in the will; and Trust document must be executed (singed) prior to or concurrently with the execution of the will. (a) If the trust is not signed or if you execute the trust instrument after execution of the will, then you must fall back to the common law analysis. Key Requirement 6. If you don’t qualify as a UTATA Trust, Acts of Independent Significance, or Incorporation by Reference, then pour-over property falls to intestacy. Presumption Doctrine: Page 48 of 51 7. a. If the trust instrument was last in the control of the Settlor, and the trust instrument cannot be found, presume the trust was revoked. (1) Exception: When the trust instrument provides for an express method of revocation, the presumption doctrine does not apply. b. 8. Applies to inter vivos, testamentary and UTATA trusts. Revocation by Operation of Law: a. Inter Vivos Trust: Divorce does not revoke an inter vivos trust b/c it is not a part of the will. Testamentary Trust: Revocation by operation of law (divorce) applies b/c all wills related doctrines apply to testamentary trusts. UTATA Trust: (1) Totally Unfunded: Courts hold that because the time and manner in which the will and trust are created, that they are related components of a single testamentary scheme and therefore, revocation by operation of law should apply Partially Funded before Death: Revocation Doctrine arguably does not apply b/c part of the trust was created inter vivos. b. c. (2) I. CHARITABLE TRUSTS: Not subject to the rule against perpetuities. 1. Nature of Charitable Purposes: To qualify as a charitable trust, the trust must be: a. Public: For the purpose of the community at large, not ascertainable beneficiaries. As long as the indirect benefits helps the community at large, then it is a public purpose; AND must have a charitable purpose: (1) (2) (3) (4) (5) (6) Relief of poverty; Advancement of education; Advancement of religion; Promotion of health; Governmental or municipal purposes; and Other Purposes the accomplishment of which is beneficial to the community. (a) This is very narrowly construed. It only applies relative to the other 5 provisions). b. 2. 3. Look at intent of the Testator through the language of the trust. Who has standing to sue based on breach of fiduciary duty? a. Common Law: State Attorney General (on behalf of the community at large); Page 49 of 51 b. Modernly: Broaden concept to those who have some direct interest in the charitable trust. 4. Modification of Charitable Trusts – Cy Pres & Administrative Deviation: a. Doctrine of Cy Pres: If the settlor has a general charitable purpose with a specific charitable purpose named which becomes impossible, impracticable, or illegal to carry out, then find a specific purpose “as near” to the specific purpose within the general charitable purpose and the trust will not fail. (1) Impossibility/Impracticability: Inefficient use of charitable money does not make it impossible or impracticable to achieve a specific charitable purpose. b. Doctrine of Administrative Deviation: If the purpose of the trust is frustrated because of the administration of the trust, then appoint a new trustee to administer the trust. (1) Use this to protect the settlor’s intent. c. For Exam: (1) If purpose frustrated b/c of administration: apply Administrative Deviation. (2) If purpose frustrated b/c of a substantive change: apply Cy Pres. (3) If Administrative Deviation and Cy Pres do not apply, then a resulting trust is created, unless there is an express provision that provides for failed charitable trusts. XIV. POWERS OF APPOINTMENT: BUILDING FLEXIBILITY INTO THE ESTATE PLAN: A. INTRODUCTION: Similar to a power to revoke, except that a power of appointment is vested in a third party. 1. Types of Powers: a. General Power of Appointment: Power to appoint property to: (1) yourself; (2) your estate; (3) your creditors; or (4) the creditors of your estate. Special Power of Appointment: Power to appoint property to anyone but the power holder. (1) 2. 3. 4. Anything that is not a general power. b. Power to appoint may be created in a trustee, beneficiary, etc. Settlor’s intent controls for determining whether it is a general or special power. Testamentary Power of Appointment: Only exercisable through a will. a. Helps the Settlor control power holder so that the power holder can survey the entire situation before exercising the power. 5. Inter Vivos Power of Appointment: Must be exercised during the power holder’s life. Page 50 of 51 a. 6. Gives the broadest power. Settlor can dictate: a. b. In Whose Favor: Special or general When: Testamentary or inter vivos. 7. Power of Appointment is a discretionary power: a. b. Power holder does not have to exercise the power. Power holder does not have a fiduciary duty. Page 51 of 51