Wills ........................................................................................................................... 1 Types of Wills ......................................................................................................1 A. Attested will, signed by Witnesses ..................................................1 B. Holographic Will: ..............................................................................1 D. Living Will: ........................................................................................1 Reasons for Probate ...........................................................................................1 A. Purpose ............................................................................................1 B. Procedure.........................................................................................1 C. Personal Representative .................................................................1 Execution..............................................................................................................1 C. Witnesses.........................................................................................1 D. Age and Competency ......................................................................1 Construction ........................................................................................................1 A. Classification of Devises ..................................................................1 B. Abatement:.......................................................................................2 C. Division of Property by Representation = same as intestate ..........2 D. Ademption/INVALIDATION of Gifts .................................................2 E. Lapse: ..............................................................................................2 F. EXTRINSIC MATTERS: ..................................................................2 Revocation ...........................................................................................................2 A. By Subsequent Will..........................................................................2 B. By Physical Act ................................................................................2 C. By Operation of Law ........................................................................2 D. Partial Revocation ............................................................................2 E. Revalidation: ....................................................................................2 INTESTACY: Lack of Will @ Death ....................................................................2 A. Statutory ...........................................................................................2 B. Surviving Spouse .............................................................................2 C. Division of Estate .............................................................................2 Trusts ........................................................................................................................ 3 Trust Property ......................................................................................................3 Types of Trusts ....................................................................................................3 A. Inter Vivos ........................................................................................3 B. Testamentary ...................................................................................3 C. Revocable ........................................................................................3 D. Irrevocable .......................................................................................3 E. Express ............................................................................................3 F. Implied..............................................................................................3 G. Bank Accounts .................................................................................3 H. Discretionary ....................................................................................3 Creation ................................................................................................................3 A. Declaration of Trust:.........................................................................3 B. Intent: ...............................................................................................3 C. Gift of Property .................................................................................3 D. Contract............................................................................................3 E. Valid Purpose...................................................................................3 F. Prohibited Purpose ..........................................................................3 Trustees (Holder of Legal Title) .........................................................................3 A. Subject to Equitable Obligation FBO Another .................................3 B. Acceptance ......................................................................................3 C. Liabilities ..........................................................................................3 D. Powers and Duties...........................................................................3 E. Relief from Obligation ......................................................................3 F. Court-Appointed (Trust will not fail for lack of a trustee) .................3 Durable Power of Attorney .................................................................................4 A. Appointment to Act as Agent ...........................................................4 Beneficiaries ........................................................................................................4 A. Must be Existing and Ascertainable for Express Trust to be Valid .4 B. Charitable (not on emmanuel’s 2003 W1 exam - GSU) ..................4 C. Rights and Interests .........................................................................4 D. Spendthrift Clause ...........................................................................4 Termination ..........................................................................................................4 A. Expiration of Time Specified in Trust ...............................................4 B. By Settlor..........................................................................................4 C. By Consent of ALL BENEFICIARIES ..............................................4 Intestacy: UPC v. GA ............................................................................................... 4 UPC: ......................................................................................................................4
WILLS Types of Wills A. Attested will, signed by Witnesses B. Holographic Will: 1) Handwriting of testator 2) May require formalities where recognized [NO HOLOGRAPHIC WILLS IN GA]
C. Nuncupative/ORAL WILL: only valid in 13 states [Not in GA] D. Living Will: 1) SupCt says everyone has right to refuse med treatment 2) Instruction to doc to withhold life sustaining procedures in event of terminal illness (exempt doc from liability) Reasons for Probate A. Purpose 1) Orderly transfer of Assets 2) Protect Creditors 3) Identify Successors B. Procedure 1) Filing petition to ct to admit will to probate 2) Notice = a) service to known creditors; b) publication to unknown interested parties 3) Hearing: includes proof of death & residence, authenticity of Will, compliance with jurisdictional execution requirements and capacity of Decedent 4) Contest: a) Undue influence, fraud, revocation b) Burden of proof/Capacity Test: T understood nature of act; known nature of property; known natural objects of bounty; understand intent of disposition C. Personal Representative 1) Administers Estate a) Collects assets, sells prop, satisfies claims, accounts to ct, distributes assets b) Named in WILL or APPOINTED BY CT Execution A. In Writing [GA] B. Signed by T (Act of Authentication) GA 1) May be signed by another, by T's discretion & in T's presence [GA] 2) Executed @ logical end a) Rebuttable Presumption that material found after signature was added after execution = that devise fails C. Witnesses 1) MAJ = 2 Ws required to be present & see T sign a) Some Juris have diff Req's b) Must be 1 contemporaneous act c) GA: 2 Ws, no one else can sign for W, over 14 yrs old [Supp p35] i. GA: If W (or W’s spouse) gets gift in will, W is competent but gift is void if not 2 extra Ws 2) Conscious Presence Test (MAJ): Each W must be conscious of T and other Ws signing 3) Scope of Vision Test: if Ws would be able to see others signing if they looked D. Age and Competency 1) Affidavit Signed Under Oath 2) Not req for attested Will (helps assure validity) Construction A. Classification of Devises 1) Specific: identifiable property (i.e., my Rolex) 2) Demonstrative: Gift to be taken from identified source (bank acct, stocks) 3) General: payable from general assets (i.e., cash gift)
Page 1
4) Residuary: Remainder of estate after gifts, taxes and other expenses paid B. Abatement: 1) Order in which gifts are sacrificed to satisfy debts, taxes, and other expenses 2) Generally: 1) residuary, 2) General, 3) Demonstrative, 4) Specific C. Division of Property by Representation = same as intestate D. Ademption/INVALIDATION of Gifts 1) By Extinction: a) Specific devise no longer in estate or it is substantially changed b) Statutory: i. Securities: specific devise takes that which remains in estate plus additional shares created through action of entity (stock splits, mergers) ii. Funds Owned on Property: proceeds from pending sale; condemnation awards; proceeds from pending insurance claims 2) By Satisfaction: Beneficiary has received testamentary gift during life of T E. Lapse: 1) B predeceased T and gift fails - gift passes under residuary 2) Anti-Lapse Statutes: a) Issue of deceased B takes gift i. Valid when B is related to T ii. No protection extended to step-children iii. Step-childrens' devise is revoked upon divorce b) Premarital Will: protects surviving spouse c) 120-Hour Survival: survival of T proven by clear and convincing evidence i. Not applicable when devise instrument contains lang dealing w/simultaneous death d) Life Insurance: i. B must survive T [excluding JOINT TENANCY] ii. ERISA pre-empts state law a. Ex-spouse entitled to benefits under ERISA even though denied same benefits by state law F. EXTRINSIC MATTERS: 1) Incorporation by reference a) Written doc referred to in a Will (list of personal prop) b) Ambiguities: i. Extrinsic evidence admissible to clarify lang in Will susceptible to differing interpretations a. Alternative devise may indicate contrary intentions c) Right to disclaim interest Revocation A. By Subsequent Will 1) With formalities required by jurisdiction 2) Inconsistency 3) LAST IN TIME PREVAILS B. By Physical Act 1) Burning, tearing, cutting, destroying, mutilating, canceling, obliterating [GA] 2) COMMON LAW: Rebuttable presumption of destruction of LOST will and mutilated will C. By Operation of Law 1) Divorce = spouse predeceased T (applies to trusts, life ins., retirement plan) 2) REMARRY FORMER SPOUSE:
a) MAJ = springs back to life, reinstated b) MIN = No revival of prior will, Laws of Intestacy govern 3) MARRIAGE AFTER WILL EXECUTED revokes will D. Partial Revocation 1) By physical act where allowed a) Drawing lines through bequest b) Remainder will be admitted to probate 2) If NO REVOCATION BY ACT allowed = entire original will admitted to probate 3) GA HAS NOT PARTIAL REVOCATION 4) GA: Presumes lost will = revocation by preponderance of evidence std; but if will found, may rebut presumed revocation must also show T did not mean to revoke 5) CODICIL: [GA] a) Rebuttable presumption that subsequent gift is cumulative b) Controls to Extent of Inconsistent Provisions: i. Last provision revokes earlier provision ii. Revocation of Codicil DOES NOT REVOKE WILL = presumed T wanted will as originally executed iii. GA = Codicil executed same formality as will E. Revalidation: 1) Revalidation by CODICIL - CODICIL must be executed with formalities 2) Revival by revocation of subsequent will (Will 1 is revived when Will 2 has been revoked) a) If Will 2 is destroyed as act of revocation, then Will 1 revives 3) DEPENDENT RELATIVE REVOCATION: presumption that T only wanted to revoke Will 2 because T thought Will 1 would revive INTESTACY: Lack of Will @ Death A. Statutory 1) Orderly distribution of estate a) Generally: spouse, children, parents, siblings 2) Consanguinity: blood relatives = lineal descendants of grandparents 3) Pretermitted Heir a) Disinherited heir may take intestate share 4) ESCHEAT: a) Prop passes to state when no next of kin B. Surviving Spouse 1) Common law MAJ a) Elective share = 1/3 usually 2) Community Property MIN a) H&W treated as co-owners and survivor takes ½ b) Separate property excluded C. Division of Estate 1) Lineal Descendants: a) Per Capita: take equally (survivors are same generation) b) Per Stirpes: take share deceased parent would have taken (survivors not same generation) c) Half-blood: MAJ = same as full-blood relative; MIN = takes 1/2 of full-blood share d) Illegitimacy: MAJ = inherits from mom and not dad; may inherit from dad if legitimized through marriage or paternity acknowledged
Page 2
e) Adoption: treated as child of adopting parents; may not inherit from natural parents 2) Advancement = got the gift early, gift applies as part of share 3) Simultaneous Death Acts: estate acts as if decedent survived 4) Voluntary Renunciation: a) Share auto goes to next in line b) B cannot disclaim share in order to keep it from paying tax or being taxed Drye v. US TRUSTS Trust Property Transferable, ascertainable interest Types of Trusts A. Inter Vivos 1) Created during settlor's life B. Testamentary 1) Created by Will a) Fed law preempts state law, so surviving second spouse may receive undistributed pension plan benefits rather than testamentary Bs of predeceased first spouse 2) Pour-over from Will to Inter Vivos deed - includes life insurance proceeds and death benefits C. Revocable 1) Settlor retains power to revoke, alter, amend or modify 2) Settlor retains power to remove and appoint trustees 3) Purpose - to provide management of assets in event of incapacity D. Irrevocable 1) Cannot be amended by settlor 2) Settlor retains power to remove and replace independent corporate trustees E. Express 1) Express intention by owner of property to create trust 2) Gratuitous transfer of property where trustee holds legal title and beneficiaries hold equitable title F. Implied 1) Resulting Trust: happens when express trust fails and property reverts to settlor 2) Constructive Trust: a) Title wrongfully acquired by fraud, mistake, undue influence, or duress is held in trust for beneficiary b) Prevention of unjust enrichment by clear and convincing evidence c) Gift made in reliance upon B's promise to hold property in trust for another G. Bank Accounts 1) Joint account with survivorship provisions 2) Totten Trust: a) Settlor retains full rights during lifetime b) Revocable by act of settlor, by will, or in event B predeceases settlor H. Discretionary 1) Trustee has sole discretion to determine distribution Creation A. Declaration of Trust: 1) Present conveyance of beneficial interest in property 2) Consideration or deed not necessary B. Intent: 1) Manifestation of present intent to transfer property
Precatory (suggested) Language = trust fails for indefiniteness C. Gift of Property 1) By deed for interest in land a) Formalities satisfied by statute of frauds 2) By delivery for interests in personal property D. Contract 1) Consideration of deed required E. Valid Purpose 1) Provide expert management of property 2) Conserve wealth 3) Simplify transfer of property upon death of settlor 4) Minimize gift, estate, and inheritance taxes F. Prohibited Purpose 1) Illegal 2) Against public policy (e.g., restraints on marriage) 3) Statutory restrictions 4) Restrictions against perpetuities and accumulations Trustees (Holder of Legal Title) A. Subject to Equitable Obligation FBO Another 1) Fee simple owner of land 2) Sole trustee cannot be sole beneficiary – legal and equitable titles merge, extinguishing trust B. Acceptance 1) Taking possession and control of trust prop C. Liabilities 1) Liable for losses resulting from breach of trust 2) Liable for acts of agents due to failure to exercise reasonable care 3) Liable for acts of co-trustees due to failure to exercise duties D. Powers and Duties 1) Power of Fee Simple owner with respect to his own property 2) Duty to segregate trust property a) Presumption in favor of trust property where commingling has occurred 3) Duty of personal performance: duty of independent judgment and decision making 4) Duty to account to beneficiaries 5) Power to make investments a) Reasonably prudent trustee standard b) Duty of preservation and safety for income and principal c) Duty to diversify 6) Duty not to engage in self-dealing a) Includes buying/selling trust assets, borrowing trust funds, taking advantage of position as trustee b) Results in breach of Trust E. Relief from Obligation 1) Death, removal or resignation F. Court-Appointed (Trust will not fail for lack of a trustee) 1) No trustee named 2) Trustee fails to qualify 3) Trustee lacks legal capacity 4) Death, removal, or resignation of Trustee
2)
Page 3
Durable Power of Attorney A. Appointment to Act as Agent 1) By statute, power is not affected by subsequent disability or incapacity of principal 2) May be limited in scope 3) Present power – effective immediately 4) Springing power – effective upon disability or incapacity Beneficiaries A. Must be Existing and Ascertainable for Express Trust to be Valid 1) Suggestive language MUST be sufficiently clear 2) After-born are added to class of existing children or must vest w/in Rule Against Perpetuities 3) Failure to name beneficiary causes Resulting Trust to arise FBO settlor B. Charitable (not on emmanuel’s 2003 W1 exam - GSU) 1) Large # of unidentifiable Bs 2) General Purpose: a) Cy Pres Doctrine: Operates to prevent failure of trust by allowing ct to allocate trust property to new use 3) Specific Purpose a) Trust prop reverts to settlor upon termination of purpose 4) Rule Against Perpetuities DOES NOT apply C. Rights and Interests 1) Right to enforcement, hold Trustee accountable 2) Co-beneficiaries a) Tenants in common b) Fiduciary relationship – duty not to seek extra benefits 3) Interests upon Death of Named Beneficiary a) Realty passes to B’s heirs b) Personalty passes to Administrator or Executor c) Intestacy without heirs passes to state 4) Alienation of Interest a) Jurisdictional requirements b) Taxable @ time of transfer of interest and NOT based on time of establishment of Trust D. Spendthrift Clause 1) Restraint on B’s power to anticipate right to income, thereby avoiding assignment of interest to pay debts 2) SUPPORT PROVISION: Income paid to B as necessary for support 3) Creditor CAN reach property when in B’s possession 4) RESTATEMENT 2d: Interest can be reached: a) By spouse or child for support b) By spouse for alimony c) By creditor for necessities d) For svcs which preserve or benefit interest e) By Gov’t to satisfy claim 5) Settlor as Beneficiary – Spendthrift Clause is Invalid a) Creditors can reach Trust prop Termination A. Expiration of Time Specified in Trust B. By Settlor 1) Revocable Trust: @ Settlor’s discretion 2) Irrevocable Trust: with consent of ALL beneficiaries C. By Consent of ALL BENEFICIARIES 1) Clafin Doctrine? a) Termination invalid if contrary to material purpose
INTESTACY: UPC V. GA UPC:
Spouse’s Share
Entire estate when: No descendant or parents Decedent’s descendants are descendants of the surviving spouse and no other decedents No descendant children but parents Surviving spouse gets $200,000 + ¾ of the balance of the intestate estate Surviving spouse has their own child but not from decedent, decedent has children with surviving spouse Surviving spouse gets $150,000 + ½ of balance of intestate estate Surviving spouse and decedent had no children together – but decedent had children from prior marriage Surviving spouse gets $100,000 + ½ of balance of intestate estate
Heirs other than Surviving Spouse
Anything not going to surviving spouse goes to survivors of decedent in the following order: p. 73 of book UPC §2-103 1. Decedent’s descendants by representation (per stirpes) a. Look @ next level down, if there are descendants, then equal shares to everyone in that generation i. If a descendant on that level has died and has children, those children take their parent’s share and divide equally ii. If a descendant on that level has died and does NOT have children, then their portion is allocated to others in that level of the line 2. Descendant’s parents if no descendant children a. Equally if both alive b. Or to the one surviving parent if one parent dead 3. No surviving descendants, no surviving parents a. Descendants of the decedent’s parents by representation (per stirpes) 4. No surviving descendants, parents, descendants of parents a. If grandparents, then equally to maternal and paternal grand parents b. Any deceased grandparents or grandparents’ descendants 5. If all else fails – it goes to the state UPC §2-105
Strict Per Stirpes [USE THIS FOR GA]:
If someone (L1) has an heir, and one of those children is dead, they can only take if they themselves have children (L3), then their (L3) grand children “represent” them as if they (L2) had survived – otherwise that person on L2 with no children takes NOTHING b/c no one to represent them AKA “Per capita with representation” Goes down to find the level with survivors (L3 if only the grand children are alive) and divide equally from there
Page 4
Modern Per Stirpes (adopted in UPC in 1990 revision)