Trust &Estate by Rosenbury 2005 I. Introduction A. The Mess of Family, Property and Death 1. In re Vickie Lynn Marshall (distributed via email) B. Overview of the Probate Process, p. 34-47 All of the decedent’s assets at death can be divided into probate (property that passes under decedent’s will or by intestacy) and non- probate property (property passing under an instrument other then a will which became effective before death, including: joint tenancy property, life insurance, K with payable-on-death provisions, interests in trus t ( if the decedent has a testamentary power of appointment over assets in the trust the decedent’s will must be admitted to probate, but the trust assets are distributed directly by the trustee to the benes. named in the will and do not go through probate). Testacy: a person dying testate devises real property to devisee, and bequeaths personal property to legatees. Intestacy: heir = next-of-kin. Probate performs three functions: (1) it provides evidence of transfer of title to the new owners by a probated will or decree of intestate succession; (2) it protects creditors by requiring payment of debts; (3) it distributes the decedent’s property to those intended after the creditors are paid. If no will is probated within 3 yeats after death, the presumption of intestacy is conclusive. The time for contesting probate of a will is dependent upon a statute in the particular jurisdiction. Probate is not always necessary, as it cost a lot. It can be avoided by providing the property owner during life transfers all his/her property into a joint tenancy or a revocable or irrevocable trust or in many states, executes a K providing for distribution of K assets to named benes. on the owner’s death. Universal succession: a different system from common law system: the heirs or the residuary devisees succeed to the title of all of the decedent’s property; there is no personal representative appointed by a court. II. The Default: Intestate Succession A. Introduction to Intestacy, p. 71-74 * People wouldn’t make their own will, b/c can’t fact their own death and 1
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Trust &Estate by Rosenbury 2005
I. Introduction
A. The Mess of Family, Property and Death
1. In re Vickie Lynn Marshall (distributed via email)
B. Overview of the Probate Process, p. 34-47
All of the decedent’s assets at death can be divided into probate (property that passes under decedent’s will or
by intestacy) and non-probate property (property passing under an instrument other then a will which became
effective before death, including: joint tenancy property, life insurance, K with payable-on-death provisions,
interests in trust ( if the decedent has a testamentary power of appointment over assets in the trust the
decedent’s will must be admitted to probate, but the trust assets are distributed directly by the trustee to the
benes. named in the will and do not go through probate).
Testacy: a person dying testate devises real property to devisee, and bequeaths personal property to legatees.
Intestacy: heir = next-of-kin.
Probate performs three functions: (1) it provides evidence of transfer of title to the new owners by a probated
will or decree of intestate succession; (2) it protects creditors by requiring payment of debts; (3) it distributes
the decedent’s property to those intended after the creditors are paid.
If no will is probated within 3 yeats after death, the presumption of intestacy is conclusive. The time for
contesting probate of a will is dependent upon a statute in the particular jurisdiction.
Probate is not always necessary, as it cost a lot. It can be avoided by providing the property owner during life
transfers all his/her property into a joint tenancy or a revocable or irrevocable trust or in many states,
executes a K providing for distribution of K assets to named benes. on the owner’s death.
Universal succession: a different system from common law system: the heirs or the residuary devisees
succeed to the title of all of the decedent’s property; there is no personal representative appointed by a court.
II. The Default: Intestate Succession
A. Introduction to Intestacy, p. 71-74
* People wouldn’t make their own will, b/c can’t fact their own death and the cost involved. Whatever the
reason, a person who does not make a will or dispose of all his/her property by non-probate transfers,
necessarily accepts the intestacy law as his/her estate plan by default.
* General speaking, the law of the state where the decedent was domiciled at death governs he disposition of
personal property, and the law of the state where the decedent’s real property is located governs the
disposition if such real property.
* UPC§§2-101, 2-102, 2-103 (p.73)
B. The Surviving Spouse
1. Share of Surviving Spouse, p. 74-77
Policy of framing an intestacy statute: to carry out the probable intent of the average intestate
decedent. Under most current state law, it is to give the surviving spouse a 1/2 share if only one child
or issue of one child survives, and a 1/3 share if more than one child or one child and issue if a
deceased child survive, but there are variations. Under the UPC, §2-102 (p.73): if the decedent’s
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descendants are also descendants of the surviving spouse, and the surviving spouse has no other
descendant, the surviving spouse takes the entire estate to the exclusion of the decedent’s
descendants. Giving everything to the spouse and nothing tp the children, under these circumstances,
is a novel statutory solution. The provisions in subsections (3) and (4), giving the surviving spouse
less when either spouse has a child by a previous marriage, are also unusual. If there is no
descendant, most states and the UPC provide that the spouse share with the decedent’s parents, if
any. If not, the surviving spouse usually takes all to the exclusion of collateral kin; but some other
states provide to share with kin and their descendants.
In Hawaii, persons who are forbidden by law to marry can register with the state as “reciprocal
benes, which are given many of the benefits of surviving spouse, including the right to inherit under
the intestacy statute the same share as a legal spouse receives and the right to an elective share.
2. Who Qualifies as a Surviving Spouse?
a. Bigamous Marriages, handout
b. Same-Sex Couples, p. 492-500 and handout
In re Estate of Cooper: (study aid p.139) is the survivor of a homosexual relationship,
alleged to be a “spousal relationship” entitled to right of election against the decedent’s
will? NO
c. Unmarried Cohabitants, handout
d. Sex Changes, handout
C. Descendants
1. Who Qualifies as a Descendant
a. Posthumous Children, p. 97-98, 127-28 (notes 2-3) and handout
(遺腹子) it is a child’s advantage to be treated as in being from the time of conception
rather than from the time of birth, the child will be so treated of born alive. The Ct. has
establish a rebuttable presumption that is “if the child claims that conception dated more
then 280 days (normal period if gestation is 280 days), the burden of proof is usually
upon the child. The UPA (p.98) presumes that a child born to a woman within 300 (rather
then 280) days after the death of her husband is a child of her husband.
* a woman in LA giving birth to a girl using the sperm retrieved from her dead husband 30
hours after the man’s death. If the father didn’t consent?
* under the social security act, the state intestate succession law determines rights to SS
benefits for a dependent child. In1996, the SS commissioner agree to pay benefits to a
Louisiana child conceived after her father’s death even though under Loui’s law such a
child is not a heir; Arizona grant this benefit to a child conceived after father’s death and
recognized the child as the father’s heir.
b. Adopted Children, p. 98-114
Hall v. Vallandingham: Does the trial Ct. is correct in denying the four children 2
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the right to inherit through their nature paternal uncle when these children
were adopted by their stepfather after the death of their nature father and the
remarriage of their natural mother. (the children adopted is not entitled to
inherit from their nature father.)
* this is for the preventing of dual inheritance. The Family Law Act plainly
mandates that adoption be considered a “rebirth” into a completely different
relationship. Once a child is adopted, the right of both the natural parents and
relatives are terminated, and b/c an adopted child has no right to inherit from
the estate of a natural parent who dies intestate, it follows that the same child
may not inherit through the natural parent by way if representation. (aid p.27)
* UPC §§2-113 ,2-114(p.101) but the inheritance rights vary from state to state.
* children born by reproduction technology, the “surrogate mother issue”.
(p.103-109) To determine whose child the true intent when making K, and the
best interest of the child is taken into consideration.related to inheritance.
* An adoption of adult can prevent will contest (in NY, adopt an adult is fine,
but can’t adopt an adult lover, but Delaware Ct. reject NY Ct.’s holding). The
adoption can’ not be set aside by the person persons who would have been the
heirs but for the adoption. But can attack an adoption decree on grounds of
mental incapacity, undue influence.
O ’ Neal v. Wilkes : the K is invalid, so the adoption of O’Neal null, such that she
is not entitled to inherit Cook’s estate property.
O’Neal was born out of wedlock, raised by mother, unrecognized by her father
(take no action to legitimize has, or provide support to her or her mother). She
was adopted by Cook by the K her aunt entered into with him.
* O’s father’s consent of the adoption is not necessary here b/c he never
recognized her in any manner. (but the law requires parent’s consent although
the child is physical custody of another b/c to arrange the adoption of their
child is an exclusive authority.) But her aunt’s relation with her is not a legal
custodian relation but merely a family obligation, so her aunt has no authority
to enter into the adoption K with Cook (neither does the relatives consent to
the K), so the K is invalid.
* Dissenting opinion: (p.112) where the child has fully performed the alleged K
over the course of many years or a lifetime and can sufficiently establish the
existence of the K to adopt, the K should be enforce regardless that the person
who consented to the adoption has no authority to do so. Reasons follow.
(p.112) (the policy of the requirement is to protect the child, but to strictly
apply it damages the policy) (p.113-14: if the foster parent performed the K, 3
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although there is no formal K, their performance estopped them to deny the
adoption, therefore the child can inherit from them.)
c. Nonmarital Children, p. 115-17
Children born out of wedlock could inherit from mother, but the rule respecting inheritance
from father vary from state to state. (argument: discriminate against nonmarital child).
The rule to inherit from father: p.115-17
2. Share of Descendants, p. 86-90 and review handout
After the spouse’s share is set aside, the children and the issue of deceased children take the
remainder of the property to the exclusion of everyone else. When one of several children has died,
before the decedent, leaving descendants, all states provide that the child’s descendants shall
represent the dead child and divide the child’s share among themselves (take by representation). Son-
in-law and daughter-in-law are excluded as intestate successors in all states.
I. Per Stirpes (SP) (Strict per stripes)
II. Per Capita with Representation (PCR) the modern American approach
III. Per Capita at each generation (PCG) the UPC approach, equally near, equally dear.
* note: Negative Disinheritance: UPC§2-101(b) authorize a negative will, the barred heir is treated as
if he disclaimed his intestate share, which means he is treated as having predeceased the intestate.
D. Ascendants and Collaterals (祖先和旁係)
1. Share of Ascendants and Collaterals, p. 90-96
When the intestate is survived by a descendant, the decedent’s ancestors and collaterals do not take.
But when there is no descendant, after deducting the spouse’s share, the rest of the intestate’s
property is usually distributed to the decedent’s parents, as under the UPC. And if there is no spouse,
parent or descendant, the decedent’s heir will be more remote ancestors or “collateral kindred” (all
persons who are related by blood to the decedent but who are not descendants or ancestors) and in all
states intestate property passes to brothers and sisters and their descendants; the descendants of any
deceased brothers or sisters (nephews and nieces) take by representation in the same manner as
decedent’s descendant.
* “laughing heirs”: UPC §2-103, it does not permit inheritance by intestate succession beyond
grandparents and their descendants. (but some legislatures have moved to the opposite direction, ex,
permitting stepchildren and kin of a predeceased spouse to inherit when the decedent leaves no blood
relatives, ex: CA)
2. Review Problems, handout
F. Special Issues Regarding “Half-Bloods,” p. 96-97
In a large majority of states, a relative of half-blood (hb) is treated the same as a relative of the whole-blood.
This is the position of UPC§2-107. a few states where a hb Is given a half share (Virginia); few others, a hb
takes only when there is no other wb relatives on the same degree (Oklahoma).
E. Advancements (生前贈與), p. 128-31 UPC§2-109 (p.130)4
Trust &Estate by Rosenbury 2005
At common law, any lifetime gift to a child was presumed to be an advancement, a prepayment of the child’s
intestate share. This is based on the presumption that the parent would want an equal distribution of assets
among the children and that true equality can be reached only if lifetime gifts are taken into account in
determining the amount of the equal shares. This presumption has been changed in some states, where a
lifetime gift is presumed not to be an advancement unless it is shown to have been intended as such.
- to avoid this doctrine, the child has the burden of establishing that the lifetime transfer was intend ed as an
absolute gift that was not to be counted against the child’s share of the estate.
- if the child predeceases the parent, the amount of the advancement is deducted from the shares of his/her
descendants, if other children of the parent survive.
* Transfer of expectancy (p.130): the expectancy is not an interest at all, therefore, can not be transferred at
law. However a transfer may be enforceable in equity as a K for an adequate consideration.
G. Special Issues Regarding Transfers to Minors, p. 132-34
A minor doesn’t have legal capacity to manage property, therefore needs a guardian. 3 alternatives for
property management are: guardianship (conservatorship), custodianship, and trusteeship.
H. Bars to Succession, p. 141-57 and handout
1. Homicide: In re Estate of Mahoney: in the sate of Vermont, may a widow convicted of manslaughter in
connection with the death of her husband inherit from his estate? NO.
A person who has killed another id prevented from taking by descent or distribution from the person he has
killed. No one should be permitted to profit by his own fraud or take advantage and profit as a result of his
own wrong or crime. Therefore, the legal title passed, but it was subjected to a constructive trust, and the
equity hold the wrongdoer to be a constructive trustee and compel him/her to convey the property to the
heirs or next of kin of the deceased.
- One who has killed while insane is not chargeable as a constructive trustee.)
- The principle is that the slayer should not be permitted to improve his position by the killing. But, he
should not be compelled to surrender property to which he would have been entitled if there had been no
killing. The doctrine of constructive trust is involve to prevent the slayer from profiting from his crime
(prevent the unjust enrichment) but not as an added criminal penalty.
* UPC§2-803, bars the killer from succeeding to non-probate as well as probate property, “a wrongful
acquisition” of property must be treated in accordance with the principle that a killer can not profit from
his wrong. The killer is treated as having predeceased the victim, the UPC provides that the killer is treated
as having disclaimed the property, and under §2-801, the disclaimant is treated as having predeceased the
decedent.
2. Disclaimer: Troy v. Hart (read the study aid p.35)
The common law treat the heir who disclaim the inheritance as if title had passed to the heir and then from
the heir to the next intestate successor. And the disclaimant is treated as predeceased the decedent (UPC§2-
801) §2the advantage of this are saving estate tax and avoiding creditors.
I. Review Problems, handout5
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III. Attempting to Manifest Intent: Wills (or Testate Succession)
A. Executing Wills
1. Testamentary Capacity
a. Mental Capacity, p. 159-65
In re Strittmater: the will that is the product of the decedent’s insanity is not valid.
*R easons for the requirement of mental capacity : ①the will should be given effect only if
it represents the T’s true desires. ②a mentally incompetent person is not definded as a
“person” in a legal sense. ③to protect the decedent’s family. ④to protect the decedent
himself carry out his true intent incase he becomes insane later and executes another will
produced under insanity. ⑤to protect the society at large from irrational acts. ⑥protect a
senile or incompetent T from exploitation by cunning persons (undue influence).
*The test of mental capacity: the T has to have the ability to know: ⑴ the nature and extent
of the T’s property. ⑵ the person who are the nature objects of the T’s bounty. ⑶ the
disposition the T is making. ⑷how these elements relate so as to form an orderly plan for
the disposition of the T’s property.
- The T must have mine and memory relevant to the 4matters, T must understand the
significance of his act. Testamentary capacity cannot be destroyed by showing a few
isolated acts unless they directly bear upon and have influenced the testamentary.
- capacity to execute a will requires less competency than the power to make a K or gift,
therefore a person has been declared incompetent and put under conservator has the
capacity to produce a valid will if during a lucid interval.
- Marriage require less mental competency then to make a will. (p.165)
- To draft a will for an incompetent person is a breach of professional ethics. The lawyer
however can rely on her own judgment regarding the client’s capacity.
b. Insane Delusion, p. 165-75
This is a legal concept refers to a false conception of reality, ex: involved the false believe
of a family member therefore to disinherit him. A man has insane delusion is not
necessarily mentally incapable. Only the part of the will caused by the ID failed.
In re Honigman: a man was obsessed by the suspicion that his wife is unfaithful. (p.42)
* an insane delusion is a belief not susceptible to correction by presenting the testator with
evidence indicating the falsity of the belief; a mistake is susceptible to correction if the
testator is told the truth. A will in mistake is valid to probate. (p.173, 2)
c. Undue Influence
i. Introduction, p. 175-84
To be undue influence in the eye of the law must be “coercion”, can be many ways
even though not actual violence. The Ct. develops the elements to examine,
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which are: ①the T was susceptible, ②the influencer had the disposition and the
opportunity to exercise UI, ③the disposition is the result of the influence.
But we still have to look into the case to determine what influence is undue.
Lipper v. Weslow: (aid P.44) the test of undue influence: whether such control was
exercised over the mind of the testatrix as to overcome her free agency and free
will and to substitute the will of another so as to cause the testatrix to do what she
would otherwise have done but for such control. The person with sound mind has
the legal right to dispose of his property as he wishes, even it’s an unusual
disposition. Those attacking the disposition have the burden to prove that it was
the product of undue influence.
the rule of undue influence applies when (1) a personal in a confidential relationship (2)
receives the bulk of the T’s property (3) from a T in the weakened intellect, the burden
of prove is shift to the person occupying the confidential relationship to prove
affirmatively the absence of undue influence.
If the part of the will id the product of UI, those part may be stricken and the remainder
is allowed to stand if the invalid part can be separated w/o defeating that T’s intent.
No contest clause: designed to discourage will contests but will defeat the safeguards
ex: “fraud”, “forgery”, “undue influence”… built around the testamentary dispoisition
of property. UPC: “probable cause rule”: the no contest clause will be enforce unless
there is a probable cause to contest.
ii. Bequests to Attorneys, p. 185-87
In NY, the surrogate must investigate any bequest to the attorney who draft the will.
In CA, invalidate any bequest to a lawyer who draft the will unless the lawyer is related
by blood or marriage to the testator.
iii. Sexual Relationships, p. 188-97
In re Will of Moses: sexual relationship with younger attorney for 7 years (occupying the
confidential relationship). Devising all her property to him drafted by another
lawyer not telling him.
d. Fraud & Tortious Interference, p. 213-22
Fraud occurs where the T is deceived by a misrepresentation and does that which the T
would not have done had the misrepresentation not been made, it is usually said that the
misrepresentation must be made with both the intent to deceive the T and the purpose if
influencing the testamentary disposition. That portion in the will procure from the fraud
is invalid. If the will been probated, the Ct. may use equity power to impose a
constructive trust on the wrongdoer.
- Fraud in the inducement: when a person misrepresent facts thereby causing the T to
execute or not to execute a will, including particular provisions in the wrongdoer’s favor,
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to refrain from revoking a will. (no intent to fraud but later change mind, the victim may
recovered on the theory of “secret trust”)
- Fraud in execution: a person misrepresent the will for T to sign.
* Tortious Interference with expectancy: a tort action for tortuous interference with an
expectancy is not a will contest (therefore a no-contest clause is not applied here). It
doesn’t challenge the probate or validity of a will but rather seeks to recover tort damages
from a 3rd party for tortuous interference. Punitive damage may be recovered.
e. Review of In re Vickie Lynn Marshall (Day 1)
2. Statutory Requirements
a. Attested Wills
i. Writing/Signature/Publication, p. 223-27
Formal requirements of executing a will: To prove there is an intentional exercise
of the power to determine the successors in ownership, the Ct. needs to be
convinced that the statement of the transfer was deliberately intended to
effectuate a transfer. Therefore for the purpose of the requirement of transfer
①there should be a ceremonial, and the term for this is “ritual function”. And ②
an “evidentiary function” for the proof presented to the Ct., and ③ to safeguard
the T at the time execution the will against UI or other forms of imposition, there
is a “protective function”. The requirement see UPC§2-502.
ii. Witnesses, p. 227-42
In re Groffman: the T should sign in front the witnesses or acknowledge the
signature in front of them. And the witnesses has to sign in presence of each
other, has to present at the same time (English and some jurisdiction in the U.S
approach, stricter then UPC), fail to meet the requirements, the will is not validly
attested. Some other circumstances described in p.234-36
Estate of Parsons: witnesses and also beneficiaries in the will. (CA probate code
§51: a gift to subscribing witness is void unless there are two other and
disinterested subscribing witness to the will) A subsequent disclaimer is
ineffective to transform an interested witness into a disinterested one b/c §51
looks solely to the time the will executed, and the propose of §51 is to protect the
T for UI and fraud at the very moment the T execute the will.
Here when there is no other two disinterested witnesses in the will, the witness’s
interest is void, so she has no interest to disclaim. (CA had adopted UPC§2-505)
iii. Execution/Proof/Safeguarding, p. 242-47
See the in class notes. Which law governs? The state of domicile and the land.
But if carefully draft the will, can avoid the problem of applying which state law.
The T ’ s declaration that the instrument is his will is called “ publication .” An
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UPC§2-505: (a) any person generally competent to be a witness to a will (b) a will or any provision thereof is not invalid because the will is signed by an interested witness. (broader view)
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“attestation clause” is important b/c it proves that the will being duly executed.
“self-proving affidavit” typed at the end of the will, swearing before the notary public
that the will has been duly executed and then signed by the T and the Ws in front the
notary public who in turn signs and attaches the required seal. This is to prevent a
situation that the W is dead, and no one can testify the will. The will is valid w/o the
affidavit, but it makes it easy to probate the will. (UPC§2-504)
Self-guarding a will : to keep the will n safe place. (p.246-47)
iv. Curing Mistakes, p. 247-62 and handout
In re Pavlinko ’ s Estate : H and W signed the will of each other but themselves’, the
lawyer and his secretary were the witnesses. The will can’t be probated as H’s
will, b/c it is not signed by H clearly and unambiguous. if the Ct. open the door
for rewriting the will for equity, there will be countless fraudulent claims, and
the will act will be nullity. (Dissenting: T’s intent should be counted, H and W’s
wills are complementary of each other, and it’s the lawyer’s fault.)
In re Will of Ranney: the signatures of two witnesses on an attached self-proving
affidavit but not the will itself (b/c the attested clause for witnesses had been
omitted. This page is on the bottom of the will but neither numbered nor
attached, the attorney and a notary public are witnesses.
Self-proving affidavits and attestation clauses, although substantially similar in content,
serve diff. functions: Spa, are a sworn statements by eye witnesses that the will has been
duly executed. The Spa performed virtually all the functions of an Ac, and has the
further effect of permitting probate without requiring the appearance of either witness.
Ac, facilitate probate by proving an evidence that the T voluntarily signed the will in the
presence pf the witnesses. Which also permits probate of a will when a witness forgets
the circumstances of the will’s execution, or die before the T.
It would be ironic to insist on literal compliance with statutory formalities when that
insistence would invalidate a will that is the deliberate and voluntary act of the T, such a
result will frustrate rather than further the purpose of the formalities.
Accordingly, if a witness, with the intent to attest, sign a Spa, but do not sign the will or
the an Ac, clear and convincing evidence of their intent should be adduced to establish
substantial compliance with the statute.
b. Unattested Wills, p. 262-76 and handout
Holographic will: a will written by the T’s hand and signed b the T; attesting witnesses are not
required. Requirements for HW vary form state to state. A holographic will may be
presented by a lot of forms, not merely written on the paper.
In re Estate if Johnson: the statutory requirement that the material provisions be draw in the T’s
own handwriting requires that the handwritten portion clearly express a testamentary
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Correcting mistake in the will, the recent movement, see p.427-438
A substantial compliance doctrine: a harmless error in executing a will may be executed if the proponent establishes by cleat and convincing evidence that the decedent adopted the document as his/her own will.(dispensing power)
Trust &Estate by Rosenbury 2005
intent. If the portion not in handwriting is essential to the testamentary disposition, the
will can not be probated. Here the mere fact that the T used a blank form, if the printed
words maybe entirely rejected as surplusage, then the will can be valid. UPC§2-502 (c)
(p.227): testamentary intent can be established for a holographic will by looking at the
portions of the document that are not in the T’s handwriting; the official comment: the
holographs may be written on a printed will form if the material portions of the document
are handwriting. (statutory form wills p269)
Kimmel ’ s Estate : (conditional will: “if something happen…” p.274, can be probated) a letter
containing some testamentary provisions can be probated as a holographic will. b/c the
word containing in the letter strongly support the testamentary intent. (p.273)
c. Review Problems, handout
B. Will Components
Two doctrines that permit extrinsic evidence to resolve the identity the will beneficiaries or property passing
under the will, which makes it possible that those documents or acts not executed with testamentary
formalities can be used to have the effect. These are ⑴ the doctrine of incorporation by reference and
⑵ the doctrine of acts of independent significance. (These 2 doctrines shouldn’t be confused with the
doctrine of integration of wills and the doctrine of republication by codicil.)
1. Integration of Wills, p. 301-02
Will which not written in several papers, all papers should be present at the time of executed, the
paper intended to be a part of the will, should be integrated into the will. Thus, which sheets of paper
present at the time of execution, comprise the testator’s duly executed will?
-the will is stabled or ribboned by which the pages of the will are physically connected.
-sufficient connection of the language carrying over from page to page.
-lawyers can prevent from any problems from arising under the integration of the will doctrine by
making sure that the will is fastened together before the testator signs and by having the testator
sign or initial each numbered page of the will for identification.
2. Republication by Codicil, p. 302-03
When codicil, the will is treated re-executed (“republished”), it’s the update of the original will. Ex:
1st will is revoked by a 2nd will, but then a codicil of the 1st will is executed, the 1st will is republished
and thus the 2nd will is revoked by implication (“squeezed out”). Only when updating the will carry
out the testator’s intent is this doctrine applied.
※the difference b/w “republication by codicil” and “incorporate by reference” are”
-RC: only applies to a prior validly executed will,
-IR: applies to the instruments that have never been validly executed (unattested) and to be
incorporated into a will.
Few jurisdictions don’t recognize the IR doctrine, ex: NY, general doesn’t permit IR but the
codicil can republish and thereby give testamentary effect to a will that was invalid b/c of mental
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incapacity or undue influence (should be duly executed with required formalities.) But a codicil
can’t republish an instrument never duly executed with the required formalities.
3. Incorporation by Reference, p. 303-18 and handout UPC§2-510,
Clark v. Greenhalge: a specific, written bequests of persona; property contained in a notebook that
was maintained by a decedent, can be incorporated by reference into the terms id tat person’s
will. “a properly executed will may incorporate by reference in to it’s provisions and document
or paper not so executed and witnessed, whether the paper referred to be in the form of …a mere
list or memorandum,.., if it was in existence at the time of the execution of the will, and is
identified by clear and satisfactory proof as the paper referred to therein.
- this IR doctrine is not recognized in NY, Connecticut, Louisiana.
Johnson v. Johnson: UPC§2-513 (p.311): a valid holographic codicil can be used to republish and thereby
give effect to an unexecuted non-holographic will. (Study aid p.79)
4. Acts of Independent Significance, p. 318-19
If the beneficiary or property designations are identified by acts or events that have a lifetime motive and
significance apart from their effect on the will, the gift will be upheld under the doctrine of acts
of independent significance (also called the doctrine of nontestamentary acts)
UPC (1990) 2-512 EVENTS OF INDEOENDENT SIGNIFICANCE
A will may dispose of property by reference to acts and events that have significance apart from their effect
upon the dispositions made by the will, whether they occur before or after the execution of the
will or before or after the testator’s death. The execution or revocation of another individual’s
will is such an event.
5. Review Problems, handout
C. Will Construction
1. Admission of Extrinsic Evidence
a. Mistakes in Drafting, p. 409-14
Mahoney v. Grainger: EE can’t be presented to try to prove the T’s intent in the will.
The will must be construed as it came from the hand of the T. mistakes in the drafting of
the will may be of significance in some circumstances in a trial as to the due execution
and allowance of the alleged testamentary instrument. It is only when testamentary
language is not clear in its application to facts that evidence may be introduced as to the
circumstances under which the T use that language in order to throw light upon its
meaning.
* personal usage exception: if the EE shows that the T always referred to a person in an
specific manner, the evidence is admissible to show that the T meant someone other than
the person with the legal name of the legatee.
* the plain meaning rule (no EE rule) had been critized.
b. Ambiguity, p. 417-27 and handout11
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Estate of Russell: Roxy the pet dog. EE is allowed to resolve the ambiguity (EE is
admissible “to explain any ambiguity arising on the face of a will.)
c. Correcting Errors, p. 427-38 and handout
Erickson v. Erickson (supreme Ct. of Conn. 1998) the EE should be admissible to establish the T’s
true intent. (p.432-434 blue mark)
2. Changes in Condition/Status of Beneficiaries, p. 438-58
Death of beneficiary before the death of testator:
3. Changes in Property, p. 459-69
4. Review Problems, handout
D. Revoking Wills
1. Revocation in Entirety
All states permit revocation of a will in 1 of 2 ways: (1) by a subsequent writing executed with
testamentary formalities, or (2) by a physical act such as destroying, obliterating, or burning the will.
Oral revocation is inoperative in all states for the assumption that that would open the door for fraud.
If a duly executed will is not revoked in a manner permitted by statute, the will is admitted to
probate.
UPC (1990) §2-507: Revocation by writing or by act: (a) A will or any part thereof is revoked:
(1)by executing a subsequent will that revokes the previous will or part expressly or by
inconsistency; or (2) by performing a revocatory act on the will, if the testator performed the act with
the intent and for the purpose of revoking the will or part or if another individual performed the act in
the testators conscious presence and by the testator’s direction. For purpose of this paragraph,
“revocatory act on the will” includes burning, tearing, canceling, obliterating, or destroying the will
or any part of it. A burning, tearing, or canceling is a “revocatory act on the will,” whether or not the
burn, tear, cancellation touched any of the words on the will.
a. By Subsequent Instrument, p. 276-77 and handout
Revocation by inconsistency: a subsequent will wholly revokes the previous will by inconsistency if
(1) the testator intends the subsequent will to replace rather then supplement the previous will, and
(2) if the subsequent one doesn’t expressly revoke it but makes a complete disposition of the
testator’s estate is presumed to replace it and revoke it by inconsistency, and (3) if not makes a
complete disposition, it is viewed as a codicil supplements a will rather than a replacement of
revocation. [UPC(1990) §2-507 (b)-(d)]
b. By Physical Act, p. 277-84
Harrison v. Bird:
F act: Harrison is the beneficiary of Speer’s will in 11/89, and Speer wanted to revoke her will in 3/4
1991, her attorney and his secretary tore the will into 4 parts in front of each other, then sent the
remainder to Speer with a letter states that she was without a will. After her death, the probate Ct
found the letter but not the 4 pieces of torn will, it ruled in accordance to the cousin, Bird. The circuit
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Ct. ruled (1) that the will was not properly revoked because the attorney didn’t destroyed the will in
her presence and (2) there could be no ratification of the destruction of Speer’s will for not meeting
the requirements of the Alb. probate code §43-8-136(b) and (3) the pieces delivered to Speer was not
found after her death, could form an assumption that she revoked the will herself thereafter.
Therefore, the duplicate will possessed by Harrison was not the last will and testament of Speer. It
held that the estate should be administrated as an intestate estate and confirmed the letter of
administration issued by the probate Ct. to Ms. Bird. Supp. Ct.: if the evidence establisjes that Speer
had possession of the will before her death, but the will is not found among her personal effects after
her death, a presumption arises that she destroyed the will. Furthermore, a presumption arises that she
revoked her will and all duplicates even though a duplicate exists that is not in her possession.
However the presumption is rebuttable and the burden of rebutting the presumption is on the
proponent of the will. Here, the evidence Bird provide is not sufficient to rebut the presumption,
therefore affirmed the decision.
Note: Probate of lost wills: In the absence of statute, a lost will (or destroyed w/o the consent of the
testator , or with the consent of T but not in compliance with the revocation statute) can be admitted
into probate if it’s contents are proved.
In a few states, there are statutes that prohibit the above to probate unless the will was “in existence”
at the T’s death (and destroyed thereafter) or was “fraudulently destroyed” during the T’s life. But
this will in conflict with the state revocation statute (a will not legally revoked is barred from
probate.) The solution the Ct. held is, either the will not lawfully revoked continues in “legal
existence” until the T’s death or that a will destroyed by a method not permitted by the will
revocation statute has been “fraudulently destroyed.”
Thompson v. Royall
F act : the will of 9/4 1932 and the 9/15 1932 codicil were dully attested but possessed by different
person. And in 9/19, she decided to destroyed both but by the advice of her attorney, she retain them
and added the notion of “as a memorandum for another will if I desire to make same” on both doc.
and signed and possessed by only one person. After she died, her heirs and beneficiaries came to
probate the will.
Issue: whether the will of Mrs. Kroll had been revoked shortly before her death.
A nalysis : the effect revocation should meet (1) the doing of one of the acts specified, (2)
accompanied by the intent to revoke. This didn’t meet the statuary requirements of a certain act to
carry out the intent, “some writing declaring that an intention to revoke”: not her writing, only her
signature, and there is no physical evidence of cutting, burning, tearing, obliterating, canceling, or
destroying. If merely write on the margin or the back is not enough consisting the revocation of the
will, the writing itself should touch the writing of the will to consist physical destroy (revocation) and
with the intent to revoke. Therefore the will is ineffectual b/e T intended to revoke her will by the
writings not meet the statutory requirement and b/e not meet the requirement of physical action to any
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writing part of the will.
Note: if use UPC(1990) §2-507 provide “whether or not burned… touched any words on the
will.” The words need not be touched but however need to be written on the same document.
c. By Operation of Law, (changing in family circumstances) p.298-300
Divorce can revoke any provisions in the decedent’s will for the divorced spouse (treats the divorced spouse
as having predeceased the testator) in very few states and in most of the states revocation occurs
only if divorce id accompanied by a property settlement. These revocation statues only applied to
wills not to other non-probate transfers.
UPC(1990) §2-804 (p299) applies to non-probate transfers as well as to wills. (the term “governing
instrument” means a deed, will, trust, insurance or annuity policy….
2. Partial Revocation, p. 284-85 and handout
While UPC(1990) §2-507 and the statute of many states authorized partial revocation by physical
act, several states can only revoke partial will by a subsequent instrument. And there are 2 reasons
for that: ① canceling a gift to one person necessarily results in sth/one else taking the gift, and this
new gift, like all bequests, can be made only by an attested writing. And ② permitting partial
revocation by physical act offers opportunity for fraud. b/e the one who takes the new gift might be
that one who made the canceling mark.
And if partial revocation by act is not recognized, the will must be admitted to probate in the form In
which it was originally executed if the original language can be ascertained.
3. Dependant Relative Revocation, p. 286-96
If the testator purports to revoke his will upon a mistaken presumption of law or fact, the revocation is
ineffective if the testator would not have revoked his will had he known the truth. This doctrine is
applied to carry out the T’s true intent. Ex, the T destroys his will under a belief that that a new will
is valid but for some reason it is invalid, if the Ct. find that the T would not have destroyed his will
had he known the new will was ineffective, the Ct, applying the doctrine of dependent relative
revocation, will cancel the revocation and probate the destroyed will.
Carter v. First United Methodist Church of Albany
F act:
R ule:
Estate of Alburn:
4. Revival, p. 296-98
5. Review Problems, handout
E. Restrictions on the Power of Disposition: Family Protection
1. Protection of the Spouse
a. Introduction to marital property system, p. 471-73
There are two basic martial property system exist, the system of separate property and the
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system of community property. And the differences are:
‧ The system of separate property (common law system) the husband and wife own
separately all property each acquires (except those items one spouse has agreed to put into
joint ownership with the other). Under this system, whatever the worker earns is his/hers,
there is no share of earnings therefore, if one spouse works at home while the other one is the
wage earning spouse, the later one will own all the property acquired during marriage (other
than gifts or inheritances from relatives or gifts by the wage earner to the homemaker).
Then here is the ISSUE: what protection against disinheritance should be given the
surviving spouse who works in the home or at a low-paying job? Almost all states adopt this
system answer this question by giving the living spouse , by statute, an elective (or force)
share in the estate of the deceased spouse. And the elective share is not limited to a share of
property acquired with earnings, however it is enforceable against all property owned by the
decedent spouse at death.
‧ The system of community property (adopted by Arizona, CA, Idaho, Louisiana, Nevada,
New Mexico, Texas, and Washington, and Wisconsin) where the husband and wife own all
acquisitions from earnings after marriage in equal undivided shares, which is, all earnings if
the spouses and property acquired from earnings are community property. The death of one
spouse dissolves the community. The deceased spouse owns and has testamentary power only
over his/her one-half community share.
But the property acquired before marriage and acquired during marriage by gift, devise,
or descent is the acquiring spouse’s separate property.
‧ Therefore, under the separate property system, if the one who has no earnings during the
life, he/she has nothing to dispose if he/she dies first. On the contrary, the community system,
the one who dies first can dispose his/her half of the community property by will.
‧ Alaska enacted a statute permitting married couples to elect to hole their property as
either community property or separate property.
b. Rights of Surviving Spouse to Support, p. 473-80
i . Social security : under social security system the retirement benefits are paid to a
worker and his/her surviving spouse. It thus incorporates the principle of
community property that the benefits of earnings should be shared by husband
and wife. The benefits can shift to spouse but not to others.
ii . Private pension plan : This is funded by employers or jointly funded by employer and
employee contributions mushroomed in the twentieth century. It requires that the
spouse of an employee must have survivorship rights if the employee predeceases
the spouse. The purpose is to insure a stream of income to surviving spouse. If the
employee spouse survives to retirement age, the pension paid must be paid as a
joint and survivor annuity to the employee and his/her spouse. Unless the non-
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employee spouse contents to some other form of payment and the pension is
vested, the surviving spouse must be entitled to a pre-retirement survivor
annunity.
iii . Homestead : UPC§2-402(1990). The Homestead law (probate homestead) was
decided to secure the family home to the surviving spouse and minor children,
free of the claims of creditors. The decedent has no power to dispose of a
homestead so as to deprive the surviving spouse of statutory rights therein. The
right to occupy the homestead is given in addition to any other rights the
surviving spouse has in the decedent’s estate.
iv . Personal property set-aside: UPC§2-403(1990). Related to Homestead is the right of
surviving spouse to have set aside to a certain tangible personal property of the
decedent up to a certain value. This is usually subject to several conditions and
limitations, but if these are met, the decedent usually has no power to deprive the
surviving spouse of the exempt items.
v . Family allowance: §2-404(1990). Every state has a statute authoring the probate Ct. to
award a family allowance for maintenance and support of the surviving spouse
(and often dependent children) the allowance may be limited by the statute to a
fixed period or it may continue after the will been contested or for the entire
period of administration. The “allowance”, as with the “homestead” and “personal
property set-aside”, is in addition to whatever other interests pass to the surviving
spouse.
vi . Dower:
1. At common law, a widow had dower in all land of which her deceased husband
had been seized during marriage and it is inheritable by the issue of the Hand W.
Once dower has attached, the H can’t sell the land free and clear of the wife’s
dower interest. No purchaser, bona fide or not, can cut off the W’s dower w/o her
consent. Dower functions today primarily to make the signatures of both spouses a
practical requirement to the sale of one spouse’s land.
2. At common law, a H had a support interest in his wife’s land, called curtesy. It
is comparable to dower except 2 points (p.479).
3. There are only 5 jurisdictions still recognize “dower”, where the surviving
spouse must elect to take dower, or to take a statutory share of the decedent’s
estate, or to take a share under the decedent’s will. As the statutory elective share
is almost always greater than dower, dower is rarely elected.
c. Rights of Surviving Spouse to Elective Share
i. Rationale, p. 480-84
All separate property system states except Georgia (is the only separate property
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state w/o an elective share statute) give the surviving spouse, in addition to any
support right mentioned above, a share in the decedent’s property. The policy is
that the surviving spouse contributed to the decedent’s acquisition of wealth and
deserves to have a portion of it, and this policy was carried out by statutes giving
the surviving spouse an elective share (forced share) of the decedent’s property.
The spouse can take under the decedent’s will or can renounce the will and take
a fractional share of the decedent’s estate.
In a few states, the elective share is limited to a life estate in one-third or one-half of the
decedent’s estate.
UPC(1990)A rticle 2 “ elective share of surviving spouse, general comment: partnership theory of
marriage:
The basic principle in common law states (title-based) is the marital
status does not affect the ownership of the property. The regime is one of
separate property, in which each spouse owns all that he or she earns. By
contrast, in the community-property states, each spouse acquires an ownership
interest in half the property the other earns during the marriage. By granting
each spouse upon acquisition an immediate half interest in the earnings of the
other, the community-property regimes directly recognize that the couple’s
enterprise is in essence collaborative.
The common-law states, however also give effect to the partnership theory when a marriage
is dissolved by divorce. When divorced, a spouse who sacrificed his or her
financial-earning opportunities to contribute so-called domestic services to the
martial enterprise stands to be recompensed under the equitable-distribution
system.
The typical elective-share law in common-law states, including the that provided by the pre-
1990 UPC, a surviving spouse may claim a one-third share of the decedent’s
estate, not the one-half share of the couple’s combined assets hat the partnership
theory would apply.
ii. Property Subject to elective share, p. 500-13
The original elective share statutes gave the spouse a fractional share of the
decedent’s estate, which implicitly meant probate estate. With the proliferation of
non-probate transfer, the Q arises whether the elective share should be extended to
some or all non-probate transfers.
(1) Judicial Decisions:
Sullivan v. Burkin: Change rule
Issue: Whether (the W’s claim was simply that) the inter vivos trust was an
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invalid testamentary disposition and that the trust assets “constitute assets of
the estate” in which P has right.
Analysis: If the W is right that the trust was an ineffective testamentary
disposition, the trust assets would be part of the H’s probate estate. In that
event, we would not have to consider ant special consequences of the W’s
election under Mass law.
Conclusion: The trust was not testamentary in character and that the H
effectively created a valid inter vivos trust. Because:
1. The inter vivos trust is valid though it was testamentary. A trust is not
testamentary and invalid for failure to comply with the requirements of the
statute of wills merely b/e the settler-trustee reserves a beneficial life
interest and power to revoke and modify the trust. A trustee controls the
administration of the trust does not invalidate it.
2. Even if the trust was not testamentary on general principles the widow has
special interests which should be recognized.
(2) Uniform Probate Code
iii. Waiver: p. 517-21 & handout
d. Rights to Community Property, p. 521-25
1. basic information
8+1(Wis. Adopted UMPA, providing for CP under the name of marital property.) states
are CP states. And Alaska permits spouses to elect CP rather than SP is they so choose.
‧ CP in the U.S is a community of acquests. H &W own earnings and acquisitions from
earnings of both spouses during marriage in divided shares. All property that is not CP is
SP, of one spouse, but when in the case of tenancy in common or joint tenancy, is the
separate property of both.
‧ SP includes property acquired before marriage and during marriage by gift or inheritance.
‧ CP states: Income from SP is CP (Ida. Loui. Tex. UMPA, other CP states, income from
SP is SP.) whenever the characterization of the property is doubtful, the strong
presumption is that the property is CP.
‧ To avoid problem, couples can make agreement regarding the character of their
property. They may change CP into SP or reverse by agreement, or may change CP into a
joint tenancy, a tenancy in common, or sole ownership of one spouse. And they can agree
that all their properties is CP to achieve favorable income tax.
‧upon the death of one spouse, the deceased spouse can dispose of his/her half of the CP
which may be devised to whomever the deceased pleases, the same as SP. Tthe surviving
spo. owns the other half, which is not subject to testamentary disposition by the deceased
spo.
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‧ In CP raises problems as to which spouse to manage the property. States ordinarily
require both spouses to join in transfers or mortgages of community real property. Ex:
when H buys a life insurance with his earning during marriage but names A as
beneficiary, upon H’s death, the W’s right in the policy proceed? - CA, During H’s life,
W is entitled to set aside an entire gift and reclaim the property for the community. But
after death, W is entitled to set aside the gift to the extent of one-half. b/e a gift by H
during life of CP is treated as if it were a devise by H of his half share.
- TEX, the manager of the CP can make reasonable gift to others, but excessive gifts are
deemed in Fraud of the other spouse’s right. If it found so, the non-manager is entitled to
half the policy proceed.
- Other CP states divided b/w CA. and TEX.
2. P utting the survivor to an Election:
“Widow election” in CP states is applicable to widows and widowers nowadays, which
refers to when one of the spouse is the manager of CP (p.524-525)
e. Multi-State Couples, p. 525-30 and handout
‧ The conflict-of-law rules used to determine which state law governs material property
are: (a) The law of the situs controls problems related to land. (b) The law of the marital
domicile at the time personal property is acquire controls the characterization of the
property (that is, as separate or community). (c) The law if the marital domicile at the
death of one spouse controls the survivor’s martial rights.
‧ Although the state of the situs has the power to control it’s land, it may choose to apply
the law of the marital domicile. (UPC§2-202). Therefore, the right of a spouse to an
elective share in land located in the state shall be governed by the law of the decedent’s
domicile at death.
a. Moving from SP state to CP state:
Problem about the fairness of the surviving spouse arises.
The movable property: the ownership of movable property is determined by the law of the
state where the couple is domiciled when the property is acquired. When they in SP state,
all the property earned by H belongs to H and W is protected by the elective share, but
when move to CP state and continue to domicile in that state, property remains H’s as H’s
SP. BUT when H “dies,” the law of the state of domicile at the date of death governs the
disposition of movable property. But when neither spouse works in the CP state, there
maybe no CP for the surviving spouse. And the W lost her selective share protection and
is not protected in the CP. Therefore the law provides a remedy, “quasi-CP” in which
upon the death of the acquiring spouse, one-half of the quasi-CP belongs to the survivor
(the quasi-CP was treated as SP during life). The other half is subject to testamentary
disposition by the decedent. If the non-acquiring spouse dies first, she has no testamentary
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power over it.
b. Moving from Cp state to SP state: The moving doesn’t change the preexisting property
right of the H or W. CP continues to be CP when move to a SP state. (the UDCPRDA
applied in SP states, which says that CP brought into SP states and all property (including
land in the state) traceable to CP remains CP for the purpose of testamentary disposition.
Unless the spouse agree to convert into SP) CP brought into SP state is not subject to
elective share.
f. Premarital Wills, p. 530-37
Estate of Shannon:
g. Review Problems, handout
2. Protection of Children
a. Intentionally Disinherited, p. 536-37, 550-51
b. Pretermitted Child Statutes, p. 537-50
IV. Trusts
A. Testamentary versus Inter Vivos Trusts
1. Overview, p. 351-52, 358-61, 386-96, 553-56
1. Revocable trusts: introduction: a revocable trust inter vivos trust is the most flexible of all will substitutes b/c the
donor can draft the dispositive provisions and the administrative provisions precisely to the donor’s liking. Typical
revocable inter vivos trust involving a deed of trust, the trust settler transfers legal title to property to another person
as trustee pursuant to a writing in which the settler retains the power to revoke, alter, or amend the trust and the
right to trust income during lifetime. On the settlor’s death, the trust assets are to be distributed to or held in further
trust for other invalid unless executed with testamentary formalities.
A trust is a management relation whereby the trustee manages property for the benefit of one or more beneficiaries.
The trustee holds legal title to the property and , in the usual trust, can sell the trust property and replace it with
property thought more desirable. The trustee owes fiduciary duties to the beneficiaries, including loyalty to them
and prudence in investments. If the trustee breaches one of these duties, the trustee is personally liable to the
beneficiaries. We call the beneficiaries’ interest in a trust “equitable title” b/c an equitable interests on beneficiaries
enforceable against the trustee who has legal title. The trustee can be one of the beneficiaries of the trust, if however
the trustee is the sole beneficiary, the legal titles merge, leaving that person with absolute legal title. There is no
trust, b/c the trustee owes no fiduciary duty to the anyone except himself. The Q is, does the settlor owe any
fiduciary duty to anyone (or created any equitable interesting anyone) other then himself? If not, there is no trust,
the settlor remains the absolute owner of the property.
When an individual manifests an intention to create a trust in property to be acquired in the future, and thereafter
confirms this intent by taking the steps necessary to transfer the property to the trust, the property so transferred
becomes subject to the terms of the trust even if he/she is settlor, trustee and lifetime beneficiary of the trust at the
same time.
The revocable declaration of trust (living trust). There is a way to avoid probate, that is, declare yourself trustee of
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your property by using a revocable declaration of trust, with the trust property to pass to named beneficiaries upon
your death.
2. Use of revocable trust in estate planning:
a. Introduction:
b. Consequence during life of settlor
2. Review of In re Vickie Lynn Marshall (from Day 1)
B. Trust Requirements
1. Valid Purpose, handout
2. Settlor & Transfer/Present Declaration, p. 557-59
3. Trustee, p. 559-61
There maybe one or more trustees, and the trustee maybe an individual or a corporation. The trustee
may be the settlor or a third party, or a beneficiary. If a settlor intends to create a trust but fails to
name a trustee, a court will appoint a trustee to carry out the trust, “a trust won’t fail for want of a
trustee.”
The trustee hold legal title to the trust property; and beneficiaries have equitable interests. The trustee
is under the duty to administer the trust in the interest of the beneficiaries; self dealing is sharply
limited and for some transactions is prohibited altogether. The trustee must preserve the property,
make it productive, and, where required by the trust instrument pay the income to the beneficiary. If
the trustee has no duties at all, there is no trust, then the trust is “passive” or “dry,” and the trust fails.
When the trustee has no active duties so the trust fails, the beneficiaries acquires legal title to the
trust property. the law doesn’t impose upon a person the office of trustee unless the person accepts,
and once accepts the office of trustee, the person can be released from liability only with consent of
the beneficiaries or by a court order.
4. Intent, p. 567-75
There is not particular form of words is necessary to create a trust, the sole question is whether the grantor
manifested an intention to create a trust relationship. Where a grantor conveys property to a grantee
to hold “for the use and benefit” of another, this is a sufficient manifestation of an intention to
create a trust.
Jimenez v. Lee Supreme Court of Oregon, 1976
Facts 1. P. the daughter against D the father also the trustee of her trust.
2. firs gift was made in 1945, $1000 face value U.S saving bond which was registered in the names of D. and/or P and/or
P’s mother.this bond was purchased to provide funds to be used for P’s educational needs
3. second gift in the amount of $500 was made in 1956 by D’s client and she made identical gifts for D’s 2 other children,
the $1500 was deposited in the names of D and his 3 children.
4. in 1960, D. cashed the saving bond and invested the proceeds in common stock. The ownership of the shares was
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registered as D., Custodian…for P. and the Joint saving was closed and $1000 was invested too, D also took the title to
this stock as custodian for 3 kids.
5. trial Ct.: there is no trust. D held the savings bond and the savings account as custodian. (P. contends that the gifts for her
educational use created trusts in each instance and tat the trusts survived D’s investment of the trust assets in the stock.)
Issue Does transfer of property with the intent that it be used for the educational needs of a third party create a trust?
Ana. 1. the donors didn’t expressly direct D to hold the subject matter of the gift “in trust”, but it’s enough if the transfer of the
property is made with the intent to vest the beneficial ownership in a third person.
2. the D admitted that the gifts from his mother and this client are for the educational needs of the children. And the letter
from the donor states the same. And the D is a lawyer.
3. the doctrine of merger defeated the intent? No, the trust was create for the benefit of P, the D brought the stock as
custodian does not expand D’s power over the trust property from that of trustee to that of custodian. And D’s action has
violate his duty to the beneficiary “to administer the trust solely in the interest of the beneficiary.
4. P was entitled to impose a constructive trust or an equitable lien upon the stock so acquired. P is also entitled to be
credited for any dividends or increment in the value of that part of the stock representing P’s proportional interest.
Whether or not the asset of P’s trust are traceable into a product, D is liable for that amount which would have accrued to
P had there been no breach of trust.
5. it is the duty of the trustee to keep full, accurate and orderly records of the statutes of the trust administration and of all
acts thereunder. Here D failed to do so, he didn’t keep separate records of trust income and trust expenditures. And the
record he kept were only for the purpose of defending the present suit. The letter in 1966 to P was inaccurate of the
amount of the trust and didn’t mention about the second gift.
6. some expenditure shows on the record clearly out side the purpose of an educational trust. Ex medical bills, this should
be obligations the parents own to their minor child.
Clu. The trial was error in both findings. D has the burden to prove that the expenditure is for the trust.
notes 1. Precatory language: the T express a wish that the property devised should be disposed of by the devisee in some
particular manner, but the language does not clearly indicate whether the T intents to create a trust or merely a moral
obligation unenforceable at law, the latter, is the precatory language. The problem could be avoid by clear drafing.
2. equitable charge: if a T devises property to a person, subject to the payment of a certain sum of money, to another person,
the T creates a equitable charge, not a trust, there is no fiduciary relationship.
5. Property, p. 581-84, 586-89
a trust is a method of disposing of, or managing, property, a trust can not exist without trust property.
Anything that is called property, can be transferred, may be put in trust. The Q is whether a
particular claim can be called property by a court.
Unthank v. Rippstein Supreme Court of Texas, 1964
facts
Issue May a promise to make payments on a monthly basis even after death be enforced as a trust?
Ana.
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Clu.
Brainard v. Commissioner U.S court of appeals, seventh Cir. 1937
facts
Issue Is a settlor of a trust consisting of property to be received in the future responsible for the taxes on that property?
Ana.
Clu.
6. Beneficiary, p. 561-62, 597-608 and handout
1. The beneficiaries hold equitable interests, and the remedies available (the personal claim against the
trustee) to the beneficiaries for breach of trust. But this claim is no higher priority then the claims of
other creditors of the trustee, so this won’t protect the beneficiaries much. Therefore, equity gives
them additional remedies relating to the trust property itself, so the creditor of trustee cannot reach
the trust property. If the trustee wrongfully disposes of the trust property, the beneficiaries can
recover the trust property unless it has come into the hands of a bona fide purchaser for value. The
beneficiaries can also enforce the trust on newly acquired property which acquired by the
disposition of the trust property by trustee.
2. There must be one or more beneficiaries to whim the trustee owes fiduciary duties, someone who can call
the trustee to account. The exception to this rule is, the beneficiaries may be unborn or unascertained
when the trust was created, under this situation, it still can be a valid trust. But if at the time the
trust becomes effective the beneficiaries are too indefinite to be ascertained, the
attempted trust may fail for want of ascertainable beneficiaries.
Clark v. Campbell Supreme Court of New Hampshire, 1926
facts Decedent’s will create a trust under which all of his personal property, such books, pictures, antiques and rugs was to be
distributed to those of his friends that his trustee, in their sole discretion, chose. All remaining property was to be sold and the
proceeds added to the residue of the estate.
Issue Do “friend” qualify as an ascertainable beneficiary sufficient to sustain a bequest or private trust.
Ana. 1. Under common law, a bequest to an indefinite person is invalid. b/c there must be beneficiary or class thereof capable of
coming into Ct. and enforcing the gift, this rule applies to private but not charitable or public, trust.
2. charitable or public trust are enforceable even w/o an ascertainable beneficiary b/c the attorney general, on behalf of the
public, may seek enforcement.
3. the language of the will itself defeat the argument which said that the will did not intent to create a trust but was instead
an outright gift of the personal property to the trustees.
4. the language of the will is also defeat the argument that the will is to create a power of appointment in the trustees.
Clu. no
In re Searight’s Estate Ohio Court of Appeals, Ninth District, 1950
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facts Searight died in Nov. 1948 leving $1000 to be paid to Florence Hand at the rate of 75 cents per day for the care of his dog,
Trixie, until the dog died. If there was money remaining at the time of Trixie’s death, the money was to be paid to a list of
persons, provided that if they survived the dog. Hand accepted Trixie upon Searight;s death and was paid 75 cents a day until
Trixie died in Oct. 1949 when she was struck by a car.
Issue Is a trust in favor of a non-human beneficiary enforceable? (is the testamentary bequest for the care of the dog valid in Ohio
(1) as a proper subject of a so-called “honorary trust”? (2) as not violate
Ana. 1. This is not a gift for the care of dogs in general, it is not a charitable trust.
2. The trust is binding on the conscience of the trustee, thus, the trust is a valid gift so long as the rule against perpetuities is
not violated.
3. Here the purpose of the trust is to care for the decedent’s dog, and the person he entrusted with the task has accepted it.
This trust also does not violate the rule against perpetuities b/c it limits itself to the life of the god.
4. even the dog life lives an inordinate length of time therefore the trust violate the rule against perpetuities, the amount of
money here even when calculating in earned interest, cannot last foe that long.
Clu. The trust is valid.
notes Under the Wait-and–see doctrine, a Ct. doesn’t declare an interest invalid until the wait-and-see period expires. Hence, if the
jurisdiction applies this doctrine for the common law perpetuities period, as Ohio does, {Under the Rule against Perpetuities,
and “honorary trust to support a pet animal is void if it can last beyond relevant lives in being at the creation of the trust plus
21 years.} But if the jurisdiction applies Uniform Statutory Rule Against perpetuities, which provides a wait-and-see period of
90 years, and honorary trust seems to be valid for 90 years.
- CA: a trust for care of a designated domestic or pet animal may be performed by the trustee for the life of the animal.
- UPC§2-907(1990): a trust for the care of a designated domestic or pet animal is valid for 21 years or for the life of the
animal, whichever period turns out to be shorter.
7. Writing? Some Exceptions, p. 584-86, 608-17
notes: resulting trust and constructive trust (p.584-86)
Resulting trust: it is a trust that arises by the operation of law in one of 2 situations: (a) where an
express trust fails or makes and incomplete disposition, or (b) were one person pays the purchase
price for property and causes title to the property to be taken in the name of another person who is
not a nature object of the bounty of the purchaser. The latter situation is called a “purchase money
resulting trust.
As resulting trust arise by operation of law, even though the subject matter is real property, it is often
hold that are not subject to the Statute of Frauds. Moreover, resulting trust doesn’t contemplated an
ongoing fiduciary relationship, once a resulting trust is found, the trustee must reconvey the property
to the beneficial owner upon demand.
C onstructive trust : also arise by the operation of law and not by express terms of an instrument. This
trust a wide variety of situations imposed to give remedies to prevent unjust enrichment. A
constructive trust is under a duty to convey the property to another on the ground that retention of
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the property will be wrongful.
The usual requirements to impose constructive trust are: (1) a confidential or fiduciary relationship;
(2) a promise, express or implied, by the transferee; (3) a transfer of property in reliance on the
promise; (4) unjust enrichment of the transferee. But the remedy is not limited to these
circumstances. (ex: p.213-21, 322-28 141-47, 586 effect of death of donor).
Although an ineffective gift will not be upheld as an express trust, when the donee in reliance upon
the gift, so change his position that it would be inequitable to preclude him form obtaining the
property, a Ct. of equity will compel the donor to complete the gift by making an effective
conveyance. In such a case, the donor holds the property upon a constructive trust for the donee until
he makes an effective conveyance of it to the donee. It is merely imposing a duty on the donor in
order to prevent unjust enrichment.
N ecessity of a writing instrument :
- An inter vivos oral declaration of trust of personal property is enforceable.
- Inter vivos trust of land has to be in writing required by Statute of Fraud.
- A testamentary trust has to be created by a will required by the statute of wills.
- Under certain circumstance the Ct. will enforce an “inter vivos oral trust of land” or an “oral
trust arising at death”.
Olliffe v. Wells Supreme Judicial Court of Massachusetts, 1881
facts Mrs. Donovan died in 1887 leaving a will in which she gave her residuary estate to the Reverend Wells, the D, “distribute the
same in such manner as in his discretion shall appear best calculated to carry out the wishes which I have expressed to him”.
Wells was named executor of her will. Mrs. Donovan’s heirs, the P, brought the suit, challenging the bequest. At the time of
the trial, Wells contended that Donovan had orally expressed her wishes that he use the residuary estate for charitable
purposes, especially for the poor, aged, infirm and needy under the care of St. Stephen’s Mission in Boston, which Wells had
founded. (St. Stephen’s had been destroyed and wells had died prior to this case being decided.)
Issue Is a semi-secret trust valid? NO
Ana. 1. under the plain language of the will, the bequest have Wells no “beneficial interest” in the residuary estate.
2. the bequest substitutes the intent of the decedent with that of Wells is too indefinite to be valid, the next of kin of the
testatrix must take by way of “resulting trust”. (he is required to distribute all of the property bequeathed to some
unknown class of persons and for some unknown purpose.)
3. the discretionary authority granted to the D by the P, might result that the D won’t carry out the P’s intentions. It has been
held in England and in other states, that, if a person procures an absolute devise or bequest to himself by orally promising
the testator that he will convey the property to or hold it for the benefits of the third person, and afterwards refuse to
perform his promise, a trust arises out of the confidence reposed on him will enforce against him at the suit of such 3rd
person.. and in other similar circumstances, where an oral agreement is made and is referred to in the will, the same will
be enforced upon a proper showing of that the agreement was made.
4. BUT, there is an important distinction, b/c where the bequest is outright on it’s face, the imposition of the constructive
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trust does not impair the rights of the heirs to that property b/c they have non of that right. On the other hand, where the
bequest id not outright but is for some indefinite purpose, the right of the heirs as the equitable owners of the interest that
is the subject of the bequest, which they received by way of a resulting trust, are injured.
5. therefore the interest of the heirs can not be deprived by the conduct of a devisee or the intent of the deceased unless the
same is clearly expressed in the required legal form.
Notes 1. this case is the origin distinction b/w a secret trust and semi-secret trust
2. the distinction is: *secret trust: can be imposed a constructive trust upon the “said” trustee, b/c the will indicates no trust
and it’s Wells’ promise to the decedent that he will distribute the money as she wanted, so the EE allows to prove Wells’
intent; * the semi-secret trust: the will indicates that there is a trust but not identifies the beneficiaries (as was true in this
case), the legacy to Wells fails, but here, no need to prevent unjust enrichment, EE not allowed.
C. Types of Private Express Trusts
1. Discretionary Trusts, p. 617-31
Trust can be divided into mandatory trusts and discretionary trusts. In a mandatory trust, the trustee
must distribute all the incomes, then the trustee has no discretion to choose either the person who will
receive the income or the amount to be distributed; in a discretionary trust, the trustee has discretion
over payment either the income or the principal or both. (“spray trust” is one of discretionary trust, in
which the trustee has the discretion to determine how to distribute all the income in what amount and
who within the group of beneficiaries can get it, which means, the beneficiary consisting one or more
members might not receive income equally.) When distribute principal of the trust, the trust
instrument may specify that the trustee has discretionary power to distribute principal to the income
beneficiary. Such a power may be limited by a standard (“such amounts as are necessary to support
my wife I the style of living to which she has become accustomed”) or the trustee may be given
wide discretion.
Marsman v. Nasca Massachusetts Appeals Court, 1991
2. Spendthrift Trusts, p. 631-42
In a spendthrift trust, the beneficiaries cannot voluntarily alienate their interests nor can their
creditors reach their interests, it is created by imposing a disabling restraint upon the beneficiaries and their creditors.
(the opinion against the spendthrift trust: “it would be to form a privileged class, who could indulge in every
speculation, could practice every fraud, and provided they kept on the sage side of the criminal law, could yet roll in
wealth.” But more and more states have adopted the new rule.)
Shelley v. Shelley Supreme Court of Oregon 1960
Fact A standard spendthrift clause in the trust: “each beneficiaries hereunder is hereby retrained from alienating, anticipating, encumbering, or
in any manner assigning his or her interest or estate, either in principal or income, and is without power so to so to do, nor shall such
interest or estate be subject to his or her liabilities or obligations nor to judgment or other legal process, bankruptcy proceedings or claims
of creditors or others.” is included in trust.
Issue Whether the incomes and the corpus can be reached by “others” (creditors..., in this case, Shelley’s former wives for the alimony
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and the beneficiary’s children for support)? Yes
Ana. 1. It is clear that the trust placed no restriction on Grant’s right to receive income from the trust. Therefore he has an absolute
property interest in the income and it can be used to pay Patrica’s claim unless the spendthrift clause prohibit them from
doing so.
2. The interest of the beneficiary of a trust should be subject to the claims for support of his children, it’s not a sound policy to
use the welfare funds of this state in support the beneficiary’s children, while he stands behind the shield of immunity
created by a spendthrift trust provision.
3. Some jurisdictions recognizing the difference in martial and parental duties and held that a spendthrift trust is subject to the
claims for the support if children but free from the claims of the former wife. But the majority of the cases, however, hold
that a spendthrift clause will not bar a claim for alimony.
4. The duty of a husband to support his former wife should override the restriction called for by the spendthrift clause. The
same reason for requiring the support of the beneficiary’s children will be applicable to the claim of a divorced wife.
Conl 1. The beneficiary’s interest in the corpus is not made immune from the claims of alimony or support, but by the terms of the
trust, the disbursement of the corpus is within the discretion of the trustee, therefore Grant’s right to receive any part of the
corpus does not arise until the trustee has exercised his discretion and has decided to invade the corpus. Until that time. The
P(Grant) and former wife cannot reach the corpus of the trust b/c the beneficiary has no realizable interest in it.
2. clause (5) “in case of any emergency arising whereby unusual and extraordinary expenses are necessary for the proper
support and care”
notes The protection of spendthrift trust from creditors has several exceptions:
1. Self-settled trusts: a spendthrift trust cannot be set up by the settlor for the settlor’s own benefit. Creditors of the settlor can
reach the settlor’s interest in income or principal in a mandatory trust. Persons with earned (or inherited) wealth can protect
their assets from creditors by creating a self-settled spendthrift trust, so the spendthrift clause in these trusts is not effective,
but in Alaska and Delaware, if the trust is not created with the intent to defraud creditors then it can be created.
2. Child support and alimony
D. Modification and Termination of Trusts, p. 651-64
1. If the settlor and all the beneficiaries consent, a trust may be modified or terminated, the trustee has no
beneficial interest and cannot object. Such a right exists even if the trust contain a spendthrift clause. If
the settlor is dean or not consent to it, the Q arises whether the beneficiaries can modify or terminate
the trust if they all agree.
2. English court (1841): a trust can be terminated at any time if al the beneficiaries are adult and sui juris
and all consent.
3. English Variation of trust act (1958): a court may consent to modification or termination of a trust on
behalf of incompetent, minor, or unborn beneficiaries whenever the court finds it beneficial to these
beneficiaries.
4. In the U.S, the settlor’s intent cannot be set aside after his death.
In re Trust of Stuchell Oregon Court of Appeals, 1990
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fact 1. Stuchell, now deceased, established a testamentary trust for his grandchildren and their families under which the
grandchildren were to receive the income for life with the remainder going to their children.
2. One of his two surviving grandchildren had 4 children of her own, one of which is mental retarded and in state assistance.
While no guardian has been appointed for him, he resided in a state facility and receives Medicaid and social security
benefits.
3. in Dec. 1989, his surviving grandchildren, with the consent of all beneficiaries under the trust, petitioned the Ct. to modify
the trust so that if the mentally retarded great-grandchild survived the others, the trust would continue as a supplemental
needs trust until his death, and then be distributed to the surviving family members of Stuchell’s grandchildren. The
proposed modification was necessary to allow the mentally retarded great-grandchild from losing public assistance. The
trial Ct. dismissed the petition.
Issue May a trust be modified by the agreement of all beneficiaries?
con. NO (the judgment of the trial Ct. affirmed.)
Anal. 1. The common law rule: the trust may be terminated of all the beneficiaries agree and none are under a legal disability and
the modification does not frustrate the trust’s purpose. By this rule, it’s only applied to the termination of the trust and see
no reason here to expand it to cover modifications.
2. §157 of Restatement 2nd of trusts provides for modification if the purpose of the trust would be substantially impaired b/c
of changing circumstances not known to the settlor.
3. However comment b to the §157 states that a modification that is merely advantageous to the beneficiaries should not be
approved.
4. Here the sole justification for the modification is to protect the public assistance currently being provided to the mentally
retarded great-grandchild of Mr. Stuchell, who is a remaindermam of the trust. As such, the only purpose is to make the
trust more advantageous to the beneficiaries and is therefore improper.
notes 1. Ct.s in several states in recent years have reformed or modified a reust so as to obtain income ot estate ta advantages.
Sometimes the Ct. have corrected a lawyer’s error in drafting the instrument; at other times the Ct. have modified the trust
b/c of changed circumstances.
2. Drafting advices: when draft a trust that is to last into the unforeseeable future, ou should consider giving a beneficiary
(either the life tenant or a remainderman or an independent third party the power to modify or terminate the trust in the
form of “ a special power of appointment”, which is a power to appoint the property to, or modify a trust for the benefit
of, anyone except the donee. In Stuchell, the lawyer who draft the will some 40 years earlier did not, and could not,
foresee the future and did not write into the trust a means of changing the trust when circumstance change. The lawyer left
the testator’s family in a strait-jacket.
3. Unless all the remainder beneficiaries consent (which usually is not possible b/c. The remainder may ultimately vest in
persons now unascertained or unborn), relief is denied unless the trust is construed to contain a power or invade, express
or implied.
4. Deviation in exercising administrative powers: Ct.s have been much more liberal in permitting trustees to deviate from
administrative directions in the trust, b/c of changes of circumstances, than they have been in permitting modification of
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distributive provisions. Ex: the Ct. in Joseph Pulitzer’s will held that even though the sale of those stocks (the shares of
the stock are the asset of the trust) was prohibited by the settlor, the Ct. had power to authorize sale in circumstances
where the trust estate was in jeopardy, and the Ct. approved the sale.
5. “Claflin Doctrine”: a trust can not be terminated prior to the time fixed foe termination, even thought all the
beneficiaries consent, if termination would be contrary to a material purpose of the settlor. In he case of
Claflin v. Claflin, a trust was established for testator’s son, with principal to be paid to the son at age of
30. after 21, the son sued to terminate the trust, pointing out the he was the sole beneficiary. The Ct.
refused to permit termination as this would violate the intent of the T.
Generally, a trust cannot be terminated if it is a spendthrift trust, of the beneficiary is not to receive the principal
until attaining a specified age, if it is a discretionary trust, or if it is a trust for support of the beneficiary.
Such provisions are usually deemed to state a material purpose of the settlor.
In re Estate of Brown Supreme Court of Vermont, 1987
Fact 1. A .J. Brown, now deceased, created the trust in his will. Under the trust the fund was to be used to educate his nephew’s
children. The trust was to continue until the purpose of providing an education has, in the determination of the trustee, been
accomplished.
2. After the accomplishment of the purpose, the income of the trust and any part of the principal were to be used for the care,
maintenance and support of his nephew and his nephew’s wife, in the style to which they had become accustomed, until
death.
3. upon their death, the trust was to terminated and the remaining funds distributed in equal share to his nephew’s living
children.
4. the trustee complied with the terms of the trust. In 1983, the nephew and his wife petitioned the Ct. to terminate the trust,
arguing that the only remaining purpose of the trust was to provide for their support and that distribution of the entire trust
was necessary to accomplish that result. The remainderman, their children, consented to the termination. (the probate Ct.
denied)
Issue May the trust be terminated by the agreement of all beneficiaries?
Con. NO (the probate Ct. denied but the appellate Ct. reversed, this Ct. reversed the decision of appellate Ct. and reaffirmed the former)
Anal. 1. Under the law, an active trust may not be terminated if a material purpose of the trust remains to be accomplished. This is
true even if all the beneficiaries consent to termination.
2. the trustee argues that the trust cannot be terminated b/c it is both a support and spendthrift trust. This argument is w/o merit
b/c this trust is neither. However that the trustee is correct to content that the termination is not possible b/c the material
purpose of the trust in this case has not been accomplished yet and thus termination is not proper. This trust has two
purposes.
3. first purpose is to provide education, but all of the living children have received it and Brown’s nephew’s wife couldn’t have
more children as the trial Ct. determined, as such, this purpose has been accomplished.
4. the 2nd purpose is to assure the life long income for the nephew and his wife through management of the trust by the trustee.
This clearly indicates Brown’s intent (the trustee must provide for the “care, maintenance and welfare” ) to make sure the
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nephew and his wife lived in the style they were accustomed to until their death. This purpose would be defeated if the trust
were terminated, since they could mismanage the funds thereby depriving themselves of the lifetime income Brown
envisioned.
note 1. A few states has enacted statutes that permit Ct.s to terminate trusts prior to the time specified by the settlor. Ex: permitting
modification or termination in changed circumstances which would defeat the purposes of the trust.
2. it may be possible to terminate a testamentary trust by a compromise agreement b/w the beneficiaries and heirs entered into
soon after the testator’s death.
3. Changing trustee: unless the trustee has been guilty of breach of trust or has shown unfitness, inasmuch as the settlor reposed
special confidence in the designated trustee, the Ct. will not change the trustee merely b/c the beneficiaries want to.
4. But now in some states, entire inventories if trust accounts are now routinely bought and sold b/w banks, should the
beneficiaries now be offered the opportunity to change trustees if they are disadvantaged by these transactions? UTA (1999
draft) §706 (p.663).
E. Charitable Trusts
1. Charitable Purpose, p. 859-65, 867-69 (start at note 2)
- A trust is a charitable trust if a trust that is for the benefit of a class of person (and not for the
benefit of the community at large) must be for the relief of property or for the advancement of
education, religion, health, or other charitable purpose. A trust if not charitable merely b/c it is for
the benefit of a class of people. Ex: a trust for the benefit of sick employees is charitable, but is not
if it’s for the general benefit of employees; a trust pay salary to law professor is charitable b/c of
education purpose.
- A trust may be a valid charitable trust although the person who directly benefit are limited in
number. Ex: a trust awarding scholarships or prizes for educational achievement is charitable.
- A trust to benefit political party is against public policy to endow perpetually to it, thus it’s not a
chartable trust, but a trust for the improvement of the gov. structure and method in a manner
advocated by a particular political party is one.
- The category to see whether it’s a chartable trust, see p.867 and 868
- Draft advice: be sure to write the exact legal name of the charity, and make sure if the client wants
an estate tax chartable deduction whether the charity is tax-exempt under the IRS code. A purpose
deemed charitable by a state court may not qualify for a federal estate tax charitable deduction,
which denied the deduction to charities that indulge in certain prohibited activities.
- Trust of “benevolent” or “philanthropic” purpose should be avoided, it may fail as a charitable trust
b/c the income can be used foe non-chartable purposes.
Rosser v. Perm (handout)
2. Modification of chartable trust: Cy Pres, p. 869-83 and handout
Cy pres: means “as close as possible” When a gift is made by will or trust and it is no longer possible
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to follow the instructions of the donor, a judge, estate, or trustee may apply the Cy Pres doctrine to
fulfill the donor's wishes as nearly as possible. It is usally applied in the case of a gift made for
charitable or educational purposes when the named recipient of the gift does not exist, has dissolved
or no longer conducts the activity for which the gift is made. In some cases, the Cy Pres doctrine is
used court disputes in which a judge must determine the appropriate substitute to receive the gift.
T he general rule is : (p.875) if property is given in trust to be applied to a particular charitable
purpose and it is or become impossible or impracticable or illegal to carry out the particular
purpose, and if the settlor manifested a more general intention to devote the property to charitable
purposes, the trust will not fail but the Ct. would will direct the application of the property to some
charitable purpose which falls within the general charitable intention of the settlor.
- Cy pres does not authorize a Ct. to vary the terms of the bequest, merely b/c the variation will
accommodate the desire of the trustee.
- to the extent that the term efficiency embraces the concept of relative need, it is not an appropriate
basis for modifying the terms of a testamentary trust.
Obermeyer v. Bank of America, N.A., Washington University (handout)
3. Supervision, p. 892-901
V. Fiduciary Administration of Trusts
A. Powers of Trustee, p. 950
The administrative power of a trustee is derived exclusively from the instrument creating the trust.
B. Duties of Trustee
1. Duty of Inquiry into Beneficiary Needs, p. 618-27 (review)
Marsman v. Nasca case:
2. Duty of Loyalty, p. 903-19
The trustee must administer the trust solely in the interest of the beneficiary.
a. not self-dealing
Hartman v. Hartle New Jersey Court of Chancery, 1923
Fact 1. Mrs. Dorothea died testate leaving 5 children. In her will, she named 2 of her son-in-law as co-executors, the D here. Her will
directed her executors to sell her real estate and distribute the proceeds equally among her children.
2. the Executors sold part of the real estate (the farm) at a public auction for $3900. They sold the farm to one of her son who
actually purchased the farm for his sister, and the sister happens to be the wife of one of the executors.
3. the proceed of the sale was distributed to the children. Subsequently the sis resold the farm for $5500.
4. one of the other children (P) brought the suit against the executor (and the ultimate purchaser of the farm, claiming the sale
was fraudulent disproved.) claiming that the executors violate their fiduciary duties by selling to the wife of one of the
executors.
Issue Is it a violation of an executor’s fiduciary duties to sell trust property to his wife? Yes!
Anal. 1. the law prohibits the sale of property by the executors and trustee to the wife of one of them w/o previous authorization by
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the Ct.
2. if the claim is true, the sale to the sis, even through her brother is illegal.
3. the settled law of this state is that a trustee cannot purchase trust property from himself at his own sale. This prohibition
applies equally to the trustee’s spouse, unless a Ct. has granted authorization for the sale by Ct. order.
4. neither the executors or the sis sought judicial authorization for this sale, as such, the sale was improper.
5. the farm, however, is now in the hand of an innocent purchaser and cannot be reclaimed. Instead, the sis and the executors
must account for the $1600 profit from the subsequent sale, each child is entitled to one fifth of that $1600 profit.
notes 1. self-dealing: good faith and fairness to the benes are not enough to save the trustee form liability. The benes can held the
trustee accountable for any profit made on the transaction, or, if the trustee has bought trust property, can compel the trustee
to restore the property to the trust, or, if the trustee has sold his own property to the trust, con compel the trustee to repay the
purchase price and take back the property. the only defense for trustee’s self-dealing is the authorization from the settlor or
the benes’ consent after full disclosure. Even then, the transaction must be fair and reasonable.
2. no-further-inquiry rule: p.905
3. Trust pursuit rule: when a trustee, in wrongfully disposing of trust property, acquires other property, the beneficiary is
entitled to enforce a constructive trust on the property so acquired, treating it as part of the trust assets. This also applied
where the property ends up in the hands of a third person, who unless be a bona fide purchaser for value and w/o notice if the
breach of trust. (p.906)
b. can not have conflict of interest
In re Rothko Court of Appeals of New York, 1977 (see the study-aid for detail)
facts Rothko is an expressionist painter, after he died testate and his paintings consisted of tremendous value. The executors was going to sell
his paintings to MNY and MAG. His daughter file a petition to enjoy 2 Ms from disposing the paintings and asked the executors to
return the paintings from 2Ms and asked to remove the executors.
Note Co-trustees: there is more then one trustees for the private, non-charitable trust, they must act as a group and with unanimity, unless the
trust instrument provides to the contrary. One of the several trustee does not have the power alone to transfer or deal with the property. a
co-trustee is liable foe the wrongful acts of a co-trustee to which he has consented o which, by his negligence through inactivity or
wrongful delegation, he has enabled the co-trustee to commit. It is improper for one trustee to leave to the others the custody and
control of the trust property. Charitable trusts where unanimity is not required of the trustees, action by a majority trustees is valid; UTA
and the restatement 3rd permits a majority of trustees’ action in the private trust.
3. Duty to Collect, Protect & Preserve Property, p. 919-20
A trustee has the duty of obtain possession of the trust assets without unnecessary delay. The
unreasonable delay depends on circumstances. Trustee is liable to benes. for not objecting to
executor’s disposition of inheritance. When obtain the property, the trustee has to preserve it
prudently. If real property is involved, trustee must keep building in repair, guard against theft, pay
taxes, and insure against loss by fire.
4. Duty to Earmark Property, p. 920-21
5. Duty Not to Commingle Funds with trustee’s own, p. 921-22
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It’s a breach of trust if commingled even though the trustee does not use the trust funds for his own
purposes. b/c that results to difficult tracing and hence subject to the risk that the personal creditors
of the trustee can reach them.
6. Duty Not to Delegate, p. 922-29
Shriners Hospitals for Crippled Children v. Gardiner: (read study aid)
General standard of prudent investment: must not delegate unreasonably, with professional advice as
needed, the trustee personally must define the trust’s investment objectives, and must also make the
decisions that establish the trust’s investment strategies and programs, at least to the extent to
approve the plans developed by agents or advisers. (p.927)
- the non-delegation rule has been abrogated in the restatement 3rd and UPIA, the authority impose upon the
trustee a duty of using care, skill, and caution in selecting an agent, when delegating to obtain the
advantage of the agent’s specialized investment or other skills. And of course the trustee must
review periodically the agent’s compliance with the authority granted.
7. Duty of Impartiality, p. 929-38
A trustee has the duty to deal with both the income benes. and the remainderman impartially. The
trust property must produce a reasonable income while being preserved foe the remainderman.
Dennis v. Rhode Island Hospital Trust Co. (read study-aid)
8. Duty to Inform and Account, p. 938-49
Fletcher v. Fletcher (read study-aid)
National Academy of Sciences v. Cambridge Trust Co. (read study-aid)
9. Duty to Make Trust Property Productive, p. 954-69
Estate of Collins (read study-aid)
The “prudent investor” rule: the trustee should exercise the judgment and care “which men of
prudence, discretion and intelligence exercised in the management of their own affairs, not in regard
to speculation, but in regard to the disposition of their funds, considering the probable income, as
well as the probable safety of their capital.” In making a loan, the co-trustee should use reasonable
care, diligence and skill, and shouldn’t act arbitrarily or in bad faith.
-Restatement 2nd of Trust: The trustee is under the duty to the beneficiaries to distribute the risk of
loss by reasonable diversification of investments unless under the circumstances it is prudent not to
do so. (p.963, UPIA §3)
-In buying a mortgage for trust investment, the trustee should give careful attention to the valuation
of the property in order to make certain that his margin of security is adequate. Must use every
reasonable endeavors to provide protection which will cover the risks of depreciation in the property
and changes in price levels. And he must investigate the status of the property and of the mortgage,
as well as the financial situation of the mortgagor.
-An “absolute discretion” does not permit a trustee to neglect its trust or abdicate it’s judgment.
C. Liabilities to Third Parties, p. 975-7633
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UPC (1990) §7-306
011205 ① the note is on the distributed question
012405 ② the note is on the distributed question
011905 ③
Who is the spouse?
Spouse: the status from state may have 3 requirements:
2. Valid marriage licence
3. DP/CV/PB
4. common law in some states (New Hampshire) serves the FUNCTION, that is, when there is no 1and
2, but meet 3, can still be spouse.
Not spouse: no statues, and function is the grey area, but some states say that function doesn’t matter, because they
only recognize status, for example: bigamous spouse, same-sex spouse, sex exchange and unmarried cohabitants.
People without status but with function often lose.
Status V. Function
W ho is a child? Who id a child will always be a child for the purpose of intestacy
Child
1. Biological product of a female (when there is no marriage becomes the question of the 3rd category)
2. Marital children (are always deemed as child) *key
3. Acknowledgement of parents
4. Adopted legaly
Hall v. Vallandigham case:
The issue here is WHEN the children is adopted? Can the child still be at a valid position to inherit from its bio.
father? And the state of Texas is the state that the child can inherit from both of the bio. and adopted parent.
The Uniform Probate Code (p.101):
Maryland: the child can only inherit from the adopted parent.
Then the state law comes to play
Woodward case: the ultimate decision of the Ct.??
The child’s father was dead before the child was conceived which is under no marital circumstance, b/e the marriage
was over.
Mars. Ct.: determine the legal question, and the federal Ct. refer to state law to resolve the definition of children. So
here, the legal question is resolved but the fact hasn’t.
The Mars. Ct. has 2 approaches: ①children are children, should not set the hierarchy of them. ②children need to be
supported.
O ’ neal v. Wilkes :
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Not a child
1. Is there a will, if no, it will be intestacy then we have to decide who is the child. *key
2. Is this a marital child, no non-marital child① boil. IV , then ACK paternity or boil. PM, then see state law.
② adopted: status or virtual/ functional
※ To determine who is a spouse or who is the child is the purpose of intestacy, b/c if you have a will, you don’t go
to intestacy. But why wouldn’t a will be enough? b/c ex: same sex marriage, there will be some relatives
challenge the will (depending on the family structure) then, when you have adoption, then it might not be
challenged.
012105 ④
Child
Status through
‧ Marriage (or)
‧ Biology
-IV: ACK Paternity / Ct. action
-PM: Within 300 days or consent overlap in UPC stepparents adoption.
‧ Adoption…………irrelevant…can be lovers
012605 ⑤
Involuntary Bars
- Homicide
- Abuse
- Abandonment/ adultery/ separated (some states ex: NY, MO, also fail to protect your children)
Voluntary Bars
Disclaim
- Tax ( but you still won’t be able to avoid federal tax)
- Avoid creditors
012805 ⑥
Will
Mental capacity, the elements:
1. What property
2. “natural objects”who would take under intestacy
3. disposition
4. orderly plan
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Testamentary Capacity
What’s the difference b/w MC and PC?
Strittmatter case (p.159)
1. Knows what is her property
2. She knows that she has concns
3. but decided to give all her property to National omen’s party
4. there is an orderly plan
Testamentary Capacity
1. have to show that you have mental capacity
2. have to show that you are not insane
Strittmatter case (p.159)
020205 ⑦
Mental capacity the testator mist know:
1. Nature/ extent of prop
2. Persons who are “natural objects”
3. dispositions in will
4. how above for ms orderly plan
Testamentary capacity
Requires mental capacity plus “not”
1. Insanely delusional
2. unduly influence
3. victim of fraud
when examine a will, first see the testator if he /she is mental incapacity under the 4 elements, then see the
testamentary capacity, and then, see if there is undue influence.
Unduly influence
“Will (here means a person’s mind) of another substituted for will of testator.”
p.177 provides 3 tests:
1. Susceptible.
2. Opportunity
3. Result
020405 ⑧
Invalidating wills:
Who are the heirs the proper distribution; is the will valid? How can one invalidate a will.
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1. Mental capacity
2. insane delusion
3. undue influence
4. fraud
5. failure to meet statutory requirements
as a lawyer, talk and advice them that the potential possibilities the will is going to be contest, see the cases of
Lipper Moses Ksuffman.
Fraud
Misrepresentation:
1. in Inducement => misrepresentation of fact related to beneficiaries
2. in Execution => character/ content of will
You have to evidence the intent, and the elements are:
1. intent to deceive
2. for purpose of influence the document
3. but for causation
ex: the Carson case (p214) and the problem in p215.
When fraud, the Ct. is often reluctant to invalidate the will, so they often post it to constructive trust.
Tortious Interference (p.221) the elements are:
1. Expectency
2. Intentional interference with expectancy
3. Tortious conduct
4. But for causation
5. Damages, because here is the tort claim, and it’s possible to get punitive damage here.
Attested will => been witnessed
UPC: ①in writing ②signed by the testator and signed by 2 witnesses ③the witnesses has to sign in reasonable time.
W hen the witnesses is a beneficiary …
020905 ⑨
What a lawyer should do when executing a will:
1. came up with a document
2. make sure how many pages stable the will together
3. make sure the testator understand the will
4. the ritual function (formality)
5. providing a private room (more often is a conference room, to be as safe as possible) make sure enter or leave,
and the testator, the lawyer the witnesses and the notary should be in the room..
6. is this you will (the Q the lawyer should ask) and make sure that the witnesses hear that the will is approved by
the testator that it’s his/her will see footnote 11 p.244 =>the “publication” satisfied the criteria, the
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requirement.
7. make sure if the two people wanted by the testator to be his/her witnesses
8. the witnesses should sign the will at the margin of each side
9. have one of the witnesses to read the attestation clause out loud to clarify that every one understand that they
are witnesses (ft.12)
10. the distinction b/w attestation clause and affidavit is that the affidavit is notarized, so it allows you to probate the
will without bring in the witnesses.( it’s not always one the same page and time is not an issue here) therefore a
notary is important for the will be respected., the reasons are follows:
⑴ play it safe
⑵ Luicianna, CA require a notary and 3 witnesses, but the notary can be one of the witnesses.
⑶footnote 13 (p.245)
to be a good lwyer, you had better follow the steps on p.242~246
when notarize, a notary follows a certain procedure which make sure that the document has a certain
credibility. Because the notary is an agent of the States, the function could ensure the accuracy so to serve
the evidential function. Follow the rules and be ethical is what the lawyer should do, while the notary has to
bear a certain responsibility, too.
Addressing mistakes in will execution: ‧‧‧
1. traditional view: invalided ( not meet the requirement)
2. Substantial compliance focus on execution
3. U.P.C.: dispensing the testator’s intent.
Paclinko case
Spouses sign each other’s will, and the Ct. didn’t permit to probate the will because the will didn’t meet the formal
requirements. (see the Groffman case at p. 227)
1. in this case, the residuary is the same
2. he is her brother
3. here there is a remedy against the lawyer => malpractice remedies. And the problem here is that they have to show
malpractice, but there exists a problem because the malpractice could be happen long time ago, therefore, the
lawyer may not be alive anymore! But there still a way out of this, that is the constructive trust.
Ranney case
‧They only sign the affidavit
Under certain states, it requires both attestation and clause and affidavit, and then,
‧have to have substantial compliance which focus on the execution.
The testator here was trying to meet all the requirements but b/e of the lawyer’s mistake here. ( and if it’s the witness’