Trusts & Wills
Trusts & Wills November 19, 2011
TRUSTS & WILLS OUTLINE
INTRODUCTION
• Main question: who gets your property when you die?
• Our constitutional system: the right to transmit property is not constitutionally protected.
• Locke: children have a natural right to inherit from their parents. However, he doesn’t talk about the right to transmit property at your death.
• Hodel v. Irvine:
o Federal government made a law to transmit property to native Americans
o Issue of fractionalizing(to the point that it becomes worthless
o So the government decided that it would go back to the tribe.
o Issue: whether the government’s decision is a taking.
o Reasoning: bundle of rights: one of them is the right to dispose or transmit the property at your death.
• Policy:
o For letting people transmit the property: incentive to work hard and invest
o Against it: it is an accidental benefit; locking the benefit in; undeserved privileges and wealth.
o Hardship factor: if you take it away, you are taking away property and at the same time, the breadwinner died. So it creates somewhat of an unnecessary hardship.
• Now it is more about lifetime transmission of benefit. The distinction is one of human capital (planning education; vacations; summer camps).
o Now that changed the estate planning field.
• Compromise: permitting transmission but subjecting it to tax.
• Federal estate and gift tax: meant to discourage transmission at death.
Wills:
• Will: to make your intent known of who gets your stuff when you die: who, what, and when.
• When: it becomes effective at your death. It is ambulatory.
• Who: you decide with certain limits like marital property (limits on minors, incompetent, alcoholics, and people that die before you).
• What:
o Your separate property
o 50% of community property
o Joint tenancy: on the death of the joint tenant, the right is extinguished. Whatever interest they had, they don’t have anything to give anymore.
o Tenancy in common: undivided owners, there is no right of survivorship.
• Can the will operate on property that is no longer there?—then it doesn’t operate on the property.
• There is a potential conflict of interest. So professional responsibility arises.
o Avoiding representation of conflicting interest
o Obligation to disclose things that are potentially detrimental to the clients.
• General rule: the property goes tot whoever you intended the property to go to:
o Provided you expressed that intent
o You can’t violate certain rules
o It depends on what kind of property: probate vs. non-probate property
o Your will can only operate with respect to probate properties.
Probate:
• It is a judicial process
• Hypo: you die w/ a will. The will must be lodged w/ the probate court. It is a process of administration. Once the will is submitted, it must be accepted by the court. Someone will be in charge of taking care of your stuff until it should be given to the people you determined would get it.
• If you died w/o a will, your assets might be subject to probate.
• Testate vs. Intestate:
o Testate:
▪ there is a will(executor is appointed
▪ you have a will; your intent expressed in a will
▪ Testamentary trusts: trusts created out of your will—don’t come into existence until your death. That passes through probate.
o Intestate:
▪ There is no will(administrator is appointed.
▪ Your intent is lacking
▪ Intent should be respected. However, the fear of fraud is a problem to letting unwritten wishes to be respected.
• Probate Process:
o Person who is in charge has to find the assets, inventory, and tell the world that you died.
o The creditors can then file a claim and the court looks at whether the claims are founded. Then the rest goes to the ones expressed in the will
o If there is no will, then they will presume the intent.
• Administrator and executors are fiduciaries
• The key is closure: no one can come in and claim an interest in the assets after the case is close.
• Probate vs. non Probate:
o Non probate (exceptions to probate): joint tenancy, life insurance, life estate and future interests, inter-vivos trusts (created while you are alive—by identifying the trustee and giving them property & money that they need to be in the trust).
▪ Not subject to probate because you expressed your intent in them already in a different way.
• Examples:
o O owns blackacre: A for life and then remainder to B.
▪ B owned the remained the whole time.
o O owns fee simple absolute: O for life and then to B for the remainder interest.
▪ On o’s death, ,he owns nothing
▪ So it bypasses probate basically.
▪ You do this by deed instead of using trust.
• Trusts:
o One person transfers property to a second person for the benefit of a third.
o The second person is known as the trustee
o The third party is the beneficiary
o The person creating the trust is the trustor or settlor
o It can potentially last for decades; it is more open-ended (different from gift b/c gifts are done in a instant).
• Gifts:
o Intent
o Delivery
o They are no revocable
o No conditions.
• Identify non-probate assets first and then get rid of that then go to the probate stuff.
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INTESTACY: AN ESTATE PLAN BY DEFAULT
• Beneficiaries:
o Ascendants: related to decedents in an ascendant line (parents, grandparents, etc.)
o Descendents: kids
o Collaterals: your brothers, nieces, and nephews.
• Most probate codes have preferences:
o Spouses and children
o Then other blood relatives
• Terms:
o Beneficiary: someone receiving property
o Bequest: gift of personal property
o Devise: gift of real property
o Legacy: gift of money
• CPC §6400: Property Subject to Intestacy Provisions: Any part of the estate of a decedent not effectively disposed of by will passes to the decedent’s heirs as prescribed in this part.
o It has to be written in a will; anything said doesn’t matter if it is not written.
• CPC §6401: Surviving spouse (or domestic partner) intestate share; community or quasi-community property; separate property:
o ½ of the community property that belongs to the decedent
o ½ of the quasi-community property that belongs to the decedent
o Separate property of the decedent:
▪ 100% if no surviving issue, parent, brother, sister, or issue of a deceased brother or sister
▪ 50% if:
• Decedent leave on child or the issue of once deceased child
• Decedent leave no issue but leave a parent or parents of their issue or the issue of either of them
▪ 33% if:
• Decedent leaves more than one child
• Decedent leaved one child and the issue of one or more deceased children
• Decedent leaves issue of two or more deceased children
o This includes domestic partners.
o Quasi-community property: buying a house in another state and moving to CA. Intestate treats assets that would have been community had they been acquired in CA. Intestacy treats quasi community assets the same as community property.
• Common law (different from CA): it is separate property if it is in a separate bank account. However, you can’t disinherit your spouse or in divorce it is the same thing.
• CPC §6402: Intestate estate not passing to surviving spouse or surviving domestic partner:
o Issue takes equally first
o If no issue, then parents equally
o If no parents, to issue of parents or either of them equally
o If no issue of parents, then to grandparents or issue of grandparents equally.
o If not, then issue of predeceased spouse (step children)
o If not, then next of kid to decedent
o If not, then parents/issue of parents of predeceased spouse
o If not, then escheat to state.
• Difference b/w Joint Tenancy and Community Property:
o Joint tenancy is more automatic
o Community property is technically yours, and you can dispose of it as you see fit. It is portioned upon the death. So there is a technical partition.
• Exception to the Rule: CPC §6402.5: Predeceased Spouse; portion of the decedent’s estate attributable to decedent’s predeceased spouse:
o On the death of the surviving spouse w/o issue, it would normally go to parents. However, this section tries to give back some to the predeceased spouse’s parents.
o Requirements:
▪ Second spouse dies intestate
▪ Second spouse does not leave surviving spouse
▪ There are no issue
▪ Second spouse to die must have acquired some property from the first spouse to die in order to trigger this rule.
• Property attributable to the predeceased spouse.
▪ If the second to die has a will, got life insurance, etc. it doesn’t apply.
o (a) you got real property from spouse w/n 15 years before you died;
▪ You give it back to the family of the predeceased spouse
▪ We don’t care how the first spouse died or whether they left a will.
o (b) you got personal property from spouse w/n 5 years before you died
▪ Personal property: not only tangible
▪ However, you have to be able to prove title
▪ Greater than or equal to $10,000
o Order of Giving:
▪ Predeceased spouse’s issue
▪ If not, to their parents
▪ If not, then to their siblings
▪ If not, then to next of kin of deceased spouse
▪ If not, then next of kin of predeceased spouse.
Meaning of Survival:
• Survive: breath and heartbeat; brain activity
• Legal survival
• Janus v. Tarasewicz (1985):
o Case about the couple who died b/c of cyanide. Stanley was not responsive but Theresa was still responding. There is a life insurance policy on Stanley’s life. So the life insurance was paid to Theresa’s father.
o Theresa was the beneficiary. so her father got the life insurance.
o Issue: was there sufficient evidence that Theresa survived Stanley?
o Holding: there was sufficient evidence to prove that Theresa survived Stanley.
• CPC §6403: Failure to survive decedent by 120 hours; deemed predeceased; application of section:
o A person who fails to survive the decedent by 120 hours is deemed to have predeceased the decedent for the purpose of intestate succession.
o If it can’t be established by clear and convincing evidence that a person who would otherwise be an heir has survived the decedent by 120 hours, it is deemed that the person failed to survive for the required period.
o Doesn’t apply if the application would result in the escheat of property to the state.
o Effective after January 1, 1990.
• CPC 21109: Transferees; failure to survive:
o (a) there is no time limit:
▪ Instruments would include wills, trusts, life insurance contracts.
▪ It is the beginning of a modern trend in CA
▪ It is in every context other than intestacy.
▪ It is a continuation of the millisecond rule.
o (b) The standard went from preponderance of the evidence to clear and convincing evidence. It is limited to survivor requirements.
• First, you have to figure out if you actually survived. If yes, then you figure out if you legally survived.
• If there is no surviving spouse:
o Joint tenancy is terminated and becomes tenancy in common (each gets 50%)
o The separate property goes to each person’s parents’ separately
o The community is dividend into half.
o Assume that each predeceased the other
o So neither has a surviving spouse and no issue.
o So it will go to the parents or to the parents’ issue
o There is nor recapture in this case.
• If there is a surviving spouse:
o Then there is the recapture rule
• Survived by Issue:
o Divided S.P. 50% to the husband and S.P. 50% to the children
o Father gets nothing b/c there is issue.
• In CA: if you didn’t get married, then you are not a spouse
o They can’t inherit anything
o Joint tenancy though doesn’t care about marital status
o Exception: Putative Spouses: in good faith you got married.
o Registered domestic partners:
▪ Same sex couples
▪ You can substitute for spouse
▪ Inheritance rights
▪ They have to be registered w/ the secretary of the state
▪ If you are over the age of 62, then you can register even if you are different sexes.
• Separation and divorce:
o For purposes of inheritance: if you are still married at the time of your death, you still have a surviving spouse.
o Solution: write a will.
• Community property:
o Community property stops when you move out or separate from the community. It is the intent issue but the clearer you are about it, the better.
• However, for purposes of inheritance, it is only effective once you get the divorce judgment.
Issue: Transfers to Children
• H+W = A + B + C + D
o If wife died, husband gets all the community property
o If then husband dies, each child gets 25%
• If A has R, B has S and T, C has no children, and D has X, Y, and Z. A, C, and D die:
o On H’s death, we treat issue equally.
• 3-prong standard: what does “equally” mean?
o Where is the starting point?
o How do we determine who is included and who isn’t? How many shares are we going to divide it into?
▪ One share for each life taker; and one share for deceased taker leaving issue behind.
o What do we do with the shares that bypass a child and go to the grandchildren?
▪ Shares dropping to the next generation through bloodline is to pass exactly to the generation after; OR,
▪ Put all the remaining shares, in one pool and then divide equally.
• 3 approaches:
o English per Stirpes:
▪ First division is ALWAYS at the children
▪ 1 for each living; 1 for each deceased/ surviving issue
▪ Drop through shares( get divided equally by bloodline
o Per capital with representation:
▪ First division is at whatever generation that has the 1st live taker
▪ 1 for each living; 1 for each deceased w/ surviving issue
▪ Drop through shares(get divided equally by bloodline
o Per capita at each generation:
▪ 1st living taker
▪ 1 for living and 1 for death with surviving issue
▪ Pooling.
| |Per Stirpes |Per Capita |P.C. Each Generation |
|Where do we make the division? |1st Gen. always (children) |First live taker |First live taker |
|How many shares? |1 for each living and 1 for each|1 for each living and 1 for each|1 for each living and 1 for each|
| |dead child w/ living issue |dead child w/ living issue |dead child w/ living issue |
|What do we do with the “bypass” |Bloodline approach: whatever the|Bloodline approach: whatever the|Pooling/pot approach: all bypass|
|shares? |person above you would get. |person above you would get. |shares are aggregated and |
| | | |divided among takers at that |
| | | |generation. |
• CPC § 240:
o It is per capita
• CPC § 246:
o It is the English per stirpes
• CPC § 247:
o It is the P.C. at each generation
• CA: is a traditional per capital jurisdiction:
o However, you can choose to use one of the other techniques if it is to your liking
o For intestacy purposes, the default is per capita.
o However, if you write a will or a trust or any other instrument, then you can use another method different from the default.
• You can have a will and still be subject to the probate code if you don’t distribute all the assets you had.
• 3 approaches:
o Parentalic approach
o Degree of relationship
o Hybrid: degree of relationship with a parentalic approach
• 1st Parentalic line:
o You, your children and their children
o How far out do you have to go to find a common ancestor?
• Next of Kin:
o You keep going out on these lines until you find a live taker. Once you find a live taker, you stop and give everything to him/her.
• Degree of relationship:
o It sees it as a chain.
o How many links do you have to link to get to this next of kin”
• Hybrid approach:
o As you are going through and finding the potential takers (if you they are in the same degree) then you give it to the one in the closets parentalic line.
• General ideas:
o A parent-child relationship is the essence of inheritance(it creates the right to inherit.
o To qalify as issue, you have to find a series of parent-child relationships.
o Spouses: only from but not through. But parents and children are from AND through.
o The parent-child relationship is the ultimate maximum relationship for passing assets.
• How to establish a parent-child relationship?
o Having a biological child: inheritance rights attach the minute they are born.
o The other way is through adoption.
• If the parents are not married: CA no long distinguishes between married and unmarried parents.
• CPC § 6450: Relationship Existence:
o No distinction b/w traditional birth and adoption
o No distinction based on marital status
o However, you still have to prove parentage.
• CPC § 6452: Out-of-wedlock birth:
o If a child is born out of wedlock, neither a natural parent nor a relative of that parent inherits from or through the child on the basis of the parent and child relationship b/w that parent and the child unless:
▪ The parent or a relative of the parent acknowledged the child AND
▪ The parent or a relative of the parent contributed to the support or the care of a child.
o The parents’ rights to inherit from the child(they have to be married.
o However, it is vague
• Ways to Establish the Parent-Child Relationship:
o Natural parents:
▪ Old days: presumption that a child born in a marriage is the child of the father and the mother
▪ It was always easier to prove that the child belongs to the mother than proving that he belongs to the father.
o If out-of-wedlock:
▪ It is easier to prove motherhood than fatherhood
▪ Have the father acknowledge the child somehow
▪ If proven, the child gets all the rights of a child in wedlock
Adoption:
• Biological parent-children:
o Inheritance rights both ways.
• Common law:
o Adoption is seen as a severance of those inheritance rights.
o However, you are considered a child of the new adoptive parents.
• For inheritance purposes, they have the same inheritance from and through the child (and vice versa) as if they are the natural parents.
• The relationship with the natural parents is completely and irrevocably severed.
• CPC § 6451: Adoption: 2 exceptions to the general rule:
o Exception 1:
▪ Post-death adoption: father and mother have a child. Father dies (or father dies before the child is born). Mother marries again and adopts the child. In this case, it doesn’t sever the natural father’s relationship with the child. However, the adopting father DOES NOT have to be a spouse. This exception could work with a whole new set of parents.
o Exception 2:
▪ Step-parent adoption: the parent doesn’t have to die. He is adopted by the second husband. But the relationship with the first father is not severed.
▪ If H and W divorce and W and F are together. They want F to adopt C and H consents. C has a relationship with F. However, the relationship with C and H is severed at common and in CA.
• Foster Children:
o H & W get a divorce. W gets F. W dies and F dies intestate. H never consented to adoption. F dies intestate. Can C inherit from F?
▪ This is the foster parent rule: They care for the child and attempt to adopt the child but they can’t b/c of some legal impediment. That was an attempted adoption scenario. If the foster parents die intestate, a parent-child relationship exists if:
• The relationship began during the person’s minority and continued through the joint lifetimes of the parent and the child AND
• They would have adopted him if it wasn’t for a legal impediment (by clear and convincing evidence).
• That does not sever the relationship with the original foster parents. It is only for the child.
• When you hit the age of majority, you can consent for yourself to be adopted.
• The foster issue: it only words downward arrow to the child.
• Hypothetical:
o H & W have A & B. they get a divorce. W finds F. F wants to adopt A and B but H says no. A and B are 2 and 3 years old. 20 years after F dies intestate.
o The problem is that the legal barrier to adoption is that the father didn’t consent to adoption.
o However, after the age of majority, they don’t have the legal barrier anymore. They can get adopted with their own consent.
• Equitable Adoption:
o O’Neal v. Wilkes:
▪ The child was tossed around. Someone gave consent that she would be adopted. The consent given was void b/c she didn’t have the authority to give consent for adoption. The daughter lives with the “adoptive” parents until the parents died.
▪ Elements of Adoption:
• Agreement between natural and adoptive parents
• Performance by both parent and child
• Partial performance by the foster parents
• Intestacy by the foster parents.
▪ Application:
• She commenced her relationship with the foster parents when she was a minor.
• She would have been adopted if there was consent
• When her dad died, she was an adult and the legal barrier vanished.
▪ Holding: contract was invalid
▪ Dissent:
• The child didn’t object to the agreement and the child was a party to the contract.
• If this is an equitable doctrine, then this should be done in equity not through contract-like law.
• The daughter did her part in the contract—she took care of her parents, etc.
o Under CPC § 6455: Contract-based jurisdiction???
• Hall v. Vallandingham:
o H and W have 4 kids. Wife remarries. H2 adopted all 4 children. 25 years later, the first husband’s brother dies. Uncle’s estate is supposed to go to the nieces and nephews. However, the kids are adopted.
o Holding: the intervening adoption by H2 has severed the relationship from H1 so it is severed the “from” and “through” relationships.
• If this case was in CA: CPC § 6451:
o Both conditions apply to this case: adoption occurred post death by stepparent. They must have lived together and father died.
o So that statute preserves the right from and through the parent. So the nieces and nephews would inherit.
• Minary v. Citizens Fidelity Bank & Trust Co.
o Amelia is the mother and she creates a trust. It was a life estate and upon her death, it would go to her sons and upon their death, it would go to the then surviving heirs of Amelia.
o Alfred married Myra. And then he adopted her so that she would become Amelia’s heir.
o The issue is adult adoption:
▪ In CA it is okay and the adults are treated the same way.
o In Kentucky, adult adoption is permitted.
o Court:
▪ She can’t frustrate Amelia’s trust and intent
▪ The legislature was not contemplating this result.
▪ Court held that he wife does not get to take the benefit of the trust.
• If this was in CA:
o An adopted individual is in your family tree for all purposes
o CPC § 21115: Halfbloods, adoptees, persons born out of wedlock, stepchildren and foster children; inclusion:
▪ The adoptee is an issue of a transferor (who is not the adopted parent) only if the person was adopted while they were a minor.
• Ex: you can’t mess up grandma’s trust by adopting your drinking buddy.
• This doesn’t apply to intestacy: under intestacy you are still adopted.
• Doris Duke: You can’t un-adopt once you are adopted.
Posthumous Children:
• Common law: they are a child of the deceased if they are born w/n 280 days of death.
• NOW: If you are born w/n 300 days of death
• Family Code 7611: Presumptions of parenthood.
• Woodward v. Commissioner of Social Security:
o Man who had leukemia and then stored some sperm and then the wife used them to have 2 children. The wife wanted to get social security benefits for the kids.
o The court is worried that allowing these types of claims would create a lot of litigation b/c it is extending the period of possibility of litigation.
o Holding: if we can determine from the fact that it was the intent of the parent to postomously conceive the child and that it was the deceased parent’s desire to support these kids.
• CPC § 249.5:
o There is no parental obligation between the child and the donor from an anonymous donor.
o However, if it is not an anonymous but it is regular conception, then parental rights attach.
o A child is an heir if born posthumously if all the following conditions are satisfied:
▪ The decedent in writing explains that his genetic material will be used to conceive posthumously.
▪ Has to be signed by decedent and dated by him/her
▪ Can only be revoked by writing w/ signature from D and one witness.
▪ Can be controlled by spouse or partner or by someone else that is identified.
▪ Has to send certified mail to person who has power to control D’s property and estate within 4 months of the issue of death certificate.
▪ The child must be in uterus w/n 2 years of the date of issuing a death certificate.
• In re Martin B.:
o Grandpa had 2 sons. One son got cancer and he was married so they decided to bank sperm. He died. His father set up a trust providing that the trust be distributed to his two sons or their issue. At the time the trust was set up and at the time the father died, there was no issue.
o The wife used the material and conceived two children after the death of James but before grandpa died.
o The court:
▪ Infer grantor’s intent to benefit his bloodline
▪ The grandfather could have changed the trust if he wanted.
o Holding: Children are issue and descendents for all purposes of the trusts
• Section 249.5 is very vague b/c it doesn’t determine who “decedent” is.
Advancements: it is an intestacy rule; it only applies to intestacy:
• Should we take into account lifetime gifts when figuring out what is equal distribution upon death?
• General presumption: if you make a lifetime gift, we assume that they are an advance against the inheritance.
• The Hotchpot: augment what the decedent had by bringing back in all the gifts made during lifetime.
o We account for the gifts that have already been made.
• Modern trend: to abandon presumption:
o We presume that gifts are not advancements unless there is a writing that says they are
▪ Decedents declare in a contemporaneous writing that the gift is an advancement.
▪ It doesn’t require it to be a will or that it is signed or dated.
▪ It has to be contemporaneous in time
▪ OR the heir acknowledges that the gift be deducted as an advancement.
o Also if the writing indicates a value, that value is the conclusive value regardless of what it is worth now.
• If father dies and children are supposed to inherit from grandfather, does advancement to the father count against the kids?
o CPC § 6409: Property given to heirs during decedent’s lifetime; advancement against share:
▪ We DO NOT count it against the children UNLESS:
• Decedent declares in contemporaneous writing that he gift is an advancement against the heir’s share of the estate; OR,
• The heir acknowledges in writing that the gift is to be so deducted.
• In wills it is different, we will talk about it later.
Minors:
• Minors lack capacity to hold property. On the death of the decedent, they can’t take the distribution.
• We find someone to stand as representative of that interest. 4 ways:
o Guardianship:
▪ Very limited; they are only to guard the property
▪ Regular account required by probate court
▪ Involves a lot of lawyer fees and accountant fees. Like an ongoing probate.
o Conservatorship:
▪ Conservator holds the assets to protect them for the benefit of the conservatee:
▪ Slightly more powers than a guardianship
▪ But it is still very costly and it still requires a lot of court supervision
o Custodianship:
▪ East to set up.
▪ Gives more power to the custodian
▪ Very limited accounting(in some cases, no accounting required.
o Trusts:
▪ Unlimited flexibility
▪ They can also last beyond the age of majority
• If you die intestate and have minor children, you get a guardianship.
BARS TO SUCCESSION
• Homicide:
o In re Estate of Mahony:
▪ Wife convicted of manslaughter of her husband. Issue is whether she can inherit his $4K estate. There is no issue and no will.
▪ Main idea: wrongdoer should no benefit from their own wrongdoing.
▪ Three possibilities:
• Legal title passes to the slayer and may be retained by him in spite of his crime.
• The legal title will not pass to the slayer b/c of the equitable principal that 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.
• The legal title passes to the slayer but equity holds him to be a constructive trustee for the heirs or next of kin of the decedent.
▪ Constructive Trusts:
• Not a formal trust
• They are just made to prevent slayer from getting benefits.
• The probate judge says that he is giving the property to you to hold but he imposes a duty of trust (basically holds it until it is given tot the appropriate taker).
• It is basically a duty to give it to the right taker.
▪ Mr. Mahony died with manslaughter. On the voluntary manslaughter would apply in CA.
▪ The court remanded it to the lower court to figure out if it is intentional or unintentional manslaughter.
o CA: we treat the slayer as having predeceased the slayer. So they don’t benefit from the estate. It goes to whoever is next in line.
▪ CPC § 250: person feloniously and intentionally killed decedent; entitlement to decedent’s property; effect on decedent’s estate:
• You must kill a person intentionally and feloniously in order for this to apply
• It applies to testate and non-probate transfers.
• Property passes as if the killer has predeceased the decedent.
▪ CPC § 251: joint tenants; rights of survivorship:
• Joint tenancy is converted to tenancy in common so it passes to whoever is supposed to get it. However, your half is not touched.
▪ CPC § 254: Judgement of Conviction as conclusive; preponderance of evidence:
• Criminal conviction of homicide or voluntary manslaughter, that is enough b/c of beyond a reasonable doubt standard.
• If you are not found guilty under the criminal courts, you can still be found a slayer because the standard is only preponderance of the evidence.
• You just have to be found responsible for the death.
Doctrine of Lapse & Anti-Lapse:
• Doctrine of Lapse: in the context of a will, if one of the heirs does not survive, the gift to A has lapsed
• Doctrine of Anti-Lapse: if the proposed taker stood in a close enough familial relationship and if the taker died leaving issue behind, then we can presume that the testator wanted the taker’s children to have something so we will prevent the gift from lapsing.
• Ex 1: If there is a mother with 4 children. One child has two children. The child kills his mom. Then he dies. Will his children get their father’s share from the mother?
o If it was testate with a will saying: to my children equally, then antilapse will NOT apply. So you don’t get anything and your children don’t take anything.
o If it was intestate: it would just go to whoever is net in line. So the children will get. So we only treat the killer as having predeceased.
• Ex 2: will says to my children equally, if they survive. If not, then to my grandchildren.
o The will tells us what to do in case of A’s death
o So lapse and anti-lapse will NOT really apply.
• The Chinese system: uses the inheritance system to encourage good behavior.
• UPC § 259: Predeceasing a decedent:
o Another bar to succession: if someone has abused the decedent, the person is found to have acted in bad faith.
o You are taking advantage of those who can’t take care of themselves.
o On the death of decedent, you are treated as having predeceased the spouse.
Disclaimer:
• When you refused to take a portion of the inheritance of an estate
• It is a tax planning devise
• You are treated as having predeceased the decedent
• Most statutes require the following for disclaimer:
o Have to be written
o Have to be within 9 months
• Drye v. United States:
o Issue with getting his share because he had a lot of IRS money to pay off. The mother died intestate. So he disclaims it, and it goes to hi daughter. The daughter creates a trust with the beneficiaries as the father and daughter.
o Court:
▪ The lien the IRS had been on the property OR INTEREST ON PROPERTY. Even though he disclaims it, it was kind of an instantaneous interest property.
▪ If you disclaim it, normally the torts and credit claims can’t touch it. However, the IRS claim is a “super” claim.
• Medicaid benefits: courts are reluctant to allow the defeat of a government claim regarding Medicaid.
• CPC § 282: Disclaimed Interest; disposition; interest created by intestate succession:
o The disclaimer is not treated as having predeceased the decedent for purposes of determining forgiveness of advancement on prior death.
o The disclaimer is not treated as having predeceased the decedent for the purpose of determining at which generation we make the cut.
Chapter 2 Review:
• Heirs: only for intestate problems. Until they die, we are heirs apparent. Once the relative dies, we are heirs.
• Expectancy: the right to inheritance before the person dies.
• You can buy and sell a portion of the rights of expectance. However, courts don’t like them.
• Shares of surviving spouses:
o Separate vs. community property
o All community and portion of the separate property depending on who else is inheriting.
o Janus v. Tarasewicz: people dying of Tylenol. This was about survivorship and who died first to get the insurance police.
• In CA: 120 hours for surivviorship to take place—this applies to probate intestate.
o But in CA: if it is non-probate, it is a millisecond rule.
o However, there is a right of recapture(applies to probate and non-probate.
• Shares of decedents:
o English per Stirpes
o Per capita
o Per capita at each generation
• Negative disinheritance:
o Recent years: trend is toward recognizing that intent. However, traditionally it wasn’t favored.
o CA: it is not favored; you have to affirmatively say it.
• Next of kin:
o Parentalic
o Degree
o Degree w/ a parentalic tie breaker
• Half bloods:
o Whole and half bloods are treated equally in CA
o Scottish rule: half blood = half share.
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WILLS: CAPACITY & CONTESTS
MENTAL CAPACITY
1) The Test of Mental Capacity:
• Capacity to make a will: CPC § 6100(a)
o Must be an adult (18 years or older)
o Of sound mind
• Have to have the ability to:
o Know the nature and extent of your property
o Natural objects of your bounty (people more likely to get your property)
o Nature of the testamentary act you are taking
o How all these elements work together to form a plan of disposition
• It is NOT that you “know,” it IS that you “have the capacity to know” if you wanted to. This reduces the threshold requirement on testamentary capacity.
• Presumption: testamentary capacity exists. It is the rare case that they don’t have that capacity.
• A court can still find a defect that renders the capacity insufficient to make a will even if there is mental capacity.
o Undue influence
o Insane/delusion
o Fraud
• Standing: you have to be able to show that if your challenge succeeds, you will benefit from the will.
• Testamentary capacity is lower and easier to meet than contractual capacity
• Capacity required to marry is the lowest of the three capacities b/c the government doesn’t want to intrude on marriage.
• In re Estate of Washburn:
o There were three different wills that were very contradictory. First two were very similar concentrating on family. The third one focused on her caregiver. Niece is claiming that the aunt had Alzheimer’s disease—she didn’t recognize people.
o Issue: whether the testator lacked capacity in making the third will.
o Court: the third will was too different from the others
o Holding: Barbara did not meet her burden of proof to show that the testator had mental capacity. Therefore lack of capacity rendered the will invalid.
• Wilson v. Lane:
o Family claims will is invalid b/c the testator lacks the mental capacity. The testator had a fear of water and she was very weird.
o Court:
▪ Attorney testified that she was adamant about choosing who would benefit from her will.
▪ The guardianship thing was an attempt to help her stay in her own home and get benefits.
▪ The eccentric behavior does not prove lack of capacity.
o Holding: there was mental capacity here.
2) Insane Delusion:
• If you have an insane delusion, this is a defect to capacity which affects the testator’s ability to know what he/she has and how to dispose of it.
• In re Strittmater:
o She left her estate to the national women’s party. People brought the challenge were members of her family.
o Issue: whether the testator was suffering from insane delusion at the time she wrote the will.
o Insane Delusion: No amount of factual support will fix the delusion. No matter how hard you might have tried, it wouldn’t have changed.
▪ The error is poisoning the ability of the testator to express his/her true wishes.
o Holding: the will probate will be set aside.
o Analysis:
▪ Testator had a loving relationship w/ her parents but after they passed away, she started hating them and hating men.
• It is very subjective and fact-intensive inquiry. You have to determine whether the delusion was insane.
• When you find an unnatural disposition (you are not giving things to those who are the natural objects of your bounty), court may view that itself as something that is not right.
• Majority rule: a delusion is insane even if there is some factual basis for it if a rational person in the testator’s situation could not have drawn the conclusion reached by the testator.
• Minority view: if there are some factual bases at all for the testator’s delusion, it is not deemed insane—that is more protective of the testator; it is a higher burden to bear.
• In re Honigman’s Will:
o He was worried that his wife of 40 years was having an affair. He was starting to hear people running around the house. He didn’t want to leave anything to his wife when he wrote the will.
o However, under the law, he can’t do that. He gave her the minimum but not more. The rest he gave to his family.
o Under the majority rule: there might have been some factual basis for the belief(the anniversary card; man entered the house.
• California takes the MINORITY approach:
o Raising the burden
o More difficult to show insane delusion
o Causation: “But for” standard.
• Causation Requirement: Breeden v. Stone:
o The testator had a drug and drinking problem. He hit a reporter and died. It was a hit and run. He handwrote a will giving everything to his drug dealer. And he shot his dog then committed suicide.
o You have to show capacity at the time the will was written.
o Issue 1: did he have the capacity to write a will at the time he wrote it?
▪ The court said yes b/c of motor capacity and expert witnesses.
o Issue 2: he was suffering from an insane delusion:
▪ He thought that the FBI was following him and that they were trying to get his dog.
▪ Holding: this evidence also does not invalidate the will. You have to show causation also: just because you were insane does not mean you lacked capacity:
• You have to be operating under an insane delusion
• The insane delusion must have caused you to do what you did. The insane delusion must “material affect” the construction of the will.
o Possible Standards:
▪ “Might have”
▪ “Materially affect”—rule in this case; middle ground
▪ “But for”—more difficult for the challengers to meet.
UNDUE INFLUENCE
1) Introduction
• It is generally not a physical influence. It can be nagging, emotional abuse, guilt, fear, etc.
• Undue influence does not have a timeline—it can last for years, decades.
• It involves questions of facts.
2) What is Undue Influence?
• Lipper v. Weslow:
o A woman disinherited her grandchildren and gave her inheritance to her two children. Julian (her first son) died before her. She had general testamentary capacity. The grandchildren bring a claim against the two other children saying that Frank exerted an undue influence on the mother to write the kids out of the will.
o 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 not otherwise have done but for such control.
o Standard of Undue Influence:
▪ Susceptibility of testator
▪ Opportunity of influencer
▪ Motive
▪ Causation: this all resulted in substituted intent
o Susceptibility: she was old, living by herself, her husband was dead
o Opportunity: he wrote the will, he was living close to her
o Motive: he didn’t like the grandchildren’s father, money
o Causation: Does the first 3 elements combine to show that there was causation? That is the conclusion that must be drawn from the evidence of the first 3 conditions.
o Good indication it was her will:
▪ She told 3 different disinterested people about the problems w/ her daughter-in-law and the kids. However, the impact of an undue influencer can take effect over hears.
o Burden shifting: shifts burden on the alleged influence to prove that he did not influence the testator.
• In re Will of Moses:
o T was married 3 times and didn’t have kids. During the 2nd. She had a relationship w/ an attorney who was much younger than her. She was alcoholic and she didn’t have good health and had breast cancer. She goes to an independent attorney and tells him she wants to leave most of her estate to Mr. Holland.
o Capacity:
▪ She was over 18, and of sound mind and she knew what she wanted.
▪ Sister alleges that she lacks capacity b/c of undue influence.
• She was a sophisticated businesswoman. She did not really like her sister.
▪ Under CA rules—but the court uses the traditional 4 element test kind of.
• Confidential relationship: there seems to be a confidential relationship here. Maybe even a fiduciary relationship (attorney-client). If the lawyer gets a gift from the will, then the presumption is raised.
• Susceptibility: maybe b/c she was old, sick, alcoholic, and alone.
• Opportunity: yes, because he spent so much time with her.
• Motive: yes b/c she had a lot of money to give away
• Causation: but for her relationship w/ that person, she might have given the money to her family. But the court doesn’t really talk about causation.
▪ Holding: there is undue influence
• Presumption of Undue Influence: Common law
o Confidential relationship
o Relieves bulk of testator’s estate
o Testator is of a weakened intellect
• Presumption of Undue Influence: California
o Confidential relationship
▪ It is not only including fiduciary relationships
▪ Ex: housekeepers who care for the elderly, medical providers, neighbors, etc.
o Active in the procurement or execution of the will
▪ It does not have to be the spot that it was signed.
▪ It can take years.
o Unduly benefits: compare what you would have gotten otherwise (if intestacy; if earlier wills are applied; etc.)
▪ Getting more than you would have gotten otherwise looking at intestacy or earlier wills and trusts.
o If you show these 3 elements are present, then there is a presumption of causation. This can be rebutted by the proponent of the will.
• If you can’t show the presumption of undue influence, you can go back to the original 4 element, but then you have the burden of showing causation.
• In CA, if you can’t meet one of the elements of the presumption, then you can go back to the traditional 4 elements and the opponent has the burden of proving causation.
• Start w/ a valid will(opponent claims it is invalid(opponent claims undue influence(burden is on opponent to prove 4 elements(if there is a confidential relationship, you can go to the 3 elements (CA or common law)(once they show the 3 elements(burdens shifts on proponent to rebut the presumption.
• Remedies:
o Strike the tainted part and leave the rest
o If the will is too infected, you can strike the will in its entirety. Then you use intestacy.
• To Avoid Litigation:
o Incentive to settle
o Testamentary explanation
o No-contest clause: if you contest this will, you will be treated as having predeceased.
• Testamentary Libel: If you say something not nice about someone and it is not true, the victim can sue your estate. If they win, they get damages. To fix that, maybe write a handwritten letter to explain in detail why you made the specific decisions you made in the will.
• No Contest Clauses:
o If you bring a contest, whatever was given to you will be lost.
o You can be treated as having predeceased leaving no issue then living.
o If you are not left with anything in the will, you pretty much have nothing to lose.
o Pros: discourages litigation and frivolous lawsuits if they will not be able to carry their burden.
o Cons: you don’t want the wrongdoer to shield himself/herself from the consequences of the wrong they did.
o They are generally upheld in most jurisdictions w/n limits. But they are construed very narrowly.
o Common law: contest clauses are generally upheld UNLESS:
▪ It is used to shield bad actions.
▪ There is probable cause even if you lose
▪ If you have reasonable grounds of bringing allegations of things like fraud, forgery, etc.
o California: CPC § 21310: direct contest means bring a claim based on:
▪ Forgery
▪ Lack of due execution
▪ Lack of capacity
▪ Menace, duress, fraud, or undue influence.
o CPC § 21311: in CA contest clauses will ONLY be enforced in 3 circumstances:
▪ If you bring a direct contest w/o probable cause
▪ Suits regarding ownership of property if the no contest clause expressly provides for that application.
▪ Contest based on creditor’s claims if the clause says that it will apply in this case.
o If you bring a contest and you win (even if there is a no contest clause), then there is no problem.
o When you lose is when the clause becomes relevant. But if you show that it was based on probable cause, then the clause DOES NOT come into pay.
o In CA, under the new law, the no contest clause will apply if the clause itself contains language that it applies to challenges based on community property and separate property mostly. Even if you win, you lose in this scenario.
• Interested Drafter:
o Legislature and courts are very suspicion of interested drafters.
o CPC § 21350: instruments can’t make donative transfers to:
▪ the person who drafted the instrument (it is not rebuttable)
▪ A relative or husband or wife of the person who drafted the instrument.
▪ No partner in a corporation
▪ Any person who has a fiduciary relationship with the transferor, including but not limited to, a conservator or trustee, who transcribes the instrument or causes it to be transcribed.
o CPC § 21351: there are 2 exceptions:
▪ The person who wrote the will is related to the transferor by blood, marriage, or domestic partner.
▪ Independent review.
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• Pertermitted People:
o There was a will, then more kids are born, you then die w/o changing your will.
o So the children are termed “pretermitted”—we assume that you did not intend to exclude them.
o CA: it would be under a presumption: confidential relationship, he did receive undue influence, and maybe active in the execution of the will but maybe not.
• Undue Influence Summary:
o Classic common law
o Presumption
o Interested drafter
FRAUD:
• Misrepresentation given in order to get a person to change their position.
• The fraud has to have an effect on the testator’s ultimate dispositive scheme.
• 2 types of fraud:
o Fraud in the Inducement: giving facts that are not true and the testator using these false facts in their decision of what to put in the will.
o Fraud in the Execution: Ex: bad eyesight and he sighs papers without knowing what they are.
o Main question: Did the fraud cause the testator to do what she did?
• Puckett v. Krida:
o Woman who was hospitalized for Alzheimer. When was discharged to her home, she gets two caregivers and they wind up with the power of attorney. Her greatest fear was that she would be put in a nursing home. Her daughter was taking care of her and her financial affairs. The two caregivers kept telling her that her daughter was going to put her in a nursing home.
o This was fraud in the inducement: the whole premise on which the will was based was fraudulent.
o Because of their bad acts, it was unjust enrichment. So they were given a constructive trust which gives the property in effect to the daughter.
o There was also an allegation by the daughter of undue influence by the two caregives.
DURESS
• Duress is another type of undue influence.
• Latham v. Father Divine:
o T was a follower of father Divine, and she left most of the estate to him. She wanted to rewrite her will that would take him out of it and give it to cousins. She got sick and needed surgery and she died during the surgery.
o So family argued that she was precluded from signing the will by being physically prevented from doing so.
o Holding: court gave effect to the intention of the testator in an unsigned will. The court used constructive trust as a remedy for duress.
TORTIOUS INTERFERENCE WITH AN EXPECTANCY
• Schilling v. Herrera:
o Sister was very sick and brother tried to help but couldn’t. so they found a caregiver. Brother lived at a distance. Caregiver got power of attorney to deal with finances. A will was drafter with the caregiver as the beneficiary. the brother was the primary beneficiary of the prior will. After she dies, caregiver filed it in probate and 4 months period expired for contesting the probate. So she distributed everything to herself THEN she told the brother that his sister died.
o Issue: whether there was tortious interference with expectancy.
o Tortious Inteference with an expectancy elements:
▪ Existence of expectance (he was named in the initial will)
▪ Intentional interference with expectance (fraud)
▪ Causation
▪ Damages (what you would have been entitled to take).
o Holding: the brother wins
• Advantages to brining a tortious interference claim:
o You can bring it after the statute of limitations run in probate.
o Statute of limitations starts to run after the tort is uncovered.
o You can get compensatory AND punitive damages
o It will not trigger the no-contest clause if it exists.
• Defects summary:
o Insane delusion
o Undue influence
o Fraud
o Duress
o Tortious interference with an expectancy.
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CHAPTER 4: WILLS: FORMALITIES & FORMS
• If you satisfy adequate capacity absent defects, you must have a properly executed will.
EXECUTION OF WILLS
a) Attested wills:
• General requirements:
o Writing
o Signature
o Witnesses
• Last paragraph, witnesses attest to the will(attestation clause. Usually two witnesses but some jurisdictions require more.
• Attested wills are different from holographic wills.
o Holographic wills don’t require witnesses and they are handwritten.
• Functions that testamentary wills play:
o Ritualistic: people take it more seriously when there is some type of a ritual to it.
o Evidentiary: the will is proof of testator’s intent
o Protective: protecting testator & heirs (protect against forgery, fraud, etc.)
o Channeling: so long as we stay on the path we won’t get it wrong. We are channeling people into using lawyers. If we are all using the same things, the chances of things happening are diminished.
• In re Groffman:
o There was writing, signed, and there were two people who signed it. The problem is that the witnesses did not see the other one sign it. His widow brings suit because she was unhappy with sharing the estate with her daughter and his daughter from a prior marriage.
o Holding: court refused to admit the will to probate.
o Wills Act (every jurisdiction has one):
▪ Will has to be in writing
▪ Signed
▪ At end/foot
▪ By testator or someone in the presence of T at his/her direction
▪ Signature made or acknowledged by T
▪ In the presence of 2 or more witnesses
▪ Who are present at the same time
▪ Attest and subscribe the will in the presence of the testator.
o This expanded the scope of the requirements of general rule
o Under this statute, you can sign it in the presence of the witnesses or acknowledge that it is your will and you signed it in the presence of 2 or more witnesses.
o Here the problem is that he didn’t do it when they were both in the same room.
o However, we are frustrating his intent by not enforcing the will.
o Strict compliance: that is the traditional model in order for the will to succeed—this is the majority approach today.
• Two levels of analysis:
o Requirements imposed in the Wills Act
o Degree of judicial scrutiny.
• Stevens v. Casdorph:
o T went to the bank and he was in a wheelchair. He signed the will then the employee takes the will to the two witnesses and they sign it as witnesses. The niece alleges that this will should be ignore.
o Holding: the will was not admitted into probate.
o Dissent:
▪ Wanted to apply substantial compliance: if you can show by clear and convincing evidence that the testator wanted this to be his will AND you have substantially complied w/ the requirements, then the will should be admitted into probate.
▪ Where the risks are low, it is okay to lower the degree of judicial scrutiny.
• Dispensing power model (Harmless Error):
o The intent is the most important factor
o Judges should be free to dispense with any statutory requirement if they are completely convinced that the will represents the intent
o Clear and convincing evidence that at the time of execution, the testator intended that to be his/her will.
• Three policies:
o Strict Compliance
o Substantial Compliance
o Dispensing power model (harmless error)
• However, courts generally like strict compliance b/c courts can avoid litigation that way.
• California: largely a strict compliance jurisdiction.
• The meaning of “presence” in will execution:
o Two approaches:
▪ Strict Compliance: line of sight test: doesn’t have to actually see those sign but that you have the ability to see were you to look.
▪ Modern Trend: conscious presence test: through sight, hearing, and general consciousness of events, comprehends that the witness is in the act of signing (this approach attempts to expand the timeline).
• California: strict compliance with a little bit of substantial compliance. Meaning of presence is not strict; harmless error to the attestation requirement.
o CPC § 6110: Will Execution Requirements
▪ Writing
▪ Signed by T or another in T’s presence and by T’s direction or a conservator
▪ Witnessed
▪ During T’s lifetime
▪ By at least 2 witnesses each of whom are present at the same time and witnessed either T’s signature or acknowledging the signature
▪ Understands that what they signed is the testator’s will.
o Interpretation:
▪ Testator has to sign in the presence of both witnesses; but when the witnesses have to sign anytime and don’t have to sign in the presence of the testator but it has to be in the testator’s lifetime.
▪ So CA has reduced the number of requirements when compared w/ common law.
▪ CA also allows the acknowledgement of the signature or the acknowledgement of the will.
▪ Harmless Error Portion: If the will was not executed in compliance w/ paragraph 1, the will shall be treated as if it was executed in compliance if:
• The proponent of the will establishes by clear and convincing evidence that, at the time the testator signed the will, the testator intended the will to constitute the testator’s will.
• This only an exception to the part requiring the 2 witnesses to sign the will during the testator’s lifetime and be present at the same time witnessed the signing of the will or the testator’s acknowledgment of the signature or of the will and understood that the instrument they sign is the testator’s will.
▪ So they have to be there at the same time when the testator signs it but they don’t have to be there at the same time when each witness signs it.
• Line of Sight v. Conscious Presence:
o If the testator signs and dies right away before the witness signs it, then it is not signed by the witnesses in the lifetime and the other issue is whether he is present at the time of the witness’ signature.
o Do problem on page 233-34 (Lecture 6-2)
o Telephonic presence has not been accepted by any court.
▪ Webcam: might be a stronger case, but it is the same concerns that exist. All courts are still reluctant to break away with the actual “physical presence.”
o While conscious presence is an improvement from the line of sight test, it still does not allow all situations.
• Stoker Case:
o In 1997, T left everything to the girlfriend. In 2001, the broke up. In 2005, he writes something giving everything to kids and taking everything away from the girlfriend. There were two witnesses but no one signed it as a witness.
o It is NOT a holographic will b/c he didn’t write it.
o Holding: admitted the handwritten will b/c of harmless error.
• Summary:
o Is a will properly executed?
▪ Requirements imposed by the Wills Act
▪ Degree of judicial scrutiny
o Common law and CA (to a large extent) are strict compliance
▪ But some are able to be more flexible in their idea of presence
▪ CA also has some elements of harmless error.
▪ So far strict compliance has worked very well.
• The Meaning of Signature in Will Execution:
o At common law, whatever you intended to be your signature is your signature.
o CA: California Civil Code: in order for an “x” to be your signature, you have to do it in front of a witness. Witness has to then write the name of the testator and then the name of the witness and sign.
▪ The witness has to write the name of the testator; it can’t just be reprinted.
▪ But substantial compliance might allow the reprinted name instead of a handwritten name—but they haven’t done this yet in the probate code context.
▪ Order of signing: at common law, the testator signs first; then the witnesses sign second.
▪ If it is a voluntary cessation, it is a valid signature. If it is an involuntary cessation, then no.
▪ If you ask for help signing, it is a valid signature. If you don’t ask for help signing and someone helped you, then it is not a valid signature.
o In re Colling:
▪ There was only one witness to the signature. There was also one witness to the attestation because the first witness had already signed before the attestation.
▪ The court used strict compliance and refused to admit the will to probate.
▪ Other courts: might have a different view: as long as everything took place as part of one unified ceremony, the court won’t care about who signed first—so it is like substantial compliance. Here there is no risk of manipulation or fraud, etc.
o California: witnesses must know that it is a will in order to sign it. Other jurisdictions might require more or less.
• Subscription and addition after Signature:
o Witnesses sign after testator at the bottom of the will in order to prevent manipulation and everyone knows the beginning and end of a will.
o A P.S. to a will is a codicil.
o At common law, anything after the signature was NOT part of the will and was ineffective.
o California: no requirement that signature is at the end. It is not about where it is, it is about when. If it contained the language at the time of signature, then it is part of the well.
▪ Standard of proof: preponderance of the evidence.
• Delayed Attestation:
o As long as the recollection is still clear, you should attest at any time in the future—any reasonable time.
o California: testators can sign at a later date and different location.
▪ However, it has to be before the testator’s death. So it has to be during the life of the testator.
• Electronic Wills:
o Taylor v. Holt:
▪ Computer-generated cursive signature.
▪ Court held that the signature was valid b/c in that state there was a very broad meaning of signature.
o Computer Disk:
▪ Canada allowed it because there was a statute about that.
▪ California: does not allow video signatures.
o Video:
▪ We are afraid of coercion, technology might later become unusable, and it can be edited.
▪ It also defies the ritualistic function. Videos might make it easy for people to make wills when they don’t know that they are making a will.
• Estate of Morea:
o There were 3 witnesses to the will: a notary, relative, and friend. The issue was that 2 of the 3 people who signed it had an interest in the will. So there is a conflict of interest here for the 2 people who get something out of the will. At common law, beneficiaries in a will can’t be used as a witness b/c they have a conflict of interest.
o Court:
▪ Since relative took less under the will than otherwise, there was no undue influence here.
▪ They are looking for two witnesses who have nothing to gain.
▪ So there were enough valid witnesses here.
▪ So the third witness is okay to be interested b/c we have two disinterested witnesses already.
• CPC § 6112: Interested Witnesses
o Presumption that the witness procured the devise by duress, menace, fraud, etc. against the interested witness.
▪ Presumption does not apply where the witness is a person to whom the devise is made solely in a fiduciary capacity.
▪ Presumption is a presumption affecting the burden of proof
▪ This is just an extension of undue influence that we already talked about.
▪ If he fails to meet the presumption, then he can take as much as he would have taken if the will was not established.
• Effect of harmless error on interested witnesses:
o They are different types of things regarding the two issues. Harmless error does not really affect the interested witnesses.
o Harmless error is ONLY regarding attestation.
b) Curing Defects in the Execution of Attested Wills
• Strict Compliance: In re Pavlinko’s Estate:
o The spouses signed in each other’s place—so there was a mistake. They leave stuff to each other and ultimately to the brother. So the two wills were very similar. Helen dies first then Vasil died. Each person signed the other spouse’s will instead of their own.
o Two options:
▪ Probate his will even though he didn’t sign it.
▪ Probate the will he signed and have the court change the terms.
o If this was intentionally done by the law, the court will come in and fix it maybe through a constructive trust.
o However, the court generally does not want to go into the will and rewrite parts of it.
o Holding: court refused to probate the will.
o The misdescription doctrine would not work here because the remaining language would not be enough if we took the wrong word out.
o This case was analyzed through strict compliance.
• Substantial Compliance Application: In re Snide:
o It was the same facts as Pavlinko. They signed each other’s will. The guardian had to bring action challenging the will.
o Holding: court cured the defect.
o There was no question regarding intent. The most important thing to the court was the intent of the testator. There was no danger of fraud.
o This was Substantial compliance: (1) clear and convincing evidence of intent, and (2) you substantially complied w/ the requirements.
• Substantial Compliance Defined: In re Will of Ranney:
o First case to come out and mention actual substantial compliance. Two-step will have a separate affidavit to the end of the will. The testator signs the will. However, the two witnesses only sign the affidavit not the actual will. The affidavit is NOT part of the will. The issue is that the witnesses did not satisfy strict compliance with the requirements.
o Holding: court admits the will because of substantial compliance.
o Substantial compliance:
▪ Clear & convincing evidence that the testator intended for that to be his will.
▪ Clear and convincing evidence that the testator substantially complied with the requirements.
• So normally, start with strict compliance. If that doesn’t work, then go to substantial compliance.
• Harmless error is the substantial compliance w/o the clear and convincing evidence of substantial compliance.
o The UPC is a harmless error model.
o Argument against harmless error: we are inviting judges to engaged in judicial law-making (job of the legislatures).
• Levels of scrutiny:
o Strict compliance
o Strict with flex—California rule: harmless error is applies to the witness requirement. Conscious presence & attestation (harmless error applies)
o Substantial compliance
o Harmless error
• Harmless Error: In re Estate of Hall:
o Montana is a harmless error jurisdiction. Issue was whether the will is valid because it was not final.
o Holding: one witness was okay because there was clear and convincing evidence that he intended for that to be his will.
c) Notarized Wills:
• In re Will of Ferree: will was a standard for with handwriting one it. Will was notarized but not attested. The court held that the will did not substantially comply with the applicable Wills Act because there was still only one rather than the required two witnesses.
d) Holographic Wills:
|Attested Wills |Holographic |
|Writing |Writing |
|Signed |Singed |
|Witnesses |Has to be entirely in T’s handwriting |
| |Has to have present testamentary intent as to this instrument |
| |(this is more difficult than finding it in an attested will). |
• Not all jurisdictions recognize holographic wills
• Common law: initially it was really strict compliance for it to be in T’s handwriting.
• California: allows holographic wills: CPC § 6111:
o Material provisions and signature has to be in your handwriting.
o CA is a material provision jurisdiction so it doesn’t all have to be in the handwriting of the testator.
o Has to show testamentary intent.
o If there is no day, you have to prove that it was executed after any other will you are trying to overrule.
• Kimmel’s Estate:
o Man writes a letter to his children and then dies right after. He mentions in the letter how he wanted his property to be divided and that his kids should keep this letter.
o Holding: there was testamentary intent.
▪ He wrote a paper that would have further impact in the case of his death.
▪ Reference to the future is significant and mentioning what he wants to happen in case he died—that is what testamentary intent is all about.
• Hypothetical:
o Woman gives the attorney a handwritten note telling the lawyer that it was her will; this is the way I want my estate to go. The will said “my entire estate is to be left to my step-son and step-daughter.” Lawyer noted on the piece of paper which of the kids would be executor. Testator then dies.
o Issues:
▪ If it is not a will, then what is it?
• It could be instructions rather than a will
• Even if there is the word “will,” that is not unambiguous.
• Even if she said “estate,” that doesn’t mean probate estate. It can be an intervivos estate.
o If we know more facts: she is a capable businesswoman, her husband had just died, and he left a fully attested will.
▪ Court found that these were instructions rather than a will.
• Estate of Gonzalez:
o Gonzalez filled out the parts of a preprinted form. He had the witnesses sign the blank form rather than the one that is filled out. He signed the one filled in. Then he died before completing the second one. It can’t be an attested will because there were no witnesses. For it to be a holographic will, the material provisions have to be in testator’s hand.
o Court applied Arizona law: a person who handwrote his wishes on a preprinted will form had effectuated a valid holographic will b/c the person’s testamentary intent is clear.
• Under harmless error: it would be the same result; he complied with most of the requirements.
• California:
o CPC § 6111(c): you can look to the language of preprinted form to draw testamentary intent.
o CPC § 6111.5: allows use of extrinsic evidence.
o Dating a will is NOT required in CA.
• Conditional wills:
o Condition: “If I don’t return, I want my estate to go to . . .”
o If I do return, what does that mean to the condition?
▪ Courts have held that they are just descriptive of the reason you are writing the will; it is NOT imposing an express condition.
o So courts ignore them unless they are in a lawyer-drafted will; if a lawyer allows you to do it, then courts feel like it is really a true condition.
o In holographic cases, courts will most likely ignore it unless you show that the condition is really what you want.
o There is a bias in favor of finding a will valid.
o Presumption is against the condition.
• A valid will does not have to give anything away; it might just appoint a representative for example.
• In re Estate of Kuralt:
o Man who wrote a letter before he died assuring his girlfriend that he would see to it that she would inherit his property in Montana.
o Issue: do we have testamentary intent.
o Court:
▪ It is clear that he intended to give her that property.
▪ Montana is a harmless error jurisdiction
▪ Montana is kind of using harmless error to cure the issue of testamentary intent.
▪ We don’t know if this is a one case off or courts will do this more often.
• CA: does not allow harmless error except for attestation:
o CA follows traditional notions. CA won’t go as far as Kuralt.
• Something to think about: if we are willing to elevate intent that high, then why not use it in intestacy as well.
REVOCATION OF WILLS
• Ways to revoke:
o Subsequent will: has to comply with testamentary formality
o Destroy the will physically
• Revocation by inconsistency: to the extent that W2 is inconsistent with W1, the later will provision will control.
• Express revocation: say in W2 that you are revoking W1
• In Whole or In part Revocation:
o Partial revocation: A codicil: a subsequent writing (there has to be a will written before codicil); it supplements, amends, or modifies an existing will. Or it can partially revoke a will. Codicils have to fulfill the requirements of attested or holographic wills.
• Components of a Will:
o Specific bequests: My car, my house, my etc.
o General bequests: $10,000( it doesn’t have to be a specific $10,000. If you don’t have the general bequest, your executor will go out and get one (buy a car).
o Residuary: anything else; what is left. Allows you to dispose of things that are acquired after the will or anything you didn’t specifically mention. So this is more flexible than the first 2 components.
• Subsequent Instruments:
o May be a subsequent will or a codicil.
o General rule: if a second instrument has a residuary clause, it is a new will not a codicil.
o Example 1:
▪ Document #1: Everything to LLS (Will; Residuary)
▪ Document #2: I give my car to X and the residue to LLS (Will; overturns the other will).
▪ If Document #2: I give my car to X (Codicil; still need Document #1)
o Example 2:
▪ Document 1: I give my car to X (Will #1)
▪ Document 2: I give my watch to Y (Will #2)
▪ Neither document has a residuary clause; they are 2 mutually independent documents.
o Example 3:
▪ Doc. 1: I give 1000 to x and my watch to y
▪ Doc. 2: I give 2000 to Z and residue to LLS.
▪ The residuary clause appears to obliterate the first document. So it is inconsistent w/ the provisions of Doc. 1. So Doc. 2 controls because it is the later one.
• Distinction between Will & Codicil:
o The distinction is important b/c you can’t have a codicil without a will.
o The revocation of a will takes all codicils with it. The revocation of a codicil does not affect the will that the codicil is related to.
1) Revocation by writing or physical Act
• Thompson v. Royall:
o Testator executed a will and then a codicil later. Then a few days later, she wanted to destroy the documents b/c she changed her mind. Attorney suggested that she does not destroy the will but use it as an example. They write a paragraph on each document saying that it is null and void and only used as an example (memorandum). The attorney wrote this paragraph and the testator signed it. They never got around to making another will.
o Analysis:
▪ The will complies w/ requirements. We will not probate the will if it was validly revoked. You have to have capacity to revoke a will.
▪ There has to be intent to revoke.
• There is no question here that she intended to revoke.
▪ Issue: did she revoke it by a destructive act?
• No, it was not destroyed because it has to be on the face of the instrument, it has to obliterate parts of the words on the document itself.
• California:
o Traditional common law jurisdiction: revocatory act must impact the face of the document itself.
o But maybe under CA’s harmless error in attestation narrow exception: maybe her statement might be treated as a will and can revoke the will.
• Presumption of Revocation: Harrison v. Bird:
o Speer has a will and wanted to revoke it. So the lawyer tore it up and mailed it to her. This was a revocation by physical act.
o This is a revocation by physical act:
▪ However, it was not in the testator’s presence. So there is no proper revocation.
▪ She dies and they found the cover letter but the pieces of the will.
▪ Presumption of revocation:
• If the testator last had the will and at the time the testator dies, we presume that the testator revoked it (destroyed it);
• We can’t find the will; and,
• Throughout the period following ownership until her death, she had capacity.
▪ Overcoming the presumption:
• If there is a plausible explanation for the absence of a will (house went on fire).
• Then we shift to alternative doctrine—lost will doctrine.
• The Lost will Doctrine:
o If you can’t find it and you don’t think it is revoked(you need to reconstruct the will.
• If we can’t get the presumption of revocation because he didn’t have it or there was no mental capacity but we can’t find it, then we go to the lost will doctrine.
• The presumption of a revocation can be rebutted.
• California:
o CPC 6121: a will executed in duplicate or any part thereof is revoked if one of the duplicates is burned, torn, canceled, etc. is revoked if another original is destroyed.
o CPC 6124: If the will and a duplicate original can’t be found, then it is presumed that they were destroyed.
• Partial Revocations:
o We can always revoke in part by writing—codicil.
o If you revoke in part, that property has to go with someone else. Doesn’t that mean that you are making a new bequest? If you are, you have to comply with the wills formalities.
o At common law, there was no partial revocation by act permitted.
• Summary of Ways to Revoke a will:
o Physical destruction
o Subsequent instrument
o Revocation by presumption:
▪ Testator last had it
▪ We can’t find it
▪ Testator had capacity.
o Partial revocation by writing = codicil
▪ It can partially revoke the terms and conditions of a previous will.
• Partial Revocation by Physical Act:
o This is a harder problem
o At common law, it was not permitted. If a will had partial revocation and you can still read it, it would be probated. It was not allowed because it was ambiguous. Also it is unclear what you do with a revoked gift because the property has to go to someone else.
o To make a partial revocation, you have to comply with the Wills Act.
o CPC § 6120: CA allows revocation in whole or in part by physical act or subsequent instrument
• What to with the revoked part:
o You can give the revoked gift to the residuary (modern trend)
o You can distribute it by intestacy (minority of jurisdiction).
o EX: I give a total of $10,000 to A and B
▪ If you cross out B, what do we do?
▪ It is a revocation by act
▪ Majority approach: you cannot increase a gift outside of the residuary without formally complying with the Wills Act. So you can’t give the full $10,000 to A.
▪ So it would go to the residuary (majority) or intestacy (minority).
▪ UPC: let the gift pass as the will now reads. So the $10K would go to A
▪ California: Partially revoked gifts drop to the residue; no requirement to go through with any further formalities.
o EX: I give a total of $10,000 to A and B. Then they cross out $10K and replace with $5K and cross out B.
▪ Here you are trying to create a new gift.
▪ So we need more to get this to be a valid gift.
▪ CA: can we bootstrap this onto the harmless error if they are treated as a holograph?
• That is a real stretch.
• Professor does not know the answer . . .
2) Dependent Relative Revocation and Revival:
• Revival: Will 1 is revoked by Will 2. Then, later testator revokes Will 2.
o Issue: does Will 1 come back to live when the document that revoked it is itself revoked?
o Wills once executed have no immediate operative effect until you die.
o Two views on revocation:
▪ English: Will 2 has no immediate operative function until you die. So when you die, then they become operational.
▪ American: revocation is a testamentary act that does become effective immediately upon execution. So the minute you signed will #2, then will #1 is revoked immediately.
o How can you bring the dead will back to life? Two views:
▪ Have to re-execute; make a new will and has to comply w/ the Wills Act; OR,
▪ You can revive Will 1 if you intend to revive will 1. But you would have a problem proving that intent.
o CPC § 6123: Second Will revoking first will; effect of revocation of second will:
▪ Draws distinction between act and writing.
▪ Revocation by Act: look at intent of testator to revive will; very flexible; look at a lot of different things.
▪ Revocation by Writing: we ONLY look at the language in the third will/instrument.
• Dependent Relative Revocation:
o If the valid revocation was based on a mistake, and but for the mistake, the testator would not have revoked that will.
o The solution to this is to ignore the revocation and bring the will back into operation. So you are asking the court to ignore the revocation.
o It is kind of the opposite of revival.
o Dependent relative revocation applies ONLY
▪ Where there is an alternative plan of disposition that fails (ineffective attempt to create a new will), OR
▪ Where the mistake is recited in the terms of the revoking instrument OR possible is established by clear and convincing evidence.
▪ Limited amount of extrinsic evidence is usable.
• Comparison:
|Revival |DRR |
|-Valid Revocation |-Valid Revocation |
|-We can revive if there is intent to revive |-based on mistake |
|-Evidence: depends on how the revocation occurred: |-Causation (but for . . .) |
|1) Revocation in Writing: intent must be found in the terms of |-Evidence: |
|the revoking instrument. |1) Revocation in writing: evidence of mistake must be in the new |
|2) revocation by Act: anything—even oral statements |will & mistake is one beyond T’s knowledge |
| |2) Revocation by act: Failed alternate plan of disposition (this |
| |is usually a mistake of law) & mistake is beyond testator’s |
| |knowledge. |
|This is about actual intent |This is about presumed intent. It is about the mistake not really|
| |the intent. |
• Revival is more about the will; DRR is more about gifts specifically.
• Do problems on 298-300 (Lecture 8-2).
• If the will is a holographic will and you cross a part of it by hand and add something else, courts are fine with changes to holographic wills. You don’t have to rewrite the whole thing.
• Exception to DRR: to the extent that the testator is the one best possessed of the information, courts are NOT going to apply DRR. They are going to limit DRR to mistakes that are beyond the knowledge of the testator.
• DRR may apply to instances where there is clear and convincing evidence that the testator would not have done this if it wasn’t for the mistake(harmless language to revive the gift.
o This hasn’t really been followed in California.
o We don’t know yet if harmless error applies that far.
• Estate of Alburn:
o Woman with no family that was changing her will according to who she was living with. Milwaukee will (1955) and Kankakee will (1959). The second expressly revoked the first. Then she decided to move and then she disposed of the Kankakee will. Then she expressed that she wanted the Milwaukee will instead. She intended to revive the first will by destroying the second will.
o Revival:
▪ Valid revocation of the second will
▪ w/ intent to revive the first will
▪ revocation in act: anything can be admitted into evidence
o In California, this is a classic revival case.
o Holding: court did not revive this will.
o Wisconsin law: if you want to revive a will, you have to do it again with the formalities. She didn’t do that so she died intestate. Since she made a mistake, the court applied DRR.
o Under DRR:
▪ Revocation by act: failed alternative plan of disposition—the plan was to revive her will #1.
• LeCroix v. Senecal:
o Decedent created a codicil that only changed the name of one of the beneficiaries. The codicil had an issue b/c one of the witnesses was a husband of the beneficiaries.
o DRR:
▪ Mistake: creating a codicil that she thought was valid; because of that mistake she had in effect revoked the gift to Mrs. Senecal.
▪ But for: if she had known of the mistake, she would not have revoked.
▪ Revocation is by writing: we look for evidence of mistake in the writing itself. This is a mistake of law.
o Holding: court went back and used the first will.
• 3 Ways to Revoke a Will:
o Revocation by subsequent writing
o Revocation by act
o Presumptive Revocation
3. Revocation by operation of Law: Change in Family Circumstances:
• Classic example: divorce changes a will that leaves everything to your wife. The presumption is that you don’t want your ex-spouse to take unless you make it crystal clear that you do.
• Presumption in California: you don’t want your ex-spouse to take.
o By statute, your ex-spouse is treated as having predeceased you.
o CPC § 6122: Dissolution or annulment of marriage; provisions revoked; other change in circumstances:
▪ You can override the presumption expressly in the will.
▪ Otherwise, divorce revokes all of the following:
• Anything in the will to the former spouse
• Anything giving special power to the spouse.
▪ Revocation would be cancelled if they remarry.
▪ This applies specifically to wills.
o CPC § 5600: Non probate transfer to former Spouse Executed before or during marriage:
▪ Non-probate property falls under the presumption that you would want the non-probate property fail if there is a divorce or annulment.
▪ Exception:
• Irrevocable transfer doesn’t fall under here
• You can rebut the presumption
• Life insurance polices—do not fall under this presumption.
• Ex: “Everything to wife; if she predeceases me to wife’s children from an earlier marriage. Then, they get a divorce.
o If you carve out the ex-spouse, do you carve out the family of the ex-spouse?
o Here there is an alternative beneficiary direct:
▪ Some jurisdictions treat divorce as severing everyone in the ex-spouse’s family.
▪ In order jurisdictions, they only cut the spouse off.
• California:
o Narrow approach to defining act of revocation: revocation only applies to surviving spouse not to family.
• If you marry and have children AFTER you created a will:
o Omitted spouse and omitted child doctrines: designed to insure that you don’t inadvertently disinherit people.
o If the will is silent, the spouse and children will be protected through intestacy law.
COMPONENTS OF A WILL:
1) Integration of Wills
• Attempts to indentify what the testator intended to be his will from the papers that were there.
• Pieces of paper physically present at the time of execution
• This is about defining the 4 corners of the will.
2) Republication by Codicil
• Codicil: it comes second and doesn’t have a residuary clause. Leaves something out. It adds to a document that already exists.
• A codicil is deemed to republish, re-execute, and re-date the underlying earlier will(s).
• This will often be used to clean up what happened before.
• HOWEVER, a codicil can’t be used to validate an otherwise invalid instrument.
• So most likely this will apply to wills where there is a defect in the witnesses.
• You can do it expressly through republication language. If there is no express language, courts will presume there is republication.
o However, if re-dating would frustrate the intent of the testator, courts will not treat it as a republication.
3) Incorporation by reference:
• There is a valid will but there are other documents that have not been properly executed or are not a will. You can’t treat it like a will b/c it is not a will.
• HOWEVER, you can use it to guide you in construing the language of the actual testator’s will.
• Requirements:
o Will expresses intent to incorporate the other document
o Will has to sufficiently identify the other document
o Writing must have been in existence at the time the will was executed.
• Simon v. Grayson:
o Will says that there is another document telling who the money should go to. We can’t integrate it because he didn’t intend for it to be part of the will.
o Incorporation by Reference:
▪ The will expressly intended to incorporate the other document.
▪ The writing was NOT in existence at the time will was executed.
• However, there was a codicil dated November 25, 1933. So that republishes the will to that date.
▪ Even thought eh date was wrong, the court said that it was okay b/c the letter can still be identified.
• The court employs very low threshold to the first 2 requirements. The high burden is for the 3rd requirement for the document to be in existence at the time the will was executed.
• Clark v. Greenhalge:
o She had a will and a notebook that explains things to be distributed. The will referenced a memorandum. She wanted to give the painting from the 1800s to her friend. The executor under-valued it. She included the painting bequest in her notebook. Will was initially written in 1972. 1977 will is revised. In 1980 the codicil was written. in 1976, she started writing in the notebook.
o Analysis:
▪ There is a valid will; expressly says that it should include a memo
▪ Court said they are not going to be strict about the definition of “memorandum.”—very low standard to meet.
▪ Was it in existence when the will was signed?
• We have codicils that were created after the notebook started.
▪ Court was very lenient maybe b/c they didn’t like the guy.
• UPC 2-513:
o Tangible personal property list.
o Can have supplement to the will. And it doesn’t apply to money.
o It doesn’t have to be signed and it doesn’t have to be a will, etc.
o It has to exist at the time of death; doesn’t have to exist at the time the will was executed.
• California: CPC § 6132: Writings that direct disposition of a T’s tangible personal property:
o Writing is effective if:
▪ An unrevoked will refers to the writing
▪ The writing is dated and is either in the handwriting of or signed by the testator.
▪ The writing describes the item and the recipient of the property w/ reasonable certainty.
o Failure to comply with above requirement does not preclude the introduction of evidence of the existence of testator’s intent—more like harmless error.
o Allow for a list of disposition
o It is very similar to incorporation by reference.
o Can’t be more than $25,000 & any item can’t be more than $5,000.
• Johnson v. Johnson:
o Man writes a will that was not signed or attested and then he added a codicil at the bottom. Will was not handwritten and it was not attested. It was not a validly attested will; it was not a holographic will. The only possible solution is that the handwritten part is a holographic codicil to the will.
o Integration: won’t work here b/c the original will was not handwritten. So you can’t integrate the typewritten part into a holograph b/c it is not handwritten.
o Republication by codicil: codicils can’t republish an invalid will; you can’t revive something that never had life
o Incorporation by reference:
▪ It is not universally accepted in all jurisdictions. This jurisdiction applied incorporation by reference and introduced the will for probate.
▪ The court concentrated on the words “this will” written in the codicil. The court draws intent to incorporate the rest of the document(show intent to incorporate.
o If the second document is a holographic will, you can’t integrate the typed earlier will as part of this will because it is not handwritten.
o With incorporation, whatever you are incorporating is not considered part of the will. We are just looking to it in guidance to interpretation of the things in the will.
• In the jurisdictions where incorporation by reference is not allowed, they expand the republication by codicil.
• California is incorporation by reference jurisdiction.
4) Acts of Independent Significance:
• Example: will referencing an act that is to happen outside the will. The act will control who or how much takes under your will.
• The act must have its own independent inter-vivos or non-testamentary significance.
• We are allowing individuals to alter their dispositive wishes w/o complying w/ the Wills Act.
• This doctrine is like an exception to the wills formalities.
• Independent = non-testamentary = some purpose when you are alive.
• If the act is being performed solely for its testamentary function, then there is no independent significance so it won’t qualify.
• Requirements:
o Referenced act in the will
o Significant independent intervivos.
• “I give $100 to each of the benefits in my brother’s will.”
o This is like incorporation by reference. But this might not work if the will is not in existence.
o So you would go to acts of independent significance: the brother’s writing a will is not a testamentary act with regards to YOU.
• Acts of independent significance are about things that will take place in the future.
• Do problems on page. 324 (lecture 9-2).
• Acts of independent significances is the only one of the 3 doctrines who looks forward.
CONTRACTS RELATING TO WILLS
1) Contracts to make a will
• In probate, the creditors take first, then the beneficiaries.
• If there is a contract to make a will, the person in that contract is a creditor not a beneficiary.
o So he takes first before anyone else.
o But you can’t elevate a beneficiary above a creditor.
• Traditional contract issues: Consideration; offer-acceptance; break of contract
• But these are not normal contracts w/ normal creditors: here the beneficiary is trying to show that the testator breached the agreement to make a will.
• Do problems on page 326-27 (lecture 9-2)
• California: CPC § 21700:
o (a) Has to show one of the following:
▪ Provisions of a will or other instrument stating the material provisions of the contract.
▪ An expressed reference in a will or other instrument to a contract and extrinsic evidence proving the terms of the contract.
▪ A writing singed by the decedent evidencing the contract
▪ Clear and convincing evidence of an agreement b/w the decedent and another person for the benefit of the claimant or a promise by the decedent to another person for the benefit of the claimant that is enforceable in equity.
2) Contracts not to revoke a will
• CPC § 21700(b): The execution of a joint will or mutual wills does not create a presumption of a contract not to revoke the will or wills.
• Husband died, wife takes all. And then wife meets someone else. Wife changes her will leaving everything to the guy. Just because there is a joint will, do not presume that the surviving spouse is bound not to change her mind.
• Hypo 1: H&W have mutual wills and there is an express provision not to revoke. Wife dies and husband gets everything.
o He can revoke the will but that would be in breach of the contract.
o Then the kids will sue him at contract.
• Hypo 2: there is a mutual will and husband later revokes the will so he is in breach of contract
o Common law: everything the husband has including separate property would fall under a potential contract claim.
o If he decides to use the money indirectly to buy the new friend a lot of expensive stuff. So courts will step in to prevent waste.
• Hypo 3: if husband marries new friend:
o Maybe she is entitled to some part of the deceased spouse’s property.
o Some portion of the husband’s property is devoted to supporting new wife.
o In CA, we use community property to do that.
• Via v. Putnam:
o Tension between two fundamental rights: right to remarry and obligation under contract.
o Creditors have priority over everyone including spouses.
o Holding: the children, as third party beneficiaries under the mutual wills of their parents, should not be given creditor status . . .when their interests contravene the interests of the surviving spouse under the pretermitted spouse statute.
• General rule: contracts must be expressly set forth.
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CHAPTER 5: CONSTRUCTION OF WILLS
MISTAKEN OR ABMIGIOUS LANGUAGE IN WILLS
1) The Traditional Approach: No Extrinsic Evidence, No Reformation
• This is about considering and understanding the will.
• The admissibility of extrinsic evidence and its role in the construction of wills:
o As a general rule, we don’t want courts looking at extrinsic evidence.
o Common law: presumption against introduction of any extrinsic evidence.
• Mahony v. Grainger:
o Woman had a lot of cousins. When the lawyer wrote her will, she left it to heirs at law living at the time of her decease. She clearly wanted the cousins to take. The heir at her death was an aunt that was it.
o Court did not permit extrinsic evidence b/c the will was clear enough as it is(if the words are clear, we don’t need extrinsic evidence.
• Fleming v. Morrison:
o Man wanted to sleep w/ a woman so he went to his lawyer and made a will. There was a challenge against the will by the lawyer saying that it was not really his will.
o Court took in extrinsic evidence b/c evidence was entered to go to the heart of the will itself. It was not there to construe or define.
o The evidence was about the validity of the will—fundamental preliminary question—extrinsic evidence went to show that there was no testamentary intent.
• Common Law:
o Under plain meaning rule, if there is an ambiguity we rarely look beyond the will.
o 2 types of ambiguities:
▪ Patent: appears on the face of will (ex: 2 conflicting provisions)
• No extrinsic evidence admissible.
• If you can’t give it effect after trying to interpret it, no extrinsic evidence allowed.
▪ Latent: not obvious from the face of the will. You have to get into it deeper.
• Only way to find out is when someone comes into court to raise it.
o So far, you can only use extrinsic evidence if there is a latent ambiguity.
• Ex 1: Will-I give 1/3 of my estate to A, 1/3 to B, 1/3 to C, 1/3 to D.
o This is a patent ambiguity
o Court has to work around it or it will declare it invalid.
• Ex 2: I give $10,000 to my favorite T&W student Michael:
o This is a latent ambiguity if there is more than one Michael.
o You would allow extrinsic evidence here to figure out which Michael you are referring to.
• Ex 3: my house at 1331 Mocking Bird Lane to x
o Executor realizes that you owned 1313 NOT 1331.
o The court would pull out the incorrect description and then they would look to see if there is enough information to give the property.
o So it would be “my house at Mockingbird Lane to X”—this would be clear enough if you have one house on that street.
• 3 Types of Latent Ambiguities:
o Misconstruction: wrong address for example
o Equivocation: My favorite trusts and wills student Michael—courts will accept extrinsic evidence to show which Michael.
o Personal Usage: you name someone by a name that doesn’t really belong to them. Nickname.
2) Slouching Toward Reformation: Correcting Mistakes without the power to Reform Wills:
• Arnheiter v. Arnheiter:
o Mistake in the address of the property.
o The court ignored the misdescription to the extent that the remaining language is clear enough to specify the property to be bequeathed.
• Estate of Gibbs:
o Will references someone they have never met at an address they have not connection to. What happened is that the lawyer just found a person with that name.
o Court adopted the misdescription approach: they gave it to the one it was meant to be given to. So they corrected the mistake.
• Estate of Russell:
o Validly executed holographic will. She left everything to three people (Chester, Roxy, and Thelma). On the other side, she gave the $10 gold piece to Georgia Nan Russel.
o Issue: latent ambiguity is that Roxy is a dog—dogs lack capacity to understand.
o Failed Gifts:
▪ If a specific gift fails, it lapses and it would most likely fall into residue or intestate.
▪ If a residuary bequest fails, it can only go to intestacy.
▪ If only a portion of the residuary bequest fails, there are two options.
• Each one in the residue gets an equal share of the residue (traditional common law). So the failed portion would pass to intestacy.
• Modern trend: the other view is that the remaining goes to the sole remaining residuary beneficiary.
o Here, it was common law traditional approach: the niece was trying to get the bequest to fail so that it would go to intestate and she would take.
o Court allowed in extrinsic evidence.
▪ However in this case, the testator seemed to want Chester to take care of the dog and give them the property.
▪ So Chester wanted to introduce extrinsic evidence to show that the testator really didn’t want her niece to get anything.
o Holding: there is no ambiguity. The gift to Roxy fails and drops to intestacy.
▪ The court does not want to rewrite the will.
▪ The potential ambiguity: did she mean “and” so 50/50 or did she mean all to Chester so that he would take care of Roxy?
▪ They don’t allow Chester to introduce any further statements. So they were applying almost a plain meaning approach to Chester’s extrinsic evidence.
▪ It might have been better to ask the court to extend the modern view and preserve the failed the partial residuary gift to the rest of the residuary beneficiaries (Chester).
o This case represents the modern trend about extrinsic evidence. Russell is the majority rule and the rule in California also.
• California: the court does not like the differentiation between patent and latent ambiguity:
o We are looking for ambiguities—the type doesn’t matter.
o We are using evidence to figure out the testator’s intent.
o Ambiguity: anything that is reasonably susceptible to more than one meaning in the express language of the will itself.
o Only admit extrinsic evidence that is consistent with one or more of those reasonably susceptible interpretations—clear preference for circumstantial evidence around the time the will was written.
• Since Russell, in California it is a residue of residue.
3) Openly Reforming Wills for Mistake:
• Erickson v. Erickson:
o Testator wrote a will and it named his future wife as executor and left half to his children and her children. The marriage was set 2 days later.
o General Rule: if you make a will, get married, and then die w/o making a will, we presume that you forgot to change the will to include your wife.
o Rule in that state: if you have a will that is not contingent to marriage and you get married, the will is revoked unless you make it specific that you are intending the will to operate subsequent to the marriage(that language was not contained in the will here.
o After he dies, his children challenged the will.
o Court looks at the will and the day of marriage and the day of death(under the statue, the will would be revoked unless you find something that expressly states contrary intent.
▪ There is no express language that contemplates marriage.
o Scrivener’s Mistake: Going beyond the document to correct the error even if there is no ambiguity.
▪ Clear and convincing evidence of the scrivener’s error
▪ Clear and convincing evidence that it had an effect on testator’s intent.
o Holding: there was an error and the court granted relief.
o Here the evidence was offered to validate the will itself(so this might just be another validity case (in which we always allow extrinsic evidence)(so here we are rewriting the will to save the will.
o So we might look at this as a validity question or an ambiguity issue.
• California DOES NOT adopt scrivener’s error.
o California is a Russell jurisdiction, so you have to show ambiguity.
• UPC 2-805:
o Court can reform a will even if unambiguous to conform the term to the intent if we show by clear and convincing evidence that the transferor’s intent were affected by a mistake of fact or law.
DEATH OF BENEFICIARY BEFORE DEATH OF TESTATOR
1) Antilapse Statutes:
• What happens if there is a change in the disposition of your property?
o If before you dies, there is a change in the “who” or “what”
• Change in Beneficiary (lapse beneficiary):
o In order to take under a will, you have to survive.
o If the beneficiary has predeceased the decedent, you treat that as a failed bequest.
o So it would drop into intestacy or residuary beneficiaries depending on jurisdiction.
• Void Gift:
o From the outset, you could not take. From the very beginning, they did not have life.
o So they would go to intestacy.
• At common law, the difference b/w lapsed gifts and void gifts is that the doctrine of antilapse can safe an otherwise failed lapsed gift.
• Antilapse:
o Presumption: what do you think the testator would want to happen?
▪ It depends on the relationship
o If the beneficiary stands w/n sufficient relationship to testator AND the potential beneficiary leaves surviving issue, then we presume that the testator would want that gift saved for the issue of the deceased beneficiary UNLESS there is clear intent to the contrary.
• California:
o Has the broadest definition of relationship—BUT the one person that is not included in this is the spouse themselves.
o The doctrine applies to PROPBATE and NON-PROBATE transfers.
o CPC § 21110:
▪ Transferee means a person who is kindred of the transferor or kindred of a surviving, deceased, or former spouse of the transferor
▪ Applies to void gifts and lapsed gifts
▪ The issue of the diseased transferee will take under intestate per capital.
▪ Unless there is an express contrary intent or a substitute disposition in the instrument intself—that rebuts the presumption.
• Do Case 9 on page 366 (lecture 10-1).
• Ruotolo v. Tietjen:
o Wife and husband have a daughter (Hazel). Hazel has a daughter, Kathleen. H died and W marries John. W died and then John died. In John’s will, John left half of the estate to Hazel: “to Hazel if she survives me.” Hazel died 17 days b/4 her stepfather.
o Analysis:
▪ There is lapse
▪ Step children are specifically included in the statue of that state.
▪ Hazel leaves issue then living.
▪ Contrary express:
• Court raised the boilerplate argument
• Testator must have known how we would interpret “if she survives me.”
▪ Holding: this was not an expression of contrary intent: this case was a stretch.
▪ It is an example of the more modern trend approach(high threshold on finding contrary intent.
• Lapse and anti-lapse statute does not apply to intestacy; antilapse statue does not work in homicide.
• Jackson v. Shultz:
o B was married to H and had 3 kids. First H died. B married John (testator) who took the kids in. In the will, he left the estate to B “to her and her heirs and assigns forever.” Aft the will was executed B died then T died.
o Analysis:
▪ There is a lapsed gift.
▪ Antilapse does not apply because B is not kindred of the transferor and B is not kindred of a surviving, deceased, or former spouse.
▪ The use of antilaps in a blended family would result in the step kids taking everything the kids taking nothing.
▪ If you are married (traditional family), you don’t need antilapse. If it is a blended family, antilapse would mess everything up so we don’t apply it in this case.
o HOWEVER< the court used the language of fee simple, unrestricted transfer of ownership. The court said that the decedent must have been contemplated that the heirs at law would be included. “And” became an “or” so the court was trying to avoid escheat.
2) Class Gifts:
• 2nd way to save failing gifts.
• Class gift: did the testator intend for this to be a class gift?
• Ex: I give my estate to A, B, C, D, & E in equal shares. If B predeceases the testator, the others will just take a bigger share.
• Dawson v. Yusu:
o Woman who died devising her interest in her late hsuban’d family farm to two nephews on her husband’s side of the family. Antilapse here was unavailable b/c of the narrow definition—it is not like California.
o 2 ways to describe beneficiaries:
▪ Name
▪ Generic (more indicative of a class)
o Ways to describe the gift:
▪ Fixed share
▪ Lump sum
o Common characteristics:
▪ More like a group rather than a group of diverse individuals without common characteristics.
o Overall testamentary scheme
o Analysis:
▪ Names and fixed shares cut against class gift argument
▪ Common characteristics: maybe b/c both are nephews but she didn’t include all the nephews and nieces.
▪ Overall testamentary scheme: there is a residuary clause so maybe it can argue in favor of the class gift.
▪ She also had a clause that included survivorship language—so she knew how to do it(that shows the court that did not intend to do it.
o Holding: this is not a class.
• Restatement of property: if you use names, there is a rebuttable presumption that you were not group-minded.
• At the time of your death, the class closes and that determines who takes.
• Interplay Between Antilapse and Class Gifts:
o If the people in a class are also kindred, then antilapse might still apply to this class gift.
o CPC § 21110(a): antilapse does apply to class gifts unless the intended benficiariy was dead at the time of the execution and the testator knew it.
• If a gift fails, there are two ways to save it, antilapse and class gift.
CHANGES IN PROPERTY AFTER EXECUTION OF WILL
• Types of Gifts:
o Specific: my 100 shares of Chevron to x, my car.
o General: 100 shares of Chevron to x; $10,000. demonstrative gift ($1,000 out of Wells Fargo checking account)—blend between general and specific but they are viewed as general
o Residuary.
1) Ademption by Extinction:
• Only applies to specific bequests.
• The absence of a specific gift makes it impossible for the executor to distribute it and therefore it is deemed to have failed (ademption by extinction; ademption)
• Presumption: treated as revocation b/c the watch is not there.
• Identity approach: irrebutable presumption—we didn’t care why it wasn’t there. Courts really like this approach but it was harsh. Other theories developed.
• Voluntary v. involuntary disposition is another issue that is taken into account.
• In re Estate of Anton:
o Woman who got into accident and her health deteriorated. Daughter started selling assets to pay for her mother’s expenses. The thing that was left was the duplex which she got from Gretchen. So she sold the duplex to pay for expenses.
o Under identity approach(Gretchen would not get anything b/c of ademption.
o Court rejected this approach and adopts the modified intent approach:
▪ If the testator knew that they the specific devise was being disposed of, it would be adeemed(voluntary.
▪ If there is knowledge of sale, it is not adeemed(involuntary.
o Holding: Court gave her 50% of what is left.
• UPC:
o Specific devisee has the right to the specifically devised property
o If it is sold or condemned, you get the note or the proceeds
o Proceeds of insurance of involuntary loss of property.
o So we are presuming that the devisee should get the property or whatever it turns into.
• California: traditional jurisdiction(but it is more of a modified intent view.
• Exceptions:
o Remainder: if any part of the property remains, whatever is left will go to the satisfaction of the bequest.
o To the extent that you can call the gift a general bequest, that can save it because ademption only applies to specific bequests. That places burden on executor
o Substance over form model: asset that has change its form not its real substance. This is kind of like acts of independent significance.
o We construe wills at the time of execution: to the extent that we construe the gift at the time of death, that might avoid confusion.
• Power of attorney, conservator: Anton:
o Rule:
▪ Was there a volitional act on the part of testator to get rid of the asset?
▪ If the testator is not the one that made the call, we don’t apply ademption to it.
o CPC § 21134: specifically given property sold or mortgaged by conservator or agent; transferee’s rights:
▪ If a specific gift is sold by a conservator or an agent, the transferee has the right of a general pecuniary gift equal to the net sale price of the property.
▪ Limit: section does not apply if testator becomes capable after, he/she has 1 year to fix it and change the will to indicate the change the will to indicate the change. If a year passes and you don’t change it, then abatement would apply.
• HOWEVER, if there is a substantial change in the asset (change in value), courts are NOT so quick to find the necessary link.
• CPC § 21133: Receipt of at-death transfers of specific gifts; recipient’s rights:
o If something is given in a specific bequest and before death, you sell part of that bequest (100 acres and you sell 30 acres), if is only partially adeemed.
o Whatever is left, it will go to the beneficiary.
o Any balance of the sale is remaining, it will go the beneficiary.
o A note of the amount remaining can also go to the beneficiary
o If the buyer gives cash and it is commingled w/ other assets, it loses connection with the land so it can’t apply under this rule.
o Beneficiary can also take insurance proceeds, imminent domain, etc.
2) Stock splits and the problem of Increase:
• A gift of MY 100 shares of stock(specific bequest; if you didn’t have that at your death, it is adeemed and it would fail.
• A gift of 100 shares of stock(if it is construed as a general bequest; affirmative duty was on executor to buy the stock and give it to beneficiary.
• Problem is that a gift of 100 shares of Chevron today is different from 100 shares of Chevron in 30 years.
• Stock split: price of stock rises; to encourage more investors they would split it. 1 share of $100=2 shares of $50. so the price went down.
• So if your will says “100 shares of stock”(at your death if you have 400 shares (through two splits), there are two thoughts:
o If it says 100, you give 100 shares
o OR if you say 100, you meant to give the value of the investment.
o Other courts view it as meaning to transfer your share in the Chevron stock pile.
• CPC § 21132: At-death Transfer of Securities:
o To the extent that we can identify corporate-initiated changes in the stock, it is the clearest case to give beneficiary the benefit of stock split.
• Stock splits vs. stock dividend:
o Stock dividend: can only be paid out of retained earnings:
▪ Ex: 10% stock dividend(means that you get stocks in the amount of 10% of the stock you already own. HOWEVER, you still own the same % of total stock because everyone else got the same thing.
• Under California Law: beneficiary’s right to receive after acquired shares (acquired after execution of the will).
o Securities acquired by action initiated by the organization.
• However, at common law, a general bequest of 100 shares of stock and then you acquire however many shares, then beneficiary is ONLY entitled to 100 shares of stock.
o California: whether it is specific or general, it is the same rule: anything it would have grown into would be included in the after-acquired shares.
• So if you didn’t own any stock at the time of execution:
o If you never acquire shares, it is void
o If you acquire shares after and you acquire the amount you gave, it will be given to beneficiary
o If you acquire more shares, then beneficiary will still be entitled only to the amount specified in the will.
• Privately-Owned Stock: If there is a general bequest of privately owned stock (no market for it), there is an exception:
o It is a specific bequest no matter how you phrase it. So if you have some, you can give it away but if you don’t it is adeemed.
3) Satisfaction of General Pecuniary Bequests:
• If some money was given to beneficiary ahead of time, does he still get the amount specific in the will or does he get a portion of it only?
• This is like advancement(satisfaction is the testate and non-probate version of satisfaction.
• Common law: if it is made to descedent, presumption was that it was in satisfaction of the gift.
• Modern Trend: there is no presumption that they are counted against gift UNLESS there is a clear expression to the contrary.
• CPC § 21135: Lifetime Gifts; Satisfaction of at-death transfer; Conditions:
o It is a satisfaction if:
▪ Instrument provides for deduction of the lifetime gift
▪ Transferor declares in a contemporaneous writing that he gift is in satisfaction.
▪ The transferee acknowledges in writing that the gift is in satisfaction of the at-death transfer.
• Ex: $10,000 to Joe, takes $5,000 during life. Under satisfaction, it is not advancement unless there is clear intent in writing to contrary.
o If after beneficiary gets $5,000 he dies, then the father dies, there is lapse. There is a relationship and the decedent has issue.
o CPC § 21135(d):
▪ Unless testator indicates otherwise, apply the reduction to antilapse or gift-over. This is different from intestate version of 6409(d).
4) Exoneration of Liens:
• You give something that has a mortgage on it for example.
• At common law: presumption was that it should be free and clear of all liens
• Modern trend: you are giving the gift of equity in the property. If you want to keep it, you have to make payments.
• In general, when you draft a will, you have language for the executor with a debt satisfaction clause. However, the language is still insufficient for the exoneration of liens. If you want to do it, it has to be very clear.
• CPC § 21131: Specific gifts; right of exoneration:
o If you want to exonerate, you have to make it very clear.
o Most of the time, there is no right of exoneration.
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CHAPTER 6: NON-PROBATE TRANSFERS: WILL SUBSTITUTES
WILL SUBSTITUTES AND THE WILLS ACT:
• 4 traditional non-probate ways to pass property at death:
o Life insurance
o Joint tenancy
o Legal life estates and remainders
o Trusts
• Now it includes payable on Death Contracts (Hillowitz).
• California: expressly applies Wills Act rule to non-probate transfers as well:
o Lapse, antilapse, satisfaction, etc. all apply to non-probate will substitutes.
1) Revocable Trusts:
• Intervivos Trusts:
o Legal title is in the trustee’s name but the beneficiary is the one who gets the benefit (equitable benefit).
o At common law, trusts were thought to be irrevocable.
▪ However, you can make it revocable by expressly saying that it is.
o Trusts are just another way to make a gift to one person for the benefit of another.
o Ex 1: I give $5 to Mr. Gregorian to hold for my benefit during my lifetime and upon my death, it is to go to B.
▪ We used to do that in deeds above
▪ Is this a testamentary action or an intervivos action?
▪ Intervivos trusts are viewed as non-probate will substitutes b/c they are operating during life. The enjoyment is just postponed until after death.
o Intervivos that don’t involve anything but personal property can be done orally.
o If it is real property, it is more likely to have to be in writing.
o For Trusts: anyone can be the trustee (including the trustor); and anyone can be a beneficiary (including the trustor).
▪ However, the trustor can’t be all without sharing this anyone else. If that happens the trust would collapse. So you can’t have the exact overlap.
• If it is revocable, you are not that confident that the remainder will get anything because it can be revoked at anytime before death.
• Farkas v. Williams:
o There was nothing given to the remainder beneficiary.
o Here it was a revocable trust, so it can disappear. So it was a contingent remainder.
o Holding: it is a valid intervivos trusts even though the settler was the trustee and the beneficiary because there was another beneficiary even though the other beneficiary did not get anything.
o This type of trust is valid even though it doesn’t comply with the Wills Act and it is basically indistinguishable from a will.
• Contingent Beneficiary’s Standing: Linthicum v. Rudi:
o She was the beneficiary and the trustor and the trustee. Brother and sister in law were named as remainder beneficiaries. One of the nephews of the deceased husband became invaluable to her. She wanted to amend the trust to include him. He became the sole remainder beneficiary and sole trustee. Nephew was also appointed conservator. Brother and sister wanted the court to rescind the amendment and bring the old one back.
o Issue: did they have standing?
o Holding: they don’t have standing because they don’t have any interest in the trust because it was a contingent remainder. The only time they would have interest would be once the trust became irrevocable.
o During the lifetime of the settler, the trustee of a revocable trust does not own any duty to anyone other than the trustor.
▪ This is in conflict with Farkas.
• For purposes of creation, something passed b/w settler and contingent beneficiary. However, for purposes of standing during the life of the settler, the contingent beneficiaries don’t have any interest.
• Revocable intervivos trusts are viewed by the court as wholly appropriate.
• Ex: O to O for life, remainder to A unless I sell or revoke prior to my death.
o That is a deed
o Can you have a revocable deed?
▪ At common law, the answer was no because it was too close to being a will.
▪ It is a contingent remainder, contingent on the revocation.
▪ Courts would ignore this deed and it would act as fee simple absolute so they would ignore the deed.
▪ Modern Trend: accepts these types of deeds as long as they clearly express the intent to revoke.
▪ California follows the modern trend approach.
• Transfer on death deed:
o CA since 2006 has been trying to pass something that would allow this but approval was not achieved.
o It is the same as POD but for real property.
2) Payable on Death Contracts and Other Nonprobate Transfers:
• Common Law Approach: In re Estate of Atkinson:
o This is about payable on death accounts. Testator made 3 deposits into his bank account. The challenge was by wife #2, the beneficiaries were daughters of wife #1.
o Issue: whether this was an ineffective transfer because it falls under the Wills Act.
o Holding: transfers were invalid.
o Common law:
▪ The only exception to these kinds of contracts (POD) was life insurance policies.
▪ So POD did not apply to bank accounts
▪ If it is not a life insurance contract, it is testamentary and it would have to fall under the Wills Act formalities. Here it didn’t follow the Wills Act formalities.
• Modern Trend Approach: Estate of Hillowitz:
o Investment partnership; in the agreement, upon the death of partner, they would be paid out and the payment will go to the spouse.
o Holding: this was valid.
o It falls under K law. And it is a valid contract.
o This is the modern trend. And it is the modern trend in California as well.
3) Joint Tenancy:
• Main idea: right of survivorship
• A, B, C as joint tenants with right of survivorship
o If one of the JT dies, there is nothing really to be transferred at death. We just extinguished the interest of A.
o A joint tenancy is like a concurrent life estate for all ones in the joint tenancy.
o The last one living takes it all.
• A creditor can bring an action against joint tenant while he is alive. However, if the joint tenant dies b/4 creditor arrives, there is nothing for creditor to reach.
• Joint tenancy of bank accounts:
o Purpose can be to give the money to another tenant if one dies
o Another purpose is to get help w/ financial spending NOT to give you any interest in the account. It is just for access as an agent. It is for convenience.
o Another way is to set up a POD bank account—but banks had little power to do that in the past.
o So joint tenancy was the solution—but there is the issue of whether there is intent to make a gift.
WILLS ACT SUBSTITUTES AND THE SUBSIDIARY LAW OF WILLS
1) Life Insurance:
• Cook v. Equitable Life Assurance Society:
o H&W were married. H had a life insurance policy and then divorced and remarried and got a new family. He never changes the police for life insurance. b/4 he died, he wrote a will and left everything to his new family.
o Court didn’t follow the will: litigation in this area would defeat the whole purpose of why we have life insurance in the first place.
• Life insurance policy is an exception to § 5600’s application to non-probate. So presumptive revocation by divorce will NOT work to change the beneficiary on a life insurance policy.
• Superwill:
o Superwill: allowing the testator’s will to trump the beneficiary designations in all nonprobate transfers.
o This hasn’t been adopted anywhere yet
o There is a concern about the chaos that could ensue even if intent is important
o Banks, insurance companies, etc. won’t be able to pay anything out until the probate was opened and everything resolved.
2) Pension and Retirement Accounts
• Egelhoff v. Egelhoff:
o H had life insurance and pension plan through employer. W was designated as beneficiary of both. They got a divorce and 2 weeks later, he died in a car accident w/o changing beneficiary designation.
o Issue: children from a prior marriage claimed presumptive revocation by divorce.
o Court: because the pension plan was governed by ERISA (government statute)—only beneficiary designated could receive the benefit.
o State law was preempted by the federal statute.
3) Multiple-Party Bank and Brokerage Accounts
• Joint Tenancy:
o Right of survivorship
o 4 rights (right, time, interest, possession)—that is created when joint tenancy happens.
• Multiple-Party Bank and Brokerage Accounts:
o Possible intent:
▪ Immediate gift to other party—joint tenancy w/ right of survivorship
▪ Use it to help you spend your money (agency) but this was not really used that much either.
▪ Payable on death—traditionally didn’t exist under common law.
• The issue is that not everyone walking into the bank intended to make a joint tenancy—immediate gift that is transferable at death.
• Courts were willing to allow in extrinsic evidence to show that some alternative intent was present to trump the presumption of the gift.
• Varelo v. Bernachea:
o Attorney was married w/ kids in Argentina. Got a mistress in Miami and opened up a bank account in joint tenancy. She got a debt car and she used it. He has a heart attack and she takes him to the hospital. Then she moves out and gets a $280k out of the bank.
o Holding: it was a joint tenancy and it wasn’t restricted.
▪ It seems that he intended to have a joint tenancy b/c he allowed her to use it freely.
• Modern Trend:
o During lifetime, if there is a problem, we presume that the money in the account belongs to the party that brought in the money to the account (contribution approach).
o Creates a presumption that the JT is a payable on death to the designated beneficiary. This presumption can be overcome by clear and convincing evidence to the contrary.
• Joint Tenancy Deeds:
o Real estate joint tenancies don’t have the same problem as the bank account joint tenancies.
o However, there is a tax advantage that exists to certain types of titling. So after the death of one spouse, sometimes the spouses argue against their own paper-work.
• Legal life estate w/ remainder is created by deed vs. intervivos trusts created by trusts:
o Ex 1: if I own Blackacre in Fee Simple Absolute(if I die, that title goes to your estate.
o Ex: 2: to x for life, remainder to Y
▪ Life estate and a remainder
▪ X can’t dispose of property most of the time
▪ At x’s death nothing new passes to Y, Y just gets possession. The interest in Y was created at the same time as x.
o Ex 3: to me for life, remainder to Y
▪ I have life estate. Again nothing is passing from me at death to Y. Y got everything when I created the first transfer and signed the deed.
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CHAPTER 7: PROTECTION OF THE SPOUSE AND CHILDREN
RIGHTS OF THE SURVIVING SPOUSE
1) Introduction:
• Distinction b/w community and separate property systems:
o Most jurisdictions are separate property; California is community property.
• Background:
o Generally your interest in property is determined at time of acquisition.
o The state you are domiciled at the time you acquire the property will determine your rights in the property
o Your martial status at the time of acquisition is also an important element.
o These things can also determine the interest of your spouse.
• California: At death the surviving spouse gets the following:
o Keep the ½ share in community property
o If intestate, they can get more of community property and a portion of separate property of decedent.
o Everything else is disposed by the decedent as they see fit.
o The surviving spouse is already protected for in the community property.
• Distinction Between Share and Support:
o Share: ownership right; devisable by the recipient.
o Support: stream of benefit designed to maintain the household. But that terminates at some point in time (death of the surviving spouse).
▪ Part of the marriage contract is to support the spouse.
▪ On the death of the spouse, we don’t want to leave behind a destitute spouse or family.
• Dower and Curtesy:
o Dower and Curtesy: spousal protection. Dower to protect the widow and Curtesy to protect the widower.
o These are only life estate.
• Community vs. Separate Property:
o Community: attaches that protection immediately
o Separate: wait and see approach; we will only apply spousal protection rights to the extent that they are needed on divorce or death. They apply.
• Separate Property model:
o Primary form of spousal protection is elective share: if a surviving spouse doesn’t like what the deceased spouse is giving under the will, the surviving spouse can elect to claim her statutory share.
o Elective share: somewhere between 1/3 and a ½ of the estate of the deceased spouse (it is a portion of the probate estate).
o Vs. Community Property:
▪ 50% upfront BUT it is only 50% of the community property. In the separate property model, it is everything in the probate estate (including premarital property, gifts, inheritances, and bequests).
o Augmented Estate Concept:
▪ Includes in the estate both the probate and non-probate estate. That would protect against the smart spouse who tries to avoid all probate.
o Purpose: you can’t leave behind a destitute spouse; to the extent that you were trying to avoid support, the court will overlook that.
• Generally, creditors are provided for before the spouse.
• In CP jurisdictions, spouse gets an immediate share of all property acquired during marriage.
• In SP we are providing the spouse with a share in the property (1/3 or ½).
• UPC:
o After 1 year of marriage, 3%
o After 15 years of marriage, 100%
o So it is a sliding scale.
2) Rights of Surviving Spouse to Support:
• Social Security:
o It is a retirement benefit based on number of years you worked, the amount you earned, etc.
o On the surviving spouse’s death, it is a pure income stream that terminates on death.
• Employee Pension Plans:
o They are private pension plans that your employer is probably contributing to.
o Upon the death of the surviving spouse, the retirement plan would terminate
o Defined contribution plan: you give specific amount of money into an account and the money is yours.
o Defined Benefit Plan: it is an obligation by your employer to pay a specific amount of money to you or to you and spouse. That terminates when everyone dies.
• Homestead:
o Set aside some protection for family following death by allowing them to keep the house and the farm for some period of time.
o This is more about support. We are locking the creditors out.
• Personal Property Set-Aside:
o This is about the personal property: tools, furniture, clothing, etc.
• Family Allowance:
o Certain amount of money just to live off of.
o It is only applied during probate
o In some jurisdictions it is a set amount; in order jurisdictions, it is up to the court based on the standard of living.
• For the support obligations: They are only for the life of the person being supported.
• Giving the spouse a life estate is unclear: debate with life estate is a share or if it is just for support. It is not clear.
• The CP model avoids all this stuff.
3) Rights of Surviving Spouse in Community Property:
• Another California Rule:
o If you marry late in life, once they get to CA, if there is little or no CP generated during marriage, there is still no elective share in CA. but there is quasi community property.
o H&W live in CA and H buys two parcels of land in his separate name. Assume that each is $1 million. Residue has $500K. In his will, he gives one acre to moose lodge and other acre to wife and the residue to wife. If wife object, I leave all my property to LLS.
▪ Both acres are CP.
▪ Wife can agree to get blackacre. However, she doesn’t have to accept. He puts her to the election. So he is forcing an outcome. However, she can decide to disagree and assert her statutory rights but won’t get the residue (SP).
▪ This is essentially a bribe by conditioning the gift on the spouse agreeing to a certain arrangement.
▪ However, courts don’t like this. So if there is any ambiguity, they will hold it against the spouse who is trying to craft the deed.
4) Migrating Couples and Multistate Property Holdings:
• What happens when spouses move:
o If couple live in a separate property jurisdiction H works and then retires and they move to a CP jurisdiction. Everything is separate property. They put the money in a bank account in LA and buy a new home. H makes a will and leaves everything to someone else.
▪ W is entitled to spousal protection rights. Domicile at the date of death controls when you are trying to determine what happens at death.
▪ b/c she is domiciled at CP at death, CP determines what she gets. She gets nothing because it is all in separate property.
▪ Treat it as quasi community property: at the time it was acquired, what would it have been if it was acquired in California?
• So she would be entitled to 50% of the quasi community property.
• Before death or divorce, in reality it is separate property.
o If W were to die first and leaves a will and leaves everything to another person.
▪ She can’t leave any of the quasi community property because it is not hers. If only belongs to the working spouse. So the working spouse is the one that owns it.
• Reverse Migration: Move from Community Property to Separate Property:
o They move from CA to OR (SP jurisdiction), then H dies. W already has ½ interests, it is still hers. But can she claim an elective share in his property that he devised in his will to someone else?
▪ Uniform dispose of CP disposition at death act.
▪ No elective share of the previously CP share is allowed.
o However, if there is SP, there is an elective share claim against the SP.
• Tax Issues:
o Hypo: you buy a house at $200k and then it is valued at $1 million. If you sell it, you profit $800K and you are taxed on $800k.
o If it is a tenancy in common and H in his will leaves everything to W and on his death, he is giving his half of the house to W, your tax basis will step up to the fair market value of the property at death.
▪ So all the gain is obliterated.
▪ New basis is $500k. so if you sell the house, it would be at the basis of $500k (decedent’s new value) + $100 (w’s portion). So now the new basis is $600K so you are taxed less when sell at $1 million.
o If the title is taken in community property, on the death of one spouse, we don’t only step up the basis of one spouse, we step up both spouses’ basis. On the death of the first spouse, both spouses step up. So that might eliminate taxes on the house if she sells the house on the next day. So that is a great family tax planning vehicle.
o California: created Community property w/ right of survivorship 682.1:
▪ Combined the advantage of J/T with right of survivorship with that of the CP.
▪ This is a new non-probate transfer in CA—in essence, it is a will substitute.
5) Spouse Omitted from premarital Will:
• B/4 marriage, you execute a will and then you marry. You die without changing the will. Your will does not reference your spouse.
o Two possibilities: you didn’t want her to take or you forgot/overlooked it.
o California: we presume it is accidental. But it is rebuttable presumption.
• It is the same thing with children not included in wills.
• Pretermission: focuses on intent:
o Validly executed will that made no provision for your spouse
o You marry after executing the document
o Die without revising the document.
o We presume that the disinheritance was accidential; we solve the problem by giving the pretermitted spouse her intestate share.
o But these presumptions are rebuttable: if you can rebut the presumption that it was unintentional, then the spouse gets nothing. If you can’t rebut the presumption, then she gets intestate share.
• In re Estate of Prestie:
o CA residents married in Las Vegas then came back to California. They get a divorce and then he goes back to Las Vegas and he buys a condo.
o Then he writes a will and he remarries her. There was an intervivos trust giving Maria life estate. The son was the beneficiary of the trust.
o The will does not provide anything for Maria.
o Law in Nevada: we treat the will as ineffective or revoked to the pretermitted spouse UNLESS:
▪ Provision has been made for spouse by marriage contract
▪ Spouse is provided for in the will or mentioned in the will
▪ NO other evidence to rebut the presumption shall be received.
o Court:
▪ We have to look for evidence in the will or marriage contract.
▪ Court can’t look beyond the will or the marriage contract. And there is no evidence or mention of her explicitly.
o Holding: she gets an intestate share.
• California:
o CPC § 21610: If there is pretermission, spouse gets:
▪ 1/2 of the CP that belongs to decedent
▪ ½ of the quasi-community property
▪ Separate property but never more than ½ (so the 100% does not apply).
▪ This includes non-probate instruments like trusts.
o CPC §21611: Rebutting the presumption in 21610:
▪ Failure to provide was intentional and that intention could be found in the instruments
▪ Decedent provided for the spouse by transfer outside of the estate passing by the decedent’s testamentary instruments and the intention that the transfer be in lieu of the provision in said instruments.
o CPC § 21612: Funding of a pretermission: we don’t use the rules of abatement in getting the share to the spouse. Order of preference:
▪ Intestate
▪ Prorate: all the stuff that the beneficiaries get, we take in proportion to what they got.
o But the simple fact that there is a bequest in a document is not conclusive:
▪ Look to the dollar amount
▪ Maybe it wasn’t intended to satisfy spousal bequest obligation.
• In general, you can’t disinherit a spouse but you can disinherit a child.
RIGHTS OF DESCENDANTS OMITTED FROM THE WILL
• Testator executes a will and then a child was born and then the testator dies w/o having altered the will.
o The issue is whether it was intentional or accidental.
o There is a presumption that it is a mistake.
▪ It will be funded through proration NOT abatement
• CPC § 21620: Child born or adopted after execution of will; share in estate:
o If the child is born or adopted after will or testamentary instruments were executed, child gets an intestate share.
o Rebuttable under CPC § 21621: by proving any of the following:
▪ Failure was intentional and intent is obvious in the testamentary instruments
▪ Decedent had one or more children and devised substantially all of the estate to the other parent of the omitted child.
▪ The decedent provided for the child outside the estate passing by D’s testamentary instruments, etc. (life insurance, joint bank accounts).
• Gray v. Gray:
o John was married before and had Robert and Monica. Then he got a divorce and married Mary and they had Jack. Will was executed giving all to his wife Mary. He didn’t make any provision for the prior kids or Jack. Then he divorces Mary and then dies.
o On divorce, there was an agreement that John would set up trust for the benefit of Jack. The funds would be from John’s grandmother. In the will John gave his estate to his brother in the case that Mary couldn’t take. So it won’t fall into intestacy.
o Jack is asserting pretermission: he gets a presumption that he was pretermitted so that he gets an intestate share.
o Rebuttal: in Alabama:
▪ Intentional
▪ T had one more children and devised substantially all his estate to the other parent of the omitted child.
o Holding: Jack is NOT entitled to receive a share of John’s estate.
• Kidwell v. Rhew:
o D executed an intervivos trust and the child wants to claim pretermission against the trust.
o Historically pretermission can only be claimed under a will.
o In California, the doctrine is expanded to include all testamentary instruments—very broad.
o The child was born after the will and trust were executed.
o Some jurisdictions apply pretermission to all children not included in the instruments even ones before.
• CPC § 21622: Decedent’s erroneous belief or lack of knowledge; child’s share of estate:
o If the decedent failed to account for a child b/c he believed that he is dead or didn’t know of his existence, the child would be provided an intestate share.
• California: has 2 pretermission doctrines for children:
o Those born after execution of will
o Those born before a will is executed(but this is more limited.
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CHAPTER 8: TRUSTS: INTRODUCTION & CREATION
INTRODUCTION:
• A trust is another way of providing for the disposition of property
• Trusts can operate to make dispositions of property not only at the time of your death but before that also.
• Types of trusts:
o Intervivos—created while you are alive
o Testamentary—they can be set up in your will upon your death
o Trusts is another way of making gifts:
▪ Intent to make the gift
▪ Delivery of the gift
▪ Acceptance of the gift
• Intervivos gift: you need intent and delivery
• Testamentary gift: you can make a will
• It is harder to make a testamentary gift than an intervivos gift
• Trusts are like intervivos gifts
• Trusts can stretch into the future, unlike gifts. Trusts can last for decades.
• Present intent to make a present gift of property vs. intent to gift in the future (intervivos vs. testamentary)
• In a classic trust, there are three players:
o Settler: donor
o Trustee: the donee of the legal title who holds it for the benefit of the beneficiary
o Beneficiary: another donee but only receiving equitable title to the asset.
• The trustee does not have to accept the duty but if he does, he has to fulfill the duties.
• Settler transfers property to trustee to hold to S. for life and then remainder to X.
o Trustee has to invest the property and make it profitable
o If you are dipping in too much into the principal, there won’t be anything left to the remainderman.
o There are also the division b/w present and future interests.
• Benefits of the Trust:
o Protects the property
o It can last for ages; it can keep on going
• Division:
o Present vs. future interest
o Legal v. equitable title
o Income v. principle (corpse).
• Common law Approach
o Gifts to trusts at common law were irrevocable.
o When the settler funds the trust, under the irrevocable model, the trustee owes duties only to the beneficiary.
• Requirements for trusts:
o Intent to create trusts
▪ Invoke the magic words (trust, beneficiaries, etc.)
▪ But words like these are not necessary
▪ The distinction between an outright gift and a trust
▪ A gift is a transfer w/ intent to make a gift and delivery and acceptance.
▪ The class trust adds another player: the trustee
o Property
▪ It has to be in the trust
▪ The property has to pass from the transferor to the transferee—funding the trust)(it is NOT a promise of future funding or something in the future.
o Ascertainable beneficiaries
▪ They are getting the right to the underlying property
▪ There may not be anything given or delivered to the beneficiaries. The property is given to the trust.
▪ The only delivery to the beneficiaries is the creation of the equitable interests.
▪ If we don’t know who the beneficiaries are, then there is no one to enforce the duties against the trustee.
o Writing (sometimes)
▪ It is a statute of frauds issue
▪ Determination of writing requirement depends on: (1) when it was created and (2) what kind of property.
• Intervivos vs. testamentary trusts
• Testamentary trusts are created in the will and they pass through probate. For that type of trust, you have to have a will so you have to have writing.
• But intervivos trusts don’t require it generally unless you require the type of property that necessitates writing (ex: real property).
CREATION OF A TRUST
1) Intent to Create a Trust:
• Lux v. Lux:
o There is a testamentary and the issue is whether she devised certain property to her grandchildren outright or in a trust. A part of the trust states that real property should be held for the benefit of the grandchildren until they reach 21.
o Holding: the real estate was a trust not an outright gift for the grandchildren.
o Even though she didn’t have a trustee or mention the word “trust,” she still created a trust.
• Jimenez v. Lee:
o Two gifts were made to the father to hold as the trustee for the benefit of the children’s education. Father sold them and invested the proceeds. The issue is whether there was a breach of fiduciary duty of the trustee. Here, the trustee used it for the daughter but it was not for educational need.
o Holding: this was a trust and there was intent that the daughter be the beneficiary.
o A trustee can’t change the property from trust to a custodianship.
o There was no adequate accounting to show that he was using the funds to support his daughter.
• The Hebrew University Association v. Nye:
o It was a library collected over a lifetime. When the owner died, his wife bought a lot of it from his estate. She wanted to have the library remain intact. So the Hebrew University was willing to house it for her. There was public acknowledgement that the University would get. She was boxing the books, but she died before she could ship them. Issue is between two Hebrew institutions.
o Issue: whether it was a gift in trust w/ wife as trustee.
o Analysis:
▪ This was a failed gift because there was no delivery
▪ The only delivery that has to happen is from the settler to the trustee. In this case, they are the same person. So there is no trustee necessary.
▪ The issue is whether there is an intent to make a trust
▪ Courts will NOT convert a gift to a trust just to save a failed gift.
▪ There has to be more evidence of the intent to make a trust.
o Holding: it is not a trust.
• Exceptions to Delivery:
o Symbolic delivery
o Constructive delivery: key to warehouse
• Hebrew University Association v. Nye:
o The University tries to prove that it was a gift intervivos
o Evidence: symbolic delivery: memo of full inventory of books. That was symbolic delivery of the library.
o If we take the approach that she had to deliver the library, we can say that it is impractical to deliver.
o Holding: there was symbolic delivery; university won.
o The donor’s intent was very clear.
2) Necessity of Trust Property:
• Unthank v. Rippstein:
o Man was in bad health condition and he wrote a letter to Ms. Rippstein that he would send her $200 for each month for next 5 years.
o Is this a will or a letter?
▪ Will only if there is a testamentary intent, writing and signature.
▪ Court held that it was not a will b/c it has no sufficient testamentary intent.
▪ So it is NOT a testamentary gift.
o Is it a trust?
▪ Funding: settler needs to set aside funds for the trust OR evidence of specific accounting (separation of assets).
▪ On the termination of a trust that came from the residue, the trust funds go back to the settler or residue to be distributed.
▪ So her argument was the he imposed a trust on his entire estate so that he would pay for the trust and upon its termination, it would go back to the general estate.
o Holding: no trust was intended or created.
• Resulting Trusts v. Constructive Trusts:
o The resulting trusts after they serve their purpose is to go back to the settler
o Constructive trusts: equitable title goes to one person and legal title goes to another.
• Property:
o First Requirement: existence of property
o Second requirement: adequacy of property (expectancy can’t be adequate property; future profits are not adequate property)
• Future Profits: Brainard v. Commissioner:
o Brainard tried to fund the trust w/ future profits. Court held that here was no sufficient property fund the trust. He was attempting to avoid taxation by giving the profits to other members of the family.
o Future Profits alone are NOT enough.
• Future Profits: Speelman v. Pascal:
o Pascal has the rights to remake the play Pygmalion. He wrote a letter to the secretary giving her a portion of the profits if he makes the play and makes profits. They are profits that may accrue if the play is made.
o General Rule: future profits are not adequate to satisfy the property requirement of the trust.
o Since he owned the underlying means or assets to the production, he could give her a share of profits.
• It is hard to reconcile Brainard and Speelman
• Rule:
o Gifts: the trend is not so rigid regarding future profits.
o Turst: law is well settled(future profits won’t sustain the funding of the trust.
3) Necessity of Trust Beneficiaries:
• Clark v. Campbell:
o A will that gives momentos to the trustee to distribute to his friends. There is intent to create a trust; he is funding the trust; there is writing (will). The only missing component is ascertainable beneficiaries.
o Ascertainable: beneficiaries that is capable of determination. But we don’t have to name them by name.
o Here the gift was to friends: too vague and subjective.
o Holding: there is no trust so it fell into intestacy.
o Powers of appointment can be given to third parties and they don’t carry any fiduciary obligations. However, here the testator did not make that clear because he mentioned a trust. This is a example of poor drafting.
o No ascertainable beneficiaries(trust fails(falls to residue or intestacy.
• Revocable vs. Irrevocable:
o Revocable: can be revoked by the settler. A court at request of a creditor can force you to exercise your power over the trust even to revoke.
o Irrevocable: can’t be revoked by settler and creditors can’t touch this.
o At common law, trusts were presumptively irrevocable unless you declare otherwise.
o California: presumes that a trust is revocable unless you expressly state that it is irrevocable.
o UTC: presumes trusts are revocable. Err on the side of people that are creating trusts don’t know what they are doing.
• Pets as Beneficiaries: In re Searight’s Estate:
o Someone left $1,000 in trust for the care of the pet. Issue is that the beneficiary is a dog. Dogs can’t sue to enforce the fiduciary right of the trustee. So they have no standing.
o Common law: this would fail.
o Honorary trust:
▪ It is not a real trust
▪ Elements:
• Intent of settler must be honor, specific, not illegal or capricious
• Court is willing to honor that because the intentions were honorable.
• Even though the trust fails, if there is a trust that is willing to do it, then it would survive.
▪ However, the court won’t apply that to save an otherwise failed trust.
• California: has a pet provision: UPC § 15212: Pet trusts are generally enforceable by trustee or anyone who care about animals.
4) Necessity of a Written Instrument:
• Oral Trusts for Disposition at Death: In re Estate of Fournier:
o One person living alone gives money to neighbors to hold for his sister. The money was there for years. He appointed sister that was supposed to get the cash as executor. There was also a will that would pass the assets in a 3-way split. Argument that assets were not part of the estate is that an oral trust was created.
o Issue: whether there was an oral trust that won’t pass through the will.
o Issue is that eh oral trust was trying to pass property at death.
o Holding: oral trusts can only be intervivos. It is not about when the trust was created but when the funding will occur.
o To the extent that the trust was fully funded during life, there is no impact as a result of your death. So here it is intervivos.
o If the property only appears on your death for your from your probate estate, that is a testamentary trust.
o Standard: clear and convincing evidence b/c we are worried about the fact that it looks like an oral will and the court didn’t want to deal with something like that.
• General Rule: trusts are irrevocable unless make revocable
• Modern Trend/California: revocable unless expressed otherwise.
• Revocation:
o You can revoke a trust by any way that makes the intent to revoke clear.
o You need witnesses or writing (nothing like the will formalities).
• If a trust fails:
o Then we can have a resulting trust: it goes back into the estate (either residue or intestacy).
o Or we can have constructive trust: funds moved to the hands of the rightful takers.
• Constructive Trusts: Hieble v. Hieble:
o Mother who has cancer and didn’t want to have probate so she transferred her real estate to her son but to give back to her if she gets well. Son refuses.
o Court: made a constructive trust on the basis of oral agreement and the confidential relationship of the parties
• Unclean Hands: Pappas:
o Man induced her to marry him and then realized that he will be divorced. So he gives it to the children.
o Court: dad had unclean hands so he wasn’t allowed to recover property.
• Secret & Semisecret Trusts: Olliffe v. Wells:
o Reverend in Massachusetts was given money by Ms. Donovan. She left everything to him so that he can do what she told him that he should with the money. So it looks like a trust. Issue is that the trust has no beneficiaries. It is a testamentary trust.
o Issue: do the terms have to be expressed in the will or can they be in the memory of the trustee? Terms were not disclosed here.
o Secret vs. Semisecret Trusts:
▪ Semisecret: trust by its terms and the presence of it is made in the will itself that a trust is undertaken.
▪ Secret trust: no hint in the will that it exists.
▪ The Distinction b/w them is like patent and latent ambiguities in wills.
o If there is a semisecret trust, we won’t let outside evidence in to the trust terms. Then it would revert back through a resulting trust to the residuary.
o If it is a secret trust, someone will have to come up with the testimony about the trust. There is evidence to show that it was not an outright gift. At common law, we would use constructive trust to move it forward to the beneficiaries’ hands.
o Here: it was a semisecret trust, so it would be a resulting trust and it would go back to the settlor’s residue.
• Under the Restatement: it says that secret and semisecret trusts should be treated the same and use constructive trust as the preferred vehicle.
• California: seems to be a common law jurisdiction distinguishing between secret and semisecret trusts.
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CHAPTER 9: RIGHTS TO DISTRUBTIONS FROM THE TRUST FUND
RIGHTS OF THE BENEFICIARY TO DISTRIBUTIONS:
• Marsman v. Nasca:
o Wife sets up a trust for her husband in the will. With her death, when he got older, the money was not enough. So he went to lawyer and lawyer asked him to submit it in writing. He didn’t ask for money. He was on the verge of BK. He struck a deal with Sarah’s daughter that he would deed the house to her daughter. After his death, the husband’s 2nd wife wants the house.
o Two type of distribution:
▪ Mandatory distributions
▪ Discretionary distributions
o For his income “shall” means mandatory distribution by the trustee. And the trustee was doing that.
o Potential distributions of principal were discretionary.
o Issue: when it came to the discretionary distributions, the trustee abused his discretion.
o Discretion:
▪ Fiduciary Responsibility: trustee has a duty to act in the best interest of the beneficiary (duty of loyalty).
▪ The issue is when there are multiple beneficiaries.
▪ Income should be distributed and principal should be preserved for as long as possible.
▪ The trustee has to inquire into the needs of the beneficiaries
▪ You can’t conduct the best informed discretion unless you find out what the needs of the beneficiaries are. Once the inquiry is completed, trustee has to exercise discretion reasonably (objective) and in good faith (subjective).
• The settler can modify the standard.
• Here, the settler gave sole and uncontrolled discretion.
▪ However, public police argues that uncontrolled discretion can’t be given b/c the relationship of a trustee-beneficiary by itself raises responsibility.
• Rule: the language of a trust can drop the “reasonable” standard BUT NOT the “good faith” portion.
• So it has to be at least good faith.
o The settlor’s intent can also be expressed in a different way: ascertainable standard.
▪ Words like comfort, support, maintenance, education.
▪ They are now terms of art that is ascertainable standards.
▪ Comfortable support and maintenance: means that settler wants the beneficiary to enjoy the same standard of living that he enjoyed when the trust was made. So the trustee failed on this standard as well.
o Holding: wife won and trust was made to pay the wife but she didn’t get the house back.
• To what extent can the trustee consider other resources:
o Common law: a trustee CAN’T consider the other resources available to beneficiary.
o Modern view: the settler must have intended for the trustee to consider other resources.
• Exculpatory Clause:
o Assurance that the trustee will not be held personally liable. Courts will generally respect and enforce them UNLESS:
▪ They are overreaching or in bad faith.
▪ If they burden the beneficiary unduly
▪ Suspicious if the trustee is the drafter of the trust: burden is on the trustee to show that it was discussed and agreed on by the settler as an exculpatory clause.
RIGHTS OF THE BENEFICIARY’S CREDITORS
• Creditors: can a creditor of the beneficiary reach the property of the beneficiary including his interest in trusts?
o As a general idea, creditor can reach anything that can be voluntarily reached by the beneficiary
o It is about control and degree of control that the debtor has over the property in question.
o A creditor can reach a beneficiary’s interest in trust. The creditor is deemed to step in the shoes of the beneficiary. So the creditor gets the mandatory or discretionary distributions.
• Shelley v. Shelley:
o Grant was married a couple of times and had a lot of kids. And he was a bum. His parents set up a trust naming him as beneficiary. The wife and kids wanted to get an order requiring the trustee to distribute the distributions to them. Once they get a judgment they become creditors.
o Trust: there is an income interest here which appears to be mandatory. The principal right is discretionary.
o Court
▪ Creditors can force the trustee to give them the mandatory income.
▪ The principal (b/c it is discretionary) creditors can’t force trustee to extend that to beneficiary. Court also can’t force trustee to exercise that discretionary amount.
▪ The kids can force the trustee to exercise discretion (b/c the language of the trust allows for distribution to the grandchildren in their own right in cases of emergency).
▪ Holding: spouses and kids can reach the mandatory distribution even though there is a spendthrift clause b/c they are a protected class.
▪ Ex spouses couldn’t reach discretionary distribution of principal. Only the children can require the discretionary distribution by arguing abuse of discretion.
• Some jurisdictions instead of letting the creditors run after the beneficiary, allows a charging order to the trustee so it is distributed directly to the creditors in the first place.
Spendthrift Clause:
• A beneficiary is not allowed to transfer his interest (mandatory or discretionary, etc.)
• That exists because they are afraid that the beneficiary will not be able to manage his assets.
• This is also about asset protection
• In theory that asset can’t be taken by creditors. But in effect, it is designed to make the creditor wait until the distribution is actually made (that is when they are chasing them around).
• CPC § 15300: Restraint on Transfer of Income:
o If the trust instrument provides that a beneficiary’s interest in income is not subject to voluntary or involuntary transfer, the beneficiary’s interest in income under the trust may not be transferred and is not subject to enforcement of a money judgment until paid to beneficiary.
• CPC § 15305: Claims for Child or Spousal Support:
o If beneficiary has right under trust to compel the trustee to pay income or principal, court may order the trustee to satisfy all or part of the support judgment out of all or part of those payments as they become due and payable.
o Whether or not beneficiary has right to compel the trustee, the court can order trustee to satisfy all or part of support judgment of all or part of future payments.
• CPC § 15304: Cases in which settler is beneficiary:
o Restraint is invalid against the transferees or creditors of the settler.
o If settler is the beneficiary of a trust and the instrument provides that the trustee shall pay income or principal for education or support of beneficiary, a transferee or creditor may reach the maximum amount that the trustee could pay to or for the benefit of the settler under instrument not to exceed the amount of the settlor’s proportionate contribution tot eh trust.
• Another measure is once there are creditors claims, all mandatory will be converted to discretionary distributions.
• Exceptions: creditors not subject to spendthrift clauses:
o Ex spouses that are entitled to alimony
o Children entitled to support
o Government regarding taxes
o Creditors that provide basic necessities of life (ER care, food, shelter).
• Scheffel v. Krueger:
o Mother sues a man who sexually assaulted a child. He is in jail and he is a pornographer. Mother gets a tort judgment against him.
o Issue: whether tort claims can get a special status in trusts that have a spendthrift provision.
o Exceptions to apply spendthrift clause are very narrow.
o Holding: tort claimants don’t fit the exceptions so we are NOT going to ignore the spendthrift provision.
Support Trusts:
• A trust by its terms limits the distribution to be made to beneficiaries to the express purpose of being used for something specific. Only as much as necessary for this type of support is mandate.
• Even if a support trust is silent, at common law, they were deemed to be spendthrift in nature.
• Ex: support of my child while going to school.
• So far, we are talking about cases where the settler is different from the beneficiary.
Self-Settled Asset Protection Trusts
• You are the settler and the beneficiary—different rules apply regarding creditors
• Policy: we don’t want people shielding themselves from creditors by putting things in trust for themselves.
• We ignore a self-settled trust for the sake of the creditor
o If the distributions are mandatory, creditors can reach them.
o If the distributions are discretionary, the court can require the beneficiary-settlor to exercise mandatory discretions.
o If there is a spendthrift provision, they are invalid as to all creditors.
• Revocable vs. irrevocable trusts:
o If it is a revocable trust a court can compel you to exercise to terminate the trust so that creditors can reach these assets.
• State Street Bank and Trust Co. v. Reiser:
o Man who had a lot of property and had a trust for him for his life and then to his wife and remainder to kids. He got an unsecured loan from the bank. He died but gave the property all of their trust.
o The trust didn’t owe any money here; the dead guy owes the money so they can only reach the probate estate not the trust. The creditor can reach him during his life. Once he is dead, this life estate is terminated.
o Holding: because it was a revocable trust, since it is a lot like a will, we will let the creditor seek payment from the trust.
▪ However, you still have to go to probate first, when probate is exhausted, then you go to the trust.
MODIFICATION AND TERMINATION OF TRUSTS:
1) Revocation of Trusts:
• You can revoke it any way because they are not will act compliance instruments.
• You should be able to revoke it in anyway that expresses the intent to revoke it.
• In re Estate and Trust Pilafas:
o This is about an estate and trust. Created a trust and in the trust disinherited one of the children. Decedent and his son reconciled and decedent wanted to make changes to his will and trust. Decedent died before any of the changes can occur. So the paperwork was missing.
o Court:
▪ Trust can only be revoked in writing b/c the trust itself contained a clause that says it can only be revoked in writing delivered to the trustee.
▪ However, if it is only boilerplate, then maybe that doesn’t show the trustor’s intent.
o Holding:
▪ No evidence showing that decedent complied with the required method of revocation, the intervivos trust was not revoked and remained valid.
• CA 6122: this is example of revocation by law (dissolution or annulment of marriage); CA 6124: this is about the destruction of the will and the presumption that it is revoked.
• CA: we think that the presumptive revocation language that applies to wills can also apply to trusts
• Modern trend: even though there is an express method, it will be the exclusive method of revocation ONLY if it states that it is the express method of revocation in the instrument.
• Assuming the trust is not revoked and the trustor dies, then we enter the next phase. If the trustor is still alive, he can do whatever he wants. However, if the trust is irrevocable or become irrevocable once the settler dies, then we have different analysis.
• A trust is created once it is funded and it will operate as long as it has a function.
• Most trust account for the logical termination for example once the remainderman are given their share.
• But here we are talking about pre-mature termination or early termination.
2) Early Termination:
• Who are we protecting?
o The interest of the settler in seeing that their intent is protected OR
o The interest of the beneficiary
o In an irrevocable trust, the settler doesn’t really own it anymore.
o If the settler is not the beneficiary to the trust, does the trustee own any duty to the settler?
• Modification is the less invasive procedure; termination is a much more drastic measure.
o So courts are more favorably inclined to give modification rather than termination.
• In re Trust of Stuchell:
o A trust set up for the benefit of parents and then remainder to their children outright. One of the remainder beneficiaries was institutionalized (mentally handicapped). The family was concerned that if distribution was to be made to him, he would be unable to hold the assets. Because he was eligible for government benefits, the presence of those assets would disqualify him from the benefits.
o So they asked the court to modify the trust.
o In common law, to modify the trust:
▪ Show courts there is good reason to do so
• All beneficiaries must consent
o Sometimes it is hard b/c come of these beneficiaries might not have capacity to consent.
o So you would appoint a guardian but historically the guardian would not make that decision because it is adversary to their charge.
o Sometimes courts will allow the adult in the group of children to represent the interests of the minors if they all share the same type of interest.
• Show that there was some change (unforeseen change) in circumstances that caused the disruption.
• The change substantially impairs the settlor’s intent.
o Holding: the trust can’t be modified b/c just because it is more beneficial for the family, that doesn’t mean that we should change it.
• Modern trend: is to turn our gaze to the beneficiaries b/c they are the real owners of the property so we need to lower our standard for figuring out settlor’s intent.
o Now some courts look at changes in inflation, tax law, estate tax regime.
• In re Riddell:
o The child was mentally ill. So the court is asking them to modify the trust
o The court allowed it here(this was more of a modern trend.
o So they look at whether the modification will advance or further the purpose of the trust(that is a much softer way of analyzing it.
o The settler would not have wanted the result that would have happened if they kept the trust as it is.
• KNOW THE COMMON LAW
• Early termination: In re Estate of Brown:
o This was the trust for the education for the kids and nephews. Once that is fulfilled, it would be given for the life of the nephew. After the death of the nephews, it would go to the kids. They wanted to terminate it early to give the remainder to the kids.
o It is an irrevocable trust.
o Holding: they can’t terminate the trust b/c a material benefit of the settler remains unaccomplished. This trust was a support trust/commitment.
• Trustees in general don’t like to terminate:
o Potential liability
o Loss of income (built-in conflict of interest).
o What if the beneficiaries consent but the trustee does not?
▪ If the settler is alive and the settler consents, the trustee does not have any argument to keep it.
▪ The trustee generally is arguing that he is seeing to it that the settler’s intent is carried out.
o When will a court ignores the trustee’s request not to terminate?
▪ Trustee usually argues that there is an unfulfilled material purpose that remains to be satisfied so the trust’s job is not done yet.
▪ Common law: 4 particular scenarios that are per se unfulfilled so the trust will not be prematurely terminated.
• Spendthrift clause
• Support trust
• Discretionary trust
• Specific age of distribution
• Summary:
o There is a lot of overlap between modification and termination.
o Common traditional law: concentrate on Trustor’s intent
o Modern trend: concentrate on beneficiaries’ benefit
3) Termination of Trusts:
• Common law: it was very difficult to remove trust. Have to show a serious breach of trust.
• Modern trend: it is to facilitate removal but it is still hard.
o But a lot of trusts include provisions for removal of trustee.
o Harder to remove personal trustees than institutional trustees.
o But the benefit of the doubt sticks with the trustee in general.
4) Trust Protector
• You can prospectively appoint a person and give them power to amend/modify/change a trust even after your death.
• In keeping with the intent of the settler.
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POUR-OVER WILLS
• This fits between wills and trusts
• What property passes free of probate if you include it in the trust?
o Intervivos trusts
o And having assets in it before you die. If the assets come out of the probate estate, you haven’t avoided probate.
o So the key is to get into the big things in the trust and worry about the other little stuff later.
▪ But then there was reluctance because it gets more complicated to open bank accounts, etc. with the idea of trust in mind.
• Alternative: to do everything with one document: testamentary trust (doesn’t require you to do anything when you are alive).
o But the funds come from the probate so you don’t avoid probate.
• Hybrid:
o Make an intervivos trust but fund it using a gift from your residuary estate (pour-over will).
o Pour-over will: takes what it is left of your estate and pour it over to your trust.
o But it is subject to probate.
o To the extent that this intervivos trust hold all the assets, that trust will be determining who gets what.
▪ However, the trust was not execute with will act formalities. So we are allowing something that did not executed with will act formalities to determine who gets your assets.
▪ We need to figure out a way to validate the pour-over provisions.
• Two doctrines:
o Incorporation by reference
o Independent significance
• Incorporation by reference:
o We are incorporating the terms of the intervivos trust into our pour-over will.
o 2 requirements:
▪ Intent to incorporate
▪ Existence of a document (trust doesn’t have to be signed or funded).
o If you actually incorporate the document, is it intervivos or testamentary
▪ Unless funding occurs before death, it occurs after death and is therefore a testamentary trust.
o Intervivos trusts are preferred because don’t have to pass through probate.
• EX: after executing the will, you amend the trust. The amendment arising after the execution of the will CAN’T be incorporated b/c it was not be incorporated if it didn’t exist.
• Acts Independent Significance:
o The will must reference some act to occur outside the will: the act will affect who takes or how much they take. And it must be an act of independent significance.
o The referenced act in the will is the giving the money to the trustee and creation of the trust and presence of the trust.
o Does it have independent significance?
▪ Only found to exist if the trust is already funded so it must be funded intervivos because at that point it is already functioning independently.
o If there are subsequent amendments, they are okay. They need only be existence at the time the settler dies.
o Also funding has to exist just sometime before death. It doesn’t have to be funded at the time of writing the will.
• UTATA: Presumptions
o Even though property is being poured into the trust from the probate estate, the trust will not be considered a testamentary trust for purposes of court supervision if you satisfy UTATA.
o The intervivos trust does not have to be funded prior to death at all to qualify under UTATA.
o CPC 6300: requirements
▪ Trust is identified in the testator’s will
▪ The terms are set forth in a written instrument other than a will.
▪ Other instrument executed before or concurrently with the execution of the testator’s will or in a valid last will of a person who has predeceased the testator
▪ Not invalid b/c the trust is amendable or revocable or b/c the trust was amended after the execution of the will or after the death of the testator.
▪ This is NOT a testamentary trust.
▪ Trust has to be signed.
o SO:
▪ Doesn’t have to be funded
▪ Allow post-execution amendments
▪ Pour over property can come from the probate estate; no court future, on-going supervision.
• However, if you don’t qualify for UTATA, you might still be to enforce it under one of the 2 common law principals.
o For example if you sign the trust AFTER the will(that won’t qualify under UTATA.
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CHARITABLE TRUSTS
• Trust by its terms serves a charitable purpose:
o Relief of proverty
o Advancement of education
o Advancement of religion
o Promotion of health;
o Governmental or municipal purposes; and
o Anything beneficial to the community as a whole
• Problem with these: there is no specific, identifiable beneficiaries
• So at common law, we dropped the requirement of the ascertainable beneficiaries.
• How long is the trust supposed to last?
o They didn’t have to comply with the Rule against perpetuities.
• Shenandoah Valley National Bank v. Taylor:
o Made a trust to leave money to the benefit of the children of his home town. It provides $5 to each child twice a year.
o Trustees claimed that it was a charitable trust for the benefit of education.
o Court:
▪ Since the money was being wasted, it wasn’t fulfilling the purpose.
▪ The court held that this was a benevolent trust but not a charitable trust.
▪ So the trust fails for the rule against perpetuities. So it went back to the heirs through intestacy.
• Since it is indefinite in duration, it might face change in circumstances. What happens if the purpose goes away?
o We can treat as the purpose of the trust is completed. Anything left would go back to the estate.
o But a doctrine developed: cy pres/modification:
▪ They will put it in another charitable purpose that approximates the settlor’s intention.
▪ To the extent that we can stay within the same general purpose, then it might be okay to modify the charitable trusts (for example the area of health).
▪ Requirements:
• General purpose has to be identifiable
• Specific purpose has to be close to the original intent.
• Charitable vs. benevolent:
o Charitable: indirect beneficiary (valedictorian from the high school).
o It becomes a question about who’s benefit your are funding.
▪ Ex: scholarship to doctor who would come back to practice in the small town.
▪ The benefit is to the community at large.
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