law school outline: wills and trusts


Wills & Trusts

  1. Community Property

  1. Law of domicile at time of acquisition of property controls classification.

  1. Separate property: Acquired before marriage, or during marriage by gift, bequest, devise or descent. Surviving spouse has no vested right to other�s SP.  Growth of SP is SP.
  2. Community property (�100): Acquired when domiciled in CA by one of the spouses during the marriage by time, labor and skill. During life, either spouse cannot dispose of without consent. Each spouse can dispose of � in will; other � must go to surviving spouse. Other spouse then has right of disposition to his half.
  3. Quasi-community property (�101): Acquired when not domiciled in CA which would have been community property had the spouses been domiciled in CA. Until death or divorce, no right of surviving spouse to access or dispose of.  Half must go to surviving spouse at death, other half can be disposed of.

  1. Spouse who claims separate property must trace and identify it
  2. Classification can be altered (transmutation) by agreement of the parties.
  3. Gifts given from community property assets can be avoided to the extent of the non-consenting spouse�s � interest. BFP�s are protected.

  1. Will (testate)

  1. Definition: A will is a person�s voluntary declaration of what is to be done after his death. It is secret, revocable and ambulatory (does not pass until death). The will instructs an executor to distribute the estate to the devisees in accordance with the devises in the will.

  1. Includes instrument that merely appoints executory or revokes prior will.

  1. Choice of law

  1. Will can specify governing law, regardless of testator�s domicile.
  2. Important to designate which state�s laws control (�21103) and the date of the controlling law (in case it changes).
  3. Must comply with law at time or place of execution (�6113).
  4. Distribution patterns may adopt a specified intestate distribution pattern (�240-�247), but should be explicit about which type. Using term heirs incorporates laws of intestate succession

  1. Present intent

  1. Demonstrated by declaration, signature, circumstances.
  2. Intention of testator controls interpretation of instrument. If not indicated by four corners of instrument, rules of construction apply (�21103).

  1. "to X and her children" = tenancy in common

  1. Capacity

  1. 18 years of age (�6100)
  2. Mentally competent (�6100) and not suffering from a mental disorder involving delusions or hallucinations which affect the devising of the property.

  1. Understand the nature of the will;
  2. Comprehend the nature and situation of the estate; or
  3. Comprehend relations to descendents, spouse, parents, and other interested parties.

  1. Formalities

  1. Serve to reflect, protect, and give evidence. Trend is away from formalization so long as fraud is protected against. Doctrine of substantial compliance can uphold will if testator substantially complies with requirements.
  2. Attested:  In writing.  (�6110)

  1. Sections

  1. Date:  Not mandatory, but highly recommended.
  2. Introductory clause and clause of revocation (combined)
  3. Devises
  4. Residuary clause to catch any parts of estate not mentioned (otherwise property passes by intestacy)
  5. Affidavit
  6. Signature

  1. Proxy ok if witnessed by T and at his direction
  2. Volitional mark ok if witnessed by 2 independent people
  3. Assisted ok if T intends to sign and acquiesces to assistance
  4. Beneficiaries should not be at signing (undue influence).
  5. When there is a problem with the signatures of T or W�s, courts are liberal if no hazard of fraud and T intended to authenticate document as his will.

  1. Witnessed

  1. By two non-interested parties (otherwise presumption of fraud, and if fails presumption, W smaller of devise or intestate share; will is still good - �6112)
  2. Who simultaniously witnessed T�s signing or acknowledgement of signing
  3. And understand that it is T�s will
  4. Who sign the will (independently is ok, T not required to ask or witness, mark probably ok, proxy not ok)
  5. With an attestation/affidavit clause, which is prima facie evidence that T voluntarily signed will in presence of Ws (not required).

  1. Do not make duplicate originals, or changes to original.
Holographic if handwritten (�6111)

  1. Signature and all material provisions must be in the handwriting of testator.

  1. No requirement of witnesses
  2. Form will from stationary store is ok because material provisions are in writing, and statement of testimentary intent is not a material provision.
  3. Full signature at end is the best, if not, intent to authenticate needed.

  1. Should be dated. CA does not require date.

  1. Undated attested will supercedes undated holographic.
  2. Inconsistent documents cancel each other out to the extent of inconsistencies.
  3. Evidence of testator lacking capacity at any time during which the will might have been executed invalidates the will.

  1. Affidavit of testator should declare will to be his last will, at least 18 years of age, of sound mind, and not revoced.
  2. Handwriting must be identified by at least two witnesses.
Nuncupative if oral and made on deathbed.

  1. Eliminated in California
  2. Video and audio tapes not allowed, but may be admissible at probate to show capacity, undue influence, fraud or mistake when signing written will.
Codicil is an addition � generally cumulative, in addition to the bequests in the will, not a substitution for the provisions of the will. Additions to will only allowed through codicil � can�t write addendum to an already signed will.   Codicil republishes earlier documents. Amendments require formalities.Limitations

  1. Devises to charities no longer limited.
  2. Protection of the spouse

  1. Test: Who has right of disposition?
  2. Duty to pay alimony ceases when payor dies.
  3. Common law: Elective share statute.

  1. As a protection against disinheritance, surviving spouse can make an election to take a statutory share (usually 1/3 or �, by abatement) of the decedent�s probate estate, in lieu of other devises in the will.
  2. Lifetime transfers made purposefully to defeat the elective share can be challenged. Other nonprobate transfers at the time of death are either ignored (maj.) or charged against the elective share (UPC).

  1. Community property (California)

  1. Will may dispose of the testator�s separate property, plus his half of the community property (�6101).

  1. If testator tries to dispose of 100% of community property, surviving spouse must allow her 50% of CP to pass under will if she wants to take under will.
  2. The will should make clear whether or not testator is disposing of both halves of the community.
  3. T can require SS to give up her half of CP in exchange for her benefits under the will.

  1. Surviving spouse who is not provided for in or out of a will made prior to marriage (but not disinherited or contemplated when will was executed) receives a share of estate: � of community (�100) and quasi-community (�101) property, and a share of the separate property that the spouse would have received had the decedent died intestate (max 50%) (�6560).
  2. Amount comes first from residuary, then pro-rated from the beneficiaries.

  1. Protection of children

  1. Provisions in divorce decree or agreement for child support are not terminated by death of obliged parent (unless agreement is contrary). Usually portion of estate or life insurance is left to child.
  2. After-born or after-adopted (pretermitted) child for whom testator fails to provide for in his/her will, receives intestate share (�6570) from residuary; �6573, then pro-rata from devises.

  1. Except (�6571):

  1. If estate went to surviving parent (thus usually n/a in community property state)
  2. If child otherwise provided for
  3. If child was disinherited in the will (or not mentioned when others were) - intention must appear on face of will.
  4. If testator is unware of child or believes child is dead (�6572)
  5. If child predeceases T, his issue don't take.

  1. Make it clear that after-born children (and/or their issue) are included in devise.

  1. Exclusionary clause:  Must be specific enough to pinpoint who is excluded, and protect against people who, even if they aren�t named, would have a claim (spouse, children).
  2. Homestead: Protects a portion of the estate from creditors claims for the benefit of spouse and children.
  3. Public policy restricts acts which senselessly destruct the estate on a whim and caprice. Applies when no benefits are present to balance against injury to heirs. Legacies to a pet are not enforced.
  4. Distributions to minors must be held in trust; trustee has power to distribute according to needs (Uniform Statutory Will Act).
Revocation

  1. Specific act + present intent

  1. Can be done at T�s direction

  1. Revocation can be partial or complete. Depends on intent (�6120)

  1. Property in revoced section passes through residuary clause (therefore revocation does not need Wills Act formalities).
  2. Intent cannot be shown by oral evidence.

  1. Marriage / Divorce

  1. Marriage does not revoke a prior will in California (pretermitted spouse statutes).
  2. Divorce revoces provisions pertaining to ex-spouse. Property passes as if spouse predeceased.  Separation is not enough.

  1. Subsequent will or codicil (�6120)

  1. Specific present intent.:  "I hereby revoce all prior wills made by me"
  2. Implied revocation through inconsistent provisions of subsequent nonrevocing will, to the extent of the inconsistencies..
  3. If neither will is dated and it cannot be determined when wills were executed, both are denied probate.
  4. Testimentary revocation takes effect at execution (not ambulatory), but if the testimentary document is bad, no revocation, or if W2 is revoked, see revalidation and DRR (below).

  1. Physical act of destruction (�6120)

  1. Burning, tearing, obliterating or canceling by writing across the face, coupled with present intent to revoce.

  1. By proxy ok if done in presence of testator and by his direction

  1. Destruction of codicil does not revoce will, but destruction of will revoces codicils.
  2. Destruction of one executed copy destroys both (�6121).

  1. Partial revocation of a single instrument or one of a series of instruments
  2. Lost wills: Presumption of destruction if last known to be in T�s control. Otherwise still probated if valid execution, not revoced, and contents known.
  3. Revalidation of revoced will

  1. Physical revocation: Better to redraft.
  2. Revalidate original (revoced) will, even if executed improperly, by sufficient incorporation in subsequent codicil.
  3. Revival by revocation of a revocing will

  1. Statement that says "this will revoces all prior wills" in every subsequent will is best way to prevent this problem
  2. If W1 is revoced by W2 which is revoced by W3 or physical act, what happens to W1? Revocation of W1 @ time W2 was made (CA �6123) unless clear intent contra.  CL:   W1 not revoked until death, therefore revived.

  1. Dependent relative revocation: If revocation of old will (i.e. by act) and making of a new testamentary intent (either a new will or a codicil) is clearly part of one scheme (intent), and new will was not made, was invalid, or ineffective, then old will is still effective. Purpose is to carry out probable intent of testator. May apply partially � i.e. take some of the new will, some of the old will.  Doesn't apply when W1 is revoked by a bad W2, in which case W1 is never revoked.

  1. Power to revoce is inherent in a will.
Power of Appointment

  1. Donor puts clause in his will giving donee power to appoint who receives the property after donee dies.
  2. Forms

  1. Testimentary: Donee can appoint only by will.
  2. Presently exercisable: Donee can appoint by deed or inter vivos transaction
  3. Not presently exercisable: Pending condition precident
  4. General: Donee can appoint to anyone, even himself and his estate.  Adverse tax consequences: Property is included in donee�s gross estate whether exercised or not.
  5. Special: Donee can appoint only to a specified, limited group of persons.
  6. Discretionary: Donee has power to exercise appointment.
  7. Imperitive: Wishes of donor must be complied with, even if donee does not do so before his death.

  1. Intent

  1. Donee must intend to exercise power of appointment for an appointment to take place.

  1. General residuary clause does not suffice, without showing further intent to exercise power of appointment (doesn�t have to be express).
  2. Must comply with manner prescribed by donor, if any.

  1. Donor and donee retains powers of revocation, unless immediate gift.
Probate

  1. Establishes a will as a valid testamentary disposition and vests the property in the beneficiary

  1. Testator must be dead.
  2. Court in domicile of testator at time of death has jurisdiction over all subject matter related to estate
  3. Court may try questions of fact by jury
  4. Extrinsic evidence admissible to determine validity of will (�6111.5)

  1. Will which is conditional shall be admitted or rejected in conformity with condition (�6105)
  2. Delay in distribution must be reasonable. If unreasonable, property vests to beneficiary sometime before distribution (so that if B dies, B�s issue take).
  3. Does not touch non-probate estate (1/2 community property, trust, etc.)
  4. Forms

  1. Ex-parte (informal)

  1. Notice may be required in some cases.
  2. Contestant can appeal via inter-parties procedure.

  1. Inter-parties (formal)

  1. Notice with due diligence required to interested parties (heirs and legatees).
  2. Contestant submits evidence against the will (caveat). If probate has ended, interested contestant must appeal.

  1. Only 1-2% are contested, most unsuccessfully.

  1. "No-contest provision" (if someone contests this will they are disinherited) are valid unless good faith and probable cause to contest. Securing a release is a better alternative.
  2. Contest

  1. Only directly interested party can contest.
  2. Burden is on contestant to establish grounds for contest, then burden shifts to executor, who has duty to defend (at expense to estate).
  3. Grounds for rejection of will, or portion thereof: Formalities, revocation, incapacity, lack of intent, fraud.
  4. Evidence: used to show intent of testator

  1. Extrinsic evidence allowed to resolve reasonable interpretation of ambiguities, general intent, and intent as to particular disposition.
  2. Extrinsic evidence not allowed to change or add to face of will, or add intent of T as ot specific disposition.

  1. Tort: Wrongful interference when expectancy intentionally interfered with by tortious conduct (fraud, duress, undue influence) with reasonable certanty that devise to p would have been received but for D �s interferance. Damages.
  2. Remedy: Set aside whole or part of will; creation of constructive trust
  3. Estoppel: One who accepts benefits under a will is estopped from later joining in a contest of the will.

  1. Contractual: As an alternative to probate, the heirs can renounce the will and come up with their own contractual division of the property.
Intestate (no will, invalid will, or property not covered by will (�6400))

  1. Administrator is appointed.
  2. Heirs - receive property of descendent (�44). Vests at moment of death. Heirs do not exist until after death � a living person has no heirs. Relations in gestation at time of death inherit as if they had been born prior to death (�6407).

  1. Definitiveness

  1. Expectant heir will inherit  Prospective heir may inherit

  1. Heir presumptive will inherit unless closer relation is born  Heir apparent will inherit unless excluded
Relationship

  1. Ascending lineal line = ascendant or ancestor
Descending lineal line = descendant  Common ancestor = collateral  Relation by marriage = affinity  Relation by blood = consanguinityDebt owed to decedent is not charged against intestate share of any person except debtor, and is not taken into account if debtor fails to survive decedent when computing share of debtor�s issue (�6410). Succession (Note: For exam, need to be familiar with chart on page 95)

  1. Spouse

  1. Separate property & spouse�s community property (�6401):

  1. No issue, parent, siblings, neice or nephew: 100%
  2. One line via issue, or parents, siblings, neices or nephews:  50%
  3. Two or more lines via issue:  33%

  1. Homestead exemption protects spouse and family of insolvent debtor from claims by creditors against a % of debtor�s residence.

  1. Issue (representation; �6402a)

  1. Minor descendents must have a guardian, who must treat all issue equally regardless of needs.
  2. Adopted child is adopted out of their natural family (or prior adoptive family) and adopted into their adoptive family.
  3. Children through artificial insemination are treated as if they were naturally born by their mother and father, although this is still being ironed out.
  4. Illegitimate children inherit from mother, need additional proof to inherit from father, such as acknowledgement of paternity.
  5. H of W who is mother of child born during marriage is presumed to be father.

  1. Parents (�6402b)
  2. Siblings (representation; �6402c).

  1. No difference between half-siblings and whole-siblings, but step-siblings are not legally related.
  2. Adoption: Natural whole-blood siblings are still heirs and share with adoptive siblings. (�6451)

  1. Grandparents (�6402d)
  2. Aunts/Uncles (representation; �6402d; NOTE: UPC cuts off here)
  3. Issue of predeceased spouse (reprsentation; �6402e)
  4. Next of kin, regardless of how remote (�6402f), but not relatives by marriage.
  5. Parents of predeceased spouse (�6402g)
  6. Heirs predeceased spouse (representation; �6402g)
  7. Escheats to state
Distribution

  1. Some/all children living: Per stirpes (representation) (�246). Living children get equal shares, issue of deceased children split the share of their deceased parent, and so on down the line.
  2. If no living children:

  1. California: Per capita and per stirpes (Equally and by right of representation) (�240). Estate is divided into as many equal shares as there are heirs in the nearest degree of kinship living. Share of deceased person at that level is divided to living descendents equally per living generation.
  2. Per stirpes (representation) (�246). Living children get equal shares, issue of deceased children split the share of their deceased parent, and so on down the line.
  3. Per capita (equally at each generation) (�247). Estate divided in equal shares to living members of nearest generation living and deceased members of that generation who leave issue. Each living member of nearest generation is allocated one equal share, and remaining shares are combined and divided in the same manner among remaining issue.
  4. All of the members of the nearest living generation share equally. Each surviving generation shares.
Trusts

  1. Definition: Fiduciary relationship in which one person is the holder of title to property subject to an equitable obligation to keep or use the property for the benefit of another.
  2. Express Private Trust

  1. Intentionally created for the benefit of an individual.
  2. Division of property into two shares

  1. A: Exemption equivilent to of unified federal estate tax credit ($600,000). Spouse has life estate, remainder to children ("by pass").
  2. B: Remainder of trust estate. Spouse has life estate, remainder to children.

  1. Creation

  1. During lifetime of individual (inter vivos or living) or by the persons will (testimentary).
  2. Grantor can authorize provisions for invading principal, distribution to beneficiaries, etc.
  3. Should be accompanied by a will to pour over property not placed in trust into the trust.

  1. Making spouse a life tenant protects principal.
  2. Should consider beneficiary�s tax consequences and consequenses to eligibility for public assistance.
  3. If for any reason a trust fails or money is excessive for the purpose, trust returns back to the estate of the grantor (resulting trust)..

  1. Charitable

  1. Indefinite � no rule against perpetuity problem
  2. No definite beneficiary required
  3. Future trustees will try and find a similar purpose as that which is described in the document (i.e. if you leave money to charity X, which goes out of business, trustee will find similar charity)
  4. Cy Pres:  When a trust fulfills its purpose or otherwise becomes impossible to carry out, equity requires the trust to continue in a similar function.

  1. Other similar functions have standing to sue.
  2. Something about state positive / negative action

  1. Resulting in favor of grantor

  1. Purchase money: One person pays consideration for transfer of property to TP, unless intent for a loan. Payor has burden of proof.
  2. Failure of express trust.
  3. When the res of express trust is excessive for the purpose specified (but see cy pres, above)

  1. Implied / Constructive / Remedial

  1. Equitable prevention of unjust enrichment which arises from fraud or abuse of confidential relationship, or simply unjust enrichment, or any other time equity requires legal beneficiary not to take.
  2. Promissory estoppel prevents legal beneficiary from claiming against equitable beneficiary.
  3. Parol evidence is admissable to prove that grantee has been unjustly enriched, but the evidence must be clear and convincing.

  1. Characteristics

  1. Grantor

  1. Creates trust
  2. Must have capacity to transfer legal title to trustee.
  3. Must have present intend to create a trust (�15201) and impose an active duty upon trustee.
  4. Retention of interest and control

  1. Avoid claims by grantor�s spouse, creditors (unless revocable or fraudulent), etc. while still retaining control.
  2. Reservation of complete control is testimentary, requiring Wills Act formalities. Test is if grantor intended an interest to pass to beneficiary before death of grantor, and court usually finds an interest as long as no danger of fraud.

  1. Revocable (default by �15400)

  1. Revocable trust can be modified via revocation, method of which may be specified in trust, or by delivering writing, other than a will, to trustee during lifetime of settlor.
  2. Taxed when grantor renounces revocability (death).
  3. Creditors can reach revocable trusts.

  1. Irrevocable

  1. Avoids gift tax
  2. Property is excluded from gross estate
  3. Irrevocable trust can be modified or terminated by all beneficiaries upon petition to court, unless material purpose (intent) exists.
  4. If settlor and all beneficiaries agree, trust can be terminated or modified, and class of beneficiaries may be limited by the court to that which is reasonably likely to take.
  5. Court may modify or terminate trust if continuation would defeat or substantially impair the purpose of the trust.
  6. Revocation possible if mistake, fraud, etc.
  7. Creditors absolutely can't reach.

  1. Trustee

  1. Not required to exist � can be appointed by judge or capable beneficiary. Lack of a trustee will not cause the trust to fail.
  2. Trustee can accept or reject appointment, but that decision is final. Resignation is effective only with court approval or consent of all beneficiaries.
  3. Beneficiary can contest selection of trustee on the basis of age or mental capacity.
  4. Holds legal title for benefit for beneficiary.
  5. Owes very high fiduciary duties to beneficiary (�16002).
  6. Cannot be same person as beneficiary because that creates problems with enforcement. OK if multiple beneficiaries during grantor�s lifetime.
  7. Trustee cannot modify or terminate trust unless that power was conferred when trust was created

  1. Beneficiary

  1. Holds equitable interest in property, subject to divestment by revocation.
  2. Cannot be same person as trustee.
  3. Must exist at time of creation of trust (�15205).

  1. Ascertainable with reasonable certainty or sufficiently described so it can be determined that someone meets the description or is in the class. Trustee may be empowered to select beneficiaries. "Friends" is insufficient, but future children is ok. "Heirs" not ok.

  1. Presumption of fertility is rebuttable (�15406).
  2. A pet cannot be a beneficiary, but a person can be named as a beneficiary with the stipulation that beneficiary receives income so long as it is used for care of pet.
  3. If beneficiary is not yet born, a next friend or guardian can enforce duties of trustee.
  4. Fiduciary duty exists between co-beneficiaries.

  1. Trust property

  1. In some form at time of intentional creation of trust.
  2. Can change form while in trust.
  3. Delivery not required
  4. No protection for pretermitted child.
  5. One spouse cannot put other spouse's community property into a trust without other spouse's permission.  If CP is put into trust, SS can get out of the trust with a forced election.

  1. Restraints on alienation / Protection from creditors

  1. If grantor intends that beneficiary�s interest is not subject to voluntary or involuntary transfer, the trust property cannot be used to pay a money judgment until the property is paid to the beneficiary.

  1. Even when property paid to beneficiary, creditor cannot reach what beneficiary needs for education and support.
  2. Alimony and child support claims are never blocked.
  3. Beneficiary with disability who cannot provide for own care and has to go on public assistance does not have to reimburse government from trust.

  1. Clauses: Grantor must manifest an intent to impose a direct restraint on alienation of beneficiary�s interest.

  1. Forfeiture clause: Interest of beneficiary ceases upon assignment or attempt by creditors to reach interest. Accompanied by gift upon forfeiture.
  2. Spendthrift clause: Restrains power of beneficiary to anticipate interest, and therefore cannot accelerate transfer or assign that interest. Creditor can reach property once paid to beneficiary by trustee. Even if beneficiary does assign interest, trustee is protected.
  3. Discretionary trust: Trustee has absolute discretionary power to pay income or distribute principal.

  1. Good way to care for disabled person, but grantor should consider effects on need based aid.
  2. Neither beneficiary nor creditor can compel trustee to make discretionary payment, nor can they claim the money until the beneficiary receives the property from the trustee.
  3. If grantor = beneficiary, creditor can compel trustee to release maximum amount allowable.

  1. Support trust: Income paid to beneficiary limited to that which is necessary for the support of beneficiary.

  1. Combinatoin: Spendthrift clause with forfeiture clause if creditors attempt to reach interest, followed by discretionary trust to pay to members of beneficiary�s family.
  2. Income is not subject to money judgment until paid to beneficiary.

  1. Legal trust purpose

  1. Intent of grantor controls.
  2. Purpose for property must exist (�15204)
  3. Purpose must be legal. Lawyer knowingly writing illegal trust is an accomplice.
  4. Trust may be void against public policy, such as unreasonably restricting marriage. In that case, beneficiary takes under the will as if conditions were complied with.
  5. Trustee�s job is to execute the purpose.
  6. Precatory language can present problems of interpretation.

  1. Trust agreement

  1. Must be executed and title delivered to trustee.
  2. Should be in writing. Express oral trusts OK only with insurmountable amount of evidence (�15207).

  1. Statute of Frauds �7: Trusts involving real property must be in writing. Oral trusts are voidable by beneficiary.

  1. If �7 not in force, oral trust ok.
  2. If �7 in force, writing is required, and must be signed prior to transferring legal title to trustee. Trustee has the power to assert or waive �7. Assertion can consist of acting as trustee and signing a deed (the writing), even though the trust itself is oral.
  3. Possible to get around this requirement with promissory estoppel, but that is unclear.

  1. Statute of Frauds �8: Trust can arise through implication or construction of law.

  1. Expires when specified term passes, when purpose is fulfilled, trust becomes unlawful, purpose becomes impossible or the trust is revoked. (�15407)
  2. Consideration not required, but promise to create a trust in the future is enforceable only if requirements for K exist (including consideration) (�15208).

  1. Groupings

  1. G/T ------- B

  1. Typical family trust where grantor is also the trustee for her life, to be succeeded by a TP.

  1. G/B ------- T
  2. G---------T-------B
  3. G/T/B

  1. Legal and equitable interest merges and no trust results.
  2. Enforcement problems.
  3. OK if multiple beneficiaries during grantor�s lifetime (�15209)

  1. Choice of law:  Trust may designate the law of a particular state to govern the validity of the trust if that state has substantial relation to the trust and application of that state with strong public policy arguments of another state with a significant relationship. If no choice of law is specified, law of the state where most significant relationship exists controls.
Inter-vivos transfers & will substitutes

  1. If transaction is declared a will, and lacking testamentary formalities, court can hold ineffective.

  1. Solution is to transfer the property, but retain a life estate.
  2. Court looks to see if any interest has been passed to beneficiary prior to death. If the court finds that an interest has passed, then the instrument is not testimentary. As long as there is no chance of fraud, the court usually finds that an interest has passed, even if it is revokable.
  3. Factor:  How much control and power of revocation the grantor retained.

  1. Deed of land creating future interest in grantee (reserving life estate in himself, and power of appointment over remainder or take delivered upon T's death is ok). Conditions or revocability of deed may be testimentary and therefore a problem.  Test is if T intended to create a present interest.
  2. Life insurance policies and US Savings Bonds with beneficiary

  1. Term: Paying for risk protection. No equity built up. Least expensive. Face value paid to beneficiary when principal dies.
  2. Whole: Not paying for risk protection, but equity is built up. Cash value can be obtained at any time upon surrender of policy.
  3. Looks testimentary, but it�s not.
  4. Option for distribution of funds is not a trust, and cannot be changed by beneficiary, because it is a K between insured and company.
  5. Life insurance trust

  1. Funded or unfunded.
  2. Revocable if unfunded.

  1. Payable to beneficiary = bypasses net personal estate.

  1. Gifts

  1. Inter vivos

  1. Donative intent, delivery, acceptance.
  2. Creates immediate interest in donee
  3. Can be of land or personal property.
  4. Irrevocable
  5. Can be subtracted from devise only if that is the expressed desire of T.

  1. Causa mortis: Made at the expectation of imminent death, conditional that the grantor does actually die.

  1. Donative intent, delivery, acceptance.
  2. Personal property only.
  3. Revocable during lifetime of grantor or if grantor fails to die
  4. Need not be probated
  5. Make sure gift will be subtracted from general devise to same person, if that is the intent.

  1. Tax consequences

  1. $10k tax-free limit
  2. No gift tax
  3. Not included in gross estate

  1. Joint tenancy with right of survivorship superscedes will.

  1. Must be in writing
  2. Express manifestation of joint tenancy
  3. Four unities no longer required
  4. Joint tenant can unilaterally sever by recordation
  5. Not ambulatory
  6. Transferable, subject to K.
  7. Community property cannot be held in joint tenancy
  8. Joint bank accounts ("Totten" trust)

  1. Technically it's not a trust, but so long as formalities exist (account set up "in trust for" someone else), statute says its effective.
  2. Presumption of intent as to disposition can be overcome by clear and convincing proof of contrary intent.
  3. Creditors can reach deposit.
  4. Rebuttable presumption of revocability, but cannot be done by will.
  5. Ability of grantor to fluctuate balance is not a factor
  6. Will cannot change B.

  1. Contract

  1. A provision for a nonprobate transfer is valid, even if not a will, if contained in an insurance policy, employment K, mortgage, promissory note, security, retirement, or pension plan, trust, deed, etc.
  2. Present interest transferred? If not, then it�s testimentary.
  3. Contract can extinguish an obligation at the death of a party to the K, without being testimentary.
  4. Third party beneficiary interest makes it ok, even if testimentary.
  5. Consideration must exist, even if after the death.
  6. Must be accepted prior to death of offeror

  1. Incorporation by reference: A valid testimentary document can incorporate an otherwise invalid document such as a contract, if the paper is in existence at the time the will is executed, and the description of the paper in the will is very specific to describe the instrument intended. Parol evidence not permitted.

  1. If the act or document has independent legal significance, it can be created after the testimentary document.
  2. Probate Code �5000

  1. Pour-over: Instruments such as life insurance can pour-over into the trust. Trust must be created first, then pour-over provisions put into a subsequent will.
Common succession problems

  1. Rebuttable presumption of simultaneous death, applies to all types of instruments. Contrary provisions in will controls.

  1. Uniform Simultaneous Death Act (�220-224): Property disposed of as if deceadent had survived. If joint tenants or community property owners die simultaneously, � passes through A, � passes through B.
  2. 120-hour rule: Beneficiary must survive deceident by 120 hours to take by intestacy.   Good thing to include in wills.

  1. Disclaimers / renunciation must meet both federal and state requirements: In writing, irrevocable, filed within 9 mos after decedent�s death. Disclaimer can be used to defeat creditor�s claim in most states, others treat as fraudulent conveyance. If a state considers a disclaimer to be an assignment, creditors do attach. Disclaimant cannot renounce in favor of a named person, but can assign to a specific person. Disclaimant is treated as deceased for purposes of representation.
  2. Acceleration of remainders:  If X makes an election, dissapointed legatees take under doctrine of sequestration. Sequestration doctrine says that the legacy is put in trust for the term of the life estate, and will go to the legatee after X dies.
  3. Advancements: Gifts from decedent are treated as an advance against share of estate only if acknowledged in contemporaneous writing to be an advancement, valued at time of gift. No refund of advancement needed, but heir receives no additional $ if he doesn�t come forward. Heir may bring advancement into "hotchpot" annd receive the difference (if any) between advancement and inheritance. "To my children equally" distributes the estate without regard to advancement. Presumtion that gifts are not advancements, unless substantial to child, then burden on child to show no advancement intended.
  4. Transfer of expectancy: OK if consideration and no duress, fraud or undue influence.
  5. Unworthy heirs: Killer of the decedent forfeits interest in estate (�250) and severs joint tenancies (�251; unclean hands). Property passes as though killer predeceased victim via constructive trust. Applies to murder and voluntary manslaughter, but not involuntary manslaughter. Not guilty by reason of insanity does not forfeit rights. UPC does not require conviction (as some states do), but requires "feloniously and intentionally." Also not entitled to nomination as executor, trustee, etc.  Equitable / Forced election: When T includes in an instrument (will, trust, etc.) property that is community owned by X, which is devised to Y, and X is given other assets in the will, X must elect between retaining his interest in the property, or taking under the will.

  1. "I leave all my property..." does not include community property, but specific description of property can cause election to be necessary.
  2. Joint tenant can be required to elect between JT and other devise if T expressly intents to give JT�s share to X. Lack of power is immaterial.
  3. Treated as renounced legacy, and remainders are accelerated.
Conflict of laws:  For real property, law of situs applies.  For personal property, law of domicile applies.Post-execution changes and interpretations

  1. Property

  1. Forms

  1. Specific devise: Property distinguished from other property in the estate. "My ten shares of X stock."
  2. General devise: Gift of property intended to be satisfied from the general assets of the estate.  "Ten shares of X stock."
  3. Demonstrative legacy: Testator intends it be paid from particular source, but if insufficient to satisfy, then from general assets of estate.
  4. Residuary devise: Gift remaining when claims against estate and specific, general or demonstrative devises have been satisfied.

  1. Ademption by extinction: Specific devise is not in the estate at death. The property does not pass to the beneficiary.

  1. Substantial change in nature or character of property will be an extinction, but norminal change will not be.
  2. Beneficiary will take proceeds from sale of property owing to T at time of death.
  3. If ademption of property was not intended by T, beneficiary will get value of property.

  1. Adeption by satisfaction: Gives beneficiary the property after will is executed but before death (advancement). T must express in writing his intent to make ademption by satisfaction, i.e. advancement clause in will or subsequent note, or transferee acknowledges property as advancement.
  2. Post-Mortem Accessions: Specific legacies are increased by all occur after death.
  3. Interest is applied to legacies at rate prescribed by law.
  4. Exoneration: Person inheriting real property that is subject to a mortgage inherits the mortgage as well, unless specific instruction to pay mortgage (but specific gift does not abate for exoneration unless intent shown).  CL says real property is exonerated.
  5. Abatement (prioritization due to insufficiency to pay debts)

  1. Old order of abatement:  Abatement order is: Intestate, residuary, general legacies, specific legacies.
  2. New order of abatement

  1. Taxes and omitted spouse have priority, and are equitably pro-rated.
  2. Testator�s indication for order of abatement controls. Particular gift may be protected from abatement, such as a stamp collection given to a museum. Drafting attorney may testify as to T�s intent.
  3. Otherwise, old order applies.

  1. Beneficiary

  1. Lapse:  If B dies after execution but before death of T (or for whatever reason is treated as predeceasing T), B does not take, property goes to residuary.
  2. Exception if B is kindred to T or T�s spouse, then B�s issue will take per per capita and by right of representation (anti-lapse statute).

  1. Includes class beneficiaries, unless class has not yet closed, in which case the property is distributed to the remaining class, when the class finally closes. In other words, survivorship until date of distribution is required (absolute vested interest, vs. early defeasable vesting)
  2. Does not apply if T expresses contrary intent or substitute disposition.
  3. Does not apply if B dies before execution and T knows.
  4. Felonious killer beneficiary is treated as predeceased, and in this case eliminates the killer's entire line.

  1. Vesting / Classes

  1. Rule of perpituities applies: Must vest within 21 years of death of individual then alive, or vest or terminate within 90 years after creation.
  2. Rule of convenience says that estate is closed when the first person is eligible to take. Persons can be born into the class after death of T, but only before first person eligible can take.

  1. General postponement:  $1,000 to each of my grandchildren when they reach 21.   Problem is how many grandchildren will be born, and therefore how much money should be set aside from the estate.  Gift fails.
  2. Particular postponement:  $1,000 to be divided between all my grandchildren.   Total amount of gift is independent to number of takers.

  1. Failure of issue construction

  1. Definite (default): Gift is in fee simple, subject to failure of issue of the first taker. Law presumes early vesting, giving an indefeasile interest to B at time of T�s death, unless there are express words of survivorship, which imposes a contingent construction. Up to the judge�s discretion to fulfill T�s intent.
  2. Indefinite: Gift is defeasable on the failure to have issue at even the most remote generation.

  1. Construction: Court may reword will in order to achieve intent of testator (devise by implication). Especially to fill a gap rather than have an intestacy. Intent must be indicated by the document as a whole � silence is insufficient.
Contract

  1. Agreement to make a will or not make a will or to revoce a will can be established only by one of the following (�150):

  1. Will stating material provisions of contract
  2. Reference in a will to a contract and extrinsic evidence proving terms of K
  3. Writing signed by decedent evidencing K

  1. Joint / Mutual Wills (�150b)

  1. Two people put their wills in one document (joint) , or make two wills reciprocal (mutual). Not a good idea.
  2. Agreement not to revoke or modify can be enforced via K damages only. Usual remedy is a constructive trust.
  3. K to not revoke will is not implied � must be proved.

  1. Pre- and Post- Marital agreements (�140)

  1. Coverage

  1. Rights of ownership
  2. Management and control during marriage
  3. Division of property at divorce
  4. Rights to property on death of either spouse (�141a)

  1. Enforceable without consideration, but other contract laws apply (fraud, duress, etc.; �142)
  2. Must be in writing and signed by both parties and good under �143 and �144. (�142)

  1. Presumption that waiver is good (burden on surviving spouse), unless (�143)

  1. No independent counsel; or
No disclosure If waiver is enforceable under this section, no fiduciary duty imposed between H&W (they deal at arm�s length; FC721).Waiver good if (burden on estate to prove; �144)

  1. Fair and reasonable disposition of surviving spouse�s rights. Fiduciary duty between H&W does not apply (they deal at arm�s length); or
Surviving spouse had adequate knowledge of decedent�s financial position and decedent did not violate fiduciary duty between H&W (not at arm�s length; FC721).Except as excluded in �143 and �144, H&W have highest fiduciary duty and must act in good faith and fair dealing, without taking advantage of each other.Waiver can be altered, amended or revoced with a subsequent written agreement signed by both spouses; does not require consideration; �143 and �144 applies. (�146) This section does not apply to agreements made before 1985 (�147). Good way to protect children by a prior marriage � should keep all separate property earmarked to overcome presumption of community property.Anatomical gifts

  1. Uniform Anatomical Gift Act (1968, 1987)
  2. Uniform Determination of Death Act
  3. California Health & Safety Code �7150
  4. Must be 18 years old.
Durable Powers of Attorney

  1. Durable Power of Attorney

  1. Not affected by subsequent disability or incapacity by principal
  2. Powers

  1. Present: Effective immediately and continues during subsequent disability or incapacity of principal.
  2. Springing: Becomes effective when principal becomes disabled or incapacitated.
  3. Terminates at death of principal.

  1. Scope is usually general, but can be specific.
  2. Can be used to fund a trust

  1. When the principal becomes incapacitated, the agent specified in the DPA funds the preexisting (empty) trust.

  1. Health Care Durable Powers

  1. Allows removal of life support when principal is unable to make the decisions.
  2. California follows the Natural Death Acts, which allows for advance medical directives to control health care in the event of terminal illness.
  3. Other states require a living will, with a durable power for health care.
Ethics

  1. Fees are on a graduated scale ranging from 4% to .5% (�10810), unless other arrangement approved by the court (�10811)
  2. As an attorney, I should not prepare a will of a family member or friend, nor should I advise family member or friend as to what attorney to go to. They should go to a totally independent attorney.
  3. Attorney who screws up a will is liable in tort to intended beneficiary who suffered damage due to invalidity. Privity with TP exists due to beneficiary with real interest. Statute of limitations begins running at death.
  4. Husband and wife have fiduciary and confidential relationship
  5. No transfers allowed to drafter or anyone associated with drafter, unless drafter lives with T.
Procedure

  1. Preliminary

  1. Find burial instructions and will.
  2. Open safe deposit box.
  3. Locate witnesses to prove will.
  4. Determine petitioner and prepare petition for letters.
  5. Determine heirs and/or beneficiaries.

  1. Testate decedents

  1. File will.
  2. Petition for probate of will and for issuance of letters test.
  3. Notices of hearing of petition (calendared, published, mailed, posted and affidavits filed).

  1. Intestate decedents

  1. Petition for letters of administration filed.
  2. Notices of hearing of petition (calendared, mailed, posted, affidavit filed).

  1. Prior to hearing

  1. Notice to creditors.
  2. Appointment with representative of controller to open safe deposit box.
  3. Surety bond or personal bond.
  4. Prepare order admitting will to probate, appointing executor/administrator, setting bond, letters.

  1. Day of hearing

  1. Notice given.
  2. Will admitted, personal rep. appointed.
  3. Letters issued and filed. Bond filed.
  4. Notice to creditors delivered to newspaper.

  1. Conference with Personal Representative

  1. Check property. Estimate cash requirements, need for sales, etc.
  2. Obtain consent of state controller to transfer.
  3. Taxes (income, death, federal, property)

  1. Final steps of administration

  1. Preliminary distribution to avoid interest accruing.
  2. Prepare first and/or final report and account and petition for distribution.
  3. Judgment of distribution entered
  4. Obtain and file receipts of distributees.
File affidavit for discharge of personal representative; cancel bond.

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