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81 Cards in this Set

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Capacity to make a will
Capacity to make a will is the lowest capacity recognized at law
1) 18 yrs old
2) Able to understand the extent of her property
3) Must know the natural objects of her bounty
4) Testator must know the nature of her act
Consequences of no capacity
Entire will is invalid and prop will past by intestacy
Unless prior will attempts to revoke a valid prior will
Look for conservator appointed or mental disorder
But either alone insufficient to show incapacity. Relevant to establish incapacity but apply the test.
Effect of insane delusion
Only that part of the will affected by insane delusion is invalid.
Types of fraud that may invalidate a will
Fraud in the EXECUTION—whole will invalid
Fraud in the INDUCEMENT—only the portion affected by fraud is invalid. Use CONSTRUCTIVE TRUST where otherwise, wrongdoer would benefit
Distinguish fraud in the execution from fraud in the inducement: where fraud in execution testator did not intend the document to be his will!
Fraud to prevent REVOCATION
Undue influence defined
Testator’s free agency is subjugated. Established 3 ways
1) Prima facia case
2) Presumption
3) Statutory
Undue influence prima facia case
Testator has a weakness such that he s able to have his free will subjugated.
1) Any weakness or predisposition
2) Opportunity: wrongdoer has access to testator
3) Active participation or disposition to exert influence
4) Unnatural result i.e. wrongdoer taking devise were that person would ordinarily take nothing. Suggesting blackmail e.g.
Presumption of undue influence
1) CONFIDENTIAL RELATIONSHIP i.e. A/C, doctor patient, guardian ward. Or wherever a relationship of TRUST i.e. two close friends
2) Active participation
3) Unnatural result
Effect: only that part of the will affected by undue influence is invalid.
Statutory undue influence
1) Generally statutory undue influence prevents gifts to the drafter of the will or their family. Unless drafter is a relative.
Consequences of statutory undue influence is that transferee does not take the gift.
HYPO: testator lawyer drafts the will and the devisee is the lawyer or the lawyers family.
Mistake in content
Wrong beneficiary is named or wrong gift is made. Can be mistake of omission or addition.
If mistake of omission, court DOES NOT REWRITE will. But potential relief under dependent relative revocation
Where mistake of addition, court may strike out mistaken addition since that is not REWRITING
Mistake in execution
I.e. testator signs will, thinking it’s a power of attny. No intent, so doc not probated. Or reciprocal or mutual will. H&W leave everything to each other and accidentally sign wrong will. Court may reform the will based on equity.
Mistake in inducement
Gift made or not made based on testators erroneous belief. No gift unless intent and mistake clear on face of will: i.e. nothing to john because he dead. If he not dead, he gets $1000.
Mistake in description
Ambiguity. Occurs where nothing fits the description or 1+ things fit the description.
Distinguish latent ambiguity where no ambiguity on face and parol evidence necessary to establish ambiguity. Patent ambiguity where ambiguous on its face: I got 2 cousins john and I leave $1000 to john
PAROL EVIDENCE ADMISSIBLE TO RESOLVE ANY AMBIGUITY
DEPENDENT RELATIVE REVOCATION
TO ALLOW A COURT TO DISREGARD A REVOCATION CAUSED BY MISTAKE.
Applies where testator revokes will #1 thinking that will #2 EFFECTUATES HIS INTENT. BUT IN FACT WILL #2 IS INVALID OR DOEST EFFECTUATE HIS INTENT.
Two hypos, virtually identical wills
I.e. will #1 revoked by physical act, destruction, and will #2 invalid. DRR relieves estate from intestacy on rational that testator has stated testamentary intent twice!
I.e. will #1 REVOKED BY SUBSEQUENT INSTRUMENT.
Integration defined
Integration refers to which papers make up the will. Applies even where 10 pg “will.” Requires
1) Intent that all papers make up the will
2) All papers present when will executed. Typo on pg 5 when executed, and attny says he’ll retype tomorrow. Pg 5 not probated because not “intended.” T did not intend the old pg 5 to be part of the will.
Prove integration by physical connection of all pages i.e. staple or by “logical” connection. It all reads together
Incorporation by reference
Non-integrated writing given testamentary effect if incorporation by reference met. Requires:
1) Doc or writing
2) In existence at execution
3) Clearly identified in the will
4) Testator intended to incorporate the doc. If 1-3 are met, 4 can be implied.
Facts of independent significance
Identity of recipient beneficiary or what gift is intended may be given meaning by facts of significance INDEPENDENT FROM WILL i.e., to my church. Or “to all my employees at time of my death.” To maintain integrity of the statute of wills, parol evidence generally inadmissible , but membership in church is a fact of independent significance. Even w/out the will the FACT WOULD HAVE EXISTED.
Facts of indep significance allow us to fill in the blanks to testator’s will w PAROL EVIDENCE THAT IS TRUSTWORTHY. May be past or future fact. Not, “to people I will name on a note tomorrow.”
Pour over will
Part or all of estate devised to trustee of INTER VIVOS TRUST to be administered pursuant to terms of that trust. Problem that trustee and terms of trust not explicit on face of will.
1) Trust instrument
2) In existence when will executed
3) Clearly identified in the will
4) Intent to incorporate trust instrument
Use pour over doctrine and FACTS OF INDEPENDENT SIGNIFICANCE.
LATER MODIFICATION INVALIDATES.
FORMALITIES OF EXECUTION
REQUIRES WRITING
1) Signed by testator, conservator ok
2) In the presence of 2 witnesses, present at the same time. need not sign in witnesses presence, but can point and acknowledge signature
3) Witnesses KNOW testator is signing his will.
Testator sign first? Write: “if there is no issue of fraud or mistake, the will should be deemed valid under California “substantial compliance” doctrine.
Interested witness problem
Where witness is beneficiary under the will
Formalities of conditional wills
Conditional wills i.e. this is my will if I die in Europe on vacation. May be formal or HOLOGRAPHIC WILLS
VALID HOLOGRAPHIC WILL
1) Must be signed by testator. Sig can be anywhere in will.
2) MATERIAL PROVISIONS must be in testator’s own handwriting. Material provision are the gifts made and the beneficiaries. Appointment of executor is not.
3) No need for witnesses.
4) Statements of testamentary intent need not be in T’s handwriting. But a mere “list” insufficient w/out parol evidence to determine testamentary intent. I.e. told people that list is will.
5) Series of letters may be will under integration. Parol evidence to determine testamentary intent.
6) DATE NOT REQUIRED. But may create problem with inconsistent wills or capacity!
CHOICE OF LAW
WILL EXECUTED IN DIFF STATE CAN BE ADMITTED TO CAL PROBATE IF
1) Actually complies w California formalities
2) Complies w formalities of state where executed
3) Doesn’t comply with California or state of execution but does comply with STATE OF DOMICILE.
CODICIL defined
Testamentary instrument executed with required formalities of the code, which MODIFIES
AMENDS OR
REVOKES. A codicil REPUBLISHES A WILL. Important for
POUR OVER WILLS
INCORPORATION BY REFERENCE
PRETERMISSION (for birth, marriage or domestic partnership)
And note codicil itself is a testamentary instrument thus pretermission analysis from date of codicil.
Revocation of codicil
Revocation of codicil only revokes codicil. Revocation of will revokes both.
Revocation by physical act
Burned torn cancelled destroyed or obliterated
Intent to revoke must COINCIDE w physical act
Physical act BY TESTATOR or by someone in his presence at his direction
Cancellations and interlineations
Must meet requirements of holographic codicil: material terms in handwriting, i.e. gift AND names of beneficiaries. Typed: $1000 to Mary. Cross out $1000 and write $2000. Mary takes noting cuz $1000 cancelled by physical act. But, under dependent relative revocation, the revocation was conditional and dependent. Original gift applies. EXCEPTION where interlineations is less, DDR does not apply.
CANCELLATION to increase gift
Cannot increase co-beneficiaries gift by CANCELLATION. I.e. farm to X & W, and subsequently crosses out X. W still gets only ½ not whole. Rest goes to residuary.
Duplicate ORIGINAL wills
Duplicate originals, not copies. Full formalities on 2 sets of original sigs. If testator revokes by physical act one dup original, second original is revoked by implication.
MUTILATED WILL
Rebuttable presumption that testator mutilated w intent to revoke.
REVOCATION BY IMPLICATION
Revocation by implication if subsequent will TOTALLY DISPOSES OF T’s ESTATE
REVIVAL
If subsequent will revokes prior will and will #2 is destroyed i.e. by physical act will #1 not revised unless evidence of INTENT TO REVIVE
Omitted or Pretermitted child
Child born or adopted after testamentary instruments are adopted and not provided for in any testamentary instrument. Child receives share of estate equal to intestate share. Exceptions:
1) Omission was intention and intention appears in testamentary instrument
2) At time of execution T had children and T leaves substantially whole estate TO SURVIVING PARENT.
3) T provided for child by transfer outside of instrument
Omitted spouse
Surviving spouse who married T after execution of all testamentary instruments and is not provided for in any testamentary instrument.
Omitted spouse receives statutory share equal to share that would have passed by intestacy. to wit ½ of community prop. Thus because omitted S already owned the other ½, now gets 100% of CP. Plus intestacy share of T’s separate property.
ABATEMENT OF OTHER DEVISES Revocation by operation of law because the statutory share will necessarily reduce other gifts in will
Exceptions: same as omitted child plus, omitted S takes nothing where she signed a waiver. Waiver requires
1) Waiver in writing signed
2) Full disclosure of T’s finances
3) Independent Counsel
Classification of devise in will 4 types
4 types of devise:
1) Specific devise: real prop, unique personal prop.
2) General devise: payable out of general estate assets. Stock, money.
3) Demonstrative devise: hybrid general and specific gift. i.e. $1000 from BofA account
4) Residuary: all other property not disposed of in will. Residue to W.
ADEMPTION
Ademption by extinction applies for specific gifts.
Where T doesn’t own the gift at DEATH. T intended gift to FAIL? If no INTENT, no ADEMPTION. I.e. no ademption by extinction where stock CLOSELY HELD and stock merger.
Ademption by satisfaction applies for general gifts
T gives Beneficiary INTER VIVOS DOWN PAYMENT ON A DEVISE. I.e., T leaves B $1000, later tells B “here’s $500 of that thou I’m leaving you.”
Requires contemporaneous writing by T or by Beneficiary in acknowledgment, or Will provides for reduction.
IF INTESTATE, IT’S CALLED ADVANCEMENT
CONTRACTS NOT TO REVOKE
CONTRACTS NOT TO REVOKE REQUIRES
1) Will STATES MATERIAL PROVISIONS OF K
2) OR There is express reference in the W to the K
Joint will & mutual will
Will of 2 or more people on 1 document. When 1st person dies the will is probated when 2d person dies the will is probated again.
Separate wills that are mutual by their terms.
The execution of a joint or mutual will does not create a presumption of a K not to revoke.
Unworthy heirs
Killers are unworthy heirs. Feloniously or intentionally kill the decedent. Guilty or plea of guilty is conclusive. Probate court may find by preponderance
Intestate succession for surviving spouse
SS inherits ½ of CP, resulting in 100% of CP.
Same for QCP.
SP
If decedent leaves no issue, parents, brothers & sisters or kids of bros & sisters, SEE NOTES
Intestate scheme where no SS
First to kids
Then parents
Then kids of parents
Then grandparents
Issue of grandparents
...more...
And finally Escheat to state.
Per capita/representation
Issue of the same degree take “per capita” if 3 children alive at death, each take equally, 1/3.
At first level where someone is living. All living or dead with issue take. Issue of dead heir step into his shoes by representation.
Strict per stirpes distribution at first level regardless of whether any living in that generation.
Rule of Lapse
Rule of lapse requires that a beneficiary to a devise in the will survives the testator. Absent a statute, survival of beneficiary must be shown by clear and convincing evidence. If beneficiary doesn't survive the testator, the gift lapses and returns the the residuary of the estate.
Anti-lapse
Anti-lapse statute applies where devisee is kindred of testator or of testators spouse and devisee predeceases testator, leaving issue. The anti-lapse statute applies to both wills and revocable trusts.
Lapse & simultaneous deaths
Where devise depends on one person surviving another and it cannot be determined by clear and convincing, presumption that the devisee DID NOT SURVIVE. ASSUMED DIED FIRST. So, gift either lapses, or transfers under anti-lapse.
If joint tenants die simultaneously, SEVER THE JOINT TENANCY.
SIMULTANEOUS DEATH AND INTESTACY
Intestate heirs must survive by 120 hours, must be shown by clear and convincing evidence.
Abatement
The process by which certain gifts are decreased. Abatement arises in case of omitted spouse or omitted child.
Order of abatement
Gift causa mortis
Gift made in contemplation of eminent death. No gift causa mortis of real prop. Requires
Actual delivery or symbolic delivery or constructive delivery. If donor survives the peril, the gift is revoked.
Private express trust
Fiduciary relationship w/r/t property whereby one person holds legal title for benefit of another and which arises out of a manifestation of intent to create it. Personal prop must be delivered to trustee.
Trust and RAP
I.e. to bank in trust “to a but if liquor is ever sold, then to B”
Requirement of a trustee
Trust must have trustee but need not be identified in instrument, court will appoint trustee.
Intent to create a trust
NO MAGIC WORDS NEEDED But Precatory words alone insufficient. Words of wish, hope or desire. However, precatory words plus parol evidence may create a trust. If no trust, transferee owns in FEE SIMPLE.
Trust of PERSONAL PROP NEED NOT BE IN WRITING.
DECLARATION IN TRUST
In declaration in trust the SETTLOR is the trustee. No delivery requirement. “I hold myself as trustee for this $100K for the benefit of A during A’s life, then to B.”
Legal purpose of trust
Illegality at creation. I.e. creates a trust for A on the condition that A divorce his wife. EXCISE the ILLEGALITY if possible. Thus, trust for A w/out condition.
If impossible to excise, trust invalid and settlor owns the prop. I.e. trust to avoid creditors. S owns, and creditors may attach. If S has unclean hands, the court will allow the trustee to keep the property.
Significance of charitable trusts
RAP does not apply
Cy Pres applies
Cy pres requires
Cy pres requires settlor has GENERAL not SPECIFIC CHARITABLE INTENT.
General intent determined by intrinsic evidence—the trust instrument and extrinsic evidence. If general charitable intent, court not trustee may modify the trust, cy pres, as near as possible.
Honorary trust defined
No identifiable beneficiary and no benefit to society. I.e. trust to take care of settlor’s pet. Trustee may, but IS NOT REQUIRED, to comply with terms of the trust. If trustee refuses to serve resulting trust in favor of the settlor
NOTE POSSIBLE RAP PROBLEMS with Honorary Trusts. Courts may allow honorary trust to continue for 21 years`
Spendthrift trusts defined
Beneficiary can’t transfer rights to future payments of income or principal and creditors cannot attach beneficiaries rights to future payments or principle
involuntary alienation of spendthrift trust
generally creditors can’t attach but at common law, preferred creditors can attach. I.e., government creditors IRS, those who provide NECESSITIES OF LIFE, child support, spousal support, alimony, tort judgment creditor
many jxn allow ANY CREDITOR to attach SURPLUS as measured by beneficiary’s station in life. Subjective test, but limited to reasonable expenses
Self settled spendthrift trust
Valid trust, but spendthrift provisions not recognized as to creditors. B
Support trust defined
Trustee is required to use only so much of the income or principle as necessary for the beneficiary’s HEALTH SUPPORT MAINTENANCE OR EDUCATION.
Beneficiary MAY NOT VOLUNTARILY ALIENATE
Creditors apply same rules for spendthrift i.e. preferred creditors
Discretionary trusts or discretionary previsions of private express trust
Trustee given SOLE AND ABSOLUTE DISCRETION in determining how much to pay, if anything, and when to pay, if ever!
Resulting trust defined
Implied IN FACT trust based on PRESUMED INTENT OF THE PARTIES. Resulting trustee will transfer property to the settlor if alive or to settlor’s estate. I.e. trust for son’s college education.
Constructive trust
Not a trust. Simply a REMEDY to prevent fraud or unjust enrichment. Constructive trustee has ONE OBLIGATION.. to transfer the property to the proper beneficiary as determined by the court. may arise where trustee of private express trust makes a profit as a result of SELF DEALING.
Power of trustee
Trustee has all enumerated power and implied powers implied power
1) Power to sell trust property
2) Power to incur expenses
3) Power to lease
4) Power to borrow.
TRUSTEE DUTIES OWNED TO BENEFICIARY
1) Duty of loyalty. Must administer for benefit of beneficiaries. NO SELF DEALING. Trustee SURCHARGED for losses. CONSTRUCTIVE TRUST for ill-gotten profits
2) Duty to invest. 3 rules:
(a) state lists that are good investments, including federal bonds, federal insured CDs, 1st deeds of trust in real estate, maybe publicly traded stocks. NEVER NEW BUSINESS.
(b) REASONABLY PRUDENT PERSON STANDARD.
(c) Uniform Prudent Investor Act. Analyze investment portfolio as a whole.
(d) Under any standard: Duty to diversify
3) Duty to earmark. Requires trustee label trust property as such. If breach of duty to earmark, trustee may be liable for losses, regardless of causation. Modern rule applies liability only if loss caused by failure to earmark, i.e. trustee’s creditors seize trust property
4) Duty to segregate. No commingling personal funds w trust funds. And can’t mingle funds from different trusts
5) Duty not to delegate, but may rely on professional advisors.
6) Duty to account, requires accounting to beneficiaries on regular basis. Statement of income and expenses.
7) Duty of care. As trustee would w/r/t own investments
Damages for breach by trustee
Damages, constructive trust, TRACING, may ratify the transaction if good for beneficiary, and REMOVE TRUSTEE.
ALWAYS DISCUSS DUTY OF LOYALTY AND DUTY OF CARE
MODIFICATION POWER BY SETTLOR
SETTLOR can modify if expressly reserved the power to modify, or POWER TO REVOKE. Power to revoke is the greatest power of them all!
MODIFICATION OF TRUST BY COURT
Under cy press COURT may modify charitable trust
Deviation power court may modify private express trust. May NOT CHANGE BENEFICIARIES. Only changing admin or management. I.e. trust says only invest in bonds not stocks. Trust created during depression. DEVIATION requires
1) Unforeseen circumstances
2) Necessity, i.e. trust will fail or go broke w/out change.
Termination of revocable trusts
When does settlor have power to revoke? Majority R: To retain the power to revoke, settlor must expressly reserve the power in the instrument.
Minority rule is all trust revocable less trust expressly irrevocable.
POWERS OF TRUSTEE
Rule statement
Trustee may only exercise those powers conferred by the trust instrument, either expressly or by implication. (Here, the terms of the will created a trust with Sam (S) as trustee with express power to “sell, invest and manage” the trust property.) Additionally, trustee may exercise certain implied powers Trustee has all enumerated power and implied powers: 1) Power to sell trust property; 2) Power to incur expenses; 3) Power to lease; and 4) Power to borrow.
TRUSTEE DUTY OF CARE
Rule statement
The trustee is a fiduciary of the trust and all trust beneficiaries. The trustee must exercise that degree of skill, care, and prudence as would a reasonably prudent person in managing their own property and finances.
Trust beneficiary as Trustee?
A trust beneficiary may permissibly serve as trustee, however, a beneficiary acting as trustee may be liable for self dealing in violation of the duty of loyalty where trust income or principal allocation benefits the trustee/beneficiary to the exclusion of other beneficiaries.
ALLOCATION OF CAPITAL GAINS, DIVIDENDS OF CASH OR STOCK
All trust assets received by the trustee must be allocated either to trust income or principal. Traditionally, CASH DIVIDENDS on securities investments are treated as trust income, while CAPITAL GAINS and STOCK DIVIDENDS are allocated to the trust principal. However, under the Uniform Principal and Income Act, the trustee has an adjustment power to reallocate investment returns. Under the Uniform Principal and Income Act, the trustee has an adjustment power to reallocate investment returns if NECESSARY TO CARRYOUT TRUST PURPOSES, and FAIR and REASONABLE to ALL beneficiaries.
TRUSTEE DUTY OF LOYALTY
The trustee owes the trust and trust beneficiaries a duty of undivided loyalty such that the trustee may not engage in self dealing or obtain secret profits to the detriment of the beneficiaries or the trust res. A trustee, or his relatives, agents, or representatives, cannot purchase property owned by the trust regardless of profit or price. Where the trustee has engaged in self-dealing the remedies to the beneficiaries include: 1) set aside the transaction, 2) ratify the transaction, or 3) recover any trust property or profits from the trustee, his agents, representatives, or relatives.
TRUSTEE DUTY TO PRESERVE THE TRUST
A trustee has a duty to preserve and protect the trust corpus. Implied in this duty is the duty to make trust property PRODUCTIVE. A trustee’s management and investment of the trust is measured by the PRUDENT INVESTOR STANDARD which requires the trustee adhere to a standard of GOOD FAITH, REASONABLE PRUDENCE, SOUND DISCRETION, and CARE in making investments. The trustee must invest trust property as would a REASONABLY PRUDENT INVESTOR with regards to their OWN FUNDS and PROPERTY. (look at good property SOLD and bad property BOUGHT)
FORMAL will requires
(4 ELEMENTS)
California probate code requires that a formal will must 1) be in writing; 2) Signed by testator (or by someone at T’s direction); 3) the testator’s signing or acknowledgment of his signature must occur in the joint presence of at least 2 witnesses; and 4) the witnesses must understand that the instrument being witnessed is the testator’s will
REVOCATION OF WILL
Rule statement
A will may be revoked by executing a subsequent will, coupled with an intent to revoke the prior will.
DEPENDANT RELATIVE REVOCATION
DRR
Rule statement
Dependant relative revocation applies when a testator revokes his will upon a MISTAKE BELIEF that another disposition of his property would be effective; and but for this mistake would not have revoked he will. DDR is not applied when to do so would DEFEAT TESTATOR’S INTENT. The court will look at the CONSISTENCY of the documents and may consider the consequences of not applying DDR.
EXPRESS TRUST
Rule statement
(6 requirements)
A trust is a fiduciary relationship with respect to property whereby one person holds legal title to the trust property for the benefit of and subject to enforceable rights of another. A valid trust requires 1) a trustee, 2) res, 3) beneficiary, 4) valid trust purpose 5) settlor, and 6) intent to create a trust.
CHARITABLE TRUST rule statement
Creation of a charitable trust requires indefinite beneficiaries and a purpose that benefits the public at large. Where beneficiary is charitable organization, the requirement of indefinite beneficiaries is met because the trust purpose is the care of “disabled elderly persons” an unnamed and changing class of people. (for example)
CY PRES & general charitable intent
Rule statement
Where the charitable purpose of the trust is ACCOMPLISHED or becomes IMPRACTICAL the court may direct the trust property be applied to another charitable purpose if the testator is deemed to have a general charitable intent. “general charitable intent” requires the court determine whether the settlor intended the trust to fail or would have wanted instead that the property be devoted to similar use. The court will admit extrinsic evidence to determine the settlor’s intent.
If the trust fails, the residue of the trust will pass as a RESULTING TRUST to settlor if alive or to his residuary estate.