De Bar - Wills And Trusts

Front 1

WT -- DE law's overarching provision regarding interpretation of wills and trusts?

Back 1

12 Del C § 3303: DE law generally respects, and gives “maximum effect” to, a person’s freedom of disposition (i.e., intent) when interpreting and enforcing a governing instrument.

Front 2

wt -- DE law on testamentary capacity

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i. 12 Del. C. § 201: Any person of 18 years or older, of sound and disposing mind.

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wt -- CL on testamentary capacity

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A testator must be capable of knowing and understanding
a. The nature and extent of her property
b. The natural objects of his or her bounty (family)
c. The disposition that he or she is making of the property
d. How all of these relate together to constitute an orderly plan of disposing of his or her property.

Front 4

wt -- what is an insane delusion?

Back 4

2. A bar to capacity --
a. Insane Delusion - A false sense of reality to which a person adheres despite all evidence to the contrary.

Front 5

wt -- atty role in capacity determination in DE?

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Atty’s testimony regarding capacity is highly probative: direct communication which precedes drafting the instrument should be the norm if the lawyer is to discharge his obligation of assessing testamentary competence.

Front 6

wt -- DE will formalities

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1. In writing
2. Signed by the testator (or some person subscribing his name in his presence and by his express direction)
3. Attested and subscribed by 2 or more credible witnesses in the testator’s presence.

Front 7

wt -- who is a credible witness to a will execution?

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1. “Credible” = legally competent to testify in court.
a. NOTEMay be an interested person (e.g., a beneficiary)

Front 8

wt -- DE requirements for a self-proving will

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a. Testator declares instrument is his last will and that he willingly signed it;
b. Witnesses state in testator’s presence and hearing that to the best of their knowledge testator is 18 years old and of sound mind and under no constraint or undue influence.
c. Witness affidavits are notarized and attached to the will.

Front 9

wt -- methods of revoking a will in DE?

Back 9

i. 12 Del. C. § 208: To revoke, testator must:
1. Cancel the will, or
a. E.g., tear or burn will.
2. Sign a new will or writing which he attested and subscribed in his presence by 2 credible witnesses.
ii. Other revocation methods --
1. Implied revocation - arise out (1) of alterations of the estate devised which are incompatible with the operations of the devise or (2) of such a complete change in the relations of the testator as impose new obligations and necessarily imply a change of testamentary purpose such as marriage or birth of issue after the will.
2. Revocation by codicil - provisions of codicil must be SO INCONSISTENT with those of the will as to exclude any other legitimate inference.
3. Revocation by Divorce - Divorce or annulment revokes any disposition to testator’s former spouse.
4. Conditional revocation - If testator intended revocation to happen upon a condition, it will be so revoked when condition occurs.

Front 10

wt -- when is a will impliedly revoked?

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1. Implied revocation - arise out (1) of alterations of the estate devised which are incompatible with the operations of the devise or (2) of such a complete change in the relations of the testator as impose new obligations and necessarily imply a change of testamentary purpose such as marriage or birth of issue after the will.

Front 11

wt -- doctrine of dependent relative revocation

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Testator’s mistaken belief that a subsequent will is effective will negate revocation of prior will.
1. E.g., After executing Will 2, Testator tears up Will 1 under belief that Will 2 is valid. If Will 2 is in fact invalid, court will deem Will 1’s revocation conditional on validity of Will 2.

Front 12

wt -- when does revival of a will occur?

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1. 2nd will revokes 1st will; 2nd will is canceled; 1st will is deemed valid.

Front 13

wt -- DE requirements to incorporate by reference a doc disposing tangible personal property

Back 13

1. 12 Del. C. § 212: Writing MUST:
a. Either (i) be in handwriting of testator or (ii) be signed by testator
b. Identify legatees and property with reasonable certainty
c. Be consistent with terms of the will;
d. Be consistent with any other writing permitted by statute unless writings are dated (in which case, latest dated writing controls).

Front 14

wt -- what is a pour over will?

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1. 12 Del. C. § 211: Testator may leave property to a trust.
a. Trust may be established during lifetime (inter vivos), or
i. Before or after execution of the will
b. established upon testator’s death by testator’s devise to trustee (a testamentary trust).

Front 15

wt -- Doctrine of Acts of Independent Significance

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e. Acts of Independent Significance - Doctrine permitting extrinsic evidence to identify the will beneficiaries or property passing under the will as long as the acts or events have a lifetime motive and significance apart from their effect on the testator’s estate.

Front 16

wt -- what is testamentary intent?

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Will must manifest testator’s intent that property is to pass to the persons indicated upon death.
i. NO lifetime transfers.
ii. A complete BAR to validity -- even if formalities have been complied with.
iii. NOTE  Where will is properly executed, there is a rebuttable PRESUMPTION that testator knew of its contents and executed understanding its contents.

Front 17

wt -- what is fraud in relation to a will?

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1. Testator was deceived by, and relied upon,
2. An intentional misrepresentation of a material fact,
3. That resulted in a will different in its terms from that which he would have made had he not been deceived.

Front 18

wt -- effect of testator's mistake on a will?

Back 18

1. As to an Extrinsic Fact (e.g., whether a relative is alive) Ct’s will not alter will.
2. As to the Legal Effect of His Words (e.g., use of executor instead of trustee)  Will is VALID; court’s will give effect to testator’s clear intent.

Front 19

wt -- undue influence: elements and burden of proof

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1. Contestant bears burden to demonstrate by a preponderance of the evidence
2. Requirements
a. A susceptible testator
b. Opportunity to exert influence
c. A disposition to do so for an improper purpose
d. Actual exertion of such influence, and
e. A result demonstrating its effect

Front 20

wt -- the spousal elective share in DE?

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i. 12 Del. C. § 901: Surviving spouse is entitled to elect to take an amount equal to 1/3 of the elective estate LESS the amount of ALL transfers to the surviving spouse by the decedent.
1. “Elective Estate”? Broadly defined in DE. Roughly equal to a decedent’s estate for fed tax purposes.

Front 21

wt -- cash allowance for surviving spouse's in DE?

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iv. 12 Del. C. § 2308: Surviving has right to cash allowance of $7500 independent of any other rights in the estate.

Front 22

wt -- DE Slayer's Act

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i. 12 Del. C. 2322: Murderers may NOT inherit from their victims. In such a case, the murderer is deemed to predecease the victim.
1. Applies to those:
a. Convicted of, pleading guilty or nolo contendere to
b. Murder1; murder 2; manslaughter (except in the case of EED).
2. Joint property Deemed to be a TIC (no right of survivorship); victim’s half passes to his or her heirs.

Front 23

wt -- DE on pretermitted/omitted children?

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i. 12 Del. C. 310: A child born after execution of will and for whom no provision has been made is entitled to the same share would have received if parent died INTESTATE.
1. NOTE Section does NOT apply if will specifically excludes after-born children.
2. After-adopted child? Treated same as after-born child.

Front 24

wt -- DE on after-born children?

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a. 12 De. C. 310: If born alive, take as if alive at time of testator’s death.
i. NOTE Distinguish from posthumously-conceived children who get nothing.

Front 25

wt -- DE on omitted spouses?

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i. 12 Del. C. § 323: Surviving spouse of decedent who made will before marriage and has not otherwise provided for the spouse is entitled to take as if testator died INTESTATE.

Front 26

wt -- effect of a divorce on a prior-executed will?

Back 26

i. 12 Del. C. § 209: Divorce revokes any disposition, power of appointment, or fiduciary capacity given to the former spouse.

Front 27

wt -- DE on property titled TOD/POD?

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i. A NON-PROBATE transfer
ii. 12 Del. C. § 801: Permits transfer of stocks, brokerage accounts, and reinvenstment accounts to named beneficiary upon death of account holder.
1. NOTE  multiple beneficiaries take as tenants in common.

Front 28

wt -- What is a resulting trust?

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i. Remedial device designed to effectuate testator intent.
ii. Effect? Where two persons own property bought solely with testator’s funds, and testator’s disposition in will requires treating property as solely that of testator, will is evidence that concurrent ownership was for convenience only.
1. Convenience Accounts - Whether funds provided by decedent were solely owned or jointly owned
a. If solely owned  joint designation is deemed to have been established for the convenience of the decedent during his lifetime. Thus, property passes by will and not to surviving JT.

Front 29

wt -- What is a constructive trust?

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i. Remedial device designed to prevent unjust enrichment of a wrongdoer.

Front 30

wt -- DE: Surviving spouse's intestate share?

Back 30

SS takes first, and his or her share depends on existence of decedent’s issue or parents.
1. No issue or parent entire estate to SS.
2. Surviving issue of decedent and SS, or parent $50K to SS, then one-half of estate to SS plus life estate in real property.
3. Surviving issue not of SS 1/2 of estate to SS plus life estate in real property.

Front 31

wt -- DE: Intestate shares of kin other than surviving spouse?

Back 31

Take remainder of estate after SS, or entire estate if no SS.
1. Surviving Issue take per stirpes, or by representation.
a. Division of shares occurs at the first generation and shares drop by bloodline.
2. No surviving issue To decedent’s parents in equal shares (or ALL if only one parent survives).
3. No issue/No parents To decedent’s surviving siblings in equal shares and to issue of deceased sibling per stirpes.
4. No issue/No parents/No siblings To next of kin and issue of next of kin per stirpes.

Front 32

wt -- DE's intestacy survivorship requirement

Back 32

1. 12 Del. C. § 504: Heir must survive decedent by 120 hours (5 days); otherwise, is deemed to have predeceased decedent.

Front 33

wt -- intestacy and adopted children?

Back 33

1. 12 Del. C. § 508: Treated as natural child.
a. Effect?
i. Adopted child inherits from parents, and parents from him.
ii. Inheritance rights between natural parents and adopted child are TERMINATED.
1. Exception Adoption by spouse of a natural parent has NO effect on rights between adopted child and natural parent.

Front 34

wt -- intestacy and illegitimate children?

Back 34

1. 12 Del. C. § 508: Treated as child of mother inherits from and through her. Will be treated as child of father if:
a. Natural parents participated in a marriage ceremony before or after birth;
b. There is an adjudication of paternity;
i. NOTE father not permitted to inherit through child as a result of adjudication of parternity unless father (i) openly treated child as his and (ii) did not refuse to support child.

Front 35

wt -- when will inter vivos gift to an intestate beneficiary be considered an advancement under DE law?

Back 35

1. An inter vivos gift given by an intestate decedent to a beneficiary will be considered an advancement on inheritance if:
a. It is declared to be an advancement in a contemporaneous writing OR
b. Acknowledge to be an advancement in writing by the heir.

Front 36

wt -- DE on escheat?

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1. 12 Del. C. § 1140: Property escheats to the state if there no heirs or any known kindred who can inherit from the intestate decedent.
a. Presumption of death -- person absent from state for 7 consecutive years and no proof of his life at hearing deemed dead.
b. Subsequent claimants -- Those with no actual notice may within 2 years of sale recover proceeds of sale or property itself.

Front 37

wt -- property not subject to probate?

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i. NOTE Not all property is subject to probate (e.g., property held as joint tenants; life insurance proceeds; property held in trust).

Front 38

wt -- where to probate a will in DE?

Back 38

1. 12 Del. C. 1302: Office of Register of Wills in county of decedent’s domicile.
a. If decedent is NOT domiciled in DE Any county where decedent had any goods or chattels, rights or credits, lands or tenements.
2. Ancillary Administration
a. 12 Del C § 1307: Will of decedent not domiciled in DE but who owned personal or real property in DE at the time of death may be admitted to probate in DE.
i. NOTE If will has been admiited to probate in another jurisdiction, it is necessary to file a verified copy in DE.

Front 39

wt -- when to probate a will in DE?

Back 39

1. 12 Del C § 1301: Within 10 days of learning of testator’s death.

Front 40

wt -- who has right of review of determintation of a will's validty and within what timeframe?

Back 40

1. Any interested person not voluntarily present at time will was proved or servied with notice pursuant to caveat procedure has six months after proof of the will to petition for review.
a. NOTE  for self-proved wills, 6 month period begins running when letters testamentary are granted.

Front 41

wt -- validity of a will's no contest clause in DE?

Back 41

1. 12 Del C. 3329: Generally enforceable UNLESS (i) beneficiary has prevailed substantially, (ii) action was to construe the document, settle a dispute, or determine whether action constitutes a contest.

Front 42

wt -- duties of a personal rep of an estate?

Back 42

1. Locate and value assets;
2. Hold and invest assets in a prudent manner;
3. Pay debts, expenses and death taxes,;
4. Distribute decedent’s estate.

Front 43

wt -- who is administrator of an intestate estate?

Back 43

For intestate estates; appointed by Register of Wills in following order of priority:
a. Spouse
b. Children
i. NOTE If more than one in any class, letters of administration will be given to all.
c. Parents
d. Siblings.

Front 44

wt -- who cannot be a personal rep of an estate?

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3. Cannot be -- 12 Del C. § 1508: mentally incapacitate; minor; person convicted of crime disqualifying him from taking an oath.

Front 45

wt -- grounds for removal of a personal rep?

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iv. Removal? For neglect; refusal to deliver unadministered assets; for failure to file a state estate tax return.

Front 46

wt -- inventory of an estate: what must it contain and when is it due?

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1. 12 Del. C. § 1905: Personal rep MUST file an inventory of assets within 3 months of the grant of letters.
a. Inventory must list solely and jointly owned assets and each asset’s FMV at time of death.

Front 47

wt -- DE on order of payment out of an estate?

Back 47

1. 12 Del C §2105: After payment of administration expenses, fees and commission, payment will be made in following order:
a. SS allowance of $7500;
b. Funeral expenses;
c. Child support arrearages’
d. Reasonable medical bills for last illness;
e. Wage of servants or laborers;
f. State taxes;
g. Rent not exceeding one year;
h. Judgments against decedent;
i. Recognizances, mortgages and other obligations or record
j. Obligations and Ks under seal;
k. Ks under hand for payment of money or delivery of goods, wares or merchandise;
l. Other demands

Front 48

wt -- DE on personal rep's duty to acct?

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1. 12 Del C § 2301: Personal rep must render an accounting of his administration to the Chancery Ct every 12 months from date of letters until a final account is passed by the court.

Front 49

wt -- DE on personal rep as a fiduciary?

Back 49

a. 12 Del C § 3302: A fiduciary MUST act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person would do.

Front 50

wt -- DE standard for evaluating propriety of a fiduciary's investment decisions?

Back 50

a. 12 Del C § 3302: Propriety of an investment decision is to be determine by what the fiduciary knew or should have known at the time of the decision about:
i. Inherent nature and expected performance of the investment portfolio;
ii. Attributes of the portfolio;
iii. General economy;
iv. Needs and objective of beneficiaries as they existed at time of the decision.

Front 51

wt -- duty of non-professional personal reps

Back 51

Held to different standards
i. Duty to exercise the skill and care that a manor ordinary prudence would exercise in dealing with his own property.

Front 52

wt -- probate and estates under $30K?

Back 52

d. Estates under $30K  Probate can be AVOIDED if total value of estate is less than $30K and no real estate was owned solely by decedent.
i. How? Small Estate Affidavit stating that requirements of statute are met; affidavit is used to transfer title.

Front 53

wt -- real estate and probate in DE?

Back 53

i. 12 Del. C. § 205: Deemed to pass to decedent’s heirs and devisees at moment of death.
1. Thus, personal rep is NOT entitled to take possession.
a. NOTE  If he does take possession, he must account for rents and profits, and keep premises in tenantable repair.

Front 54

wt -- notice of probate in DE?

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i. Notice, 12 Del C § 2101:
1. Will be posted within 40 days of grant of letters on county website or in county courthouse
2. Notice will also be published in newspaper at least 3 times during 8-month period unless gross personal estate did not exceed $30K or gross personal and real estate did not exceed $35K.

Front 55

wt -- timing for creditor claims against an estate?

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f. Creditor Claims -- Period to make claim is eight months from date of death.

Front 56

wt -- Requirements for disclaiming an inheritance/bequest/etc.?

Back 56

a. Be in writing;
b. Declare the disclaimer and extent thereof;
c. Describe property or interest being disclaimed;
d. Signed by the disclaimant in the presence of two competent Ws
e. Delivered in form and manner prescribed by statute.

Front 57

wt -- when is disclaimer not permitted?

Back 57

1. Acceptance of the interest or any of its benefits;
2. Transfer of the property or interest;
3. Written waiver of right to disclaim;
4. Sale of property or interest under judicial sale before disclaimer is effected.

Front 58

wt -- personal rep's amount of time to settle and distribute an estate?

Back 58

i. 12 Del C § 2311: Except where circumstances justify, personal rep has one year from grant of letters to settle an estate.

Front 59

wt -- personal rep's liability for premature distribution of estate?

Back 59

1. Distribution before expiration of creditor claims period & before final accounting to court  Personal rep strictly liable.
2. Distribution after personal rep held to negligence/due care standard

Front 60

wt -- ademption doctrine?

Back 60

If, at the time of his death, decedent did not own property specifically bequeathed or devised, the beneficiary does NOT receive the bequest and NO substitution is made.
i. Stock splits/stock-for-stock transactions Beneficiary will receive this stock.

Front 61

wt -- abatement in DE

Back 61

i. If estate is insufficient to provide for bequests made under a will, gifts will be reduced in the following order to satisfy obligations of the estate:
1. Property not disposed of by will
2. Residuary bequests and devises;
3. General bequests and devises (confers a general benefit and not a specific item; usually money);
4. Specific bequests and devises

Front 62

wt -- DE's anti-lapse statute?

Back 62

ii. 12 Del C § 2313: Unless will provides to the contrary, the issue of the deceased beneficiary who survive the testator by 120 hours take per stirpes
1. where the beneficiary is a grandparent or lineal descendant of a grandparent of the testator
2. and the beneficiary is either:
a. dead at time of will’s execution, or
b. fails to survive testator; or
c. is treated as if he predeceased testator

Front 63

wt -- DE's simultaneous death statute

Back 63

i. 12 Del C § 701: Requires only a showing by sufficient evidence that one party survived for a mere instant more.
1. Co-Owned Property one-half will be distributed as if one tenant survived and the other half as if the other tenant survived.
2. Insurance policies distributed as if the insured survived the beneficiary (money goes to insured’s estate).

Front 64

wt -- DE Presumed Death statute

Back 64

i. 12 Del C § 1701: If death of person is in issue, unexplained absence from last known residence + fact that he is unheard of for last 7 years is grounds for finding he died.
1. NOTE Exposure to peril is sufficient to find death before 7 years.
2. NOTE Written finding of MIA or presumed death under Federal Missing Persons Act is prima facie evidence of death.

Front 65

wt -- common resulting trust situations

Back 65

a. Failure or Termination of Express Trust
i. Where express trust fails to dispose of an entire interest in property
ii. Where express trust purpose is satisfied and it is unclear to whom/what manner property should be disposed of.
b. Purchase Money Resulting Trust
i. One person pays for property but title is taken by another. May be a gift or a loan.

Front 66

wt -- what is an honorary trust?

Back 66

A trust that does not name an individual as beneficiary, but instead provides for (i) care of an animal or (ii) other noncharitable purposes (e.g., maintenance of a grave or monument).

Front 67

wt -- requirements for a valid trust in DE?

Back 67

1. Writing
2. Executed by disinterred settlor OR executed by settlor and witnessed by one disinterested person or two credible persons
3. Settlor has legal capacity
4. Settlor has requisite intent
5. Corpus
6. Beneficiary

Front 68

wt -- who is a "disinterested person"?

Back 68

A person who has no beneficial interest that would be materially increased or decreased as a result of the creation, modification or revocation of the trust.

Front 69

wt -- requisite settlor intent?

Back 69

1. Rule: Settlor MUST manifest present intent to create a trust relationship.
a. Intent to create a trust relationship?
i. Settlor must intend that enforceable duties be imposed on the trustee to manage and use the trust property for the benefit of the beneficiary.
ii. There is NO magic language necessary, but mere precatory language (“I give…in the hope that”) is NOT sufficient.
b. Can be conveyed by words or conduct

Front 70

wt -- exception to the corpus requirement?

Back 70

b. Exception No corpus necessary for revocable inter vivos trust if settlor executes a pour-over will naming trust as the receptacle.

Front 71

wt -- benefiicary requirements for trust creation under DE law?

Back 71

a. Beneficiaries of a private express trust MUST be ascertainable at the time of creation of the trust or within the period of the RAP.
i. NOTE DE has abolished RAP for personal property held in trust; 110 yr limit for real property in trust.
b. Class designations? Okay, so long as members are clearly ascertainable by some objective standard and not too indefinite.

Front 72

wt -- failure to name a trustee -- effect in DE?

Back 72

1. Rule: If a trust is intended but no trustee is named, courts will generally appoint a trustee rather than permit the trust to fail.

Front 73

wt -- renunciation of trustee duties in DE?

Back 73

a. 12 Del C § 3531: If, before acceptance of the trust, named trustee files in Office of the Register a (i) written renunciation, (ii) his declination to act, (iii) and that he has not accepted the trust or exercised any powers or performed any duties thereunder.

Front 74

wt -- merger of a trust?

Back 74

If settlor is also trustee and the ONLY beneficiary, legal and equitable interests merge and NO trust is created.
i. NOTE Revocable inter vivos trust is okay if other beneficiaries do not receive their interest until settlor/trustee’s death.

Front 75

wt -- scope of terms of governing instrument in DE?

Back 75

i. 12 Del C 3303: It is the policy of this section to give maximum effect to the principle of freedom of disposition and to the enforceability of governing instruments.
1. Thus Governing instrument may expand, restrict, eliminate, or otherwise vary the rights and interests of beneficiaries and the fiduciary’s powers, duties, standard of care, rights of indemnification, and liability.
2. NOTE  Chancery Ct’s power to deviate from terms is made expressly subject to § 3303’s mandate.

Front 76

wt -- DE on interpretation of a trust? DE on vesting?

Back 76

i. Rule: SETTLOR’s INTENT CONTROLS.
1. CL: A court must consider the trust instrument in its entirety, based on a plain language reading and all circumstances surrounding its creation.
a. If there is ambiguity  12 Del C §3330 states a preference for early vesting. Thus, determination of beneficiaries entitled to receive a distribution is made at settlor’s death.
ii. Parole Evidence -- can be used to prove existence of trust.

Front 77

wt -- DE on trustee powers

Back 77

i. Trust instrument delineates these powers.
1. Unless limited by trust instrument, trustee also permitted to exercise powers enumerated in 12 De. C. § 3325
a. Includes: continuing a biz enterprise, granting options, abandoning property, petitioning Chancery Ct to order the sale of real estate or personalty held in trust.
ii. Exercise of any power by trustee is subject to fiduciary duties imposed by law.
iii. Trustee may incur reasonable expenses in connection with management of trust property.
iv. Trustee succession has no effect on powers (i.e., successor may exercise same powers as his predecessor).

Front 78

wt -- multiple trustees: exercising power? how do they hold property?

Back 78

1. Hold title to property as joint tenants with right of survivorship.
2. 12 Del C: Unless otherwise provided, any power vested in 3 or more trustees may be exercised by a majority of them.

Front 79

wt -- Trustee's duty of care/prudent person rule?

Back 79

2. In acquiring, investing and managing property for the benefit of beneficiaries, trustee must act with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity would use.
a. NOTE Professional trustees HELD to higher standard than individuals. Law v. Law.
b. When is investment evaluated?
i. Propriety of an investment is determined by what trustee knew or should have known at the time of the decision

Front 80

wt -- what is trustee's duty of loyalty?

Back 80

1. Trustee cannot engage in acts of self-dealing nor place himself in a situation in which he has a conflict of interest with the trust.

Front 81

wt -- when will a self-dealing transaction be upheld against a beneficiary challenge?

Back 81

i. A self-dealing transaction will be upheld against a beneficiary challenge only if:
1. Transaction was fair; or
2. Beneficiaries consented after full disclosure.

Front 82

wt -- trustee's duty to segreate property

Back 82

1. Trustee has a duty not to comingle trust assets with assets of another trust or with his own assets.
a. Old view failure to earmark trust assets = liability
b. Modern view  trustee liable only for bad-faith failure to earmark.

Front 83

wt -- trustee's duty of impartiality?

Back 83

1. Trustee must be impartial as to all classes of beneficiaries.

Front 84

wt -- trustee's duty to acct?

Back 84

1. Trustees named under a will or appointed by the court MUST file an accounting at least once every two years.
a. NOTE Trustees name in inter vivos trusts have NO duty to file an accounting unless ordered by court.

Front 85

wt -- when is a beneficiary estopped from bringing an action against a trustee:

Back 85

Beneficiary is estopped from bringing an action against trustee where:
a. Beneficiary consented to trustee’s actions;
b. Beneficiary participated in the breach; or
c. Where the doctrine of laches applies

Front 86

wt -- what is the doctrine of laches?

Back 86

A legal right or claim will not be enforced or allowed if a long delay in asserting the claim has prejudiced the adverse party.
1. Concern here is allowing D ability to mount an adequate defense.

Front 87

wt -- what remedies are available to a beneficiary against a trustee?

Back 87

a. Compelling trustee to perform;
b. Ordering trustee to compensate the trust;
i. 12 Del C § 3582: Beneficiary may recover damages for a trustee’s breach of trust.
c. Enjoining trustee;
d. Requiring an accounting
e. Remove trustee
f. Appoint another trustee;
g. Reduce trustee’s compensation;
h. Recover property;
i. Other remedies

Front 88

wt --SOL for actions brought by a beneficiary?

Back 88

a. If trustee send beneficiary report adequately disclosing facts constituting a claim  2 years from receipt of report
b. Otherwise  5 years from first to occur:
i. Removal, resignation or death of trustee;
ii. Termination of beneficiary’s interest in trust;
iii. Termination of trust

Front 89

wt -- trustee's liability for Ks entered into in trustee capacity?

Back 89

a. Rule: A trustee is NOT personally liable on a K entered into in trustee’s fiduciary capacity if the trustee discloses the fiduciary capacity in the K.

Front 90

wt -- timing to contest trust validity?

Back 90

i. 12 Del C § 3546: A judicial proceeding to contest whether a trust, or any amendment thereto, was validly created may not be initiated later than the first to occur of:
1. 120 days after trustee notified in writing the person contesting of (i) the trust’s existence, (ii) trustee’s name and address, (iii) whether person is a beneficiary, and (iv) time allowed for initiating judicial proceeding to contest, provided that the trustee has no duty to provide notice;
2. 2 years after settlor’s death;
3. If trust was revocable at settlor’s death and specifically reference settlor’s will, the time in which a petition for review of the will could be filed; or
4. Date person’s right to contest was precluded by adjudication, contest or limitation.

Front 91

wt -- distinguishing principal from income in a trust?

Back 91

1. DE statute provides fiduciary with a discretionary standard:
a. If trust instrument provides standard it RULES.
b. A discretionary standard to allocate between principal and income may be given under the trust instrument or by local law.
c. If instrument provides no standard DE statute controls.
i. Income = money or property received as current return from a principal asset.
ii. Principal = property held in trust for distribution to a remainder beneficiary when the trust terminates

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wt -- when may a trustee resign under DE law?

Back 92

1. 12 Del C § 3326: Trustee may resign if
a. Trust terms permit resignation;
b. Trust terms neither permit nor prohibit resignation AND trust terms establish procedure for appoint of successor AND trustee provides 30 days written notice to beneficiaries and co-trustees; or
c. Chancery court approves resignation.

Front 93

wt -- when may a trustee be removed under DE law?

Back 93

1. 12 Del C: Removal permitted upon Chancery Ct’s own initiative or by request of beneficiary, co-trustee, or settlor if:
a. Trustee has committed a breach of trust;
b. A lack of cooperation of co-trustees substantially impairs administration of the trust; or
c. Substantial change in circumstances OR inability of trustee to properly administer OR hostility between trustee and beneficiaries threatens efficient administration of the trust.

Front 94

wt -- when does a successor trustee have a duty to inquire under DE law?

Back 94

1. 12 Del C 3544: Successor trustee is NOT obligate to inquire into acts or omissions or even examine accounts and records of its predecessor trustee UNLESS he has actual knowledge of
a. A breach of trust, or
b. Information concerning a possible breach that would cause a reasonable person to inquire.

Front 95

wt -- DE's spendthrift provision

Back 95

1. 12 Del C: A settlor may restrain the beneficiary’s ability to alienate his interest under the trust.
a. EVERY assignment by a beneficiary in contravention of such a provision is VOID.
2. Id.: An assignee of the beneficiary (e.g., a creditor) canNOT compel the trustee to recognize the assignee’s claim.
a. In fact, a creditor of a beneficiary only has such rights as expressly granted in the trust instrument or under DE law.

Front 96

wt -- effect of a discretionary trust on a spendthrift provision?

Back 96

i. Del C: Where trustee is directed to distribute property in his own discretion, neither the beneficiary nor an assignee or creditor of the beneficiary can compel a distribution.
ii. Contesting the trustee’s exercise of discretion? If trustee has discretion without regard to beneficiary’s needs, then court will NOT interject so long as trustee acts honestly and from proper motives.

Front 97

wt -- spendthrift provisions are ineffective against?

Back 97

1. A wife suing her husband for spousal support
a. NOTE Spousal elective share IS subject to spendthrift clause.
2. Self-settled trusts. I.e., settlor cannot transfer his property to a trust and insulate it from claims of creditors.
a. Exceptions very specific

Front 98

wt -- when can settlor revoke or modify a trust under DE law?

Back 98

i. If settlor affirmatively and clearly retains right to modify or revoke YES
1. NOTE Right to revoke is generally considered to include the right to modify.
ii. If trust is silent It is IRREVOCABLE.

Front 99

wt -- revocation or modification of a trust by consent?

Back 99

i. CL: Revocation or modification is permissible where both the settlor AND all beneficiaries consent.

Front 100

wt -- modification or revocation of a trust by a court?

Back 100

1. Circumstances were not known and not anticipated by settlor, AND
2. Compliance with terms as is would defeat or substantially impair accomplishment of trust purposes.

Front 101

wt -- DE law of corporate trustee's termination of a trust?

Back 101

i. 12 Del C: Unless otherwise provided, a corp trustee who finds costs of administering are such that continuation would defeat or substantially impair accomplishment of trust goals may, after written notice to all interested persons, terminate trust and distribute property.

Front 102

wt -- requirements for a charitable trust?

Back 102

i. MUST have a charitable purpose.
1. Includes: relief of poverty, advancement of education or religion, promotion of health.
ii. MUST be established for some significant benefit to the community at large and canNOT limit benefits to a particular class of the public so that it applies to only a few individuals.
1. In other words, NO definite beneficiaries needed.

Front 103

wt -- DE's cy pres doctrine?

Back 103

i. 12 Del C: Unless otherwise provided, if a particular charitable purpose or noncharitable purpose becomes unlawful or the trust would otherwise no longer serve any religious, charitable, scientific, literary, educational, or noncharitable purpose, the Chancery Ct may modify or terminate a charitable trust, and direct that the trust property be distributed in a manner consistent with the settlor’s original charitable purposes.
1. Why does noncharitable purpose keep getting mentioned? Refers to Honorary Trusts (e.g., care for an animal; maintenance of a monument).

Front 104

wt -- requirements/characteristics of a durable power of atty?

Back 104

1. written and contain definite language
2. attorney-in-fact given preference by Ct. if a guardian is appointed
3. death of Principal revokes the power when death is known
4. revocable by Principal if Principal is competent
5. if used to sell real estate, must be recorded
6. statute silent a to lapse of power after passage of time

Front 105

wt -- execution requirements for a DE advanced healthcare directive

Back 105

1. written
2. signed by person making declaration
3. dated
4. in presence of 2 or more adult witnesses, who are NOT (interested parties):
a. related to declarant by blood, marriage, or adoption
b. entitled to any portion of declarant’s estate;
c. person with direct financial responsibility for declarant’s medical care, OR
d. employee, owner, etc., of health care facility where declarant is a patient or resident.

Front 106

wt -- revocation of an advance healthcare directive under DE law

Back 106

v. Declarant may revoke health care directive by:
1. A signed writing; or
2. Any manner communicating an intent to revoke done in presence of 2 competent persons, 1 of whom is a health care provider.