Estates And Trusts

Front 1

What is Probating

Back 1

Proving a wills validity. Done after death to make effective.

Front 2

What property is subject to probate

Back 2

Property decedent held alone
Property held as tenant in common

Front 3

What property is not subject to probate

Back 3

Joint Tenancy property
Tenancy by the entirety property
Life insurance proceeds on the decedent's life
Property in lifetime trusts
Trusts
Pensions
IRAs

Front 4

Reasons to probate

Back 4

Collects the assets of decedent
Satisfy creditors
Resolve conflicts amon beneficiaries
distribute what was left to the appropriate persons or institutions

Clearning of title and cutting off of unknown creditors. (unknown creditors have a window of time to claim, elsewise claim is barred
Establishes validity of the will.

Front 5

What does a personal representative (executor/administrator) do?

Back 5

identifies the assets, pays the debts, distributes the execess to the surivivor.

Front 6

Probate process

Back 6

Occurs in jurisdiction of decedent
(if there is a will) the will is proved by the testimony of its witnesses, either in person or by affidavit and may be challenged by interested parties.
if valid, cts admit will to probate
Personal representative is appointed and administration begins either formally or informally
Probate is expensive

Front 7

Essential elements of a trust

Back 7

(1) property (the res)
(2) held by someone (the trustee)
(3) to benefit someone else (the beneficiary)

Property serves as principle or corpus, and is to be invested to generate income for the bene
Creater of trust is settlor, grantor, donor, testator, etc.
One person can be multiple titles, but TRUSTEE must owe a duty to at least one other person.

Front 8

Probate avoidance Devices

Back 8

Trusts
Joint Tenancy
Contract law, funds paid by a thrid party at the death of someone are treated as contract rights of the bene rather than property rights of the deceased
Life insurance, death benefits from either (1) term insurance, or (2) whole life insurance

Front 9

Avoiding Gift tax

Back 9

Lifetime/death gifts are below the Congressional exemption (5 million per person, 10 million per couple?)
gifts to spouse - exemption is unlimited in frequency and amount

Front 10

GST

Back 10

Generation Skipping Tax - Goal is to tax wealth once in each generation. tax is transfered to two or more generations below transferor's generation

Front 11

Survivorship

Back 11

Any person who fails to survive the decedent by five days shall be deemed to have predeceased the decedent for purposes of intestate succession and the decedent's heirs shall be determiend accordingly.

Front 12

Where does Probate occur?

Back 12

Usually decedent's place of domicile at his/her death, but property outside the state will trigger ancillary probate.

Front 13

PA intestate succession 2103

Back 13

Anything that does not pass to surviving spouse (if there is one) passes in following order:

Issue
Parents
Brothers, sisters or their issue
Grandparents (even split between paternal and maternal sides) (if GP are dead then look to GPC or GPGC)
Uncles, aunts, and their children/GC
State (if none of the above)

Front 14

Intestate: Spouses

Back 14

Spouse of decendent who dies in the course of divorce pendings will have NO INTEREST
Estraged/neglectful spouse for one year or more shall have NO INTEREST

Front 15

Intestate: Non-Marital Children

Back 15

Child of Mother: born out of wedlock is the child of his mother
Child of Father: born out of wedlock must prove identity of father by (1) parents of child susequently marry, (2) father embraces the child as his own by receiving him in his home, or providing support for hte child, (3) other clear and convincing evidence such as paternity tests.

Front 16

Intestate: Adopted Child

Back 16

child is considered the issue of the adopting parents and not of the natural parents unless
(1) a natural blood relative (other than parent) has maintained a familial relationship with adoptee and adoptee stands to collect from him, or
(2) child's natural parent marries adopted parent.

Front 17

Intestate: Posthumous Heirs

Back 17

Can collect if conceived before decedent's death
(something additional about eggs)

Front 18

Intestate: Step Child

Back 18

Not a heir in PA.

Front 19

Sec. 2102 Share of Surviving Spouse

Back 19

No issue or parents: Spouse gets the entire intestate estate
No issue but parents: Spouse gets the first $30K plus half of the remaining balance
Surviving issue of both decedent and spouse: Spouse gets the first $30K plkus half of the remaining balance
Surviving issue where one or more of whom are not issue of spouse: Spouse gets half of the intestate estate [not the first $30K too]
Partial Intestacy: any party spouse gets under will contributes to the first $30K

Front 20

Allocating Shares

Back 20

"Per capita" - counts people (common in same generation)
"representation" - focus on generation that has a survivor and may treat people as if they were standing in the shoes of their parents/GP

Front 21

Strict Per Stirpes

Back 21

divides the estate into as many shares as there are surviving children or deceased children who left descendants surviving the decedent. Children's shares are divvied amonst survivors within their respective stocks.

Front 22

Per Stirpes

Back 22

Skips older (empty) generation and divides estate into shares at the first generation leaving survivors

Front 23

Representation: Per Capita at Each Generation

Back 23

divides the estate into as many equal shares as there are: (1) surviving descendents in the generation nearest to the decedent which contains one more surviving descendents; and (2) deceased descendants in the same generation who left surviving descendents if any.

Go to first generation with survivors. Split shares into equal amounts for all, dead or alive, and give one share to each survivor. Recombine remaining shares (provided for deceased) and split them into equal shares for their issues. Rinse. Wash, Repeat

Front 24

Will Vocabulary:

Nuncupative Will
Negative Will
Holographic WIll
Codicil

Back 24

Nuncupative Will - an oral or verbal will
Negative Will - a will that does not dispose of property but simply names a fiduciary or disinherits someone.
Holographic WIll - a will that has been handwritten and signed
Codicil - amendment to a will.

Front 25

PA (does not) recognize(s) what wills

Back 25

Recognizes: document that merely naemes an executor or exercises power to appoint
Does not recognize: oral wills or document that simply disinherits

Front 26

Mental element of wills: Testamentary Intent

Back 26

Intend for the document or transaction to: (1) control the dispostion of my property at my death; and (2) to create no rights or powers until that time.
----Creation of powers before death is an intervivos gift

If a letter is merely a declaration of what the writer intends to do in the future, but fails to do so, it is not consdiered a will. but if a letter shows the intent to be effective until a more formal writing is executed, it is considered a will or codicil.

Front 27

mental element of wills: Testamentary Capacity

Back 27

testator must be above 18 & mental state must be of sound mind
-Mental deficiency: does the testator understand enough things realting to the will making process. this may invalidate entire will
-Insane Delusion: only effects teh particular provisions and strikes them for void. (wife is screwing the milkman so i disinherit. there hasn't been a milk man for forty years)

Front 28

Undue Influence

Back 28

Person benefiting from will, had a hand in its creation and contestant proves that:
(1) the donor was susceptible to undue influence;
(2) the alleged wrongdoer had an opportunity to exert under influence;
(3) the alleged wrongdoer had a disposition to exert undue influence, and
(4) there was a result appearing to be in the effect of undue influence.

Front 29

Tortious Interference w. expectancy

Back 29

One who by fraud,duress, etc. prevents another from receiving inheritance/gift from a third

Front 30

Fraud in factum

Back 30

fooling the testator into signing a document purporting to be a will, or including a false provision in a real will

Front 31

Fraud in the inducement

Back 31

Getting the testator to execute a document by misrepresenting facts

Front 32

Will execution

Back 32

Must be signed by testator (if so no witness is necessary, but two competent disinterested subscribing witnesses will be called to verify signature for probate)

Front 33

Self-Proving will

Back 33

(1) the testator signs at the end,
(2) the witnesses sign to attest;
(3) both the testator and the witnesses take oaths (via affidavits) that it is their signatures on the will.

Front 34

Holographic will

Back 34

Permitted in pa, does not need to be entirely handwritten, just signed at the end.

Front 35

Doctrine of integration

Back 35

which pieces of paper were meant to be in the will

All papers must be
(1) present at the time of execution of the will, and
(2) intended to be part of the will
are considered part of the will.

Front 36

Doctrine of incorporation by reference

Back 36

allows a testator to give testamentary effect to words not physically present at the execution ceremony.

if document is not present at execution, doc may be incorp. by reference if
(1) it was in existence at the time of the execution, and
(2) it can be clearly identified because of its reference in the will.

If a subsequent codicill references a doc that was dated after the will, it is accepted.

Front 37

Doctrine of acts of independent significance

Back 37

allows reference to facts outside the will

My children/ my home. All can be determined by extrinsic evidence
Document must exist to serve some function aside from the will. (prevents adding and removing of names/items)

Front 38

Two types of ambiguities

Back 38

Patent Ambiguities: ones that are apparent from the face of the document (CL no extrinsic evdience allowed to prove)
Latent Ambiguities: ones only discoverable by considering evidences extrinsic to the document

Front 39

3 ways to revoke a will

Back 39

(1) by putting something in writing (signed, in writing, and must have intent to revoke)
(2) by physical act
(3) by operation of law

Front 40

Revocation by Writing

Back 40

validly executing a later document expressly revoking the will.
Later writing meeting the statutory requirements for a will can supersede earlier will. (must be accompanied by intent to revoke)

Front 41

Revocation by Act

Back 41

Caan be revoked by being burnt, torn, canceled, obliterated, or destroyed. (to destroy, must go into the body(language))
Can be done by proxy so long as two competent witnesses are present

Front 42

Partial revocation by act

Back 42

Can cross out but if adding text, codicil requirements kick in (signature/initials)

Front 43

Revival of will

Back 43

If revoked by another will, can revive if writing revoking will 2 specifically revives will 1, or reexecution of will 1

Front 44

Dependent Relative Revocation (DRR)

Back 44

Revoke will 1 and execute will 2 improperly, will one can be probated if:
(1) the revocation fo will 1 was based on some mistake of fact or law
(2) you can show that the testator's intent will be better served by ignoring will 1's revocation

Front 45

Constructive Trust

Back 45

More of a remedy than trust; when someone gets title unjustly, a Ct. may impose the creation of a trust, which orders the titleholder to deed the property to where it should rightfully go.

Front 46

Pour-Over WIll

Back 46

functions as a residual will under a trust. meant to cover forgotten property.

Front 47

Creditors & Trusts

Back 47

Putting property into a trust and retaining use/management of it, allows creditors to reach into trust after the settlor's death.

Front 48

Term Life Insurance

Back 48

Covers only the risk of death and runs for a specific period of time, often renewable.

Front 49

Whole Life insurance

Back 49

Last the insured's whole life provided premiums are paid. premiums remain constant, and they pay not only for life insurance, but also the company invests some of the premium

Front 50

Advancements of Gifts

Back 50

only matter if declared in writing to be an advancement of a gift. can be written by decedent or heir. calculated against intestacy at value of when gift was given or death occured. whichever was done first

Front 51

Divorce

Back 51

Any provision involving the ex spouse will be voided unless it is apparent that the decedent intended to gift the ex still.l

Front 52

Disclaimers

Back 52

Cannot control the course of money through disclaimers. Disclaimers can be used to direct the money to the intended person only if all persons in the chain between decedent and intended bene. disclaim.

Pennsylvania disclaimers requirements: written describing the interest being disclaimed, declare the disclaimer and sign it.

Front 53

Misconduct

Back 53

courts impose a constructive trust against the property the malfeasing bene would otherwise get.

8802-3 No slayer can benefit from the killing of someone else. ( participating in the willful and unlawful killing of another person) [ PA protects BFPs if purchased before slayer was adjudicated.]

Front 54

Classifications of Gifts

Back 54

Specific - those specifically identified. Refer to particular piece of property. Usually fail if the asset is not present at death of testator
General - refer to a category or an amount of something. Often legacies
Demonstrative - cross between specific and general gifts. ones the testator intends to come from a specific source, but which can also come out of general estate (6K from my PNC account, if account is too small, from my other funds."
Residuary - Catch-alls giving "everything else I own."

Front 55

Does a specific gift of securities include the gain

Back 55

CASH DIVIDENDS after death will not be included, dividends before will be.
STOCK SPLITS between drafting and death? - includes subsequent stock because no additional value
STOCK DIVIDENDS cts are split (Pa includes)

Front 56

Ademption

Back 56

if a document gives away property that which is not available and the gift is
general: the fiduciary uses general estate assets to buy property for the bene.
specific: bene loses out under the "identity" theory which says that a specific gift fails if the subject matter is not an estate asset at death.

Front 57

Abatement

Back 57

If there is not enough money in the trust, gifts to benes abate, or fail, in the following order

Residuary
General
Demonstrative and Specific

Multiple gifts in the same class abate proportionately not equally

Front 58

PA specific gift abatement

Back 58

Specific gifts fail in the following order

gifts to non-familial persons
gifts to the decedent's issues
gifts to decedent's spouse.

Front 59

Exoneration

Back 59

PA property will pas subject to any security interest therein existing at the date of the testator's death, i.e. mortgage, liens, etc.

Front 60

Doctrine of Lapse

Back 60

Doctrine of Lapse says that if you are given a gift, but ypu predecease the testator, the gift will lapse (or fail), and pass under the testator's residuary clause, or if the will lacks one, then by the laws of intestacy

Front 61

Anti-Lapse Statutes

Back 61

When lapsing would not be sufficient to meet testator's intent or best interest.

Property goes to alternative takers as per statute.

Front 62

Void gifts

Back 62

Bene. was dead at the execution of the will

Front 63

lapse

Back 63

Bene. dies after will is executed but before decedent passes.

Front 64

Anti-Lapse 2514(9)

Back 64

protect gifts to (1) my issue, (2) my brothers or sisters, or (3) a child of a brother or sister.
Does not protect gifts to wives, so that the gift would not go to a non-blood relative

If there is express condition that if the named person does not survive then to my wife/kids, anti-lapse will not kick in

Front 65

Right to elect

Back 65

Used when surviving spouse was disinherited in a Separate property State.

SS has right to claim a share of their predeceased spouse's estate
-Elect against hte will and get what the election statuete says they are entitled to

Front 66

PA right to elect statute 2203

Back 66

Surviving spouse has a right to an elective share of one third of what was in the will, plus the augmented estate.

Front 67

2203 Augmented Estate

Back 67

Prevents decedent from dumping everything into a trust and disinheriting spouse

any income from property the decedent conveyed during the marriage if the decedent retained right to w/drawal income therefrom
any prop. the dec. conveyed during marriage if the dec. retained the right to revoke, convey, consume, invade, or dispose the principal for his own benefit.
any prop. the dec. conveyed with rights of survivorship if he retained the power to unilaterally convey.
survivorship rights to a bene. of an annuity contract, purchased during marriage, if the dec. was receiving annual payments
conveyances in excess of $3K made by the dec. w/in ONE YEAR OF DEATH.

Front 68

What is excluded from Augmented Estate 2203(b)

Back 68

conveyances made where both spouses agreed to it.
life insurance proceeds
Interests under any pension, profit sharing, etc. from an employer
any property passing by power of appointment

Front 69

Pretermitted Spouses/children

Back 69

-Will made, then guy gets married, fails to revise will and did not intentionally exlude, dies.
---Spouse is entitled to the share she would have received had he died intestate
-Will made, Child born/adopted, failed to include child and it was not intentional
---child will receive property not passing to a SS, the share the child would have got had the testator died unmarried and intestate (get what wife doesnt)

Front 70

Resulting Trust

Back 70

arises when a person
-intends to create an express trust;
-validly transfers property to a person as trustee; but
-for some reason the trust fails in whole or in part

law infers intent of transferor and that he would want the property returned and to go where he intended. Transferee becomes trustee w/ a duty to return property

Front 71

Private Express Trust

Back 71

transferor (settlor) transfer legal title to property to a person (trustee) and expressly intends to impose active duties on the trustee for the benefit of one or more private persons (beneficiaries)

Front 72

Creation of Trust

Back 72

valid trust requires
(1) an intention to create a fiduciary;
(2) a settlor;
(3) a trustee;
(4) a beneficiary;
(5) property (and delivery);
(6) a valid trust purpose;
(7) compliance with formalities

Front 73

Burton case

Back 73

For a trust, you must impose a fiduciary obligation on someone for the benefit of at least one other person.

Front 74

Oral trusts

Back 74

Not allowed in PA

Front 75

Mandatory Trust

Back 75

Income beneficiary is mandatorily required to receive from the trustee the income derived from the trust. Annual distribution is default

Front 76

Discretionary Trust

Back 76

Trust authorizes trustee to pay benes. "such amt of principal or income as the trustee in its aboslute discretion shall deem advisable."
Cannot force payments outside of abuse of discretion, so may be better than a spendthrift as far as creditors go

Front 77

Unitrust

Back 77

Annuity Trust variant. Settlor decides on what percentage of the trust principal the intended income bene. will receive
Does not require trustee to make any investments because income is not benchmark for distributions

Front 78

Mandatory Accumulation Trust

Back 78

Trust is untouchable for x amount of years then principal and accumulation are available to bene.

Front 79

Annuity Trusts

Back 79

Gives bene. the right to a fixed dollar amount annually. If there isnt enough money in the accumulation, it will take from the corpus.

Front 80

Support Trusts

Back 80

Limits trustee's discretion for distribution to those necessary for the comfortable support of the bene.

Front 81

Discretionary Support Trust

Back 81

hybrid which gives the trustee uncontrolled discretion to pay funds for support.

Front 82

Beneficial Interests in Trusts

Back 82

Freely transferable (unless designated otherwise)
Creditor's rights follow alienability (they get what bene has power to transfer)

Front 83

Spendthrift Trust

Back 83

restrict the alienability of their beneficiary's interests as a way of protecting the beneficiaries both from themselves and creditors
Involuntary Creditors are probably exempt from spend thrift (tort victims, child support)

Interests (1) cannot be assigned, (2) are not subject to the claims of creditors

Is valid in PA only if it restrains both voluntary and involuntary transfer of a benes. interest

Front 84

Chaflin Doctrine

Back 84

Benes. can never force termination of a trust if the main purpose has not been accomplished:
"Income to y for life; remainder to Z spendthrift on y." Cannot terminate because MP is spendthrift.

Front 85

Sprinkle Power

Back 85

mandatory income trust with power to distribute to benes at any share.

Front 86

Modification of Trusts based on ambiguity

Back 86

Correction on lifetime trusts is fine (even if settlor is dead before correction)
cannot correct testamentary trusts

Front 87

Power of Termination of a Trust

Back 87

if settlor retains he may terminate trust at will
if settlor does not retain, he must gain benes. approval
if power of termination was appointed, appointee may terminate at will

Front 88

Vested Remainder

Back 88

Remainder is vested if it satisfies all three:
(1) holder of remainder must be someone who has been born
(2) person must be identified
(3) can be no express or implied conditon precedent to that person taking.

Front 89

Contingent Remainder

Back 89

If it fails any of the vested remainder test it is contingent
(not born yet, unidentified person, express or implied precedent to that person taking)

Front 90

Survival for remainder in trust

Back 90

So long as it is not necessary to survive someone else, remainder is not lost at death and passes to heirs

Front 91

Swanson v. Swanson

Back 91

Predeceasing life beneficiary does not remove right if interested is already vested subject to defeasance upon the occurence of conditions subsequent.
(Son predeceased mother and Son's Wife sought declaration of her rights under the trust. Trust: income to wife for life, remainder to sons & their issue)
Son

Front 92

How to determine vested/contingent remainders

Back 92

when the instrument takes effect is there a person(s) who would take all the property if the life estate ended now. If yes, then the remainder is vested subject to partial or complete defeasance. if not contingent remainder

Front 93

Clobberie's Case

Back 93

Gift to someone at a particular age:
"to x at the age of 21" --- x must reach 21
gift payable at a particular age does not require survivorship.

Front 94

Class Gifts Children

Back 94

Normal non-marital children are excluded
PA - non-marital children are included in class gifts absent contrary intent.

Adopted children are included in their parent's class gifts to children. Not included by others if the others were unaware of the adoption
PA - does include adopted children w/in lawful descendant class

Adult Adoption: generally excluded from class gifts unless (1) parent treated the adult as a child during child's minority, or (2) step parent or foster parent

Front 95

Class Closing on Gifts (Two ways)

Back 95

Physiologically - classes close physiologically when all the person who can feed the class are dead
Rule of Convenience: class will close according to the rule of convenience when any class member has a right to demand possession.

Front 96

Powers of Appointment

Donor
Donee
Objects
Appointee
Taker in default appointment

Back 96

Donor: who creates the power
Donee: who gets the power
Objects: donee can give property to only those designated by donor as objects of the power
Appointee: donee exercises power (person must come from objects)
Taker in default appointment: who gets the property if the donee does not give it

Front 97

General power of appointment

Back 97

one in which a donee could give the property to anyone he wanted; including self

Front 98

Special power of Appointment

Back 98

donee was limited to a particular class of objects

Front 99

Hybrid power

Back 99

donee could give to anyone but himself

Front 100

Donee dies holding gift

Back 100

If general, property is taxed
If special, property is not taxed.

Front 101

If a person's will is not found at their death the presumption is:

Back 101

it was revoked

Front 102

What happens when a subsequent will was revoked

Back 102

Nothing. The prior will can only be reinstated if it was executed again. Otherwise, the property goes intestate.

Front 103

Intestate decedent survived by spouse:

Back 103

Spouse + No Issue + No Parent = All

Spouse + parent + No issue = First $30K + 1/2 of remainder

Spouse + Issue:
All issue same parent = 30 + 1/2 remaining
Not all issue same parent = 1/2 of estate

Front 104

Intestate order after amount given to spouse or no spouse

Back 104

Decedent's Issue (everything left)
Decedent's Parents (both parents equally, or all to remaining parent)
Decedent's Parents Issue (siblings; nieces & nephews)
Grandparents
Uncles Aunts and their children
Children of cousins
State

Front 105

Method of distribution of decedent's intestate estate

Back 105

All living heirs of same degree = Per capita - divided equally

All heirs not of the same degree = per stirpes (take by representation) 1 share for each line

Front 106

Revocation of a codicil

Back 106

Either by:
(1) revocation of a will, which revokes ALL codicils thereto,
or
(2) revoking of the codicil, which does not revoke the will

Front 107

Secret Trusts

Back 107

an absolute devise with oral promise to hold on trust

oral evidence is admissible to show the existence of the trust by CLEAR SATISFACTORY and CONVINCING EVIDENCE

Constructive Trust results