Ky Bar 2015 - Wills & Trusts

Front 1

Formal requirements for Execution of a Will

Back 1

1. Testamentary capacity - over 18 and sound mind)

2. Testamentary intent - intent this document to be will

3. In writing and signed
4. Two attesting witnesses
5. T's signature w/in each of the witness' presence
6. witness' signature w/in T's presence

Front 2

What if a portion of the will follows the T's signature?

Back 2

UPC/Majority: If present at execution, everything above signature is valid, below invalid

KY: If additional clause appears below T's signature, then whole will is void

Front 3

What is a handwritten will called? How much must be written by T to be valid?

Back 3

Holographic Will: in T's writing w/ T's signature

UPC: Only material provisions needed, such as identity of property/beneficiaries

KY: Entire will or invalid

Front 4

What are the majority and minority/KY positions on witness presence?

Back 4

Majority: Conscious Presence test - conscious of each other and what they are doing

Minority/KY: Scope of Vision - if they were to look when signing they can see each other sign

Front 5

T is domiciled in Blue State but owns real estate in Red State. On vacation in Purple State, T executes a will meeting Blue State's legal requirements but not Red State's. T dies after changing domicile to Red State. Is will valid for purposes of disposition in or the Red State real estate?

Back 5

UPC: In order to be valid and subject to full, faith, and credit, a will must comply with:
1. Place of Execution (Purple),

2. Domicile at Death (Red),
3. Domicile at Execution (Blue), or
4. Place of Probate (Red)?

Front 6

Are gifts to witness of wills within the will valid?

Back 6

UPC: Valid

KY: Gift invalid, unless:

1. One other disinterested witness, or

2. If witness is heir w/o will, then takes lesser of amount given or intestate share

Front 7

What is the best practice for proving a will?

Back 7

Elements: At time will is executed (or later in T's lifetime), T and witness sign:
self-proving affidavits:
1. Under oath
2. Before notary public

3. Stating all elements of due execution were performed

Front 8

What is revocation by physical act?

Back 8

1. Intent to revoke
2. Physical act (UPC: anywhere on will Majority/KY: over some language of the will)

Hint 8

KY: cutting, tearing, burning, obliterating, canceling, or destroying

Front 9

What are the elements to presume revocation?

Back 9

1. Will was last in T's possession, and
2. Will was found mutilated, or not found at all

Front 10

How do we handle a lost/destroyed will?

Back 10

Prove by clear & convincing evidence:

1. Valid execution
2. Cause of non-production
3. Contents

Front 11

How do we interpret codicils?

How do we treat later wills?

Back 11

A codicil is a later testamentary instrument that alters a previously executed will.

If codicil makes no reference to will, then, if possible, the two are read together

If codicil makes reference to will, the later document controls

Later wills w/o residuary clauses are treated as codicils

Later wills w/ residuary clauses revoke prior will by inconsistancy

Front 12

How does divorce impact a will?

Back 12

All provisions to spouse are revoked as a matter of law (but revived if T remarries ex-spouse)

Front 13

What doctrine saves an otherwise revoked will?

Back 13

Dependent Relative Revocation

1. T revokes his will under the mistaken belief that another disposition of his property would be effective, and

2. But for the mistake belief, T would not have wanted his first will revoked

Front 14

May a first will revoked by a second will be revived?

Back 14

UPC/minority: Yes, if
1. First will still exists
2. T wants revival
3. Second will is revoked by physical act

KY: No

Front 15

May a will devise property "as designated in a memo, that I plan to write, that will be found attached to this will?"

Back 15

Yes - Doctrine of Incorporation by Reference, if:
1. Writing was in existence at time will was executed
2. Will manifested an intent to incorporate the document
3. Will describes writing sufficient to permit idenifying

If tangible personal property (other than money) may be written after will executed and altered at any time

KY: limits incorporation by reference to strict requirements, even for tangible property

Hint 15

(KY) limits Incorporation by reference to strict requirements, even for tangible property

Front 16

Will devises an auto to Neil. 3 months after execution, T trades Hummer for Prius. What effect?

Back 16

Doctrine of Independent Significance: acts having independent lifetime significance may impact the will

Front 17

What happens if a beneficiary dies before T? What does the law do to prevent lapse?

What if it describes a class of beneficiaries, such as "children?"

Back 17

Normally, gifts lapse, passing to residuary estate.

Anti-lapse saves gift for issue of beneficiary, if the predeceased beneficiary:

1. Was in a specified degree of relationship with T, and

2. Left descendants who survived T

KY: applies to any predeceasing beneficiary who leaves surviving issue

Class gift rule: only surviving members take

Front 18

What are the five kinds of gifts?

In what order are the gifts sacrificed to satisfy administration expenses, creditors, etc if T's estate partially insolvent?

Back 18

In order of sacrificed property:
1. Intestate property - partial intestacy
2. Residuary bequest
3. General Legacy - amount paid from general fund
4. Demonstrative legacy - amount of money paid from specific fund
5. Specific devise/bequest

KY: Intestate and Residuary sacrificed first, then pro rata the remaining

Hint 18

KY

Intestate and Residuary sacrificed first, then pro rata from the rest

Front 19

What happens if specific property no longer in estate at death?

Back 19

Ademption

Majority: Specific gift fails
UPC: Devisee receives value, unless T expressed intention that gift fail

KY: Devisee receives value, unless T expressed intention that gift fail

Hint 19

KY

devisee receives value, unless T expressed intention that gift fail

Front 20

How are gifts of stock treated?

Back 20

UPC: Includes additional shares from:
1. Stock split/dividend
2. Issued due to merger/consolidation
3. Issued in exchange for devised shares

Hint 20

KY; same, but

"My shares" treated as general legacy

Front 21

Does a specific devisee of encumbered property take the property encumbered?

Back 21

UPC/Majority: Must take encumbered, absent explicit intent otherwise

KY: May pay off lien from funds in residuary estate, unless explicit intent otherwise

Hint 21

KY

May pay off lien from funds in residuary estate, unless explicit intent otherwise

Front 22

How do courts handle ambiguities, mistakes, and blanks in the will?

Back 22

Extrinsic evidence allowed to clear up latent ambiguity

But plain meaning cannot be disturbed by extrinsic evidence

Courts will not fill in blanks

Front 23

If decedent survived by spouse, and decedent is intestate, how much does spouse take?

Back 23

UPC: Spouse takes all, unless issue is not of spouse's, then first $100k and 1/2 remainder

KY: 1/2 of surplus real property and personal property + life estate in 1/3 of real property conveyed during the marriage with the spouse's release

Hint 23

KY: 1/2 of surplus real property and personal property + life estate in 1/3 of real property conveyed during the marriage with the spouse's release

Front 24

If D not survived by spouse or descendants, who takes intestate?

Back 24

Following order:

1. Parents or surviving parent

2. Siblings and their descendants

3. 1/2 to both grandparents and their descendants

4. 1/2 to nearest kin on maternal side and paternal side

KY: If no descendants, then portion not passing to surviving spouse goes to:

1. D's parent(s) (all or 1/2 each)

2. Descendants of D's parents (D's siblings and their issue)

3. Surviving spouse

4. 1/2 to both sets of grandparents

5. D's nearest kin

6. D's spouse's nearest kin

Hint 24

KY: If no descendants, then portion not passing to surviving spouse goes to:

1. D's parent(s) (all or 1/2 each)

2. Descendants of D's parents (D's siblings and their issue)

3. Surviving spouse

4. 1/2 to both sets of grandparents

5. D's nearest kin

6. D's spouse's nearest kin

Front 25

Do illegitimate children take intestate?

What about adopted children intestate?

Back 25

Children inherit from natural mother, and maybe from natural father if: legitimatize paternity (but even after death of father)

UPC: Child doesn't inherit from natural family but from adopted family, unless of course step-parent adoption

Front 26

What is the significance of 120 hours?

Back 26

Deceased #1 pre-deceased decedent #2, unless #1 survived #2 by 120 hours (unless contrary intent in will)

Front 27

What is the effect of a gift in the lifetime on the estate/probate?

Back 27

UPC/Majority: Advancement is a lifetime gift to descendent

- Applies intestate

- No advancement unless declared such in a contemporaneous writing or acknowledgment by heir

KY: presumes advancement

Satsifaction: applies testate and none unless will provides or contemporaneous writing/acknowledgement

Front 28

What is the homestead exemption/elective share?

Back 28

Given over and above the estate - right to live in home as long as spouse chooses

Elective share (UPC) 3% per year of marriage until 50% after 15 years

In addition to intestate share, but deducted from testate share unless will provides otherwise

KY: First $15k of personal property set aside for surviving spouse or surviving children

Dower & curtesy (if spouse renounces will), 1/3 personal, 1/3 real, 1/3 life estate in property transferred before death w/o joinder of surviving spouse

Hint 28

KY

First $15k of personal property set aside for surviving spouse or surviving children

Dower & curtesy (if spouse renounces will), 1/3 personal, 1/3 real, 1/3 life estate in property transferred before death w/o joinder of surviving spouse

Front 29

What bars a party from sharing in the estate?

Back 29

Felonious and intentional killing: killer treated as predeceasing decedent

KY: also any adultery or parent willfully abandons care and maintenance of child

Front 30

Do pretermitted children or children thought dead take under a will?

Back 30

Pretermitted children (born/adopted after will execution): take intestate share, unless:

1. Omission appears intentional
2. T had other children at execution and left substantially all of estate to parent of pretermitted child, or
3. T provided for child outside will

UPC: Child thought dead deemed pretermitted

KY: No relief for child thought dead unless provision appears in will

Hint 30

(KY)

no relief for child thought dead unless provision appears in will

Front 31

Who has standing in a will contest?

Back 31

Anyone who would take more as heir if no will or as beneficiary under a prior will

Front 32

What are indicators for testamentary capacity or lack thereof?

Back 32

1) Did T understand the nature of act?
2) Did T know nature/character of his property?
3) Did T know the natural objects of his bounty?
4) Did T understand the disposition he wished to make?

Front 33

How may contestants show undue influence on will?

Back 33

1) Existence and exertion of influence
2) Effect to overpower the mind/will of testator
3) Will would not have been executed but for the influence

But presumption of undue influence arises upon showing that a principal beneficiary stood in a confidential relationship to testator procures execution of the will

Front 34

What is insane delusion?

Back 34

T adheres to delusion against all reason and evidence, despite being otherwise sane, and will is product of that delusion

Front 35

What is the definition of a trust?

Back 35

- Creator (settlor)
- Delivers
- Legal title of assets
to trustee
- For benefit of beneficiaries
w/ intent to create trust
for valid purpose

Front 36

What is the trust's requirement of intent?

Back 36

Title + intent

Word "trust" unnecessary; but the phrases "wish and desire" mere precatory language and insufficient

Front 37

What is the trust's requirement of delivery?

Back 37

Signature alone insufficient; must deliver subject matter of the trust

(unless settlor is trustee)

Front 38

What is the trust's Res requirement?

Back 38

Subject matter of trust must be certain and identifiable

An empty trust is allowed if named direct beneficiary of life insurance, pension death benefits, or will

Front 39

What is the Ascertainable Beneficiaries requirement?

Back 39

Required for private trusts, but not charitable trusts

"Friends" = invalid
"Children/heirs" = valid

Trust w/ invalid beneficiaries cannot become a power of appointment

RAP applies

Front 40

What are three will substitutes (trusts)?

Back 40

(1) Revocable trusts are valid
(2) Pourover clauses (into wills) are valid if trsut ID'd in will and terms written
(3) Totten trust (POD): bank account held in trust, revocable during life, accessible to creditors even after death, beneficiary gets money at depositor's death, trust auto revoked if beneficiary predeceases depositor

Front 41

Can there be only one trustee? Only one beneficiary?

Back 41

Yes, but sole trustee cannot also be sole beneficiary (cannot be both unless there are two of either)

Front 42

Are oral trusts valid?
Distinctions? Exceptions?

Back 42

Majority: Enforceable if of personalty; Statute of Frauds (SoF) applies to realty

Possible exception if grantee-trustee had confidential relationship to grantor-settlor (equity > SoF requirements)

KY: Oral land trust may be proven by clear & convincing evidence (if no writing)

Front 43

What are secret and semi-secret trusts?

Back 43

Secret trust: Devise in will w/ oral promise to hold in trust
- Beneficiaries may prove intent by extrinsic evidence upon clear & convincing evidence; court may impose constructive trust to avoid unjust enrichment

Semi-secret trust: Devise in will mentions trust w/ oral agreement as to beneficiaries

Front 44

How are charitable trusts special? (4 ways)

Back 44

1. Exception to RAP (can last forever)
2. Enforceable Charitable purpose requirement (does society as a whole benefit?)
3. Must be reasonably large number of unidentified beneficiaries
4. Cy pres may allow reformation if original purpose may not longer be accomplished

Front 45

What are beneficiary's remedies if trustee fails to distribute income?

Back 45

1. May file suit for order to distribute income
2. If does not comply, may sue to remove trustee

Front 46

Creditors v. Trust

Who prevails?

Back 46

Creditors cannot touch the corpus/principal (owned by trustee) but may get income

If trust is a spendthrift trust, creditors generally cannot even reach income. Exceptions:
1. Claims for necessities
2. Alimony and child support obligations
3. State/Fed tax claims

Front 47

"income in support . . . sole discretion of trustee . . ." What effect of such language?

Back 47

Discretionary Support Trust: Beneficiary has very limited right to income, basically only when in need

Trustee's standard: honesty, good faith, proper motives in exercising discretion

Front 48

What does the Duty of Loyalty mean to the trustee?

Back 48

No self-dealing (key)
1. No selling trust assets to self

2. No borrowing trust funds
3. No selling asset from one trust to another

4. No transactions re: trust resulting in personal gain

Front 49

Besides Duty of Loyalty, what is the standard for trustee management?

Back 49

Prudent Investor Rule
1. Keep trust productive
2. Balance risk & return
3. Diversify
4. No commingling
5. Limit delegation to dec'ns allowed by statute

Front 50

What is a trustee's duty between multiple beneficiaries?

Back 50

Duty of Impartiality: may not favor one beneficiary over another (unless terms allow)

Front 51

What are the implied powers of a trustee? What power have most statutes added?

Back 51

Implied Powers

1. To sell

2. Improve
3. Lease (but not borrow)

Statutes add power 4) to borrow

Trustees may invest in common trust funds

Front 52

What is a trustee's liability? (3 types)

(Detailed)

Back 52

1. Breach: beneficiary may
- Ratify transaction and waive breach
- Surcharge: sue for resulting loss
- Trace: recover property for trust

2.Tort: 3rd parties may sue trust or trustee (latter not personally liable unless fault is personal)

3. Contract: 3rd parties proceed against trustee in rep capacity; only personally if trustee failed to reveal rep capacity or identify the trust; trust can sue trustee for indemnification, and vice versa, in latter case

Front 53

How may a trustee be personally liable?

Back 53

Delegation to agent situations:
1. Improper delegation
2. Failure to take proper steps to remedy improper actions by agent
3. Failed to use reasonable care in agent selection

Front 54

What are the (4) basic principles of Trust Accounting

Back 54

1. Income beneficiaries get income but remaindermen entitled to trust corpus
2. Income = interest, rents, cash dividends from stock; Principal = sale of assets, royalties for mineral removal, stock splits, and stock dividends
3. Expenditures:
- Ordinary means repairs, interest, taxes and is charged to income

- Extraordinary means capital improvements, taxes on sales, other non-recurring and is charged to principal
- Trustee fee is divided to 4. Trustee may adjust if necessary to comply w/ duty of impartiality

Front 55

Trust Termination; what requirements?

Back 55

Beneficiaries may if
1. Unanimous consent,

2. No further purpose served, and

3. No minor/unborn beneficiaries

Spendthrift trusts also require settlor's consent to terminate

Settlor may alone terminate if:
1. He has expressly reserved such rights
2. He complies w/ all provisions of the trust re: revocation's form

Front 56

Who does what in a power of appointment? (5 possible parties)

Back 56

Donee creates power; donee exercises it

Objects of power: those for whom favor of power may be exercised

Appointee: those in whose favor it is exercised

Takes in default: those who will receive property if power not exercised

Front 57

What are the different types of power of appointment? (4 possible kinds of powers)

Back 57

1. General powers may be used in favor of donee, donee's estate, or creditors;

2. Special powers may not
3. Testamentary powers are only exercisable by will

4. Presently exercisable powers exercisable during life

Front 58

Must trusts be in writing?

Back 58

Most states do not require a writing for a trust of personal property

Statute of Frauds requires it for real property.

Front 59

Is a promise to create a trust in the future enforceable? On what conditions?

Back 59

If supported by valid consideration, a valid trust will arise in the future, even if the res property has not yet been acquired

Front 60

What is the effect of a valid disclaimer by a beneficiary of the trust?

Back 60

Same as wills, the effect is as if beneficiary has predeceased settlor and remainder interest is accelerated if appropriate.