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81 Cards in this Set
- Front
- Back
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Trust types
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- Express trust
* Private * Charitable - Totten trust - Pour-over trust - Joint account with survivorship - Uniform Transfer to Minors Act - Honorary trust * Pet trust * Cemetery trust - Resulting trust - Purchase Money Resulting Trust - Constructive trust |
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Requirements for express private trust
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- Settlor (18+; contract ability)
- Delivery (titled document: transferred formally) - Property (settlor has title not expectation) - Intent (wish insufficient) - Trustee - Beneficiary - For lawful purposes - Signed by settlor (notarized or 2 witnesses) |
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Appointment of trustee (qualificatins)
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- Failure to appoint a trustee:
* Trust does not fail * Court appoints a trustee - Inter vivos (lifetime) trust: anyone - Testamentary under court supervision: * Generally, anyone * Not under 18 * Not judicially declared incapacitated * Not convicted felon * Not dishonest, drunken, etc - Non-NY-resident trustee * Must be related to settlor * Must have a NY co-fiduciary |
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Express trust beneficiary
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- Private trust
* Definite * Ascertainable * "heir" and "next of kin": fine - Charitable trust * Indefinite * A sufficiently large group * May be "masses" for relatives - May not be a non-person except * Pet * Cemetery |
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Express trust purposes
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- Private Trust
* Not to commit crime * Not to destroy property * Not violating public policy - Public Policy - marriage * Not compel marriage * Not promote divorce * May screen ethnic/religion * May support widow until remarry - Charitable trust: charitable purpose * Education * Health * Religion |
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Express trust intent
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- Precatory language is insufficient
- Must create duties in trustee - Beneficiary may enforce - Attorney General represents charitable trust * AG is necessary party to suit * Donor and AG may enforce charitable trust |
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Pet trust
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- Pet trust is allowed
- Term: life of pet (not 21 years) - Enforcement: * Person named in trust * Person appointed by court |
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Cemetery trust
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- Deemd charitable trust
- May last forever |
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Trust RAP Issues
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- Private trust:
* RAP for interests * RAP for spendthrift restrictions - Charitable trust: no RAP issue - Cemetery trust: no RAP issue |
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Express charitable trust
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- Not subject to RAP
- For indefinite large group - For charitable purposes - Enforced by Attorney General - Cy pres doctrine to reform * "As nearly as possible" * Match settlor's intent |
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Totten Trust
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- Created by depositor "ITF" beneficiary
- No "magic words" necessary - Depositor may deposit/withdraw freely - Creditor may resort to account - Beneficiary: no claim until depositor dies - Upon death: goes to living beneficiary - Revocation: * Withdraw all money * Formal revocation WB FIND * Formal will WB FIND * Death of beneficiary before depositor - WB FIND: * Writing * Beneficiary * Financial Institution * Notarized * Delivery to account bank |
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Joint account with survivorship
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- Upon death, goes to suriving holder
- Creditors cannot reach upon death - Each holds 1/2 - Defeating joing account: * Clear and convincing evidence * Survivorship not intended * Merely for convenience - If one holder transfers money w/ bad faith: * Account is severed * Creditor may resort to half amount |
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Uniform Transfer to Minors Act (UTMA)
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- Purpose
* Avoid guardianship proceeding * Avoid trust * Gift tax exclusion of $13,000 - Must be explicit about UTMA - Made to guardian - The guardian of minor: * Prudent investment * Use money for minor * Give to minor upon turning 21 * (prior to 97, upon turning 18) - Guardian is not owner (minor is) - Not a trust - Gift exclusion NA if donor is guardian |
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Pour-over trust
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- Will may make gift to a revocable trust
- Easier management and change - Revocable trust * may be partially funded or unfunded * may be created by other persons * must exist at or prior to executing will - Life insurance may go to trust * Revocable trust existing now * Trust created in will * Beneficiary: to trustee |
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Revocable trust
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- Presumption: irrevocable
- Settlor must explicitly makes it revocable - Settlor may not be both: * sole trustee * sole beneficiary - Must exist at least one additional: * trustee * beneficiary - Potential purpose: * management * avoid probate * provide for incapacity - No tax benefit if revocable |
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Modification of trust
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- Modification by settlor: c.f. revocable
- For others: settlor intent is more important - If conditions change, may modify: * Could not achieve the purpose * Designated entity no longer exists - Cy pres doctrine: match intent - Trustee/beneficiary has standing? - Court may authorize invasions of principal |
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Termination of trust
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Not revocable by presumption
Termination by settlor with consent: - Requires consent of all beneficiaries - Incapacitated cannot give consent - Infant cannot give consent - "heirs" no need to consent - Consent not required for fetus Merge: - not if there is any potential beneficiary - only if sole trustee is sole beneficiary |
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Resulting trust
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- Situations:
* Trust fails for indefiniteness * Trust fails for non-human beneficiary - PMRT * One pays, title in non-relative * Majority: PMRT, trustee must return * NY: No PMRT, trustee no need to return - Effect of PMRT * Constructive trust if trustee promised * Clear and convincing evidence required |
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Constructive trust
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- Equitable remedy for fraud, etc
- Holder's duty: transfer to beneficiary - Example: * Slayer of testator * Default on joint will contract * Promise to induce PMRT |
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Spendthrift rules regarding trust
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- Majority: presumed no spendthrift rules
- NY: presumed for income interests - Income interest: * Spendthrift rule * may be explicitly excluded by settlor - Beneficiary of principal * No spendthrift rule * may be explicitly provided by settlor - Rule: not alienable by interest holder - Exceptions: * necessity creditor * alimony, child support * federal IRS * excess of living and education * 10% mandatory lien for all creditors - NA to settlor's retained interest, if any |
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Trustee's power
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- Fiduciary Powers Act
- Almost anything to dispose res - Investment power - Trustee may not: * Self-dealing * Borrow on behalf of trust * Continue business put in trust |
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Trustee's investment power
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- Uniform Prudent Investors Act (UPIA)
- Portfolio theory - Not reviewed with hindsight - Maximize total return as the goal - Not evaluate individual investment - May make adjustment for fairness |
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Trustee's self dealing
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- Trustee may not:
* Buy trust property * Sell property to trust * Borrow from trust * Lend to trust * Use confidential information from trust * By corporate trustee's shares for trust - Trustee must: * Separate personal and trust property * Earmark trust property |
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Trustee's comingling of assets
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- Gains: go to trust
- Losses: borne by trustee |
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Remedy for trustee self-dealing
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- No inquiry about good faith - No inqury about reasonableness - Remove and replace trustee - Damages - Ratify if advantageous (Beneficiary has standing) |
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Trust and 3rd party re trustee' self-dealing
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- Trust has no resort to BFP 3rd party
- Not BFP if both: * Know trustee's capacity as trustee * Know trustee is self-dealing - Treated as trustee: * Trustee's relative * Trustee's business (control, partner, etc) |
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Contract by trustee
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If trustee signs in trustee's name:
- trust is liable - trustee is not personally liable If trustee signs in personal capacity: - trustee is liable - reimbursement if: * within trustee's power * signed in ordinary administration |
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Tort by trustee
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- Trustee L for any tort by:
* trustee * trustee's agent - Trustee may seek reimbursement if: * It is in trustee's power * It is not the personal fault of trustee - No exception if not able to reimburse - Trustee may buy insurance - Trust pays for the insurance |
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Exculpatory provisions for trustee
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- Testamentary: void for public policy
- Inter vivos: allowed |
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Intestate distribution
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- Spouse takes all
- Spouse and issues: * Spouse take $50k + 1/2 of remaining * Issues share 1/2 of remaining - Issues takes all if no spouse - No issues/spouse: parent - No parent: siblings - Grandparents - G.G.Parent down to same level - G.G.Children of G.G.Parents - Eschew to state |
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Issues take by representation or per capita in each generation
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- Seek to first level with living issue
- Divide by total threads (incl. dead) - Living issue take one share each - Dead shares combined - Drop to the next level w/ living issue of dead - Circle - Effect: on each level, equal share - Even if will says "per stirpes to children": * Children gets per stirpes * Grandchildren on: per capita |
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Effect of adoption re inheritance
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- Adopted children:
* full rights in adopting family * no right in birth family - Children adopted by new spouse of parent: * full right via each parent * full right via adopting spouse - Children has birth and adoptive relations: * Use birth relations * Use adoptive relation if adopted by decedent |
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Non-marital children re inheritance
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- Full right in biology mother's family
- Full right in biology father's family if: * Father and mother marries afterwards * Decree of filiation establishing paternity * Notarized statement in Putative Father Reg * Clear and convincing evidence of paternity - Clear and convincing evidence: * DNA test * Open and notorious acknowledgment * Mere support is not enough |
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Situations spouse loses inheritance / elective share
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- Divorce valid in NY
- Invalid divorce by surviving spouse - Separation decree ag. surviving spouse - Marriage is incestuous or bigamous - Abandon by surviving spouse - Lack of support by surviving spouse [DISMAL] |
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Disclaimer by distributee or will beneficiary
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- Notarized writing
- Separate affidavit of no consideration - Irrevocable - Filed with Surrogate Court w/i 9m: * Death of decedent * Beneficiary becomes 21 - Effect: * Disclaimant predeceased decedent * Not disrupting distribution * Otherwise: immediately after |
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Simultaneous deaths
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- Revised Uniform Simultaneous Death Act
- Clear and convincing evidence - Died 5d (120h) apart - Effect if insufficient evidence: * B dies first when distributing A's estate * A dies first when distributing B's estate * AB joint account: each has 1/2 |
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Execution requirement for will
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- T must be 18+
- Signed by T - At the end thereof - In presence of 2 witnesses - Witnesses both sign - Completed w/i 30d after W1 signed - Publication |
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Signing of will
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- T may sign by proxy
* Proxy sign directed by and in presence of T * Proxy not witness * Proxy sign (essential) * Proxy provide address (non-essential) - T signs at the end * Everything after signature: void * If essential provision after signature: will void - T signs in the presence of witness: * W no need in presence of each other * T must sign or acknowledge before W * W must sign when T signs/acknowledges |
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Interested witnesses for will execution
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- Signing by interested witness: will still valid
- Interested witness loses gift, except: * 2 other non-interested witness signed * lesser of will gift or intestate share |
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Proof of due execution of will
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- Burden on proponent
- Requires: testimonies of 2W - If 1W unavailable, testimony of 1W fine - If both unavailable, must prove: * signature of T * signature of 1W - If self-proving: may go directly to probate - If self-proving and contest: need to prove |
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Attestation clause / affidavit for will witnesses
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- Attesting clause:
* Prima facie evidence * Do not replace testimony * May be used to impeach * May be used if W is hostile - Affidavit replaces testimony: * W signs in front of attorney * W under oath * Reciting 7-point execution - Neither is required by law |
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Holographic will and nuncupative will
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- Holographic will: all in handwriting of T
- Nuncupative will: oral will - Both invalid in NY except: * Soldier in war until 1 year after discharge * Marine at sea until 3 years after discharge * recognized under Foreign Wills Act |
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Foreign Wills Act
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- Foreign wills are valid if:
* Valid under NY law * Valid under place of execution law * Valid under T's domicile law (death/execution) |
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Lapse of gifts in will
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- If beneficiary dies before T: lapses
- Anti-lapse saves gift if: * Beneficiary has issue * Beneficiary is T's issue/brother/sister - Gifts then goes to Beneficiary's issue - By representation at each generation - Dead beneficiary's will: irrelevant - Will may override anti-lapse statute - It also applies to disclaimer situation - Specifically named adopted-out child: applies - Lapsed gifts goes to: * Residuary estate * Other beneficiaries of residuary |
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Revocation of will
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- Explicit revocation:
* Revocation with 7-point formality * Physical act with intent to revoke * Physical act of another: 4 persons - Implicit revocation: * New will with 7-point formality * If consistent: no revocation but codicil - Presumed revocation with intent: * Cannot find will last seen in T's possession * Will damaged last seen in T's possession - Presumed no revocation if: * Will last seen in beneficiary's possession * Beneficiary adversely affected |
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Modification of will
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- New will with 7-point formality
- Codicil with 7-point formality - Partial change with 7-point formality - short of 7-point formality: no change - Examples: * cross words with T's initials * change amounts with T's initials |
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Reference to extrinsic matters
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- Documents: allowed in majority; not NY
* Preexisting * Identified * Intention to incorporate - NY requires: same 7-point formality - Acts of independent significance: * Good for non-titled property * Not good for titled property |
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Changes of marital status after execution of will (effects on gifts)
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- Marry: will still valid
- Effect: spouse may gain rights - Divorce/anulment/separation: * Requires formal decree * Separation agreement not good * File for divorce not good - Effects: * Terminates fiduciary appointment * Terminates gifts * Terminates life insurance benefit * Terminates Totten trust * As if spouse predeceased T * Not terminate gifts to spouse's issue * Not terminate custody * NO anti-lapse for spouse - Remarry: restored |
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New children after execution of will (effects on gifts)
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- Pretermitted children
* Born or adopted after execution of will * Living or in gestation at T's death * Not provided for in settlement * Not named or provided for in will - T has >=1 child, pretermitted child gets: * No gift to child: 0 * Gift to child: equal share * Norminal gift to child: intestate share - T has 0 child, pretermitted child gets: * Intestate share |
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Revival of wills after revocation
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- No automatic revival
- Revival requires: * Re-execution with 7-point formality * Codicil to republish with 7-point formality - Dependent Relative Revocation: * T had mistake in law re revival * Similar: non-revocation and revival |
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Proof of content with non-production of will
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- Burden on will proponent
- Prove: * Due execution of will * DRR or over presumption of non-production * Specific terms of the will |
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Incapacity of testator
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- Capacity: less than for other civil acts
* Understand the nature of act (will) * Know the property (nature and value) * Know natural ojbects of will (beneficiary) * Understand disposition of gifts - Lucid interval is sufficient - Insane delution: no capacity * Otherwise normal person * Belief in supposed facts * Against all evidence, probabilty, control |
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Ambiguity in will
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- Latent: requires extrinsic evidence
- Patent: facial mistakes - Extrinsic evidence allowed: * Facts/circumstances: for both * T's statement to preparer: for both * T's statement of intent to 3P: for latent |
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Undue influence in making will
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- Challenger has burden to prove:
* Existence and exertion of influence * Effect of influence on T * But for influence, will would be different - Insufficient: * Opportunity * Susceptibility * Inequality - Sufficient: * Gifts made to confident relaitonship * Beneficiary prepared the will - Automatic inquiry for gift to attorney - Attorney must inform if named executor: * In writing signed by T * Witnessed by 2 * Anyone, even nonlawyer, may be executor * Executor receives statutory compensation * Executor names attorney, who get fees - If fail to inform: 1/2 statutory fees |
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Conditional wills, if CP not satisfied
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- CP is valid, and will not enforceable
- CP is to show motive, will still enforceable |
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Joint wills contract
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- 2 persons share will with 7-point formality
* Deemed joint will only * Is contract only by express provisions - One party fail to honor contract: * Probate according to his later will * Constructive trust for first will beneficiary |
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Advancement; satsifaction of legacies
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- Majority: deemed advancement
- NY: not advancement or satisfaction - Exception: * Contemporaneous writing * Signed by donor or donee |
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Abatement of will
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- Following sequence:
* Creditors * Specific gifts * Demonstrative legacy * General legacy * Residuary * Intestate estate - Pro rata for demonstrative/general legacy |
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Ademption of will
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- Only for specific gifts
- Reason of destruction: irrelevant - Exceptions: * Insurance for the gift paid after death * Executory K for the gift paid after death * Proceeds traceable to guardian disposed gifts - Specific source for demonstrative legacy: * Demonstrative only * If not exist: go to other sources |
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Share certificate gifts in will
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- Public company: general gifts
* Exception: "my ... stock" - Closed company: specific gifts - Share split: treated as specific - Shares changed in form: not destroyed |
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Elective share of spouse
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- $50,000 or 1/3 of elective share assets
- Elective share assets: * Net probate estate (af/t debt, b/f tax) * Testamentary substitutes - Other beneficiary must contribute if deficient: * Beneficiary of will * Beneficiary of testamentary subs * Intestate distributees - No need to return gifts; cash is fine |
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Testamentary Substitutes
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- Totten trust for others
- Survivorship interests - Non-qualified employee benefits - 1/2 of qualified employee benefits - Irrevocable in marriage retain life estate a/f 92 - Revocable transfer anytime - Gifts within 1 year of death in excess of $13k - US bonds - Paid on Death arrangements - Presently exercisable, general POA |
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Not Testamentary Substitutes
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- Life insurance
- Irrevocable transfer pre-marriage - Irrevocable retain life estate in marriage pre 92 - 1/2 of qualified employee benefits - Gifts outside 1 year of death - Gifts less than $13K |
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Testamentary substitutes (value)
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- Full value
- Survivorship interest with 3rd party * 1/2 if prior to marriage * all if post marriage * consideration furnished as proved - Survivorship interest with spouse: 1/2 |
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Elective share elections
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- File w/ surrogate court
- w/i 6m after letter is issued by court - Personal to the spouse: * Administrator/executor cannot elect * Guardian/custodian may elect - Waiver: in writing notarized - Pre or post marriage: both allowed - Waiving "all rights in estate" * waives elective share * does not waive specific gifts - No elective share if DISMAL |
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Elective share choice of law
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- T domiciled in NY: NY law
- Will chooses NY: NY law for RE in NY - RE in other state: ancillary proceeding - probate in other state: NY ancillary proceeding |
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Non-probate assets
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- Property transfers by operation of law
* Joint tenancy with survivorship * Joint account * Totten trust - Property transfers by contract * Life insurance * Employee benefits - Property in trust - Property held in POA |
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Power of appointment (types)
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- Presently exercisable POA
- Testamentary POA: exercise in will - General POA: may designate any one - Special POA: only within limit |
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Exercise of POA
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- Testamentary: in will
* Residuary clause: sufficient * Not referring POA: sufficient * Donor may explicitly require reference - Presently exercisable: * may also exercise in will * Unless donor specifically prohibits - Failure to exercise, goes to: * Beneficiary of donee's will * Residuary of donee's will * Intestacy distributee of donee |
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RAP and POA
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- Testamentary or Special POA
* Validity of POA: execution from creation * Validity of interest: vest from creation * Second look * Reform age limit to 21 * Consider spendthrift - General, presently exercisable POA: * Validity of POA: acquisition from creation * Validity of interest: vest from exercise * No second look * Consider spendthrift * Reform age limit to 21 |
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Health care proxy
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- Power of attorney granted to person:
* Effective when incapacitated * Decision on treatment - Requirements: * Signed by principal * Writing * Witnessed by 2 adults * Recite: grantor is free from duress |
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Living will
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- Show desire regarding treatment:
* Terminally ill * Vegetative state * Artificial life support * Artificial nutrition * Relieving pain - Right to refuse medical treatment: good - Physician assisted suicide: unconstitutional |
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Lawyer malpractice in preparing will
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- NL to beneficiary: no privity
- L to estate for bad planning advice |
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Class gifts in will
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- Rule of convenience:
* Closes if any person may claim * Including child in gestation - Goes to surviving member at death - Anti-lapse also applies - Adopted out children is not w/i class |
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Negative bequeaths in will
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- Common law: not valid
- NY: valid - Treated as if predeceased - Anti-lapse still applies |
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Specific gifts of encumbered property
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- Common law: right to exornerate
- NY: exornerate only with specific instruction - General direction of paying debt: insufficient |
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Elective Share Trust
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- Good if T died prior to 94
* Outright >= $50,000 * Principal in trust >= 1/3 * Spouse has life estate - Now: not good * Kill trust if outright gift < elective share * Not if outright gift >= elective share |
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Exempted property before will distribution
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- $92,500 in total
- $25,000 for vehicle - $20,000 for furniture - $25,000 in cash * Creditor cannot touch * Funeral can touch - $20,000 for farm machine; animal - $2,500 for books etc |
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Donee's creditor and POA
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- General, presently exercisable POA: can
- Specific or testamentary: cannot, except: * Donee gives to her estate * Donee is donor |
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Mistake in will
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- No extrinsic evidence may come in
- T presumed to: * Have read the will * Understand the consequences |
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No-contest provisions in will
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- C/L: not forefeit if:
* good faith * probable cause - NY: forefeit, except: * Contest jurisdiction * Construe will * Forgery * Later will exists * Guardian/custodian contest - Safe harbor: preliminary discovery - T may explicitly exclude safe-harbor |
