Will, Trusts & Estates

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WILL

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An oral declaration or written instrument to take effect upon death whereby a person:

Disposes of property

Directs how property shall be disposed of

Disposes of his body or any part thereof

Exercises a power

Appoints a fiduciary; Which is revocable

- Must comply with formalities

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CODICIL

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A supplment to a will either

addicting to

taking from or

altering its provisions or

confirming it in whole or in part by republication

but not totally revoking such will

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PER STIRPES

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Dispositions of property

who take as issue

where property is divided into as many equal shares

at the nearest generation with surviving issue

plus any deceased issue who left surviving issue, if any.

The share of a deceased issue shall be distributed in the same manner.

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REPRESENTATION

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Disposition of property who take as issue

where property is divided into as many equal shares at the nearest generation with surviving issue

plus any deceased issue who left surviving issue, if any.

The remaining shares, if any, are then combined and then divided in the same manner as if the surviving issue who were allocated a share above had all predeceased the decedent, without issue.

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ISSUE TO TAKE BY REPRESENTATION

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Whenever a disposition of property is made to issue, such issue takes by representation, unless a contrary intention is expressed.

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INTESTACY

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Applies to property that is not disposed of in decedent's will.

In computing the distribution, debts, administration expenses and reasonable funeral expenses are deducted and all estate taxes are disregarded.

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DISTRIBUTIONS IN INTESTACY

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If the decedent is survived by:

Spouse and Issue: $50,000 and 1/2 of residue to spouse and rest to issue by representation.

Spouse: All to spouse

Only Issue: All to issue by representation

Only Parents: All the parents

Only Issue of Parents: All to issue of parents.

Only GP or Issue of GP: split in half, to give equally to paternal and maternal sides, Issue of grandparents shall not include issue more remote than grandchildren of such grandparents.

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CONTINUED: DISTRIBUTIONS IN INTESTACY

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Only great-grandchildren of grandparents-> split in half, to give equally to paternal and maternal great-grandchildren, who take per capita.

Half bloods are treated the same as whole bloods and adopted children are treated the same as biological children. (DRL117)

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DISQUALIFICATION OF PARENT

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No property of a deceased child shall be given to the parent, if the parent while the children was under 21:

Failed to support the child.

Abandoned the child;

Lost parent rights

The estate is distributed as though the parent had pre-deceased the child.

This does not apply to parents who were fraudulently induced to give up child for adoption.

Can be redeemed if the parent comes back into the childs life before he dies and until his death.

Can be disqualified if subject to third party proceeding: order terminating rights or parents fail to comply with judgment

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DISQUALIFICATION OF SPOUSE

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A surviving spouse inherits unless it is established in court that:

1) There is a valid divorce

2) Marriage is void (incestous, bigamous or invalid)

3) Spouse procured outside NY a final decree of judgment of divorce, annulment or dissolution that is NOT VALID in NY.

4) A final decree of separation, valid in NY, rendered against the spouse, that is in effect when the decedent dies.

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DISQUALIFICATION OF SPOUSE

CONTINUED

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5) The spouse abandoned the decedent up to and including the time death

6) The spouse failed in his duty to provide for the deceased spouse even though he had the means to do so.

Surviving spouse loses all STATUTORY RIGHTS, intestacy, right of election, inhering exempt assets, no damages for wrongful death lawsuit.t

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REVOCATION BY DIVORCE

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If, after executing a will, the testator gets

(a) divorce

(b) annulment

(c) dissolution on grounds of absence

(2)It revokes any disposition or appointment to the former spouse.

(Stocks and bonds, will, life insurance policy, pension plans, totten trust, power of appointment, nomination to serve as fiduciary.

(3)Unless the will expressly provides otherwise

(4)And the provisions of the will take effect as such former spouse had predeceased.

(5) If revocation solely by this section, revival shall occur only on remarriage.

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NON-MARITAL CHILDREN

MATTER OF HOFMAN

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The word issue standing alone, when appearing in a will, should be construed to refer to biological and non-marital children alike, in the absence of an express qualification by the testatrix.

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NON-MARITAL CHILDREN

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A NMC is a legitimate child of the mother.

A NMC is a legitimate child of the father for inheritance purposes if:

a) Order of filiation.

b) M and F expected and file a acknowledgment of paternity.

(c) Instrument of paternity signed by the father, signed before witnesses and a notary, filed within 60 days and the Dept of Social Services send a written notice in the mail to the mother. (Putative Father Registry)

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NMC: Continued

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(d) The paternity has been established by clear and convincing evidence through a DNA test or

the father has open and notoriously acknowledged the child as his own.

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ADOPTED CHILDREN

(DEFAULT RULE)

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EPTL:

Unless otherwise express, property to persons described as issue,distributes includes adopted children and their issue in their adoptive relationship.

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ADOPTED CHILDREN

DRL 117

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After the making of an order of adoption

(a) The birth parents shall be relieved of all parental duties, responsibilities, and rights by intestacy

(b) the rights of an adoptive child to intestacy from and through his birth parents shall terminate.

(2)The adoptive parents and child shall have the legal relation of parent and child including all the rights, responsibilities, and duties of that relation, including intestacy.

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DOMESTIC RELATIONS LAW 117

CONTINUED

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(3) When a birth or adoptive parent, having lawful custody of a child, marries, or remarries and consents that the stepparent may adopt such child, such consent shall NOT change her parental duty or rights of such consenting spouse and such adoptive child to intestacy

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DOMESTIC RELATIONS LAW 117

INTERFAMILY ADOPTIONS EXCEPTION

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IF:

(a) the decedent is the adoptive child's birth grandparents or is a descendant of such grandparents, and

(b) an adoptive parent:

(i) is married to the child's birth parent,

(ii) is the childs birth grandparent, or

(iii) is descended from such grandparent,

the rights of an adoptive child to intestacy from and through either birth parents SHALL NOT TERMINATE upon the making of the order of adoption.

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EXCEPTION CONTINUED

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(5) However, an adoptive child who is related to the decedent both by BIRTH and ADOPTION shall INHERIT only under the BIRTH relationship unless the decedent is ALSO the adoptive parent, in which case the child shall inherent pursuant to the ADOPTIVE relationship only.

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MATTER OF BEST

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Court held that the non marital child that was given up for adoption was not an issue entitled to property under the trust.

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ANTI-LAPSE

(DEFAULT RULE)

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Whenever a testamentary disposition is made to SPECIFIC ISSUE or BROTHER AND SISTER

and such beneficiary dies before the testator, leaving issue surviving the testator

Such disposition does not lapse but vests in such surviving issue, by representation.

The provisions apply to class gift unless it is to "issue" or "descendants"

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ANTI-LAPSE

CONTINUED

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No benefit shall be conferred hereunder upon the surviving issue of an ancestor who died before the execution of the will in which the disposition to the class was made.

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RESIDUE OF A RESIDUE

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(1) Whenever a testamentary disposition of property of 2+ or more residuary beneficiaries

(2) are ineffective in part

(3) as of the date of the testators death, and

(4) anti-lapse does NOT apply to such ineffective part

(5) Nor has an an alternative disposition been made in will,

(6) such ineffective part shall pass to and vest

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(a) in the remaining residuary beneficiary, or

(b) In such beneficiaries, ratably, in the proportions that their respective interests bear to the aggregate.

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RESIDUE OF A RESIDUE FOR TRUSTS

2-1.15

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Whenever the remainder of a lifetime trust or a testamentary trust passes, whether outright or in further trust, to 2 or more beneficiaries, and such remainder is ineffective in part of no effective alternative disposition has been made in the governing instrument , such part shall pass to the other designated beneficiary, if there are 2 or more then in proportion to their shares in the principal bear to the total of the interests of each designated person in such principal.

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ADVANCEMENTS

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(1) An advancement is

(a) an irrevocable gift

(b) intended by donor as an anticipatory distribution

(c) in complete/partial satisfaction of interest in donor estate; either as:

(i) distributee in intestacy or as beneficiary under existing will.

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ADVANCEMENTS (II)

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(2) No advancement shall affect distribution of estate unless proved

(a) by a signed writing contemporaneous therewith (within a couple days) evidencing his intention to make it an advancement, or

(b) by donee acknowledging that such was the intention.

(3) When proved, the advancement is part of estate of donor for purposes of distribution.

(a) if equal or greater than interest of donee, done/successor in interest MAY not share in distribution.

(b) when less than share/interest, donee/sucessor in interest may take his share rescued by the amount of advancement.

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ADVANCEMENTS (III)

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Unless otherwise directed,

An advancement may be adjusted OUT of property as may be equitable

The advancement shall have value at which it is appraised for estate tax purposes, or if not included in the gross taxable estate, what it would have been appraised if included therein (FMV at death).

Nothing shall increase or decrease SROE except as authorized as a testamentary substitute.

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SIMULTANEOUS DEATH

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Where, under (intestacy and by will) the title to property or the devolution of property depends on the individuals survivorship of the death of another individual, an individual who is not established by clear and convincing evidence to have survived the other individual by 120 hours is DEEMED TO HAVE PREDECEASED the other person.

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Where a disposition of property under a governing instrument

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Depends on the time of death of 2 or more beneficiaries designed to take alternatively by reason of surviving an event including the death of another individual, and

it is not established by CC evidence that such benefices have survived by 120 hours, the property shall be divided into as many equal parts as there are alternative beneficiaries.

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EXAMPLE OF THIS

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Grantor created a trust to pay income to A and B while they are both alive, remainder to the survivor, A and B die within 120 hours of each other, their estates would share their remainder.

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SIMULTANEOUS DEATH AND JOINT PROPERTY

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Where it is not established by CC evidence that 1 or 2 co-owners with rights of survivorship survived the co-owner, 1/2 of the property passes as if 1 had survived the other by 12 hours and 1/2 as if the OTHER had survived by 120 hours.

Where 2 or more co-owners, no CC of 120 hours, then property cases in proportion that one bears to the whole number of owners.

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SIMULTANEOUS DEATH

"GOVERNING INSTRUMENT"

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Deed, will, trust, insurance or annuity policy, Totten trust, TOD, pension, profit-sharing, retirement, or similar benefit plan, instrument creating or exercising a POA or POAttorney, or a dispositive, appointive, or nominative instrument of any similar type.

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JANUS CASE

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Couple returning from honeymoon both took poisonous tylenol, husband is pronounced dead at arrival, wife surveys for 2 days. The wife survived the husband and her family gets everything.

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JOINT AND MUTUAL WILLS

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Joint Will: A single instrument by two persons, that they intend to operate as the will of each. It is probated twice.

Mutual Wills: Separate wills executed by 2 persons containing similar and reciprocal provisions.

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EPTL 13-2.1

Agreement involving a K to Create Trust, To Make a testamentary provision of any kind

(Trust and Estate SOF)

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A contract to make a joint will, or not to revoke a joint will, can be established only be an express statement in the will that the instrument:

- is a joint will

-that the provisions are intended to constitute a K between the parties.

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DUE EXECUTION OF A WILL

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Who may make a will?

Every person over 18 years old who has testamentary capacity may make a will.

What property may be disposed of a by a will?

Any every estate in property.

Who may receive property under a will?

Anyone who has capacity to acquire and hold property.

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FORMAL REQUIREMENTS OF THE EXECUTION AND ATTESTATION OF WILLS

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Every will must be in writing, and executed and attested in the following manner:

1) signed at the end by the testator, or signed in his name by another person, in his presence and at his direction.

(a) if there is writing after the testators signature ate time of execution, will not invalidate the writing appearing before the signature, Except if ct:

(i) will incomplete with out; or (ii) to give effect to writing before the signature would be against the testators intent.

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FORMAL REQUIREMENTS

CONTINUED

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(b) No effect will be given to any writing after the signature in the will or subsequent in time to the execution.

(c) Person who signs for testators must sign his own signature and addressed and DOES NOT COUNT as valid attestation witness.

(2) The testator should sign or acknowledge his signature in the presence of the witnesses

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FORMAL REQUIREMENTS

CONTINUED

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(3) the testator shall at some time during the ceremony declare to reach witness that the instrument bearing his signature is his will (Publication Rule) (proves intent)

(4) There shall be at least 2 attesting witnesses, who shall within 30 days, both attest to the testators signature, and at the request of the testator, sign and affix their addresses to the end of the will.

(5) No specific order needed.

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NUNCUPATIVE AND HOLOGRAPIC WILLS

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Nuncupative (oral) will needs to bet established by 2 witnesses.

Holographic (written entirely in the testators hand) and not executed under 3-2.1

Only valid if the person is a member of the armed forces during war, a civilian who served alongside the armed forces, a mariner while at sea.

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When do the nuncupative will and holographic will become invalid?

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After 1 year of the persons discharge from service.

If made by a manner, 3 years after the will was made.

If the testators loses capacity, the length of time before invalidity tools until 1 year after he regains capacity.

These wil late subject to other provisions, provided that they are applied consistently with their character.

(See revocation of wills, these can be used to revoke a properly executed will under 3-2.1)

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Matter of Stride

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Anything below signature is not valid.

Anything above is valid.

If wife and husband accidentally signed each others wills, Court accepted the will because there was substantial compliance and the court limited its decision to these facts.

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SCPA 1406

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Any or all of the attesting witnesses to a will may at the request of the testator or after his death, at th request of the executor, make a notarized affidavit of the uncontradicted facts to establish the genuine of the will, the validity of its execution and that the testators at the time of execution was in all respects competent to make a will and not under any restraint.

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OBJECTIONS TO SCPA 1406

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A party entitled to process in the proceeding raises objection there to or

for any other reason the court may require that the witness or witnesses be produced or examined.

2) The exhibition to the witness can be a court certified photo of the will is the same as the original will.

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WITNESS BENEFICIARIES

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(1) An attesting witness who is also a beneficiary under the will is competent witness subject to:

(a) any such disposition is VOID unless there are 2 other attesting witnesses to the will who were not beneficiaries were present.

(b) subject to (1) any disposition is effective unless the will cannot be proved without testimony of such witness, in which the disposition is void.

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EFFECT OF VOID DISPOSITION

IF INTESTATE DISTRIBUTEE, DISPOSITION SAVED IN THE FOLLOWING WAY

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(3) Any attesting witnesses share that is void, is entitled to receive so much of his INTESTATE SHARE as does not exceed the value of the disposition in the will.

(4) Share recovered as follows:

If voided disposition goes to the residuary: from there only (disposition is pre-residuary)

If it passes in intestacy: ratably from the distributes who succeed to such interest.

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TESTAMENTARY CAPACITY

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Ever person 18 years or over, of sound mind and memory, may by will dispose of real and personal property and exercise a power to appoint such property.

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TESTATOR REQUIREMENTS

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Must understand what he owns

Must understand what persons are the objects of his bounty

Must know what your will provides. Must know how these things relate to each other.

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UNDUE INFLUENCE

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If wrongdoer exerted such influence over the testator that overcome the testators free will and and caused him to make a will that testator otherwise wouldn't have made.

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DURESS

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IF wrongdoer threatened to perform or did perform a wrongful act that coerced testator into making will that testator otherwise wouldn't have made.

Presumption:where there is a confidential relationship, jury is permitted to draw an inference.

NY: Inference can only be drawn if can show a confidential relationship and some other factors:

Susceptibility, opportunity, character of accused, and results.

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LAWYERS AS BENEFICIARIES/EXECUTORS

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As Beneficiary: if an attorney both drafts the wills and receives something from it, there is a presumption of undue influence.

As Executor: Executor has the right to hire an attorney, Attorney would get testator to name him as executor, he would do both, and makes enormous amounts of money.

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SCPA 2307-a

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(1) Disclosure: When an attorney prepares a will and is an executor-designee, the testators SHALL be informed prior to the execution of the will that :

(a) anyone can be an executor, including an attorney.

(b) every executor is entitled to statutory commissions

(c) attorney performing executor work is entitled to just and reasonable compensation for those legal services as well.

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SCPA 2307-a

TESTATORS WRITTEN ACKNOWLEDGMENT OF DISCLOSURE

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(a) set forth in writing

(b) executed by the testator

(c) in the presence of at least 1 witness other than the designee-executor.

(d) must be separate from the will (may be annexed to it) can be executed prior, with, or after the will, AND must be filed with the court proceeding for the issuance of letters of administration.

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SCPA 2307-a

Effect of Absence of Disclosure

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Absent compliance with the listed requirements, the commissions of an attorney who serves as an executor shall be 1/2 the statutory commissions to which such attorney as executor would otherwise be entitled to.

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FRAUD

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If wrongdoer knowingly or recklessly made a false representation to testator about a material fact that was intended to (cause reliance) and did lead testator to make will that he would not have had otherwise made.

A) Lie B)Teller must know it is fake c)Liar has to intend to testator to rely on it d) he does rely.

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TWO TYPES OF FRAUD

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Fraud in the Execution:Occurs when testator is defrauded about the nature and content of the documents that they are signing

Fraud in the Inducement: When testators are intentionally misled into forming a testamentary intention that they would not have otherwise have formed.

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REVOCATION OF WILLS

*A revocation can only happen in this manner:

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(a) A will or any part thereof may be revoked/altered by writing:

(i) Another will

(ii) A writing of testator clearly indicating intention to effect such revocation nor alteration, executed with will formalities.

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REVOCATION BY ACT

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(b) A will may be revoked by act which revokes the entire will.

(i) An act of burning, tearing, cutting, cancellation, obliteration, or other mutilation or destruction performed by

(A) Testator

(B) Another person in presence and by direction of testator proved by 2 additional witnesses

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REVOCATION AND NUNCUPATIVE AND HOLOGRAPHIC WILLS

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If you are allowed to have these type of wills, then you can revoke or alter by the same type of declaration or alteration BUT

For N wills: must be clearly established by 2+ witnesses.

For H wills: must be entirely written in the hand of the testator.

Revocation of a will, revokes all codicils thereto.

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DULY EXECUTED WILL AND REVOCATION AND NUNCUPATIVE AND HOLOGRAPHIC WILLS

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NYEPTL 3-4.1(b) states:1. Willmay be revoked or altered by a nuncupative or holographic declaration ofrevocation2. Butit must be made in circumstances provided by 3-2.2b. Anyrevocation of a will revokes all codicils made with respect to that will

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What happens if a will is lost or destroyed?

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i. IMPORTANT PRESUMPTION: 1. If testator has possession of their own will 2. And that will is missing when the testator dies 3. There is a REBUTTABLE PRESUMPTION that the testator destroyed the will with the intention of revoking it

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SCPA 1407 Proving a Lost Will

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1. Prove that the will has not been revoked

2. Execution of the will is proved in manner required for probate of an existing will

3. All provisions of will and clearly and distinctly proved by each of

a. at least two credible witnesses

b. or by a copy of draft of will, proved to be true and complete

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MATTER OF TOLIN

Back 65

Tolin tears up a photocopy of his will, believing it was the original ii. Court holds that this is not a valid attempt to revoke 1. If this was in NY: a. Assume that Tolin made a codicil to his will, and he tears up that codicil. This would be sufficient under 3-4.1 to revoke the codicil, and keep the original will “as is”

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GILBERT CASE

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Two wills in question, one holographic and one was a formal will. Regular will was earlier in time. Holographic will just tried to revoke $50,000 in safe. Court held that this did not revoke the will just supplant it. This was informal and unlikely to revoke 8 pages will.

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REVIVAL OF REVOKED WILL

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(1) If after executing the will the testator executes a later will which revokes or alters the prior one, a revocation of the later will does not, of itself, review the prior will or any provision thereof.

(2) A revival of a prior will or of one or more of its provision may be effected by:

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REVIVAL EFFECTED BY

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(a) the execution of a codicil which in terms incorporates by reference such prior will or 1 or more of its provisions

(b) A writing declaring the revival os such prior will or 1+ of its provisions, which is executed with the normal will formalities.

(c) A republication of such prior will, requiring re-execution of all the normal will formalities.

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STOECKLEIN CASE

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Wrote in the margin saying that the will is void, did not touch any words of the will, NOT A VALID REVOCATION. That is not enough to revoke the will and there allows no witnesses present.

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DEPENDENT RELATIVE REVOCATION

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Imposesa condition on testator’s act of revoking a will. Courtdetermination

1. Purposeis to come close to actual intention2. Willlet the person die testate in situations where court believes the testatorwould have preferred the revoked instrument to dispose of testator’s property,rather than for testator’s estate to pass by intestacy or under a differentwill iii. “LAWOF SECOND BEST”

1. Individualwill get their second best-choice of how they wanted their estate to pass in awill (because their first choice is invalid for some reason)

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DRR ANALYSIS

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1)Did testator clearly revoke Will #1?2)Did testator revoke Will #1 on the assumption that Will #2 would substitute for it, but it did not in fact substitute for it ? ( You ask: was testator disappointed in that assumption?) 3) Would testator have preferred Will #1 to intestacy? IF YES to all three, DRR Applies.

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SENECAL CASE

(APPLIES TO SECOND STEP IN ANALYSIS)

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"cancel will with intent tomake a new one as a substitute, and that new one is not made, or fails ofeffect for any reason”

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CONDITIONS ON WILL

CONDITIONS QUALIFYING DISPOSITIONS

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A condition is operative despite the testator failing to provide alternative fight to take effect upon the breach or non-occurrence of such condition.

IN TERRORUM CLAUSE Condition designed to to prevent disposition from taking effect in case the will is contested by the beneficiary is OPERATIVE despite presence or absence of probable cause

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EXCEPTIONS TO IN TERROREM CLAUSE

(No Contest Clause)

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1. A contest that the will is a forgery or revoked by later will. (Contesting forgery, not that the will was fraud or undue influence).

2. Infant/incompetent may affirmatively oppose probate.

3. Objections to jurisdiction of court for probate

4. Disclosure to parties/court of any info relating to document offered for probate as will.

5. Refusal to join in petition for probate.

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SCPA 1404

SAFE HARBOR EXCEPTION

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(a) Allows for the examination of proponents witnesses, person who prepared for the will, nominated executor, any person who with court approval who has info about the validity of the will that is SUBSTANTIAL AND RELEVANT.

(b) Any person whose examination the Ct determines may provide info about validity of the will that is of substantial import or relevance to a decision to file objections to the will.

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Who can you question under the In Terrorem Clause?

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1. Personwho prepared the will

2. Attestingwitnesses

3. Nominatedexecutors

4. Proponentsof the will

5. Andany person court feels has information that is “substantial and relevant”

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EFFECT OF CONTESTATION

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If contestation is effective, the will is revoked and the contestant might take under a prior will, or under intestacy. If contestation in ineffective, the contestant loses his share and the share passes in intestacy of it is a residuary share, or to the residuary share if not in residuary share.

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DISCRIMINATORY CONDITION

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You cannot have a discriminatory scenario when there is STATE action. (Evans Case)

BUT Wilson case: court allows discrimination to continue, charitable gifts that provided scholarships for men only. Ct used Cy Pres Power to change the gift to allow men and own to receive scholarships, because it did not comport with the original charitable intention.

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Cy Pres Power

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Court has the power to change the terms if the will or trust, if the testators original charitable purpose fails.

Reform charitable fit in a way that best purpose with original intention of testator.

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Invidious Discrimination

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Court will only remove discrimination from a charitable gift if its constitutes INVIDIOUS DISCRIMINATION

Lockwood Case- Ct was correct in application of its cy res power removing white as a qualification for a scholarship.

RACE IS INVIDIOUS

GENDER IS NOT INVIDIOUS U of Delaware Case.

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DISCRIMINATORY CONDITION

Back 81

Look at the testamentary intent

1. If there is discrimination - any state actor involved in the fulfillment of the condition can remain.

2. If there is discrimination - state actor MUST be removed.

3. If there is invidious discrimination- then the court will have to remove the discriminatory clause.

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CATEGORIES OF DISPOSITIONS

SPECIFIC DISPOSITION

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Disposition of a specified or identified item of the testators property.

Key Term to Remember "MY"

RULE: If you own anything at the time that first the description, it will still passed in a specific gift.

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GENERAL DISPOSITION

Back 83

A general disposition is a testamentary disposition of property not amounting ti a demonstrative, residuary or specific disposition.

"$10,000 to X"

"10,000 shares of XYZ Co to X" this is a general amount of property, so its a general disposition."

"I got $10k to Alvin" Still general, outright $ gift.

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DEMONSTRATIVE DISPOSITION

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Testamentary disposition of property to be taken out of specified or identified property.

Usuallya specified amount of money or quantity of property, primarily payable from adesignated source, but is secondarily payable from the general assets of theestate to the extent that the primary source is insufficient

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How to identify a demonstrative gift?

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1. Generalbequest

Remember theremust be a specific amount listed in the general bequest, using a phrase such as“the money from the sales proceeds” is NOT ENOUGH

2. Fundout of which you pay it.

"100 shares of Google of out my Lynch Account"

"10k out of the proceeds of the sale of my condo"

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Residuary Devise

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Testamentary disposition of testators net probate estate not disposed by a specific, general or demonstrative devise.

"My entire state to X"

"I give the rest residue and remainder of my estate to John"

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WHAT CAN THE TESTATOR DISPOSE OF IN HIS WILL

Back 87

What can the testator dispose of in his will?

What a testamentary disposition includes

Unless will provides otherwise

Disposition by testator passes all of the property he was entitled to dispose of at the time of his death.

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ADEMPTION BY EXTINCTION RULE

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Ademption is specifically bequeathed property is not in the testators estate at his death, the bequest has deemed (meaning its has failed).

1. if specifically bequeathed property is not owned by the testator at death, the gift fails.

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ESTATE OF HUME

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House in a foreclosure sale, there was a surplus amount froth foreclosure. Subject of the gift had sufficiently changed form so the person who was going to get the house now gets nothing. Shows the IDENTITY THEORY of ademption.

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IDENTITY THEORY

Back 90

Ademption depends solely on whether the subject matter of a specific devise exists as part of the testators estate at death, and the testator's intent concerning the continued validity of the devise is irrelevant.

** Except in cases where the rule has been changed by statute, NY applies this common law doctrine**

Front 91

INTENT THEORY

Back 91

Ademption depends on the testators subjective intent, determined on a case by case basis.

Front 92

ANTI-ADEMPTION STATUTES

INSURANCE PROCEEDS FROM A SPECIFIC

DISPOSITION

Back 92

1.Disposition if property, specifically given to someone else.

2. Insurance paid TO THE EXECUTOR of ESTATE after the person's death

3. Those proceeds retain the character of the specific gift, and are payable by executor to the named beneficiary.

REMEMBER: the insurance proceeds must go to the estate. The testator cannot get the proceeds himself, then save the proceeds to give for the named beneficiary whose gift adeemed.

Front 93

Conveyance of Property of an Incompetent/

Conservatee

Back 93

Trigger: Testater had to sell the specific gift to someone in order to take care of themselves.

Front 94

RULE of Conveyance of Property of an Incompetent/ Conservatee

Back 94

In the event of a sale or transfer of a gift during the lifetime of the testator.

Beneficiary of such specific disposition becomes entitled to receive any remaining money or other property into which the proceeds from such sale or transfer may be traced.

Front 95

AGREEMENT TO CONVEY PROPERTY PREVIOUSLY DISPOSED OF BY WILL

3-4.2

Back 95

Trigger:

Testator makes a specific bequest in a will.

Then makes a K to sell the property named in that specific bequest.

Effect:

This K does not revoke the gift.

Property still passes to named beneficiary.

Subjet to whatever rights were created by such agreement.

Front 96

ALTERED PROPERTY

Conveyance, Settlement, or Other Act Affecting Property Previously Disposed of BY Will

EPTL 3-4.3

Back 96

Triggering Condition: Alteration of a piece of property that you have made a specific gift of.

Rule:

1. Property that has been conveyed by will

2. That is altered but not wholly divested of

3. Does not revoke the disposition

4. What remains of property passes to beneficiaries in the conveyance

5. BUT > if act of testator is wholly inconsistent with such previous testamentary disposition the gift is revoked.

Front 97

MATTER OF MARCIA

Back 97

H made a will leaving property to W. Then H and W enter into a separation agreement, not officially divorced yet, then H died during the divorce process. Is the prior gift that H made to W revoked, despite the fat that the divorce was not final yet?

Court says the act of entering into a separation agreement in this was NOT WHOLLY INCONSISTENT with the bequest to the other spouse.

CT Upheld the Will: in the sep agreement they only gave up rights by operation of law or otherwise, and right under a will are NOT included in this.

Front 98

EFFECT OF DIVORCE AND ADEMPTION

Back 98

Remember that divorce REVOKES any revocable transfer of property in a governing instrument from 1 spouse to the other spouse. If a bequest is made to a spouse, and then there is a subsequent divorce, divorced spouse IS NOT ENTITLED TO ANYTHING .

Front 99

ENCUMBRANCES ON PROPERTY ARE NOT CHARGEABLE AGAINST ASSETS OF THE

DECEDENTS ESTATE

EPTL 3-3.6

Back 99

General Rule:

Where any property at the time of decedent's death

Is subject to a lean or charge

The PR is NOT RESPONSIbLE for the satisfaction of such encumbrance out of the property of decedents estate.

UNLESS the testator expressly says so in a will.

Front 100

WHO ARE THE ENCUMBRANCES CHARGE AGAINST?

Back 100

1. Any encumbrance is "chargeable against the property of the decedent or the proceeds of a policy of insurance on the life of the decedent"

a. Beneficiary who received the property does not have any personal liability for the payment of the debt secured by the encumbrance.

b. BUT > if that person wants to take that property and keep it, then they need to assume the lien.

Front 101

RULE FOR ENCUMBRANCE AGAINST MULTIPLE PROPERTIES OR AGAINST PROPERTY PASSING TO 2 OR MORE PERSONS

Back 101

PROPAGATE SHARE

(c) If a lien encumbers:

a. against property passing to 2 or more persons

(then interest of each personal bears its proportionate share of total encumbrance

b. two or more properties

(each property shall bear its proportionate share of total encumbrance.

Front 102

ABATEMENT

Back 102

When the amount in the state is not large enough to both pay the debts of the estate and the legacies in the will.

Front 103

ASSETS CHARGEABLE WITH PAYMENT OF ESTATE OBLIGATIONS

Back 103

All property of a decedent is chargeable with the payment of:

(i) Administration and reasonable funeral expenses

(ii) Debts of decedent

(iii) Any taxes for which the estate is liable.

When the property is INSUFFICIENT to satisfy both the estate obligations and all dispositions under will, the estate ABATES, in this manner:

Front 104

CONTINUED

Back 104

i. Distributive shares in intestacy.

ii. Residuary dispositions.

iii. General Dispositions: Includes a DEMONSTRATIVE if that disposition has deemed (no longer exists at the time of testators death)

iv. Specific Dispositions: Includes a DEM disposition if the property has not DEEMED.

Any disposition to a surviving spouse that qualifies for the estate tax martial deduction.

Front 105

CONTINUED

Back 105

Order of abatement SHALL NOT apply to the payment of an estate or death tax.

Front 106

PROCESS TO DETERMINE ABATEMENT

Back 106

1) Determine the net estate.

2) Remove the reasonable funeral expenses off the top.

3) Determine the types of gifts given to the named beneficiaries.

Front 107

THE ORDER THAT PROPERTY ABATES

Whenever such property is insufficient to satisfy the above and all dispositive under the will the property abates as follows:

Back 107

(a) distributive shares not disposed of by will (intestate and invalid distributions)

(b) Residuary

(c)General (demonstrative are treated as general the property has adeeemed)

(d) Specific Dispositions and any income derived therefore ratably, in accordance with the value of the respective interests of beneficiaries. (Demon are specific if the prop/fund is still there)

(e) Any bequest subject to marital deduction

Front 108

INCORPORATION BY REFERENCE

Back 108

Permits incorporation into the will of unattested documents not present at the time the will was executed. Although the extrinsic writing was not present at the time the will was elected, and physically part of it, the clear references to it in the will satisfies the execution and attestation requirements.

Front 109

NEW YORK DOES NOT HAVE INCORPORATION BY REFERENCE

Back 109

NY Rule is that you cannot incorporate something into your will unless it follows the proper requirements of 3-2.1 (statute of wills).

Front 110

POUR OVER TRUST

(the exception for living (lifetime trusts)

Back 110

A testator may by will dispose of or appoint all or any part of his estate to a trustee of a trust

In a written instrument

Executed by the testator

Or by the testator and another person

provided that the instrument is executed in the proper manner for the execution of trusts, prior to or contemporaneously with the execution of the will.

And the instrument is identified in such will.

Front 111

EXCEPTIONS

Back 111

Trust instrument is valid, even thought:

a. Trust is amendable or revocable

b. Grantors Right reserved in trust instrument to:

i. exercise power over property transferred to or held in trust or

ii. to direct during lifetime of settlor or nay other person, the persons whose the income shall be paid or principal distributes.

C. trust not executed in accordance with the state of wills.

Front 112

POR OVER TRUST RULE

CONTINUED

Back 112

All property put into the trust becomes a part of the trust, and title vests in the trustee.

If the disposition or appointment to the trustee fails because the testator died before the effective date of the statute: a testamentary trust is created under and in accordance with the terms of the trust instrument.

If the trust is revoked or terminated before the the death of the testator, the disposition or appointment will fail. UNLESS if there is an alternative disposition made by the testator.

Front 113

BENEFITS OF USING A POUR OVER TRUST

Back 113

Good probate avoidance device, trusts are non probate asset.

Avoid giving the laughing heir, because you dont have to notice the heir when it is a trust.

Front 114

FACTS HAVING INDEPENDENT SIGNIFICANCE

Back 114

The meaning of a dispositive or other provision in a will may be supplied or affected by an external circumstance referred to in the will, unless the external circumstance has not significant part from its effect upon the will.

Front 115

What does this mean?

Back 115

A will may provide that a beneficiary or the amount of disposition will be determined by some future unattested act occurring at the wills execution. These provisions are valid, only if the future act has some lifetime significance other than providing for the testamentary disposition.

Front 116

EXAMPLES

Back 116

Hypo 1: I leave $ to whoever is mycleaning lady at my death – OK because you’re not apt to change cleaning ladyto manipulate will. Hypo 2: I give $ to the last person that I give a flower – not OK because its veryeasy to manipulate this.

Hypo 3: I give to A my bureau and its contents – Book says OK but prof wonders.

Front 117

RENUNCIATIONS

(applies both to wills and intestacy)

Back 117

Allows you to no have to accept property that you do not want. Enables you to pass it to someone else as if you had never owned the property. Might be for a tax reason, or want your child or whoever to inherit the property. Also might be a problem if you have creditors at your doors.

Front 118

RENUNCIATION OF PROPERTY INTERESTS

2-1.11

Back 118

Authorizes a beneficiary or distributee to renounce or disclaim an interest that otherwise would pass to that person from the decedent or the decedents estate. Final result is that the property passes as though the disclaiming party had predeceased the decedent.

Front 119

PROPERTY DISPOSITION INCLUDES

Back 119

a. Under a will or trust agreement.

b. POA

c. Distribution because of a POA.

d. Intestacy Shares.

e. Life Insurance Polcy.

f. Operation of Law, Joint Tenancy or Tenancy by Entirety.

g. Pension, retirement, death benefit, stock bo.

h. Any other transfer by op of law, test, or non te

Front 120

EFFECTIVE DATE OF DISPOSITION

( the date that the person must renounce)

Back 120

9 MO's from the date of decedent if the disposition is created by:

1. Will

2. Testamentary power

3. Distribution by intestacy.

4. Deposit of money in a trust account

5. Life Insurance

6. Death of joint tenant or tenant in the entirety.

Front 121

EFFECTIVE DATE OF DISPOSITION

CONTINUED

Back 121

9 MO's from date of creation or exercise, if disposition is:

1. Created by trust agreement.

2. Exercise of a presently exercisable POA

3. Creation of a joint tenancy or tenancy by the entirety.

FUTURE ESTATES: from the date it becomes an estate in possession.

Front 122

WHO IS ALLOWED TO RENOUNCE?

Back 122

The general rule is that any beneficiary of a disposition may renounce either in whole, the entire gift, or in part (wife can renounce the income interest and get the corpus of the trust)

Front 123

THE RIGHT TO RENOUNCE IS ALSO GIVEN TO:

Back 123

1. Guardian of the property of an infant (ct permission needed)

2. Committee of an incompetent

3. Conservator of a conservative

4. Guardian appointed under MHL 81.

5. Personal Representative of a decedent.

6. Attorney in Fact.

Front 124

PROCEDURES REQUIRED TO RENOUNCE

Back 124

i. Renunciation must be in writing ii. Signed and acknowledged by the person renounced. “acknowledged” means to be notarized by a notary public iii. Filed in office of clerk of court having jurisdiction iv. Must also include an affidavit of the renouncing party that the renouncing party has not received and is not going to receive any consideration for the renunciation (unless it has been authorized by the court)

Front 125

WHAT IS THE GENERAL RULE IF SOMEONE RENOUNCES A PROPERTY INTEREST?

Back 125

If the will has a statement that says "no acceleration" a person can renounce but the gifts do not accelerate.

Renunciation has the effect with respect to renounced interest as though the renouncing person had predeceased creator or the testator.

Front 126

WHAT EFFECT?

Back 126

Shall have the effect of ACCELERATING THE POSSESSION AND ENJOYMENT OF SUBSEQUENT INTERESTS.

No effect on the vesting of a future estate.

NOTE: that anti-lapse is likely to apply in these situations be careful to notice the relationship between the decedent and the named beneficiary who is renouncing in the will.

Front 127

A RENUNCIATION DOES NOT AFFECT THE SHARES OF OTHER DISTRIBUTEES

Back 127

RULE: Ifthere would occur a per stirpes disposition of renounced interest ordistribution by representation, renouncing person is treated as having died ONTHE SAME DATE, BUT IMMEDIATELY AFTER THE CREATOR OR DECEDENT

Front 128

FUTURE ESTATES AND RENUNCIATION

Back 128

Renunciation shall have no effect upon the vesting of a future estate which by the terms of the disposition is limited upon a preceding estate other than the renounced interest.

If someone has a present and future interest and they renounce the present interest the future interest is also renounced EXCEPT FOR SPOUSE.

Front 129

SPOUSAL RULES UNDER RENUNCIATION

Back 129

A renunciation by a surviving spouse of a decedent of a disposition created by said decedent SHALL NOT be deemed to be a renunciation by such spouse of all or any part of any other disposition in favor of such spouse.

NOTE: you can renounce a bequest subject to creditors.

Front 130

PRESUMPTION OF DEATH

Back 130

A person who is absent for a continuous period of 3 years, during which, after diligent search, he has not been seen or heard of, and whose absence is not satisfactorily explained, shall be premised, in any court proceeding concerning property/estate to have died 3 years after the date such unexplained absence commented or on such earlier date as CC Evidence establish as date of death.

Front 131

EXCEPTION

Back 131

Three years will not apply if statute says otherwise, the fact that such person was exposed to a specific peril of death may be a sufficient basis for earlier date of death.

Front 132

MURDEROUS HEIRS

Back 132

RIGGS GENERAL RULE

You cannot profit from your own wrong, i.e. you cannot profit from

Front 133

NY COMMON LAW

Covert

Gulbrandsen

Back 133

Covert Case: Court held that Riggs doctrine nullifies any an all bequests from wife to him. But, he still maintains an interest in an already-vested property- he does not forget his own property.

Gulbrandsen: Wife killed H, house was held in entirety, C treated Wife as predeceasing H but cannot deprive W of her interest in the house. The Court computed the W life estate in the property.

Front 134

DISQUALIFICATION OF JOINT TENANT

Back 134

A joint tenant convicted of a murder2 or murder 1 of another joint tenant shall not be entitled to any money in a joint bank account crated or contributed to by decedent except for this monies contributed to by the convicted joint tenant.

Civil Rights Law 79

Property that you already own outright, you do not have to forfeit.

Front 135

NEIMAN CASE

Back 135

Found the present value of the property at the time and tookhalf the value. It wasn’t because of the murder that he enjoyed one half ofthe house.If he would have predeceased her then you would be valuingon his life expectancy. How long would he have enjoyed the house before hedied. The court uses actuarial calculations. His share is $2,400 and the rest to the cancer fund.

Front 136

COVERT CASE

Back 136

Husband murdered his wife then committed suicide. If one died before the other it would go to one another orin the alternate to the parent and siblings. Are the parents and siblings of the husbands sidedisqualified.Husbands insurance and pension would go to the husbands own family.Jointly owned properties, property was split in half, half to each family. Each joint owner is immediately entitled to one half

Front 137

MATTER OF MATHEW CASE

Back 137

Husband killed the wife. There was a home. Court, : He is entitled to a life estate of one half of the house. Just like Neiman Case above.

Front 138

GULBRANDSON CASE

Back 138

Wife killed the husband. There was Joint property

Court: Cited Covert for the joint bank accounts Cited Mathew for The home, using commuted life estatetheory.

Front 139

MULTI JURISDICTIONAL ESTATES

DEFINITIONS

Back 139

Real property- land. estate in land, leaseholds, fixtures/mortgages, liens. Defined by local law where the land is situated.

Personal Property: everything besides real property.

Formal Validity: Formalities requirements.

Intrinsic Validity: Substantive law.

Effect: legal consequences of statutes.

Front 140

MULTI JURISDICTIONAL ESTATES

REAL PROPERTY

Back 140

Formal validity, intrinsic validity, effect, interpretation, revocation, or alteration of a disposition, and intestacy are all determined by the law of the jurisdiction in which the land is situated.

Front 141

MJE

PERSONAL PROPERTY

Back 141

Intrinsic validity, effect, revocation, or alteration of a disposition and intestacy are all determined by the jurisdiction in which the DECEDENT WAS DOMICILED AT TIME OF DEATH.

(formal validity and interpretation not here)

Interpretation of Personal property is determined by the jurisdiction in which the decedent was domiciled at the time of execution.

Front 142

CAN THE WILL BE EXECUTED IN NEW YORK?

Back 142

For personal property, whoever situated or real property in NY made in NY or outside of NY by a domiciliary or non-domiciliary IS FORMALLY VALID AND CAN BE PROBATED IF:

it is in writing, signed by the testator, executed ad attested in accordance with the law of: NY, jurisdiction where will was executed or jurisdiction in which testator domiciled.

Front 143

FOR WILLS OF PERSONAL PROPERTY

Back 143

If intrinsically valid under law of jurisdiction of testators domicile at time of will execution NOT AFFECTED by subsequent change in domicile of testator to jurisdiction where it would be intrinsically valid.

Front 144

INTERPRETATION OF WILLS

Back 144

Personal property, interpretation done with law of TESTATORS DOMICILE, at the time of WILL EXECUTION.

Front 145

EFFECT OF REVOCATION OR ALTERATION

Back 145

Will disposing of PERSONAL PROPERTY, revoked or alternated by subsequent instrument or physical act determined by law of JURISDICTION OF TESTATORS DOMICILE AT TIME OF REVOCATION.

Front 146

SPOUSAL RIGHT OF ELECTION

Back 146

FOUR STEPS

Spouse is entitled to take one third or $50,000

Look at testamentary substitutes to determine what is in the estate

Subtract the other things that the spouse gets absolutely

Look at beneficiaries who has to pay the spouse.

Front 147

SPOUSAL RIGHT OF ELECTION

RULE

Back 147

The spouse has a right of election to take a share of the decedent spouses estate.

The elective share is the pecuniary amount to the great or 50k or its less than that, the capital value of the estate of 1/3 of the net estate, the net estate DOES NOT include debts, administration expenses or funeral expenses.

Front 148

NET ELECTIVE SHARE

Back 148

The Spouse Elective Share MINUS the capital

value of any interest that PASSES ABSOLUTELY

(i) by intestacy

(ii) by testamentary substitute

(iii) by will

OR IS RENOUNCED

Front 149

INTERESTS THAT DO NO PASS ABSOLUTELY

Back 149

(i) less than the decedents entire estate in the property, or

(ii) any interest in a trust or trust equivalent created by the decedent.

Unless the D provides otherwise, the election shall have same effect with respect to any interest which passes or would have passed to spouse, other than absolutely, as though the spoused PREDECEASED the decedent.

Front 150

EFFECT OF CHOOSING TO ELECT

Back 150

Therefore, it will accelerate any remainder interest. This means that the spouse forfeits her non-absolute interests when she chooses to election against the will.

IF there is a trust of 100k to life for W and reminder to children, she could elect then accelerate the right to her children.

Front 151

TESTAMENTARY SUBSTITUTES

Back 151

1. Gifts Cause Mortis.

2. Aggregate transfers of property, made to the benefit of any person, and within the last year of D's life. (Must subtract 14 k tax)

3. Totten Trusts

4. Money deposited into joint bank accounts.

5. Jointly Owned Property

6. Revocable life time trusts

Front 152

TESTAMENTARY SUBSTITUTES

Continued

Back 152

7.Transfer of Security to a Beneficiary

8. Pension plans, Retirement, deferred compensation and profit-sharing plans.

9. Interest in property passing to benefit of a person subject to a presently exercisable power of appointment. (Must be done within 1 year before death).

Front 153

SEIFFERT CASE

Back 153

H create trust worth 800k, a new trust was to be carved to create a 150k trust to the wife, wife would receive the life interest in the trust, only to principal for medical purposes. Wife wants the trust to be part of net estate to elect against it.

Court holds that the TRUST is ILLUSORY and trying to avoid SRO, assets to estate to use for elective share.

Front 154

SET OFF EXEMPT PROPERTY

Back 154

If persons dies and leaves spouse or children under 21, the following items are not probated (creditors can't reach them) but vest in, and shall be set off to such surviving spouse (or children if there is no spouse)

Front 155

CATEGORIES OF EXEMPT PROPERTY

Back 155

1. All household items, <20,000.

2. Family heirlooms <2,500.

3. Domestic animals with food for 60 days, farm machine and tractors <20,000.

4. One car <25,000. If more than 1 car owned even if more than 35 k spouse can pick the one he wants and pay the difference to the spouse.

The spouse can elect to receive the value of the car not > 25,000.

Front 156

CONTINUED CATEGORIES OF EXEMPT PROPERTY

Back 156

If any car was a specific disposition in will, the payment to the estate of the amount by which the value of the car exceed 25k shall vest in the specific beneficiary.

5. Money or other personal property <25k.

6. No allowance for property that does not exist at the time of decedents death.

The term of value shall refer to FMV.

7. If a child is going to get a gift less than 10k, they can give it to the guardian or the parent.

Front 157

AFTER BORN CHILDREN

DEFAULT RULE

Back 157

Whenever testator during his lifetime or after his death, has a child born after the execution of a last will, dies leaving the after born child neither provided for nor mentioned in the will (can draft around this statute), every such child shall succeed to a portion of the testators estate as provided:

(a) if there is 1+ children living when testators executes the will.

Front 158

AFTER BORN CHILDREN

CONTINUED

Back 158

(i) if no child is provided for, then the after born gets nothing.

(ii) if at least one child is provided for, then the AB shares in the estate:

(A) His share is limited to the max disposition made to the other children

(B) He gets as he would have received had the testator included all after born children, and given an equal share of the estate to each child.

Front 159

AFTER BORN CHILDREN CONTINUED

Back 159

(C) If it appears that the testator's intention was to make a limited provision which specifically applied only to the children born before the execution of the will, the AB share in his intestate share.

(Apply only where there is a stated reason for disinheritance. Comes ratably from all will beneficiaries.)

Front 160

AFTER BORN CHILDREN CONTINUED

Back 160

(D) To the extent feasible, the afterborn's interest shall be of the same character as the interest conferred upon the other children.

(b) If there is no children living at the time of execution, the ab share in his intestate share.

(5) AB means born in testators lifetime or in gestation at his death and born after.

Front 161

AFTER BORN CHILDREN CONTINUED

Back 161

(6) The ab child may recover the share of the testators estate to which he is entitled, either from other children, or if none, from other testamentary beneficiaries, ratably out of the portions of such estate passing under the will.

(a) In abating the interests of such beneficiaries, the character of the testamentary plan adopted by the testator shall be preserved to the maximum extent possible.

Front 162

TAX APPORTIONMENT

Back 162

Whenever there appears that a fiduciary may be required to pay an estate tax, under the laws of any state, with respect to any property required to be included in the gross estate tax EXCEPT if the testator otherwise specifically directs in the will, or he does so by any instrument other than will, which only affects the taxes for the funds disposed of in that instrument.

Front 163

TAX APPORTIONMENT

Back 163

The taxes shall be equitably apportioned among the persons benefitted.

The taxable property shall be valued at FMV at time of death or 6 months later.

Front 164

HOW TAX IS APPORTIONED

Back 164

Unless otherwise provided in the in the will/non-testamentary instrument. Tax shall be apportioned among the persons benefitted

In the proportion that the value of the interest bears to total value of property.

EXEMPTIONS: Spouse and Charity.

Front 165

HOW TO UN-TRIGGER THE TAX BURDEN?

Back 165

1. Testator can specifically make a provision to avoid the tax.

2. Testator may also specifically request hat taxes be paid from 1 person, multiple people or from certain portions of the estate.

"Any direction as to tax relates only to the property passing thereunder, unless such will provides otherwise"

Front 166

RULES FOR THE APPORTIONMENT/

NON APPORTIONMENT OF TAXES

Back 166

Need a WILL, later in date than prior non testamentary instrument and that will contains a contrary direction that new direction will govern, IF there is a specific reference to the direction in the prior instrument.

Front 167

RULES FOR THE APPORTIONMENT/NON APPORTIONMENT OF TAXES

CONTINUED

Back 167

(d)(2)

Need a Non-Testamentary instrument, later in date than a prior will or non testamentary instrument, containing a contrary direction, that new direction shall govern, if there is specific reference to the prior will.

Front 168

SPECIAL CORRELARY TO NON-TESTAMENTARY INSTRUMENTS

Back 168

The direction of tax apportionment in a non-testamentary instrument only relates to the payment of tax from the non-testamentary property. CANNOY exonerate the non-testamentary property from the payment of tax.

Front 169

ATTORNEY INVOLVEMENT IN ESTATE TAX PROCEEDINGS

Back 169

When an attorney render services to estate or to its personal rep, resulting in exclusion from gross estate tax of any non-testamentary

property surrogate may asses against such property an equitable share of compensation for such legal services rendered to the estate or to its personal representative in proportion to the benefit received by such property or interest from such services.

Front 170

INTERPLAY BETWEEN TAX APPORTIONMENT AND THE ABATEMENT STATUTE

Back 170

When the amount of money in the estate will not cover BOTH the individual dispositions and the estate taxes.

FIRST- do the abatement, decide who gets what and whose gifts has abated.

SECOND- apportion the tax. Do the tax second base there are some people who may not have a benefit anymore and if so they cannot be taxed for something that they do not have.

Front 171

TRUSTS

Back 171

A trust is a fiduciary relationship with respect to property arising as a result of a manifestation of an intention to create that relationship, and subjecting the person who holds title to the property to duties to deal with it for the benefit of 1 or more persons at least one whom is not the trustee.

Front 172

PARTIES TO A TRUST

Back 172

The creator: can name herself or someone else as a trustee. May name himself as the beneficiary.

The trustee: is the legal owner of the property; holds title to it.

A trust won't fail for lack of a trustee, the court will appoint one if there isn't one.

The beneficiaries- have an equitable interest in the trust property. Must have at least 1.

Front 173

DIVISION OF OWNERSHIP

Back 173

The divisions of ownership is at the very heart of trusts. The trustee holds legal title but not beneficial title which carries with it the fiduciary duties with respect ti property. The beneficiaries hold equitable title, which confers rights in personal to enforce those duties.

Front 174

Who can make a trust?

Back 174

Any person who is over eighteen, but this also includes government entities, associations or corporations.

Front 175

What property can be disposed of in a trust?

Back 175

Real and personal property can be used for the trust.

Front 176

REVOCATION OF A LIFETIME TRUST BY WILL

Back 176

A lifetime trust shall be IRREVOCABLE unless provided otherwise. A revocable life time trust can be reeked or amended by a express direction in creators will which specifically refers to such lifetime trust or a particular provision therefore.

Front 177

REQUIREMENTS FOR THE EXECUTION OF A TRUST

Back 177

Must be in writing, executed or acknowledged by the grantor of the grantor, the grantor must sign the document and at least 1 of the trustees has to sign the document, unless the grantor is the trustee of the trust. It shall be acknowledged such as a real estate deed or by 2 witnesses there to wittiness the signature of the instrument and also placed their signatures on the trust.

Front 178

EXTENT OF TRUSTEE'S ESTATE

( DEFAULT RULE)

Back 178

(a) An express trust vests in the trustee the legal estate subject only to the execution of the trust and the beneficiary does not take any legal estate in the property but may ENFORCE the trust.

Front 179

SAME SUBSECTION

Back 179

(b) This section does not prevent the creator of a trust from providing to whom the property shall belong in the event of the failure or termination of the trust or from disposing of the property subject to the execution of the trust. Such a transferee shall have a legal estate in the property as against all persons except the trustee and those lawfully claiming under him.

Front 180

MORSMAN CASE

Back 180

P is unmarried with no kids. He puts money in trust income to him and then to his widow. He has no wife nor children. IRS argued that this is not a trust. The court held that this was not a valid trust because there was no enforcer. The interests had merged in P.

Front 181

FOLK CASE

Back 181

Father transferred to the son and then to sons kids after. The son was also the trustee. The Court held that this was valid because it was a contingent interest but if he didn't it would back to the grantor.

Front 182

WHEN TRUST INTERESTS DO NOT MERGE (1) A trust is not merged/invalid because 1 person

Back 182

(a) including but not limited to the creator of the trust, (2) is or may become the sole trustee and the sole holder of the present beneficial interest therein, (3) provided that 1+ other persons hold a beneficial interest therein, (a) whether such interest be vested or contingent, present or future, (b) and whether created by express provision of the instrument or as a result of reversion to the creator’s estate.

Front 183

EXTENT OF TRUSTEES ESTATE

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(a) an express trust vests in the trustee the legal estate, subject only to the execution of the trust, and the beneficiary does not take any legal estate in the property but may enforce the trust.

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EXTENT OF TRUSTEES ESTATE

CONTINUED

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(b) This does not prevent the creator from providing to whom the property shall belong in the event of the failure or termination of the trust or from disposing of the property subject to the execution of the trust. Such a transferee shall have a legal estate in the property as against all persons except the trustee and those lawfully claiming under him.

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LIFE TIME TRUST

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Lifetime trust means an express trust and all amendments thereto created by OTHER than a will.

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Who may make a life time trust?

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Any person may by lifetime trust dispose of really and personal property as long as they are 18 years or older. Person can include corporations.

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What property can be disposed of?

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Any estate in property.

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FUNDING OF A TRUST

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A lifetime trust shall be valid as to any assets to the extent the assets have BEEN transferred to the trust.

(a) A transfer is not accomplished by recital of assignment, holding or receipt in the trust instrument and

(b) in case of at rust where creator is the sole trustee, transfer shall mean:

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TRUST WITH CREATOR AS SOLE TRUSTEE

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For assets capable of registration - the recording of the deed or completion of registration in are of trust or trustee.

(ii) For other assets - a written assignment describing the asset with particularity.

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FARMERS LOAN CASE

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Assets were not delivered so they could not be part of the trust.

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AMENDMENT/ REVOCATION OF LIFETIME TRUST BY WILL

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A life time trust shall be irrevocable unless otherwise stated to be revocable.

In addition to below, a revocable lifetime trust CAN be revoked or amended by express direction in creators will, which specifically refers to such lifetime trust or a particular provision thereof.

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AMENDMENT/REVOCATION OF LIFETIME TRUSTS

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Any amendment/revocation authorized by the trust shall be in writing and executed by the authorized person, and EXCEPT as provided in the governing instrument, shall be witnessed and acknowledged same as required in execution, and shall take effect on the date of execution. Written notice must be delivered to at least 1 other trustee within a reasonable time.

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AMENDMENT/REVOCATION OF LIFETIME TRUSTS

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A failure to do will not effect the validity of the amendments/revocation.

No trustee shall be liable for any act reasonably taken in reliance of the old trust instrument prior to notice of amendment revocation.

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RESIGNATION OF A TRUSTEE

and SCPA 715

Subject to the relevant provisions of the law,

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the Supreme Court has the power (a) on application of a trustee, to accept his resignation and to discharge him on such terms as it deems proper.

On Application of any person to the Ct: To suspend or remove trustee bc he violated or threatened to violate trust, who is insolvent or going to be, or if trustee is unsuitable to execute the trust.

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SCPA 715

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A fiduciary may present to the court at any time a petition praying that he be permitted to resign, that his letters be revoked and that he be permitted to settle his or her account judicially or informally as such fiduciary, and that notice of the application to be given to the person and in the manner directed by the court. The petition shall show the facts upon which the application is founded.

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TRUST ESTATE NOT TO DESCEND ON DEATH OF TRUSTEE; VESTS IN COURT

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On the death of the sole surviving trustee of an express trust, the trust estate does not pass to his rep/distributees/devisees, but in absence of contrary direction, IF THE TRUST HAS FINISHED the trust estate vests in the court, and the trust expected by a person appointed by court.

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NOTICE FOR CONTINUATION

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Upon notice to beneficiaries, the court MAY direct upon application for successor trustee, unless creator has directed otherwise the court may appoint a successive trustee whenever in the courts opinion the appointment is necessary for effective administration and distribution of the trust estate SUBJECT TO THE FOLLOWING:

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EXCEPTIONS

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(a) A successor trustee shall give security as court may direct

(b) A successor shall be subject to the same duties as imposed y law on trustees and

(gets reasonable administration expenses plus such commissions as may be fixed by court not exceeded by law.

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MORE THAN ONE TRUSTEE

DEFAULT RULE

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If trust does not provide otherwise and more than 2 trustees, simple majority will suffice to take action.

If just 2 trustees, it is unanimous vote.

Trustees are liable for the actions of their co-trsutees.

Dissenting truress may if in writing avoid liability, but they must do this right and send it to the others.

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LIMITATIONS ON POWERS & IMMUNITIES OF

EXECUTORS AND TRUSTEES

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1. The attempted grant to an en executor (will ) or testamentary trustee or successor either (DOES NOT APPLY TO LIFE TIME TRUSTS)

2. of any of the following powers or immunities,

3. is against public policy and void (and in a will, will render the remaining terms ineffective as far as possible)

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LIMITATIONS ON POWERS & IMMUNITIES OF EXECUTORS AND TRUSTEES

CONTINUED

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(a) The exoneration of such fiduciary from liability for failure to exercise reasonable care, diligence and prudence

(b) the power to make a binding and conclusive fixation of the value of any asset for purposes of distribution, allocation, or otherwise.

(4) Any interested person may contest the validity of any purported grant of power of immunity w/out affecting adversely his interest in the estate or trust (unless will says otherwise).

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POWERS OF A TRUSTEE

(DEFAULT RULE; Make sure to always go to the trust document to see what powers have been conferred)

(EXECUTOR CANNOT BORROW MONEY)

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Accept additions to an estate

Acquire a remaining interest in jointly held property

Keep or acquire insurance

Invest

Take possession or sell property

Lease Property (executor can lease for 3 years trustee can for 10 years)

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POWERS OF TRUSTEE

CONTINUED

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Can mortgage the property if it needs liquidity

Make repairs

Grants options for the sale of property

Foreclose on properties

Can deal with stocks and assets through accounts instead of certificates

To contest or compromise or settle claims in favor of estate or in favor of third party claims against estate.

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PRECATORY LANGUAGE

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Unless a testator or other grantor manifests an intention to impose enforceable duties on the transferee, the intention to create a trust is lacking and no trust is created.

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COLTON CASE

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Testatormakes a bequest to his wife, gives all money in his estate to his wife. Saysthat he “recommends” his wife to take care of his mom and sister. Testator diesthe next day. Issueover the specific language in the will. SCOTUS: Don’thave to use the explicit language that “this is a trust”a. Youcould tell it was here based on the urgency (testator made will, died the nextday)

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FIDUCIARY DUTIES ON A TRUSTEE

Back 206

1. Duty to inform and account. 2. Duty of Loyalty3. Duty of Prudence.4. Duty of Impartiality

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IF TRUSTEE CEASES TO SERVE

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If trustee dies > trust does not vest in personal rep or pass to distributes or devisee. A trust does not fail for the lack of a trustee- the Ct will appoint somebody to serve as the trustee, and the trust will continue.

If trust has not been executed: estate vests in court, trust shall be executed by a person appointed by the court.

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IF TRUSTEE CEASES TO SERVE

CONTINUED

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If trustee ceases to serve - court may direct application for appointment of a successor trustee, unless creator directs otherwise.

1. Ct may appoint a successor trustee even though trust has terminated.

2. successor trustee shall be subject to the same duties, as to accounting and trust administration as are imposed by law on trustees and is entitled to commissions.

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EXERCISE OF POWER BY MULTIPLE FIDUCIARIES (DEFAULT RULE)

Back 209

A joint power, including a power in a trustee to invade trust principal, conferred upon 3 or more fiduciaries may be exercised by a majority of such fiduciaries. Or by a majority of survivor fincuarieis or by the survivor fiduciary.

If a fiduciary is going to dissent from the actions of other fiduciaries:1. Must make dissent known in writing in order to not be liable of any majority decision.

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LIMITATIONS ON POWERS AND IMMUNITIES OF EXECUTORS AND TESTAMENTARY TRUSTEES

Back 210

Attempting to grant to executor or testamentary trustee, or their successor, of the following powers is contrary to public policy. 1. Exonerations of fiduciary from liability for failure to exercise reasonable care diligence and prudence. 2. Exonerate the power to make a binding and conclusive fixation of value of any asset for purpose of distribution, allocation, or otherwise.

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APPLICATION OF THESE RULES TO LIFETIME TRSUT NOT IN STATUTES BUT MAJORITY RULE

Back 211

Exonerationcan be broader than this statute, a. Youcannot absolve your lifetime trustee from: i. Grossnegligence ii. Actingin bad faith iii. Can’tself-deal, cannot make a profitb. Butyou can be absolved from ordinary negligence (gross negligence is bad)

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CAN CREDITORS REACH THE ASSETS OF A TRUST

SPENDTHRIFT TRUST

Back 212

Contains a provision imposing a disabling restraint on the alienation of the beneficiaries equitable interests.

Disabling restraint or alienation - One that purports to nullify any attempted assignment by a beneficiary for his or her equitable interest and any attempted attachment of a beneficiary inters by the beneficiaries creditors.

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EPTL 7-1.5 (a)

When TRUST INTEREST INALIENABLE: EXCEPTION

Back 213

The interest of beneficiary of any trust may be assigned.

The exception is that the income benefits are inalienable

Remainder interest can be inalienable if you specifically provide for it in the trust (matter of vought)

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When TRUST INTEREST INALIENABLE: EXCEPTION

Back 214

Except:

Right to receive INCOME may not be transferred unless the instrument declaring the trust says so otherwise (income interest in inalienable unless otherwise stated)

And generally you CAN transfer the remainder interest, UNLESS stated otherwise in the trust instrument.

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MATTER OF VOUGHT

Back 215

Beneficiary tried to alienate his remainder interest in the trust. During his lifetime he successfully sold his remainder interest, court held that this was invalid.

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7-1.5(b)

PART TWO

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Income beneficiary, unless stated otherwise, can transfer amounts in excess of $10k to listed family member.

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Excess income from trust property subject to creditors' claims

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Where a trust is created to receive the income from property and no valid direction for accumulation is given, the income in excess of the sum necessary for the education and support of the beneficiary is subject to the claims of his creditors in the same manner as other property which cannot be reached by execution.

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CPLR 5205

Back 218

1. Creditors can reach:

a. 10% of the income of the trust, even if it isneeded for the beneficiary’s support and education. This is on top of theexcess income

b. Even for a needed beneficiary, they are onlyentitled to 90%

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TERMINATION OF TRUSTS

Back 219

NY requires grantor to join in the decision to terminate the trust.

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WAYS THAT A TRUST CAN TERMINATE

Back 220

1. Trusts ends by their own terms.

2. Trusts purposes are completed.

3. Trust purpose is frustrated.

4. Trust runs out of money.

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APPLICATION FOR THE TERMINATION

OF UNECONOMICAL TRUST

Back 221

Any trustee or beneficiary of a lifetime or testamentary trust may by application to court having jurisdiction over the trust, seek a termination of the trust when the expense of administering the trust is uneconomical.

The trust proceeds going to beneficiaries according to their dispositions under the trust.

All of the beneficiaries must be notified.

**This cannot apply to a supplemental needs trust**

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CLAFLIN and CLAFLIN

Back 222

Courts are lenient on finding a valid purpose for keeping a trust going.Kid wanted to terminate the trust and get his money early, trust state that he was to receive the rest of his interest when he turned 25. Ct held that there was a vlid purpose for the trust was to keep the kid waiting, creators intent is going to trump and creators intent is a valid purpose for keeping the trust.

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MODIFICATION OF TRUSTS

Back 223

If trust beneficiaries have right to compel termination, they also have right to compel modification of the trusts provisions.

Equitable Deviation Doctrine: The court still might modify or terminate the trust because of circumstances not foreseen by grantor (not in the trust document).

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APPLICATION OF PRINCIPAL TO INCOME

BENEFICIARY

(DEFAULT RULE)

Back 224

If express trust is an income beneficiary trust, the court may in its discretion make an allowance from principal to income beneficiary whose support or education is not sufficiently provided for whether or not such person is entitled to the principal or any part, provided that the ct after notice to all, is satisfied that the original purpose of the creator cannot be carried out and the allowance was the entire of the creator.

Front 225

APPLICATION OF PRINCIPAL TO INCOME BENEFICIARY (DEFAULT RULE)

Back 225

If such income beneficiary becomes entitled to share of the principal, such allowance as given about will be charged against the income beneficiary share of the principal.

This does not apply if it would to reduce or eliminate any charitable deduction otherwise available.

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DISPOSITION IN TRUST FOR GRANTOR

Back 226

A disposition in trust for the use of the creator is void as against existing or subsequent creditors of the creator.

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EXERCISE OF POWER BY MULTIPLE FIDUCIARIES

(DEFAULT)

Back 227

Three Fiduciaries, a joint power other than POA, conferred upon 3 or more fiduciaries, may be exercised by a majority of such fiduciaries, a majority of surviving fiduciaries, or the sole surviving fiduciary.

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TWO FIDUCIARIES

Back 228

Such a power conferred on 2 appointed/surviving fiduciaries may be exercised jointly, unless contrary to express terms of instrument.

Front 229

FAILURE TO ACT AND DISSENT

Back 229

A fiduciary who fails to act through absence/disability, or a dissenting fiduciary who joins in a carrying out majority decision as long as dissent is expressed promptly in writing shall not be liable for consequences of majority decision provided that liability for failure to join in administering estate/trust to prevent breach of trust may not be avoided.

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THE PRUDENT INVESTOR RULE

Back 230

Trustee has a duty to invest and manage property held in a fiduciary capacity in accordance with prudent investor standard BUT the trust can otherwise provide for a different standard. The applies to lifetime and testamentary trusts, for Testamentary Trusts, you cannot absolve the fiduciary for acting without reasonable care.

Front 231

THE STANDARD FOR THE PRUDENT INVESTOR

RULE

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Trustee shall exercise reasonable care, skill and caution to make and implement investments and management decisions as a prudent invest would for the entire portfolio. Taking into account the purposes and terms and provisions of the governing instrument. Compliance determine in light circumstances at the time the decision was made.

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WHAT DOES THE STANDARD REQUIRE A TRUSTEE TO DO?

Back 232

Purpose overall investment strategy. Consider the size of the portfolio, nature and estimated duration of fiduciary relationship, needs of beneficiaries for present and future beneficiaries. Diversity assets UNLESS trustee reasonably determines that interest of beneficiaries are not to diversify). Determine whether to retain or dispose of initial assets.

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WHAT DOES THE STANDARD AUTHORIZE A

TRUSTEE TO DO

Back 233

Invest consistently with requirements of prudent investor standard. Consider related trusts. Delegate investment and management functions.

Incur costs only to the extent they are appropriate and reasonable.

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TRUSTEES POWER TO ADJUST

Back 234

Rules of principal and income act must apply.

Trust describes the amount that must be distributed to the beneficiary by referring to the trust income.

Trustees are allowed to adjust between income and principal to the extent the trustee considers it advisable to enable the trustee to make appropriate present and future distributions.

Must determine that it is far and reasonable to all of the beneficiaries.

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CRITERIA TO CONSIDER

Back 235

1.Intent of the settlor (assets of the trust, financial interests, closely held enterprises, tangible and intangible personal property, real property)

2. Net amount allocated to income.

3. Terms of the trust instrument give trustee power to invade principal of the trust or accumulate income, or prohibit trustee from exercising the power to invade.

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TRUSTEE CANNOT MAKE AN ADJUSTMENT WHEN

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1. Charitable remainder unitrust.

2. Doing so would change the amount payable to a beneficiary as a fixed annuity or a fixed fraction of value of trust's assets.

3. It would come from any amount ghat is permanently set aside for charitable purposes under a will, or when income is permanently devote to a charitable purpose.

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CHECKS AND BALANCES

Back 237

Beneficiary says that they are not invading enough. Remainder men says that trust is invading too much into the principal.

The prudent investor standard will kick in only if the trustee has abused their discretion.

Default Option -> To adjust by the trustee.

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OPTIONAL UNITRUST PROVISION

Back 238

The unitrust is a rule that will click in and be the default rule for the trust.

Front 239

UNITRUST AMOUNT CALCULATION

Back 239

First Year: 4%

Second Year: 4 % multiplied by FMV of assets held in trust at the beginning of the year and FMV of assets at the beginning of year 2 divided by 2.

BASIC RULE: prior evaluation year includes each of the 2 years prior.

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TRUSTEES POWER TO ADJUST BETWEEN THE INCOME AND THE PRINCIPAL

Back 240

This provision allows you to invade the principal. No limitations that the invasion is to pay for education of the beneficiary. Default would be to invade up to 4 percent, good idea to make it this amount because this is the amount in the entrust provision. If trustee makes a mistake with this adjudgment, the other beneficiaries can bring suit.

Front 241

ESTATE OF JANES CASE

Back 241

Ifyou find that a trustee was not prudent, how do you calculate the damages?Depends upon the level of wrongdoing of the trusteea. Arewe looking at conduct of trustee? Or outcome? Weexamine the conduct of the trustee

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RATIONALE

Back 242

a. Thereis a requirement to diversify assets UNLESS the trustee reasonably determinesthat it is in the interests of the beneficiaries not to diversity

a. Whena fiduciaries imprudence consists solely of negligent retention of assets itshould have sol, the measure of damages is the value of the lost capital

Front 243

CY PRES POWER IN TRUSTS

Back 243

Wherever it appears to the court that circumstances have changed since execution of instrument making dispositions for religious, charitable or education or benevolent purposes as to rdenr impracticable or impossible a literal compliance with disposition, court may, on application of trustee, make an order or decree directing that such disposition be administrated and applied in such manner as in the judgment of ct will most effectively accomplish its general purposes.

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ESTATE OF BUCK

Back 244

Cy pres only applies when it becomes impossible, illegal, or impracticable to carry out the trust.

Impossibility or impracticality does not include inefficiency or ineffective philanthropy

Ct: there was no reason to apply the cy res doctrine in this situation

Front 245

FUTURE INTERESTS

REVERSION

Back 245

Anything that is not a possibility of reverter or a right of reacquisition. Something that goes back to he grantor when they didn't give away all that they gave.

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REVERSION

Back 246

Future estate

Left in the creator or successors in interest

Upon simultaneous creation of 1 or more lesser estates than creator actually owned.

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POSSIBILITY OF REVERTER

Back 247

Future estate left in the creator

Upon simultaneous creation of an estate

that will TERMINATE AUTOMATICALLY WITHIN A PERIOD OF TIME

KEY WORDS: so long as, while, until, during.

Defined by the occurrence of a specified event. R

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RIGHT OF REAQUISITION

Back 248

Future estate left in the creator

Upon simultaneous creation of estate

On a CONDITION SUBSEQUENT

Condition subsequent: means that the estate will come to an end if this condition is met.

Look for: BUT IF, ON CONDITION THAT, PROVIDED THAT, IF.

Front 249

FUTURE INTERST IN FAVOR OF SOMEONE ELSE

REMAINDER

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Future estate in favor of someone other than the creator. Future estate is limited to commence in possession at a future time, with or without the interest of a precedent estate.

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ESTATES IN PROPERTY AS TO DURATION

Back 250

1. Fee on condition.

2. Fee on limitation.

Front 251

INDEFEASIBLY VESTED

Back 251

It is absolute and cannot be destroyed. Estate created in favor of 1 or more ascertains persons in being, certain when created to become an estate in possession, whenever and however the preceding estates end, and which can in way be defeated or abridged.

Front 252

VESTED SUBJECT TO COMPLETE DEFEASANCE

Back 252

Estatecreated in favor of one or more ascertained persons in being Wouldbecome an estate in possession upon the expiration of the preceding estates Butmay end or may be terminated as provided by the creator at, before or after theexpiration of such preceding estates1.

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VESTED SUBJECT TO COMPLETE DEFEASANCE

Continued

Back 253

Means

a. Given the property (the future interest) outright, but it is attached to a condition, and if that condition fails, the beneficiary will lose the property

2. The divesting event can be

a. A condition subsequent, or

b. A limitation

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VESTED SUBJECT TO OPEN

Back 254

Estatecreated in favor of a class of persons Oneor more of whom are ascertained or in being Certainwhen created to become an estate in possession wherever and however thepreceding estates end Andis subject to diminution by reasons of another person becoming entitled toshare therein

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EXAMPLE OF VEST SUBJECT TO OPEN

Back 255

1. “income to my husband, remainder to my children” a. You have children 1, 2, and 3 at this time, its vested in them b. But if you have more children, then the shares of 1/2/3 are subject to diminution because of the existence of more children c. ANY CLASS GIFT IS A “SUBJECT TO OPEN”

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CONTINGENT

Back 256

Estatecreated in favor of one or more unborn or unascertained persons Orin favor of one or more presently ascertainable persons

Uponoccurrence of an uncertain event

1. “contingentremainder interest”

a. Subjectto a condition2. NOT VESTED THEREIS A CONDITION THAT ATTACHES TO IT.