Wills Trust Estates

Front 1

Definition of a Will

Back 1

Legally enforceable written declaration of a persons intended distribution of property after death

Front 2

Codicil

Back 2

Amendment to will

Front 3

Estate

Back 3

Body of property you wish to distribute at death

Front 4

Dying testate =
Dying intestate =

Back 4

Dying testate = with will
Dying intestate = without will

Front 5

Testator

Back 5

= person drafting will

Front 6

CPC§ 6110 Requirements for Will (CA)

Back 6

(a) a will shall be in writing

(b) The will shall be signed by the testator

(c) The will shall be witnessed by being signed by at least two persons each of whom
- being present at the same time, witnessed either the signing

- and understand that the instrument they sign is the testator’s will

Front 7

CPC § 6111 Requirements for Holographic Will

Back 7

a holographic will is, whether or not witnessed, if the signature and the material provisions are in the handwriting of the testator (symbols not adequate for will) and dated

Front 8

Determining Whether Document is a Will

Back 8

Extrinsic evidence is admissible to determine whether a document constitutes a will pursuant to section 6110 or 6111, or to determine the meaning of a will or a portion of a will if the meaning is unclear

Front 9

What is the property mentioned in the will is located in another state?

Back 9

- Ancillary proceeding needed if you have property in another state
- CA will handle CA portion but other state will take care of property in that state

Front 10

CA Wills Facts

Back 10

- cannot exclude spouse
- cannot go against public policy
- If beneficiary in will kills the testator and is deemed insane by law they can still collect under the will
- CA allows form wills

Front 11

Public Policy

Back 11

- Will cannot force someone to do something against their will in order to get bequest
- cannot require illegal act to be given bequest

Front 12

Creditor’s Rights

Back 12

- Creditor’s claims do not disappear at decedent’s death
- Creditor claims generally enjoy priority over claims of estate beneficiaries

Front 13

CEREMONY FOR EXECUTION OF WILL

Back 13

- no one can leave the room once the will begins execution
- do not leave anything to the attorney
- interested parties cannot be witnesses
- specificity required in the will
- form wills are acceptable in CA

Front 14

Abatement

Back 14

- the process of reducing the gifts to beneficiaries under a will because the testator’s estate is not sufficient enough to pay all estate obligations
- court will first fulfill the specific bequests and then abate the general bequests

Front 15

Ademption

Back 15

- revocation of a gift by Ademption applies only to specific legacies or devises
- specific devise or bequest is adeemed if the specific property given is not part of the testator’s estate at the time of death
- if the testator owns the specific property at death, the gift is good
- if the testator does not own the specific property at death, the gift is adeemed and the beneficiary is not entitled to the proceeds of the specific property or to any property in lieu of the specific property

Front 16

Specific Legacy

Back 16

A gift by will of property which is particularly designated and which is to be satisfied only by the receipt of the particular property described

Front 17

General Legacy

Back 17

One which may be satisfied out of the general assets of the testator’s estate instead of from any specific fund; does not consist of a gift of a particular item

Front 18

Anti-lapse

Back 18

C.L.: a lapse devise was a devise to a person who died between the time of will execution and the time of testator’s death
- If the devise was to a person who had died before the time of will execution the devise was a void devise

M.L.: modern anti-lapse statutes generally apply to save both lapsed and void devises

Front 19

AMBIGUITIES & MISTAKE

Back 19

Patent Ambiguities
An ambiguity which is apparent on the face of the will

Latent Ambiguities
An ambiguity that does not appear on the face of the document; ambiguity only becomes apparent with reference to extrinsic evidence

Note: extrinsic evidence is usually allowed if there can be an inference of testator’s intent

Front 20

REVOCATION OF WILLS

Back 20

- testator can always revoke her will and, in same situations, the government can revoke a will by presumption, to carry out the testator’s imagined intent

Front 21

3 ways to revoke a will

Back 21

- Revocation by a physical act to the original will; either to the paper the will is written on or to the writing on the paper
- Revocation by subsequent instrument; either by an express clause of revocation or by inconsistent subsequent provisions
- Revocation by operation of law due to a change in the circumstances of the testator

Front 22

Effect of Revoking Duplicate Will

Back 22

A will executed in duplicate or any part thereof is revoked if one of the duplicates is burned, torn, canceled, obliterated or destroyed, with the intent and for the purpose of revoking it, by either
1) The testator or
2) Another person in the testator’s presence and by the testator’s direction

Front 23

Presumption of Revocation

Back 23

If the testator’s will was last in the testator’s possession, the testator was competent until death, and neither the will nor a duplicate original of the will can be found after the testator’s death, it is presumed that the testator destroyed the will with intent to revoke it (This presumption is a presumption affecting the burden of producing evidence)

Front 24

Revival of Revoked Will

Back 24

The previous will is revived if it is evident from the circumstances of the revocation of the subsequent will or from the testator’s contemporary or subsequent declarations that the testator intended the previous will to take effect as executed

Front 25

CONTESTING THE WILL

Back 25

Contesting a will can occur in 4 situations
- procedural: based on requirements for valid will
- capacity; was testator of sound mind
- undue influence
- fraud

Note: in order to contest a will the moving party must have some interest in the will

Front 26

INTESTACY

Back 26

Involves the process when a person dies either without a will, or an invalid will or a portion of the will is invalid

Front 27

Adopted Children

Back 27

- An adopted child is deemed a descendent of the person who adopted them, the same as natural child
- Adopted child cannot inherit from natural parents or their relatives

Front 28

Nonmarital Children (omitted)

Back 28

- nonmarital children are recognized as heirs of their mother; they can inherit through and from their mother
- most states permit the nonmarital child to inherit from the father if the paternity is established or if there is a parent-child relationship

Front 29

Half Blood

Back 29

- Relatives of half-blood inherit the same share they would inherit if they were of the whole blood

Front 30

SIMULTANEOUS DEATH

Back 30

- if it cannot be established by clear and convincing evidence that a person who would otherwise be an heir for the purposes of intestate succession it is deemed the person failed to survive he decedent
- if husband and wife die simultaneously and it cannot be established by clear and convincing evidence that one spouse survived the other, ½ of the community property goes to the husband’s estate and the other half to the wife’s estate

Front 31

Community Property (Intestate)

Back 31

- In California, the decedent’s share of community property passes to the surviving spouse or domestic partner in the absence of a will

Front 32

Separate Property (Intestate)

Back 32

- The surviving spouse or domestic partner takes 1/3 of the decedent’s separate property if the decedent is survived by
o More than child
o One child and the issue of one or more deceased children
o Issue of tow or more deceased children
- Surviving spouse or domestic partner takes ½ of the decedent’s separate property if the decedent is survived by
o Only 1 child
o No issue, but a parent or the issue of a parent

- Surviving spouse or domestic partner takes all of the decedent’s separate property if the decedent leaves no surviving issue, parent, brother, sister, or issue of a deceased brother or sister

Front 33

TRUSTS

Back 33

Trust is an estate planning tool which allows property owners, settlers, to transfer legal ownership to a person or institution, trustee, to manage that property/assets for the benefit of another, the beneficiary.

Front 34

Elements of a Trust

Back 34

1. Trustor/settler
2. Trustee (trust will not fail for lack of trustee; court will appoint)
3. Trust Property
4. Beneficiary (trust will fail for lack of beneficiary)
5. Trust Purpose

Front 35

Classifications of Trusts

Back 35

2 Classifications of Trusts
1. Express
2. Implied
- resulting
- constructive

Front 36

Express Trusts

Back 36

- arise from the expressed intention of the owner of property to create the relationship with respect to the property
- can be either written or oral

Front 37

Implied Trust

Back 37

Resulting
- arise from the presumed intention of the owner of property
- someone would be unjustly enriched unless trust was imposed
- resulting trust is remedy court will use to correct an invalid trust
Constructive
- do not depend on intention but rather constitute a useful equitable remedy in cases involving fraud and unjust enrichment

Front 38

Trustor

Back 38

- can consist of legal entity or partnership or an individual person
- If individual person must have; sound mind, capacity, be of majority and have contractual capacity

Front 39

Trustee/legal title

Back 39

- In the event trustee dies, becomes incapacitated, resigns or is removed; a successor trustee will be appointed
- trustee must exercise that degree of care, skill and caution that would be exercised by a reasonable prudent person in managing her own property
- trustee has a duty of loyalty and cannot enter into any transaction in which they are dealing with the trust in their individual capacity
- duty to make accounting/accurate record
- must make trust property profitable
- must pay & collect all debts
- cannot delegate duties
- can hire professionals to assist in trust operation ex: cpa

note: when the legal title and equitable title merges (becomes same person) trust becomes invalid

Front 40

Trust Property

Back 40

- lack of trust property invalidates trust
- property may be real or personal property
- trust property must be an existing interest in existing property: an interest that has not yet come in to legal existence cannot be held in trust

Front 41

Beneficiaries/equitable title

Back 41

- a trust cannot exist without beneficiary
- beneficiary need not have capacity, age of majority, or contractual capacity to benefit from trust
- more than 1 beneficiary can hold property as tenants in common
- it is not necessary that a beneficiary be designated by name, or by description which makes identification automatic: it is enough that testator uses language which is sufficiently clear to enable the court by extrinsic evidence to identify the beneficiary
- when the settlor describes the beneficiary class as “family” or “relatives”, most courts will validate the trust by looking to the intestacy statutes to define the class

Front 42

Trust Purpose

Back 42

- trusts can be created for any purpose that is not deemed contrary to public policy
- Trust purpose cannot be illegal, criminal or tortuous act

Front 43

types of Express Trusts

Back 43

2 types of Express Trusts
1. Testamentary Trust: created by will (clause in will not separate instrument)
2. Inter Vivos Trust: created by transfer of property by settler during his lifetime

Front 44

Testamentary Trust

Back 44

- trust intent and the essential terms of the trust must be ascertained from
o terms of the will itself
o an existing writing properly incorporated by reference into the will
o facts having a substantial, independent significance apart from their effect on the terms of the will
o the exercise of a power of appointment created by the will
o personal representative must receive trust property

Front 45

Inter Vivos Trust

Back 45

- Present Declaration or Present Transfer of Trust Required
o Declaration of Trust: no delivery is required because settler is the trustee; when the trustee is another person, the property must be delivered to the trustee in order to transfer it in trust
o Transfer of Property: a trust can be created by the transfer of property to another trustee; trustee takes legal title upon delivery of a deed or other document
o Must manifest intent when trust property exists

Front 46

Inter Vivos Trust

Back 46

- Present Declaration or Present Transfer of Trust Required
o Declaration of Trust: no delivery is required because settler is the trustee; when the trustee is another person, the property must be delivered to the trustee in order to transfer it in trust
o Transfer of Property: a trust can be created by the transfer of property to another trustee; trustee takes legal title upon delivery of a deed or other document
o Must manifest intent when trust property exists

Front 47

Types of Inter Vivos Trusts

Back 47

Irrevocable Trusts
- Irrevocable trust cannot be altered, revoked or changed
- All trusts become irrevocable upon settlor’s death

Revocable Trusts
- avoids the costs and delays of probate and has a number of advantages over a will
- Interest passes to the beneficiary during the settlor’s life; it merely becomes possessory on the settlor’s death
- Allows settlor to change, amend or revoke anytime during lifetime

Front 48

Advantages of Revocable Trust

Back 48

- management of assets
- planning for incapacity-avoidance of guardianship
- avoidance of probate
- secrecy

Front 49

5 Methods to Revoke Trust

Back 49

. Trust purpose is fulfilled
2. Trust terms require termination at specific time
3. revocable by Trustor
4. Legal & equitable titles merge (trustee and beneficiary same person)
5. Beneficiaries mutually agree trust purpose is no longer viable

Front 50

Sprinkle/Spray Trust

Back 50

- a trust in which the trustee has discretion to decide how much will be given to each beneficiary
- trustee has discretion as required by the circumstances or tax bracket of the beneficiary
- Trust will include specific language on how to use trust

Front 51

Totten Trust

Back 51

- a deposit in bank account/trust by the settlor of his own money for the benefit of another
- settlor may be named the trustee
- during settlor’s lifetime the trust can be revoked and settlor can use funds for their own benefit
- does not require delivery; beneficiary receives trust funds upon settlor’s death

Front 52

INTER VIVOS REVOCABLE TRUST

Back 52

Revocable Living Trusts
- are subject to the same policy constraints and rules of construction applicable to wills

Uses of Revocable Trust
1. Avoiding probate
2. Need to plan for Incapacity
3. Privacy Concerns
4. Minimizing Will Contest
5. Asset Management Needs

Front 53

“Pour-Over” Gifts from Will to Revocable Trust

Back 53

- allows for the disposition of testamentary assets with a trust created during settlor’s lifetime
- Will designates assets to be “poured” into trust
- Trust must be in existence before or executed concurrently with will
- Trust may be amendable and revocable
- Gift is valid even though trust is unfunded during settlor’s lifetime

Front 54

Illusory Trust

Back 54

- when a settlor’s spouse challenges a revocable inter vivos trust as illusory because the settlor retained full control over the trust’s assets until the moment of death
- trust instrument provides that at settlor’s death, trust assets should be paid to someone other than the surviving spouse

Front 55

Spendthrift Trust

Back 55

- a trust that prohibits the beneficiary’s interest from being assigned and also prevents a creditor from attaching that interest
- trustee allocates trust property as instructed by Trustor; Trustor has instituted restraints on trust property

Front 56

2 Exceptions to the Enforceability of a Spendthrift Trust

Back 56

1. If the beneficiary is the settlor and the trust is not a special needs trust established for the benefit of a disabled person
2. If trust is created for fraudulent transfers into the trust

Note: some jurisdictions, CA included, allow the garnishment of a spendthrift trust for judgments of alimony and child support

Asset Protection Trust
These trusts are established out of the U.S. in order to “hide” assets from U.S. courts and government; analogous to Swiss Bank accounts

Medicaid Qualifying Trust
- trust that elderly use to prevent showing of income in order to qualify for Medicaid
- if there are enough assets in trust in order to care for elderly, courts will enforce use of those funds
- Although the resources of both spouses are considered in determining eligibility for Medicaid, after one spouse is institutionalized, the statute provides the community spouse some protection against claims by the state

Front 57

MODIFICATION & TERMINATION OF TRUSTS

Back 57

When the beneficiaries can compel the early termination of trust
1. If all the beneficiaries of a trust consent and none of them is under an incapacity
2. If the continuance of the trust is necessary to carry out a material purpose of the trust the beneficiaries cannot terminate trust

Modification or Termination Without Consent of Beneficiaries
- courts typically enforce trusts according to their terms because trust instruments typically reflect the intentions of the trust settlor
- as time passes, the language of the trust instrument may become less reliable as a guide to the settlor’s intentions because it is not clear how testator would have responded to the changed circumstances

Modification Due to Mistake ( Uniform Trust Code)
A court may reform the terms of a trust, even if unambiguous, to conform the terms to the settlor’s intention if it is proved by clear and convincing evidence that both the settlor’s intent and the terms of the trust were affected by a mistake of fact or law

Unanticipated Circumstances Affecting Trust Objectives
California statute gives the trustee authority to terminate a trust, without even obtaining consent, if the trust principle falls below $20,000

Front 58

Charitable Trust

Back 58

- a trust created to benefit a specific charity or the general public
- 100% of the assets in Charitable Trust is tax deductible
- purpose must be either religious, scientific, charitable, literary or educational
- beneficiary must be indefinite class of people
- Settlor can draft a charitable trust specifically for a certain group of persons or religion without violating the 14th amendment

Front 59

Charitable-Remainder Trust

Back 59

- a trust that consists of assets that are designated for a charitable purpose and that are paid over to the trust after the expiration of beneficiary’s life estate

Front 60

Cy Pres Doctrine

Back 60

Doctrine permits a court to implement a testator’s intent and save gift to charity by substituting beneficiaries when the named charitable beneficiary is unable to take the gift due to non-existence

Front 61

In Order to Apply Cy Pres

Back 61

- gift must be to charitable organization
- it must be impossible, impractical or illegal to carry out donor’s stated charitable purpose
- must appear that donor had charitable intent

Front 62

When Cy Pres Is Not Applied If Testator

Back 62

- has manifested a specific charitable intent
- has anticipated possible failure of the trust
- has made an alternative disposition of the gift if the charitable gift should fail

Front 63

POWER OF APPOINTMENT

Back 63

A power of appointment is a power that authorizes the donee to designate recipients of the appointive property

Front 64

Donee

Back 64

One to whom a gift is made; the person in whose favor a power of appointment is created or reserved (Trustee)

Front 65

Donor

Back 65

One who gives something without receiving consideration for the transfer; person who creates power of attorney (trustor/settlor)

Front 66

Appointee

Back 66

People to whom the donee appoints the property (beneficiary)

Front 67

Objects of the power/class of permissible appointees

Back 67

class of people eligible to receive the appointive property

Front 68

Takers in Default

Back 68

People who would take in the absence of exercise; whether or not they are explicitly named in the instrument creating the power

Front 69

Power of Appointment is classified as

Back 69

1. General
2. Special

General Power
- donor can give the donee a general power, which entitles the donee to appoint to anyone, including themselves
- general power is taxable by IRS

Special Power
- donor restricts the class of potential appointees
- allows tax benefits from IRS
- “reference to a specific power” in order for the exercise to be effective
- if donee fails to exercise special powers; class will receive property in default
- when a power is special, a donee’s contract to appoint is unenforceable, at least so long as the contract benefits a person outside the class of permissible appointees

Front 70

Time of Appointment is broken down into 2 categories

Back 70

1. Presently Exercised
2. Testamentary

Presently Exercised
- donor gives donee a power of appointment that the donee is free to exercise immediately
- Donee can exercise power by either creating another trust or
- If the power is not presently exercisable, the assumption is that the donor wanted to permit the donee to retain discretion until some point in the future, when more circumstances relating to the appointment will have unfolded

Testamentary
- donor requires that the power be exercised by Will

Front 71

RELEASES

Back 71

- a release assures that the appointive property will pass to the takers in default
- In many jurisdictions, the donee of a power may execute a “partial release” of the power; binding herself not to exercise the power in favor of a particular class of people

Front 72

Property Covered by General Power

Back 72

- Creditors must first attach to donee’s personal property, if those assets are insufficient, then creditors may attach appointive property

Front 73

Heirs

Back 73

- refers to those persons appointed in law to inherit an estate in case of intestacy

Front 74

Pretermitted Child (child within wedlock)

Back 74

1. Those which protect only children born after execution of testator’s will
2. Those which protect all children who have been unintentionally disinherited

Front 75

Capacity

Back 75

- to have capacity to make a will, a testator must have the ability to communicate their wishes and to understand and appreciate the following
o the rights, duties and responsibilities created or affected by the will
o probable consequences for the testator and, where appropriate, the persons affected by the will
o significant risks, benefits and reasonable alternatives involved in the disposition

Front 76

Lucid Intervals

Back 76

Periods during which testator did have sufficient understanding to make a will

Front 77

Insane Delusion

Back 77

An irrational, persistent belief in an imaginary state of facts resulting in a lack of capacity to undertake acts of legal consequence

Note: an attorney who fails to investigate a client’s testamentary capacity incur liability to a pension disinherited by the will drawn by the attorney