Rb - Wills & Trusts (Ca)

Front 1

Formal Wills

Back 1

1) must be in writing
2) signed by testator (or someone at T's direction)
3) T's signing or acknowledgement must come at the joint presence of TWO witnesses, and
4) witnesses must understand that the instrument being witnessed is a will.

Front 2

Revocation of Wills
(by Will)

Back 2

A will may be revoked by executing a subsequent will, coupled with an intent to revoke prior will.

(but the new will must comply with statutory req's of a formal will)

Front 3

Joint Presence of W's Required

Back 3

Under CA law, the signing by the testator myst occur in the joint presence of the witnesses.

Front 4

Dependent Relative Revocation

Back 4

DRR applies when a T revokes his will upon the mistaken belief that another disposition of her ppy would be effective; and but for this mistake would not have revoked the will.

Front 5

DRR does not apply when...

Back 5

the subsequent instrument revoking the the will and making the disposition is defectively executed.

Moreover, DRR would not be applied where to do so would defeat T's INTENT.

Front 6

Express Trust Requirements

Back 6

Beneficiary, Trustee, Intent, Property (Res), Legal Purpose

BTIPP

Front 7

Express Trust Defined

Back 7

A trust is a fiduciary relationship with respect to PROPERTY whereby a TRUSTEE holds legal title for BENEFICIARY, and arises out of Settlor's INTENT to create it for a LEGAL PURPOSE.

Front 8

Testamentary Trust

Back 8

One that i created by WILL which is effective upon T's death.

Front 9

Charitable Trust

Back 9

must have definite beneficiaries and must have a purpose that benefits the public.

Front 10

Cy Pres

Back 10

If the specific charitable purpose indicated by the Settlor is accomplished or becomes impractical, the court may direct the trust ppy to be applied to another charitable purpose if the testator is deemed to have GENERAL CHARITABLE INTENT.

Front 11

Trustee is a fiduciary to a 1) Trust and 2) it's beneficiaries
(Duty of Care and Loyalty)

Back 11

Must exercise that degree of CARE, skill and prudence that would be exercised by a reasonably prudent person in managing her own property (Modern=another's ppy).

Trustee owes a duty of LOYALTY, to the trust and its beneficiaries. T cannot engage in self-dealing to the detriment of the beneficiaries or the trust property.

Front 12

Duty to Invest

Back 12

A T has a duty to preserve and protect the trust corpus. Implied in this duty is the duty to make trust property productive.

Front 13

Prudent Investor Rule

Back 13

Measures the soundness of the T's investment. The T must adhere in GOOD FAITH, reasonable PRUDENCE, sound discretion, and care in making trust investments.

Must invest as a PRUDENT BIZ PERSON in making permanent disposition of her own funds, considering the probable income and probably safety of capital.

Front 14

Interested Witness to a Will

Back 14

At CL, a W who was beneficially interested in the will was deemed incompetent and the will was held INVALID.

CA creates a PRESUMPTION that the interested witness procured the devise by duress, menace, fraud, or undue influence.

If a devise fails because a W fails to rebut the presumption, the W takes what she would have under intestate succession.

Front 15

Consequences of Lapsed Gifts

Back 15

Under Common Law, specific devises that lapse fall into the residuary estate.

CA's ANTI-LAPSE statute applies if the devisee who predeceased the testator was kindred of the testator, or testator's wife, and left issue.

However, anti-lapse will not apply if the will expresses a contrary . intention

Front 16

Is a "trustee" named under a will an interested witness?

Back 16

No. The trustee under the provision of a will may still be a valid witness an Attested will.

Front 17

Private Express Trust

Back 17

A fiduciary relationship with respect to PROPERTY whereby a TRUSTEE holds legal title for BENEFICIARY, and arises out of Settlor's manifestation of a present INTENT to create it for a legal PURPOSE.

Front 18

Testamentary Trust

Back 18

A testamentary trust is one that is created by will which is effective on T's death.

Front 19

Charitable Trusts

Back 19

Charitable trusts must have INDEFINITE BENEFICIARIES and must have a purpose that benefits the PUBLIC.

Indefinite Bens = unnamed and changing class of people (ex: "the eldery" or "the disabled")

RAP doesn't apply to shift from one charitable trust to another.

Front 20

Cy Pres

Back 20

Where the Settlor is deemed to have GENERAL CHARITABLE INTENT and the SPECIFIC charitable intent has become IMPRACTICAL or ACCOMPLISHED, the court may direct the trust property to be applied to ANOTHER charitable purpose.

The court can resort to extrinsic evidence to prove Settlor's intent. (Did S want the trust to fail or continue on?)

Front 21

Trustee's Powers

Back 21

A trustee can only exercise express or implied powers.

Front 22

Standard of Care Required of Trustee

Back 22

A trustee is in a fiduciary relationship with the Trust and its Beneficiaries, and must exercise that degree of CARE that a RPP would exercise in managing her own ppy.

Front 23

T's Duty of Loyalty

Back 23

A T owes a duty of undivided loyalty to the Trust and all its Beneficiaries, and cannot engage in self-dealing to the detriment of the Ben's or Trust Res

Front 24

Breach of Duty of Loyalty by:

Back 24

--> Allocating stock dividends to income, not principal.
-->selling trust assets to a relative, agent, or rep of trustee.
--> allocating capital gain to income, not principal.

Front 25

Beneficiary's Rights if T Breaches Duty of Loyalty

Back 25

Beneficiaries can set aside these transactions and recover any resulting loss, and recover trust property.

Front 26

Duty of Loyalty:
Accounting - Allocation of Principal, Income, and Expense

Back 26

All assets received by T must be allocated to Trust principal or income.

Front 27

Income or Principal?
Increase in the value of an Asset

Back 27

Traditionally, an increase in the value of an asset should be credited to PRINCIPAL.

Front 28

Income or Principal?
Cash Dividends

Back 28

Traditionally, cash dividends on corporate stock are treated as INCOME.

Front 29

Income or Principal?
Stock Dividends

Back 29

Traditionally, stock dividends on corporate stock are treated as PRINCIPAL.

Front 30

Uniform PRINCIPAL & INCOME Act

Back 30

The trustee has an ADJUSTMENT POWER to REALLOCATE investment portfolio return.

Thus, a different allocation than traditionally done may be necessary to carry out the TRUST PURPOSES and the allocation is FAIR and REASONABLE to all beneficiaries.

Changing the allocation from principal to income is self-dealing*

Front 31

Duty to Preserve Trust Property

Back 31

Implied in the duty to preserve the trust property is the duty to make the trust property PRODUCTIVE and to INVEST reasonable care.

Front 32

Prudent Investor Rule
(RPI)

Back 32

Trustee must exercise good faith, reasonable prudence, and sound discretion and care in making trust investments.

Front 33

A RPI would not ...

Back 33

A prudent investor would not purchase of stock from an unknown, newly formed company based on speculative and untested product.

A prudent investor would not fail to diversify investment, and receive no reas guarantee of return.

A RPI would not sell stock which was steadily increasing in value and already providing both cash and stock divs to the investor.

Front 34

Incorporation by Reference

Back 34

A document may be incorporated into the will by reference, but the document must be in existence AT THE TIME the will was EXECUTED.
It must also be clearly IDENTIFIED IN THE WILL and in WRITING.
T must INTEND to incorporate the document in the will as well.

Front 35

Acts of Indep Significance

Back 35

This doctrine permits a court to fill in certain blanks in the testator's will by referring to the documents or acts during the testator's lifetime for preliminary non-testamentary motives.

Front 36

Formal (Attested) Will
Interested Witness

Back 36

Under CA law, if one of two W's is beneficially interested in the will, the will is still VALID, but the fact that the will makes a devise to a subscribing witness creates a REBUTTABLE PRESUMPTION that the W procured the devise by duress, fraud, menace, or undue influence.

The GIFT of the interested W MAY be INVALIDATED, but the will is still valid.

Front 37

Interested Witness' Rebuttal, what he takes if he fails

Back 37

The interested W must rebut the presumption that he procured his gift by duress, fraud, menace, or UI.
If he is unable to do so he only takes what he would under intestate succession, and the gift will fall into the residue.

Front 38

Specific Gift

Back 38

A specific gift is a devise of a particular item of property distinct from all other objects in the T's estate.

Ex: A gift of "my residence" is probably a specific gift, if T only had one residence.

Front 39

Lapse

Back 39

Where a beneficiary fails to survive the testator, under CL, the specific devises to that beneficiary fall into the residuary estate.

Front 40

CA's Anti-Lapse

Back 40

CA's anti-lapse statute applies if the devisee who predeceased the testator was KINDRED of the testator and left issue (issue take by representation)

However, anti-lapse ill not apply if the will expresses a contrary intention.
(ex: where will requires Ben to survive by 30 days to get a gift, gift will fall into the residuary)

Front 41

Components of a Will:
"The following Doctrines permit documents other than the will to be probated, provided certain requirements are met."

(Whenever a document outside a will is introduced, always discuss ALL FOUR)

Back 41

Integration,
Incorporation by Reference
Acts of Indep Legal Significance
Codicil

Front 42

Integration

Back 42

Papers actually in existence at the time of execution that the T intended to constitute her will are admissible.

Test:
Physical Connection (stapled)
Logical Connection (words relate to papers)

Front 43

Codicil

Back 43

A testamentary instrument executed subsequent to the execution of a will is admissible with the same formalities required for the execution of a formal will.

It may be used to RAM a will (Revoke, Amend, Modify).

Front 44

Secret Trust

Back 44

A gift made in reliance on beneficiary's promise to hold the gift ppy in trust for ANOTHER will be enforced if sufficient proof of the arrangement is produced.

Front 45

Secret Trust (Constructive Trust)

Back 45

When a gift is made in reliance upon the Ben's promise (oral) to hold the gift ppy in trust for another.
The intended Ben may offer extrinsic evidence of the agreement so that the "named" beneficiary is not unjustly enriched.
A constructive trust will be imposed on the "named" beneficiary if the agreement can be proven by C&C evidence. (He holds the ppy in trust for the intended beneficiary.)

Front 46

Semi-Secret Trust (Resulting Trust)

Back 46

where the gift is in trust to someone to hold for an unnamed beneficiary.
Because Ben is not named, the trust does not comply with the PET formalities (BTIPP), and the trust will be an unenforceable resulting trust.
The gift must be transferred back to the estate and therefore will fall into the residuary.

Front 47

Residuary Gift

Back 47

Remainder of T's ppy after satisfying all the gifts.

Front 48

Revocation by Written Instrument

Back 48

A valid will may be revoked in part by the express terms of a later codicil. The revoking instrument must be executed with the formalities required for execution of the will.

Front 49

Revoking a Codicil

Back 49

Intention to revoke a codicil must be concurrent with the physical act (like wills).

Words indicating the intent to revoke have NO LEGAL EFFECT, UNLESS they were said CONTEMPORANEOUS with the physical act of revocation.

Front 50

Revocation by Physical Act (Cancellation)

Back 50

The Act of writing "NULL AND VOID" on the text of a codicil WILL REVOKE the codicil, where the words take place on a MATERIAL PART of the will or at least "touches the words" of the will.

Front 51

Express Revocation by Holographic Will

Back 51

A normally attested will may be revoked by a holographic will.
It may also revoke a codicil.

Ex: writing "Null and Void" followed by a signature will revoke by a holographic will.

Front 52

Express Revocation of Codicil does not Revoke a Will

Back 52

An act of revocation physically performed upon a codicil does not revoke the will, even if the testator so intended.

Front 53

Revival*

Back 53

Under CL, the revocation of the codicil will revive a devise under the will.

However, under CA law, the revival of the devise depends on the T's INTENT.

Extrinsic Evidence is admissible to prove the T's intent to revive the devise in the will.

Front 54

Ademption (intent NOT to adeem)

Back 54

A specific request is adeemed if the specific ppy given is not part of the T's estate at the time of death.

In CA, ademption is dependent upon the T's intent to adeem at the time he disposes of the specific ppy.

Thus, the DEVISEE must PROVE the T's INTENT was NOT to ADEEM the specific gift.***

Front 55

Intestate Succession -
Issue of Unequal Degree
Property Passes with Right of Representation

Back 55

Under CA law, if the issue are not of the same degree of kinship to the decedent, they take per capita with right of representation.

Front 56

lapse

Back 56

Under CL, when a devisee dies after the testator executes his will, but before the gift becomes effective, the gift fails, or lapses.

Front 57

Anti-Lapse Statutes

Back 57

Under CA law, if the devisee who predeceased the testator was KINDRED of the testator, the issue of the deceased devisee takes in her place by right of representation.

Front 58

Residuary Gift

Back 58

A residuary gift is a gift of what remains in the Testator's property after paying debts, expenses, and taxes, and satisfying the specific, general, and demonstrative gifts.

Front 59

Express Trust

Back 59

A trust is a fiduciary relationship wrt property in which one person, the trustee, hold legal title to the trust property, the res, subject to enforceable, equitable rights in another, the beneficiary, for a legal purpose.

Front 60

Intention to Create a Trust

Back 60

Intent to create a trust must be manifested by words, writing, or conduct.

Front 61

Trustee(s)

Back 61

Trustee(s) must be appointed to carry out the testator's intent.

Front 62

Trust Property

Back 62

There must be trust ppy or res.

Front 63

Beneficiaries

Back 63

A trust cannot exist without someone to enforce it.

Front 64

Trust purposes

Back 64

The trust may be created for a purpose that is not contrary to public policy or illegal.

Front 65

Duties of the Trustee
Standard of Care required of Trustee

Back 65

A trustee must exercise that degree of care that a RPP would exercise in managing her own ppy.

Front 66

Duty of Loyalty

Back 66

Trustee owes a duty of undivided loyalty to the TRUST.
Trustee may not borrow from or encumber trust funds (placing trust funds in an individual checking account violates this duty).

Front 67

Duty to Preserve Trust Property

Back 67

Implied in the duty to preserve the trust ppy is the duty to make the trust productive and to invest with reas care.

Front 68

Prudent Investor Rule

Back 68

Trustee must exercise good faith, reas prudence, and care in making trust investments.

Front 69

Not Prudent

Back 69

= placing trust proceeds in a non-interest bearing account.
= selling stock that has been steadily increasing in value.
= buying stock with unknown potential.

Front 70

Duty to Separate and Earmark Trust PPy

Back 70

Trust assets must be kept physically separate from the Trustee's personal assets and from assets of other trusts.

Trustees' personal funds will be presumed to be spent before the trust proceeds if this occurs (saving the funds for the trust),

Front 71

Diversification of Investments

Back 71

Trustee has a duty to diversify trust assets.
Keeping most of the trust assets in a risky investment (stocks) may violate this duty.
ex: trustee kept $5000 in stocks and $1000 in a checking account.

Front 72

Innocent Donee

Back 72

An innocent donee of trust ppy MUST RESTORE the ppy to the trust by cannot be held liable for damages.

Innocent = where donee did not know the funds were actually for trust (may know that they are for the benefit of another, but must not specifically know they are trust assets).

Front 73

Trustee Resigns

Back 73

Trustee must refuse appointment as trustee.

Front 74

T's Liab for the Acts of Others
--> Duty not to Delegate

Back 74

A co-trustee is liable for breach of trust if she improperly delegated her authority to the co-trustee or negligently disregarded her own duties of administration so as to facilitate the breach by her co-trustee.

Will be equally liable for breach of trust.

Front 75

Integration

Back 75

This doctrine permits all papers or writings that were actually present at the time of execution that the T intended to constitute the will become part of the will.

Front 76

Incorporation by Reference

Back 76

A doc may be incorporated by ref if the 1) doc is IN EXISTENCE at the time the will is executed, 2) the document is sufficiently DESCRIBED IN THE WILL, and 3) there is satisfactory PROOF that the document is the doc described in the will.

Front 77

Acts of Indep Significance

Back 77

This doctrine permits a court to fill in certain blanks in testator's will by referring to documents or acts effectuated during the T's lifetime for primarily nontestamentary motives.
*no significance independent of the will where the document's purpose was to name the taker of the gift.

Front 78

Codicil

Back 78

A codicil is a testamentary instrument executed SUBSEQUENT to the execution of a will and may be admitted to probate if executed with the same formalities required for the execution of a will. (RAMS a will)

Front 79

Pour-over gift from will to revocable trust

Back 79

A pour-over trust results where the T adds or "pours" his estate into an inter-vivos trust.

While such trusts violate the requirement that the trust ppy be immediately delivered to the trustee, courts have sustained such trusts on three theories:
Incorporation by Reference, Independent Significance, and UTATA
Some Cts allowed pour-over of probate assets into a trust account established by the Settlor during his lifetime under these theories.

Front 80

Pour-Over WIll by Incorporation by Reference
(Testamentary Trust)

Back 80

Permits a testator to incorporate any documents in existence @ the time the will is executed into the will by referring to and describing the document. A Testamentary Trust which refers to and describes an existing trust is valid under this theory.

Front 81

Pour-Over WIll by Acts of Indep Significance
(Testamentary Trust)

Back 81

An act of creating a trust is an act of indep significance apart and separate from the will. Courts will uphold a pour-over trust on this theory as well.

Front 82

UTATA
Uniform Testamentary Additions to Trust Act

Back 82

This Act permits the pour-over of trust estate assets to an inter-vivos trust as amended on the Testator's death if the trust is IDENTIFIED in the Testator's WILL and its terms are set forth in a written instrument executed BEFORE or CONCURRENTLY with the execution of Testator's will.

Front 83

Pretermitted Children

Back 83

Most states have a pretermission statute designed to protect children from being unintentionally omitted from the testator's will.

Pretermitted heir receives the INTESTATE SHARE unless proof of intent to disinherit appears on the face of the will (intentional omission).
However, a child does not receive his/her share if the testator PROVIDED for the child by transfer OUTSIDE THE WILL, and such intention is shown by STATEMENTS or OTHER EVIDENCE.

Front 84

Anti-Lapse Statutes

Back 84

Most states have enacted anti-lapse statutes that provide a substitute beneficiary for the devisee who predeceased the testator.

In CA, the anti-lapse statute applies only if the devisee was the kindred of the testator or his spouse. If so, the kindred's issue will take by representation.

Front 85

Intestate Succession
Surviving Child

Back 85

Where spouse predeceases, under intestate succession, the issue take ALL.

ie, an only surviving child will take ALL under intestate succession (even a pretermitted heir).

Front 86

Interested Witness

Back 86

At CL, a W with a beneficial interest in the will was deemed incompetent and the will that relied on such a witness was INVALID.

Under CA law, the will is VALID, and instead it is presumed that the interested witness took his devise by undue influence.

Front 87

Pretermitted Children

Back 87

Most states share statutes that hold that if a Testator fails to provide in his will for a child BORN AFTER execution of the a will, the omitted child will receive the amount she would have received if the testator had died intestate.

Front 88

3 Exceptions to Pretermitted Child Taking Intestate Share

Back 88

1) where the testator INTENTIONALLY (if any ambiguity court favors child) fails to provide for the child in the will,
2) when the will was executed, Testator devised substantially all the estate to the other parent of the omitted child (child must have been born at the time of the will), OR
3) the Testator provided for the chid outside the will.

Front 89

Liabilities of Trustee who Breaches duty to Trust
(Profits PLUS Losses)

Back 89

A trustee who breaches his duty to the trust is liable to the trust estate for all losses resulting from the breach and any profit that would have accrued to the trust but for the breach and for any profit made by the trustee as a result of her breach, plus interest.

Losses due to breach cannot be offset by gains resulting from another breach.

Front 90

Allocation of Income Where Trustee had a duty to Sell

UPIA- Prudent Investor

Back 90

Traditionally, where the T had a duty to sell unproductive property, some portion of the sale proceeds should be given to the income beneficiary when the ppy is finally disposed of.

However, under the Uniform Prudent Investor Act each investment must be evaluated under the context of the ENTIRE TRUST PORTFOLIO and as part of an overall investment strategy (a RPI seeks overall return and not merely income).