MEE Subjects (Skinny)

Transactions (Priority): What is the priority hierarchy?

(1) Highest: BIOC, holder in due course, buyers covered under garage sale rule (taking free of security interest) (2) High: PMSI parties; parties perfected by control; Art 9 purchasers (beats other kinds of perfected parties) (3) Middle: Perfected parties, judicial lienholders (first to file or perfect wins; for liens, first in time wins) (4) Lower: Unperfected holders (first to attach to collateral wins, no filing/perfection date), buyers without notice (takes free of unperfected interest, if no knowledge of it) (5) Lowest: Debtor (gets any remainder), buyers with notice (usually take subject to security interests)

Corporations (Formation): How is a corporation formed de jure?

(1) Person: Need incorporators to execute/deliver articles (2) Paper: Need articles of incorporation w/ name of corp (including corp, co, ltd, etc.), names/addresses of incorporator /registered agent, and information on company stock (3) Act: Must deliver notarized articles to secretary of state Note: Out-of-state business must register and pay fees to do business in that state. Does not cover interstate activity (i.e., occasional or sporadic activity in state, or owning property)

Conflict of Laws (Choice of Law): What choice of law defenses exist?

(1) Public Policy: Unlike for recognition of judgments, forum court won't apply law against fundamental public policy (2) Procedural Rules: Choice of law is for substantive rules. Forum state always applies its own procedural rules (3) Statute of Limitations: Mostly procedural (forum law) unless: (a) Borrowing statute directs court to look at both forum's period and foreign period, apply shorter one, or (b) If choice of law analysis says apply foreign statute which has SOL, should apply that SOL as part of the foreign statute. Note: For Erie, fed court applies state choice of law for SOL. So, if state has law on SOL or approach to SOL, apply that.

Corporations (Fundamental Corporate Changes): What is a shareholder's right to appraisal following a fundamental corporate change?

Appraisal: If corp approves fundamental change, dissenting shareholders can seek right to force corp to buy them out. Applies for acts of merger, consolidation, asset transfer, stock share exchange, or business conversion. Process: To claim right, must file objection w/ corp before voting, abstain or vote against proposal, and notify within 10 days after approval intent to demand payment. If shareholder doesn't like corp valuation of stock, has 30 days to send corp own estimate. If no agreement on fair value, corp must file action w/ court within 60 days to adjudicate fair value Note: No appraisal right if company listed on national exchange or more than 2,000 shareholders + $20 million value

Conflict of Laws (Recognizing Judgments): When does the law of comity demand recognition of judgments in a foreign jurisdiction?

Comity follows same test as FFC for states/fed, but court can ask if jurisdiction proper more closely, and asks if forum was fair to the parties.

Transactions (Mechanisms): What is Perfection? What is required?

Perfection: Secures rights against third parties. To perfect, need both attachment AND one of the 5 ways to perfect: (1) Automatic Perfection (2) Perfection by Possession (3) Perfection by Control (4) Perfection by Filing (5) Temporary Perfection Note: Because you need attachment (but can file before goods are attached), act can result in both attachment and perfection. For priority, important to distinguish when goods were attached, when perfected, and when (if at all) filing.

Conflict of Laws (Choice of Law): When does a choice of law problem arise? What is the general approach to solving one?

Problem: Arises if lawsuit has factual connections to multiple states, and law in each would lead to different results. If no different results, then no real conflict (doesn't matter). Approach: First, check if no limits from Constitution (can't have law govern if state has no significant contact/interest in case). Second, ask if federal court exception (Erie/transfer) applies. Third, look to state statute to see if it dictates proper approach. If not, forum court uses own choice of law approach to decide. Note: In most states, state will apply own law for procedural questions, will use choice of law approach for substantive q's. Note: State statute or common law applied in state tells you which approach to use. Federal court "exceptions" modify by saying WHICH state statute or common law to use.

Wills & Trusts (Will Mechanics): When is a will revived? What is the doctrine of dependent relative revocation (DRR)?

Revoked will can be revived if: (a) Under UPC, intent test: if aim of revoking a new will that, in turn, revoked an older will was to revive the older will, revive. (b) Minority rule: Revival is automatic when newer will, which revoked older will, is validly revoked (old will is back) (c) In still other states, once will is revoked, not revived. Conditions: Testator can say in revoking instrument that revocation is conditional of named event. Some conditions are implied, involving dependent relative revocation DRR: If testator revokes will under mistaken belief that another disposition of property was effective, would not revoke but for belief, DRR, finds revocation impliedly conditional. If disposition not effective, will is revived as to that property

Corporations (Stock & Shareholders): How does corporate stock allocate preferences for dividend distributions among stockholders?

Shares may be preferred or common. Preferred shares are paid before common. No right to share of distributions made to common shares unless preferred shares are "participating." Payment from dividend can accumulate if unpaid in year, or as current earnings allow.

Wills & Trusts (Trust Mechanisms): How is a beneficiary's interest in a trust transferred? What restrictions may apply?

TRANSFER Voluntary Transfer: Beneficiary can freely transfer interest unless statute or trust instrument prohibits. All conditions and limitation apply. Involuntary Transfer: Creditors can reach beneficiary's interest in trust unless statute/trust instrument prohibits. RESTRICTIONS Discretionary Trust: Trustee has discretion to pay beneficiary or not. Before payment made, beneficiary can't assign interest, and creditors can't reach it (beneficiary has nothing to give). Beneficiary can't force payment unless trustee abuses power Spendthrift: Precludes beneficiary from transferring interest in trust, precludes creditors from reaching it. But, not valid if settlor is the beneficiary, unless state allows DAPT trusts. Creditors can reach assets only when paid to beneficiary. Support Trusts: Support trust directs trustee to pay only amount necessary for beneficiary's support. May be mandatory or discretionary; beneficiary can't assign interests, so these are impliedly spendthrift. Support = accustomed standard of living

Transactions (Mechanisms): What are the five methods of perfection?

(1) Automatic perfection: Upon attachment, PMSI loans for consumer goods are automatically perfected. Does not apply to cars (special notation rule) or fixtures (need fixture filing) (2) Possession: Occurs when creditor takes actual possession, lasts as long as possession does. Does not apply to deposit accounts, accounts, gen intangibles, e-chattel, title certificate (3) Control: Applies to investment property, deposit accounts, e-chattel. For investments/e-chattel, must take steps needed to reliably establish holder as assignee without owner's action. For deposit accounts, can either put in party's name or sign control agreement with the bank. (4) Filing: File financial statement centrally (w/ state) or locally (for goods related to real property) which includes debtor's name (must match driver's license, if they have one), secured party's info, and description of collateral (supergeneric fine). For real property goods, must also describe property/owner. (5) Temporary: For proceeds of any perfected collateral, proceeds are temporarily perfected for 20 days. Becomes permanent if new perfection in 20 days, proceeds are cash, or original collateral perfected by filing + proceeds are type that would be filed in same office (same office rule). Note: Special rules for cars (notation only), money (can't perfect by filing), and deposit accounts (control only). For cars, must get gov authority to mark interest on certificate of title, unless car is held in dealer's inventory (then can perfect w/ file).

Wills & Trusts (Will Mechanics): What is required for a will to be valid?

(1) Capacity; testator must have legal capacity (18+) and testamentary capacity (be of sound mind, able to understand nature/effect of their act, their property, and who inherits). (2) Intent: Testator must have present intent to give will effect. Promises to make will in future are invalid. If unclear, show by desire to dispose of property upon death via instrument (3) Formalities; for attested will, must be in writing signed by testator in presence of two attesting witnesses, then witnesses sign in testator's presence. Signature can be by proxy, if at testator's direction and in their presence. Can use attestation clauses/self-proving affidavits sworn to by testator/ witnesses before notary as evidence of will's validity. Note: Witnesses must be of sufficient age/competency, and some states require witnesses to be aware doc is a will. Some states have "purging statutes," bequests to interested witnesses are void (at common law, will also invalid, but states abolished). Note: Presence has diff tests. Phone usually not enough. (1) Conscious presence; each party conscious of others and act of signing was within general awareness/cognizance (2) Scope of vision; each person in such close proximity that they could have seen signing had they looked. Note: Same rules apply to codicils. Valid codicil can incorporate an invalid will by reference, validate that will. Oral Wills: Most states/UPC do not allow, others allow only for personal property for soldiers/sailors or gravely ill person Holographic Will: If entirely in testator's handwriting, valid if signed. If typed in part, valid if typed part is not material.

Wills & Trusts (Will Mechanics): What rules apply for interpreting a will?

(1) If no evidence of testator's intent (governs), look to rules; (a) Leaving a will = indicates intent to not die intestate (b) If clauses conflict, the last one prevails (c) Will construed as whole (d) Words given ordinary meaning, unless term of art/intent (e) Should give effect to all words testator included (2) Usage of extrinsic evidence depends on ambiguity: (a) If provision is ambiguous on its face, modern view is to use extrinsic evidence to discern meaning. But, can't fill in blank (b) If provision is clear on face but can't be carried out without clarification, can use extrinsic evidence to resolve ambiguity (c) If no apparent ambiguity, but beneficiary thinks mistake made, can't use extrinsic evidence to disturb plain meaning. But, modern rule, allows extrinsic evidence to carry out intent

Wills & Trusts (Trust Mechanisms): How is a private trust usually formed?

(1) Intent: Need intent to split legal/equitable title and impose duties on legal title holders. Settlor must have capacity (same as will), present intent, competent trustee, definite beneficiary. Intent must arise while settler owned property; promises to make future trust are not enforceable without consideration. Precatory language (hope, wish, etc.) does not create a trust. --Note: Need trustee for inter vivos trust only. Testamentary trust can be made without definite trustee. (2) Corpus: Trust must be funded with property, ascertainable with certainty. Must be existing interest in property at time of creation (doesn't count if settlor can't transfer or doesn't yet own it). Future interests/profits can count, if conveyable, as do "pour-over" gifts (initial funding comes from a will). (3) Beneficiaries: Need beneficiary who is qualified (current or first in line remainderman) with capacity to take title, who trust directly benefits (not incidental). Beneficiary can disclaim trust within 9 months of creation unless under 21 or accepted benefits. Class gifts can designate general beneficiaries, if ascertainable when they are to benefit. --Note: Most splits are fine, but SOLE trustee can't be same as SOLE beneficiary (4) Proper Purpose: Can't have trust that is illegal, contrary to policy (inducing criminal/tortious acts, encourage immorality, neglect duties, etc.), intended to defraud creditors, or in violation of the rule against perpetuities. (5) Formalities: Can make trust by will (testamentary), inter vivos transfer, or declaration of trust. Most states don't require writing for personal property trust, but do for land trust unless statute of fraud exception applies. Trusts can be secret, if will beneficiary agrees to hold property for another (but if fails to name beneficiary, semi-secret trust, gift fails).

Transactions (Mechanisms): What special rules apply for perfection by filing?

(1) Mechanics: if debtor's name is wrong, standard search logic can't find it, filing is ineffective. If debtor changes name, must refile within 4 months. If debtor changes use of collateral, filed financing statement remains effective to perfect interest. (2) Authorization: Filing must be authorized by debtor. Any signed writing works (even if not of record itself). Ipso facto authorization if signed security agreement on same collateral. (3) Where to file: Basic rule, file wherever debtor is domiciled. But, file locally (in county where real property is located) for real estate goods and fixtures (timber, minerals, etc.). (4) Timing: Filing is valid for 5 years. But, can file a continuation statement to extend by 5 years within 6 months before lapse. Don't need debtor authorization to file continuation (5) Termination: If security agreement ends or debtor didn't authorize filing, secured party must file termination statement within 20 days of debtor's demand. Must file automatically within 1 month in case of termination for consumer goods.

Family Law (Children): What is required for adoption? What is the effect? What happens if a parent's rights are terminated involuntarily, without adoption?

(1) Need consent of child's natural parents, unless rights were terminated. Can be waived if consent being unreasonably withheld against best interest of child. Nonconsenting parents entitled to hearing/opportunity to be heard (2) Adoptees of certain age (12, 14, etc.) must also consent. Most states investigate proposed adoption, court must approve. Most states prohibit paying natural parents to adopt Effect: Adoption records are sealed. After adoption, new birth certificate issued, listing adoptive parents as parents. Terminates birth parents' rights, creates new duties for parents Termination of Rights: If involuntary, need due process before loss. Grounds include abuse, abandonment, neglect, failure to provide support, mental illness/incapacity, parental unfitness Note: States always want to reunite parents/children, goal is not to permanently deprive if rights terminated involuntarily. Instead, find suitable home while parents get back on track

Transactions (Priority): What rules govern the higher part of the priority heirarchy?

(1) PMSI parties that perfect properly have superpriority over other perfected parties (even those that came before). Must: (a) For inventory/livestock, perfect by time debtor gets possession, and give notice to all filed creditors of PMSI (b) For all other collateral and proceeds, perfect within 20 days after debtor gets possession of the goods. Note: Notice for inventory is valid for 5 years. (2) If several PMSI parties have superpriority, seller PMSIs win over financer PMSIs. Otherwise, first to file/perfect wins. (3) Interests perfected by control have priority over interest perfected by any other means. If several with control, any with title (i.e., deposit account in their name, or bank w/ control of account) wins, otherwise first to file or perfect wins. (4) Purchasers of Chattel Paper/Instruments who give new value in good faith + take possession/control in ordinary course of business win over interests in proceeds AND any other security interest purchaser did not know about.

Wills & Trusts (Intestacy): How are descendant shares calculated in intestacy?

(1) Per Stirpes: Minority rule, split at child generation (living or not), one share per child. Passes to surviving child and the descendants of deceased children. (2) Per Capita w/ Representation: Most states use. Divide at first level where there are living takers. Each living person at level takes share, and each deceased share passes to descendant. (3) Per Capita At Each Level: Divide at first level with living takers, then shares of deceased persons are combined and divided equally among next level. So, first split level gets equal shares of whole, lower level gets equal shares of the remainder

Transactions (Priority): What rules govern the middle and lower part of the priority hierarchy?

(1) Perfected Parties: First to file or perfect wins between perfected parties. Beats all unperfected parties. (2) Judicial Lienholder: Prevails over all unperfected interests, and perfected interests that came after lien attached (levy). But, PMSI that files within 20 days of debtor possession wins. (3) Unperfected Parties: First to attach wins. Other than that, only wins over debtor or subsequent buyers with notice. But, can beat judicial lienholder if has prior security agreement and filed financing statement, so long as it plans to attach/perfect. (4) Subsequent Buyers: If notice of unperfected interest, takes subject to that interest. If no notice, takes free of interest.** **Exception: PMSI that files within 20 days of debtor taking collateral and before buyer pays value and receives delivery preserves interest (even if perfection automatic, must file to win against buyer)

Agency/Partnership (Agency Liability): What are the rules of contractual liability in agency law?

(1) Principal: Liable if agent had valid actual/apparent/ratified authority. Does NOT matter if disclosed or not (2) Agent: Liable unless both principal's existence and identity are disclosed (may be liable for breach of implied warranty) (3) Third Parties: Liable to principal if agent had valid authority, unless agent fraudulently misrepresented principal's identity, or burden increased. Liable to agent if principal unidentified/ undisclosed, but principal will be entitled to contract's benefits.

Transactions (Priority): What remedies does a creditor have on default?

(1) Self Help: Creditor can take possession of collateral without judicial process if this can be done without breach of the peace (potential to lead to violence, debtor presence + verbal objection is enough; can't break/enter intro residence). If breach of peace, can be sued for conversion/damages/torts. (2) Judicial Process: If self-help unavailable, creditor can seek to take possession of collateral through replevin action (3) Rendering Unusable: Creditor can seek to make goods unusable (taking keys, etc.) and sell it on debtor's property if no breach of peace. (4) Accounts: Creditor can notify person owing money to debtor (account's debtor) to make payment to creditor instead (5) Strict Foreclosure and resale

Wills & Trusts (Will Mechanics): What limits exist on a testator's will?

(1) Spouses: Common law marital property states have elective share statutes; spouse has right to take share of testator's estate in lieu of taking under will. Amount calculated from decedent's net estate; must file notice w/in 6 months of death (2) Children: Testator can disinherit kids, but pretermitted child statutes protect children from being accidentally omitted. Forced share for child born/adopted after will executed. In many states, share amount is same as intestate share. Note: But, no protection if (a) testator had other children at time, and devised estate to other parent of omitted child, (b) testator provided for omitted child by transfer outside of will, or (c) evidence omission was intentional (e.g., republishing). (3) Homesteads/family allowance: States may protect family residence or farm from creditor claims, allowing spouse/child to continue occupying. States may also give surviving family an allowance from estate to support during probate. (4) Personal Property: Surviving spouse/children can petition to set aside certain items of personal property (e.g., household furnishings) as exempt from claims against estate

Wills & Trusts (Intestacy): What do spouses, descendants, and other heirs get from intestacy?

(1) Spouses: Under modern law, spouse is an heir, gets statutory share of estate depending on factors. If decedent leaves descendants AND spouse, spouse takes 1/2 or 1/3 in most states. If only spouse (no descendants), spouse gets all. Note: Uniform Probate Code (UPC) alters rules. Spouse gets full estate if descendants are also descendants of spouse, and only gets full estate if not survived by descendants or parents. (2) Children/Descendants: What doesn't pass to spouse passes to descendants and their surviving children. Adopted children are treated same. Nonmarital children inherit from mother always, can inherit from father if paternity adjudged or proven. Children in gestation/born in statutory window can be heirs. (3) If no spouse or descendants, then goes to ancestors. To surviving parents first, then siblings and their descendants. If none, then to half and half to paternal/maternal grandparents and their descendants. If none of any of these, goes to state. Note: To inherit, heir must survive the decedent by 120 hours under UPC, unless diff provision of will/instrument applies. Note: In nearly all states, person who feloniously/intentionally brings about death of decedent forfeits any interest in estate

Conflict of Laws (Choice of Law): What are the three choice of law approaches?

(1) Vested Rights Approach (1st restatement): Ask where salient facts happened, apply law of that state. Must (a) characterize area of law, (b) determine rule for that area, (c) find the state where rule is localized (2) Interest Analysis Approach: Assume forum state law will govern. Then, ask if forum has interest in litigation. If not, false conflict; apply law of other interested state. If both forum and other state have interest, court considers policies of both. If no interested state, apply law of forum court. (3) Most Significant Relationship Approach (2nd restatement): Hybrid of where/why. Balance (a) where facts happened, (b) policy principles, choose governing law based on balancing. Note: Principles include needs of state system, forum policies, jurisdiction interests, party expectations, policies of area of law, predictability or uniformity of result, ease of determining law. Note: Interest analysis is the only one of the three that doesn't care which substantive area of law applies. Pure policy inquiry

Agency/Partnership (Agency Basics): What are the main fiduciary duties owed by an agent? What about a principal? What remedies are available?

AGENT Care - Agent must carry out duties w/ reasonable care (sliding scale depending on their skills). Loyalty - Agent must treat principal fairly, cannot act to benefit themselves/third party, competing, etc. Obedience - Agent must obey reasonable directions of principal, liable for losses resulting from disobedience Note: Agent has absolute liability for subagent breaches. PRINCIPAL No Fiduciary Duties; only duty to compensate/reimburse for expenses, and other duties arising from contract. REMEDIES If Agent Breaches - Contract/tort actions, equitable actions, and withholding compensation or recovering secret profits If Principal Breaches - Contract remedies

Agency/Partnership (Agency Liability): What are the three kinds of authority of an agent?

Actual: Based on principal's words/acts/contract, agent reasonably believes they have authority. Can be express or implied (incidental to express authority, custom, principal's prior acquiescence, emergency measures, paying for goods). Apparent: Based on principal's words/acts/contract, third party reasonably believes agent has authority. Can come from prior approved acts, power of agent's position, negligently letting imposter act as agent, lingering apparent authority, etc. Ratification: Principal validates agent's prior unapproved act. Relieves agent of liability for breach of duty. Principal must ratify entire transaction with knowledge of all material facts, and be competent. Can't use it to cut off another's rights.

Agency/Partnership (Agency Liability): How is an agent's authority terminated?

Actual: Can happen from event, lapse of time, change in circumstances, agent's breach, unilateral termination of agency, or operation of law (effective when agent gets notice of principal's death/incapacity; death terminates agency). Note: If agency is coupled w/ interest or power given as security, principal can't unilaterally terminate it if supported by consideration. Apparent: Must act to end third party's reasonable belief that agent has authority. If actual authority ended, principal should give notice that authority is over (authority can linger).

Agency/Partnership (General Partnership): What special authority rules exist for partner authority?

Actual: Partner reasonably believes they have it based on partnership communications (authority statement, vote, etc.). Effect of statement differs depending on type of transaction. For ordinary acts, need majority vote. For acts outside ordinary course of business, need unanimous partner approval. (a) For Real Property transactions, statement binding if recorded locally, unless third party had actual knowledge authority differs. Third parties have constructive knowledge of statement, benefits from AND burdened by statement limits. (b) For Other Property transactions, statement scope is binding on partnership (unless third party has actual knowledge to contrary), but restrictions do not bind third parties (not given construct knowledge). So, benefits but not burdens imputed. Apparent: Partner binds partnership to transactions within the ordinary course of partnership's business, or business of kind carried out by the partnership (unless party knew no authority). Notice to third party effective when read OR duly delivered.

Wills & Trusts (Intestacy): What are advancements? What is a disclaimer?

Advancement: Lifetime gift to heir w/ intent that it buys them out of shares they will inherit from donor's estate. Not treated as such unless intent known. UPC also requires writing by donor or by heir showing the intent. If found, value is added back to estate and subtracted from recipient's share. Disclaimer: Heir or beneficiary can refuse inheritance. Most require disclaimer to be written, signed, and notarized, filed with court within 9 months of death. Modern view; effective so long as it occurs before heir accepts or uses any gift benefits.

Wills & Trusts (Trust Mechanisms): How is a trust modified? Who can modify?

Amendment: Settlor can revoke or amend a trust unless its terms state trust is irrevocable (still can if consent given by parties). Beneficiary can end/modify trust w/ consent of settlor and all other beneficiaries, or without settlor consent if no material purpose of trust would be frustrated. Trustees can modify by combining trusts into one or dividing one trust into many, unless violates purpose/provisions of trust Court can modify/terminate in response to unanticipated change in circumstances, continuing trust is wasteful, or value of trust is insufficient to justify cost.

Family Law (Marriage): What is annulment? How is a marriage annulled?

Annulment: Invalidates marriage as unlawfully formed. Depending on defect, marriage is void or voidable. If marriage is annulled, treated as if it never happened. Void: Occurs if bigamy, consanguinity, nonage (in some states). Defect can't be ratified, marriage is null even absent court order. Any interested party can nullify it, and is open to collateral attack/after death. Only defense is to deny defect. Voidable: Occurs if nonage, incurable impotence, or lack of capacity/fraud. Defect can be ratified, marriage remains valid until spouse seeks to annul it. Defenses include denial or defect, ratification, estoppel, unclean hands (rare), laches. Note: For bigamy, strong presumption that later marriage is valid (must rebut w/ strong evidence), and if later marriage is terminated, continued cohabitation validates second marriage

Transactions (Mechanisms): What is attachment? What is required?

Attachment: Establishes rights of creditor against the debtor in the secured interest. Must attach interest for it to be secured. Need: Three things must coexist at same time, ANY order: (1) Created interest evidenced by (a) creditor possession, (b) authenticated security agreement (!), OR (c) creditor control (2) Value must be given by secured party, AND (3) Debtor must have rights in collateral (e.g., ownership) Agreements: Security agreement must be in writing signed by debtor, show intent to create security interest, and reasonably identify the collateral (by category or type, or specifically). No supergeneric descriptions like "all of debtor's assets" Possession/Control: If creditor takes possession, must use reasonable care in storing (can be reimbursed for expenses). Risk of loss is on debtor for insurance. Note: Interests in consumer goods and commercial tort claims must be described more specifically, not by type/category. Note: Any consideration for contract is sufficient for value. And rights in collateral need not be full title (e.g., right to possess)

Family Law (Children): What are the parental duties to pay child support to children? How is an award modified? When does it terminate?

Awards: Parents have equal duty to support child. Court awards child support based on guidelines, less discretion than alimony, but can consider child's needs and ability to pay. Modification: If substantial change in circumstances affecting needs of child or parent's ability to pay, can modify award. Termination: Child support award terminates when: (1) Child reaches age of majority, dies, is emancipated, or (2) Parental rights are terminated (voluntary or otherwise) Enforcement: Contempt; seizure of real estate; attachment of wages; order to pay attorneys' fees; wage withholding; etc. Note: Child support is independent of visitation rights; can't withhold visitation due to failure to pay child support Note: Some courts require child support up to certain level of education (e.g., finishing high school) even after reaching 18

Family Law (Children): What is a custody order? How is it issued? What kinds of custody are there? What is visitation?

Basics: Custody is legal or physical control of child (or both). Main test for order is best interest of child, including: (a) Parents' wishes and mental/physical health (b) Child's preferences (if over 12, great weight) (c) Child's relationship with parents/others in house (d) Child's relationship with environment Joint Custody: Many iterations, can be joint physical or joint legal, or true 50-50. Courts consider fitness/agreement of parents, child's preference, geographic proximity/similarity of the houses, effect on child's development, parental health, etc. Sole Custody: If strong evidence one parent is in best interest of child, sole custody. Other parent almost always entitled to reasonable visitation, unless harm to child will result Nonparent Custody: Natural parent has constitutional right to raise child, parent entitled to custody unless nonparent can show parent unfit/harm to child will result. If neglect/abuse, court can find parent has lost right to rear child Visitation: Can be parental (absolute denial rare, but may be supervised if harm could result) or nonparental (third parties or other family, if extraordinary circumstances). Nonparental visitation decided in best interest of child, look to prior relation Note: If parent is fit, their wishes on nonparent visitation are given special weight under constitution, not just child's interest

Corporations (Fundamental Corporate Changes): What is fundamental corporate change? What actions count?

Big changes can't be done by board alone. Includes amending articles (except certain "housekeeping" amendments), merging (blending corps)/consolidating (adding to make new corp), transferring all assets, converting business forms, or dissolving. Process: To do any such act, need board action to adopt resolution, resolution submitted to shareholders w/ written notice, and shareholder approval (majority of shares entitled to vote, but in some states majority of votes actually cast). For specific fundamental changes, need additional acts as well.

Wills & Trusts (Alternative Trusts): What is a charitable trust? What is an honorary trust?

Charitable Trust: Trust made for charitable purpose (poverty, education, religion, health, gov purpose), even if expressed in very general terms. Implied if goal clear from community need (a) Beneficiary can be indefinite (public) (b) Not bound by rule against perpetuities (c) Cy pres, if original purpose is frustrated, unlawful, wasteful, impossible, court can select an alternative that is close enough looking at settlor's goal & charitable intent (court discretion). Honorary Trust: Trust not for charitable purpose, but no private beneficiaries. Instead established for pets/burial places. Trustee is "on their honor" to carry out its terms, but can be enforced by someone named by trust or court-appointed. (a) Rule against perpetuities applies (b) Trust for animal's benefit terminates when animal dies

Wills & Trusts (Will Execution): What is a will contest? What are the grounds?

Contest challenges will's validity, burden on challenger. Only interested parties have standing (e.g., heirs). Grounds: (1) Defective will execution, or will revoked (2) Lack of testamentary capacity or intent (insane delusion) (3) Undue influence, duress, fraud, or mistake --Note: Will may have no-contest clause, party that challenges will and loses forfeits rights under will, absent probable cause Insane Delusion: Insane delusion is belief in facts that do not exist, and no rational person would believe. Destroys testamentary capacity if nexus between delusion and will. Influence/Duress: Duress is influence backed by violent threat. Influence = overpowered mind/free will of testator, will would not have been executed otherwise. Look to odd disposition (cutting out family), relationships, testator's ability to resist, and beneficiary's involvement with drafting/executing will --Note: Presumption of undue influence if confidential relationship between testator/beneficiary, unless spouse. Attorneys can't be beneficiaries unless closely related. Fraud, Mistake: Can be fraud/mistake in factum (identity or contents of the instrument) or in inducement (material fact underlying the distribution). Fraud in either invalidates. But, court usually grants relief only for mistake in factum; any fraud or mistake in factum indicates lack of testamentary intent.

Corporations (Formation): What is a corporation's status as an entity? How is it taxed? What are its rules of liability? What actions can it take?

Corporation is distinct entity, can hold property, sue, be sued, etc apart from the owners. Also means ownership can change hands and corporation will endure. Distinct status means corporation alone is liable for its debt obligation, not shareholders. But, because distinct, is taxed as separate entity; so, shareholders taxed for income from corp, and corp itself is taxed independently of that. Actions: Corps can do anything necessary/appropriate for its purpose (usually stated in articles). Any lawful purpose is fine, so usually means corps/its agents can do anything for lawful business purposes. But, act is ultra vires if outside bounds.

Wills & Trusts (Will Execution): What is the power of appointment? What rules govern its application?

Defined: Authority granted to donee, to designate the persons who shall take property, and manner in which they take. General power can be exercised in favor of anyone. Special power is exercised only in favor of limited class of appointees. Note: Donee does not own property in question, so their creditors can't reach it until exercised. Once exercised, can reach it as if it were donee's property (even if to another). Note: Residuary clause does not exercise appointment power by itself, but UPC says clause exercises general power of appointment unless will provides for gift in default of appointment, or will calls for exercise by specific reference.

Corporations (Stock & Shareholders): What is a stock distribution? What rules apply to it? What is the effect?

Defined: Distribution is payment by corp to shareholders. Can be dividends, redemptions (forced sale of shares to corp), repurchases of shares, distribution of assets after liquidation Rule: Generally, board has discretion to distribute. But: (1) At least one class of stocks must have right to get corp's net assets on dissolution (2) Corp cannot make distribution if it's insolvent or if the distribution would render it insolvent (3) Shareholders can force distribution only if it makes strong showing of board's abuse of discretion Note: (2) is big one. If corp couldn't pay debts after distribution or total assets would be less than liabilities + amount needed to satisfy preferential rights, no distribution. Directors are jointly and severally liable for improper distribution, if grossly negligent, reckless, or intentional. Good faith is defense Effect: If lawful, after declaration of distribution, shareholders treated as unsecured creditors. Can enjoin/revoke unlawful declaration. Articles can restrict declaration discretion. Note: Shareholders can be liable for improper distribution only if they knew distribution was improper when they received it

Agency/Partnership (Agency Basics): What is an agency relationship? How is an agency relationship formed?

Defined: Fiduciary relationship between principal and agent, formed when principal appoints another to act on her behalf, agent consents, and principal has control Note: Consent must be bilateral, either express or implied (but agent must be acting primarily for principal). Agent must be subject to principal's control (low bar) Note: Principal needs contractual capacity to consent, but not agent. No writing needed, unless agent working for more than one year (SOF) or needs authority to contract something under SOF (equal dignities rule). No consideration needed.

Wills & Trusts (Trust Mechanisms): What is a testamentary trust?

Defined: Trusts created by settlor's valid will. Will must show intent and essential terms (corpus, beneficiaries, purpose), etc. Can be secret: Beneficiary holds property in trust for someone else, relying on beneficiary's promise to transfer. Intended trust beneficiary can prove they were meant to get it, then the court will impose a constructive trust in their favor. Can be semi-secret: Will makes gift in trust but fails to name a beneficiary. Gift fails, and named trustee holds the property as a resulting trust for the testator's successors in interest. Note: Distinguish from pour-over gifts. These are will gifts to an existing trust (or gift to initially fund a new trust). Trust must be clearly identified in will. Property is given after death, not when will is executed (so, subsequent amendments are valid).

Wills & Trusts (Will Execution): How is a decedent's property distributed by will? What are the types of distribution? Can the property be burdened?

Devise: Will's gift of real property. Recipient is devisee Residuary Estate: Gift of residue, balance of testator's estate after paying debts, expenses, taxes, and gifts. Bequest: Will's gift of personal property. Specific bequest or legacy is gift of PARTICULAR item. Can be general, specific upon death ("my computer; unclear which that is until death) Legacy: Will's gift of personal property not sufficiently described to be specific. Recipient is legatee. Applies to gifts of general economic benefit ($$), can be from specific source Exoneration: Process of paying liens on specifically devised property with estate funds. States/UPC say no exoneration unless will so directs (so, beneficiary takes subject to lien) Abatement: Process of reducing testamentary gifts if estate assets aren't sufficient to pay all claims against estate, satisfy all bequests/devises. If will doesn't specify, order of abatement: (a) Property passed by intestacy is sold first (b) Residuary estate sold next (c) General legacies, then demonstrative legacies, and (d) Finally, specific bequests and devises

Corporations (Directors & Officers): When is a director liable to a corporation?

Director liable for improper distributions/loans, ultra vires acts, or breaches of duty. If board does improper act, director must dissent/abstain in writing or else is presumed to concur. Exception: Director entitled to rely in good faith on info, opinions, reports of another, if prepared by (1) corp officer reasonably believed to be competent, (2) legal counsel or accountants, if in scope of profession, or (3) committee Exception: Director not liable under main rule if absent from board meeting. Exculpation: Articles can limit/eliminate director's personal liability for money damages through exculpatory clause, except for (1) intentional illegality or harm to corp, (2) unlawful distributions, or (3) the receipt of improper benefits

Corporations (Directors & Officers): What fiduciary duties does a director owe to a corporation?

Director must discharge duties in good faith, with reasonable belief actions are in best interest of corp. Must also use care reasonable person in like position would think appropriate. Duty of Care: Breach if plaintiff proves nonfeasance (director fails to act at all, caused harm) or misfeasance (director made decision that hurt business, with clear causation). (a) Business judgment rule, no liability for bad results if decision was informed, made in good faith, and had a rational basis. Akin to a test of reasonableness under the circumstances Duty of Loyalty: Breach if plaintiff shows director was self-dealing/engaged in conflicting transactions, usually involving director/director's close relative or director's other business. (a) Exception: Self-serving transaction will be upheld if either (1) disinterested board approves it with all material facts known, or (2) transaction is otherwise fair to the business. Note: Duty of loyalty prevents director from diverting business opportunity from corp without first giving chance to corp, if something corp would have interest in/expectancy of. Lack of ability to afford chance is not a defense, remedy is corp can sue to recover under constructive trust.

Corporations (Directors & Officers): Who is a corporate director? How are they appointed? What powers do they have, and how is it used?

Director: Responsible for management, must be adult natural person. Need not be shareholder. Can be named in articles, or elected by incorporators at org meeting. After that, elected by the shareholders at annual meeting (unless articles differ). Removal: Shareholders can remove before term expires with or without cause. Vacancies on board can arise if director resigns, then board or shareholders select replacement. Powers: Board acts as group, director alone can't bind or speak for corp. Can either act unanimously in writing, or act after meeting with quorum/vote. Can also ratify defective acts after

Agency/Partnership (General Partnership): What is dissociation? How is it done in a general partnership? What are the consequences?

Dissociation: Partner leaves association. Does not necessarily result in dissolution (ending/winding up partnership). Occurs by (1) notice of express will to withdraw, (2) agreed upon event, (3) valid expulsion, (4) bankruptcy/death/incapacity, (5) court decision or termination of partner that is business entity Wrongful Dissociation: Occurs if withdrawal is in breach of partnership agreement, or withdraws before end of agreed upon term/completion of goal. Can withdraw at any time if partnership is at will, but then results in dissolution. Consequences: Partner ends management rights. Partnership buys out interest, indemnify against liabilities unless departure is early in term partnership. Partner can seek payment even if wrongful, if proves withdrawal will not cause undue hardship. Note: Partner remains liable for pre-dissociation obligations, and remains liable for post-dissociation liabilities (vice versa, can also bind partnership) for 2 years if third party reasonably believed they were partner and had no notice of departure. To bind, act must also be sort that would bind partnership before.

Agency/Partnership (General Partnership): What is dissolution? What triggers it? What is required of a partnership to "wind up" its business?

Dissolution: Ends partnership. Commonly occurs upon express withdrawal of partner from at-will partnership, partners all consent, or in term partnership wrongful withdrawal followed by vote to dissolve from 1/2 of partners within 90 days. Court can order dissolution if purpose frustrated/impracticable Distribution: Upon dissolution, partnership must first pay out debts to all creditors, whether outside or inside (loans from partners). Then, must pay partner capital contributions. Then, must divvy up profits and losses from remainder. Winding Up: All living partners have right to participate in winging up. Must collect assets and liquidate. Partners have apparent authority to bind partnership during wind up, unless third party had notice of dissolution (can file public statement). Waiver: Any time before winding up ends, partners can decide to waive dissolution, continue partnership by unanimous vote.

Family Law (Marriage): What is divorce? What are the grounds?

Divorce: Ends a legal marriage (not about formation). For court to have jurisdiction, petitioner must be bona fide resident (i.e., residing in state, some state have minimum duration rules). But to go beyond order and divide property/alimony, also need PJ (except as to marital property in state, then PJ via in rem) No Fault: If marriage is irretrievably broken or spouses are living apart for statutory period, grounds for divorce. Only defense is to deny that grounds exist. One spouse objecting usually isn't enough to defeat, if separation for long enough Fault: If adultery, desertion, extreme cruelty, drug addiction, drunkenness, insanity, grounds for divorce. Defenses: denial, collusion (simulation), connivance (consent), condonation (forgiveness), recrimination (unclean hands) (almost extinct). Note: In place of divorce, court may issue legal separation, which does not end marriage but draws line in the sand for future property or to adjudicate support/custody.

Agency/Partnership (General Partnership): What duties to partners owe to one another? What is their contractual liability to third parties? What about torts?

Duties: Partners are agents of partnership and of one another. Have same agent fiduciary duties (care, loyalty, obedience, disclosure). Can't discharge care/loyalty by agreement. Contract Liability: Each partner jointly and severally liable for contracts partner enters into in scope of partnership business or with partnership authority (actual, apparent, ratified). Tort Liability: Each partner (and partnership) are jointly and severally liable for tortious injury caused by partner acting in ordinary course of business or with partnership authority. Note: Before seeking partner assets, plaintiff must exhaust remedies of partnership recovery first (partner = guarantor). If partner pays, can seek indemnification from partnership Note: Partners can agree to limit liability amongst each other, but not as to third parties (unless third party consents). Note: New partners not liable for acts preceding admission. Dissociated partners liable for up to 2 years after leaving

Conflict of Laws (Choice of Law): What special choice of law rules apply for federal courts?

Erie: Fed court sitting in diversity must apply the choice of law rules of the state in which it sits. That means, fed court will use the choice of law approach the state courts do (CL or statute) Transfer: Diversity case transferred to different venue, transferor court will use original court's choice of law approach if venue was proper there. If improper, uses own choice of law

Transactions (Priority): Which priority rules apply to fixtures? What about accessions?

Fixtures: Goods so related to real property, interest arises under real property law. To perfect, fixture filing must be made where mortgage would be, reasonably identifying property. If party files for fixtures, they have priority over subsequent lienholder on land. Prior liens win over fixture filing, unless fixture filing is of PMSI perfected within 20 days. Note: No filing is needed for fixtures that are readily removable (factor machines, domestic appliances, etc.), any method of perfection works. Accessions: Goods physically united with other goods, if identity of original goods are not lost (e.g., tires on a car). SI perfected on collateral remains if it becomes accession. Same usual rules (first to file or perfect, but PMSI priority) apply. But, SI in accession is subordinate to interest in whole if perfected by certificate-of-title statute. Removal: Creditor can remove accession from other goods if SI in accession has priority over all other claims in whole. But, responsible for costs of repair. Similarly, can remove fixtures from property, but liable for costs to repair.

Wills & Trusts (Alternative Trusts): What is a constructive trust?

Flexible equitable remedy to prevent wrongful conduct; trustee's only duty is to convey property to wronged person. Must be requested as a remedy, must be pled and proven to be necessary by clear and convincing evidence. Note: To find trust, must establish nexus between trust property and wrongdoing Note: If fraud, duress, mistake, breach of duty, violating party holds property in constructive trust for innocent party Note: Generally, breach of promise does not raise constructive trust, unless promise fraudulent, breach of confidential relationship, breach by decedent's devisee to hold property

Family Law (Marriage): When is a legal marriage formed?

Formal Marriage: Need four elements - (1) License: Need license (often with waiting period), but failure to get one does not invalidate a marriage (2) Ceremony: Need solemnized ceremony with authorized officiant (state law decides who is authorized) (3) No Legal Impediments: Parties must not be too closely related, and can't already be married to living spouse (4) Capacity to consent: At time of ceremony, parties must have ability to consent (understand acts/voluntarily agree). Common Law Marriage: Common Law Marriage: No license or ceremony, but court finds marriage if parties (a) consent to marry with capacity/without impediments, (b) live together, and (c) hold themselves out to public as spouses (e.g., joint bank accounts, shared name, calling themselves spouses). Note: Court may also find putative marriage on estoppel, if good faith effort to get married resulted in invalid marriage Note: Marriage done in one state must be recognized by others, even if state law differs (e.g., second doesn't recognize common law marriage, but first one does--still valid).

Family Law (Marriage): How is alimony determined after marriage ends?

Four Kinds of Alimony: (1) Permanent Periodic Support: Regular payments paid unless substantial change of circumstances (may last forever). Issued if one spouse has no resources/ability to be self-sustaining (2) Lump Sum: Fixed amount paid all at once or in installments, cannot be modified (akin to a contract right) (3) Rehabilitative Support: Regular payments paid until spouse becomes self-supporting, lasts for specified time (can modify) (4) Reimbursement Support: Award for spouse who supported other during license/degree, usually no modifications Deciding Alimony: Again, huge trial court discretion (1) Most important factors are spousal need and ability to pay. (2) Also considers duration of marriage/standard of living (3) Also considers marital fault (contra property), contribution Modification: For types 1/3, modification occurs in response to substantial change in circumstances, usually regarding spouse need or ability to pay (not voluntary reduction in capacity) Termination: For types 1/3, support ends on death/remarriage of spouse. In many states, also ends if dependent spouse begins to cohabitate in marriage-like relationship with another. Note: Spousal support not taxable currently. But, for awards before 2019, was deductible by payor and income to payee

Wills & Trusts (Will Execution): How might a will's distribution be affected by changes to the property or beneficiaries prior to the testator's death?

GIFT VARIENCES Ademption: At time of death, estate no longer has the property testator meant to gift. Can occur by extinction (property gone) or by satisfaction (gift transferred inter vivos to beneficiary to satisfy their share of the will). Does not apply to legacies (cash), estate can sell other things to avoid ademption (a) Can be in whole or in part, depending on remaining rights (b) If testator replaced stuff, beneficiary may get new version (c) If testator sold stuff, beneficiary may get unpaid proceeds (d) If stuff was condemned, beneficiary may get part of award (e) If stuff sold by guardian, beneficiary may get proceeds Accession: At time of death, gifted property has appreciated or depreciated in value since will's execution. (a) Variance occurs between will execution & death = irrelevant (b) Variance occurs before death = goes to general estate (c) Variance occurs after death = increase goes to beneficiary (d) Cash income of property goes to general estate for (b), but improvements to real property go to the specific devisee BENEFICIARY VARIANCE Gift Lapses: If beneficiary dies before testator, or if beneficiary disclaims, look to will's terms, residuary clause, and intestacy to decide who inherits a lapsed gift. (a) Anti-Lapse Statutes: Beneficiary's descendants take their gift by substitution, if beneficiary dies before testator. But, if beneficiary was dead at time will executed, gift is void. (b) Residuary Gift: If will devises residuary estate to several beneficiaries and one of them dies first, states split. Some say share passes by intestacy. Others allow surviving beneficiary to divide share in proportion to their interests

Agency/Partnership (General Partnership): What is a general partnership? How is it formed?

GP: Partnership is association to carry on business for profit. Formed as soon as business begins, regardless of intent to form one. Instead, look to intent to carry out business/share profits (raises presumption unless profits given (not shared) merely to pay debt, wages, rent). Acts as independent entity (like corp), can own property/sue Note: To find partnership, look for profit-sharing and right to participate in control. Other evidence from acts as partner. No writing needed, but to be enforceable past 1 year, satisfy SOF Note: Court may imply partnership by estoppel if person holds themselves out as partner to third party. Other "partner" won't be bound unless they consent to holding out.

Transactions (Mechanisms): Which state's law governs perfection? How does movement of the debtor or collateral impact perfection?

Generally, law where debtor located (domiciled, where corp is organized, or where partnership has place of business/chief executive office). Exceptions: (a) For real estate goods/fixtures, state of property's situs (b) For goods under certificate of title, newest issuing state (c) For deposit accounts, state where bank has head office (d) For Agriculture Lien, use state where farm product located (e) For investment property, certified securities use law of state where located; if uncertified, state where issuer organized. Note: If security interest is perfected by filing/automatically, law of state where debtor located governs Movement's Impact on Perfection: (a) If debtor moves, must refile in new state within 4 months (b) If collateral transferred to new owner in another state, must refile in new state within 1 year (c) If collateral perfected by possession, stays perfected even if moved, as long as new state law recognizes perfection (d) For deposit accounts, if bank moves, perfection continues for 4 months or until unperfected in original state (e) If collateral is vehicle, perfection in original state lasts as long as it would even if not covered by new state (except if bought by purchaser for value, then only lasts 4 months or until it would naturally be unperfected).

Transactions (Priority): What rules govern the top of the priority heirarchy?

Highest Takers: (1) Buyer in ordinary course of business (BIOC): Takes free of security interest incurred by seller if (a) is a good faith buyer, (b) seller is merchant of goods sold, and (c) buyer does not know the sale violates anyone's security interests. (2) Holders in Due Course: For negotiable instruments, holder in due course has priority over security interests in that instrument (same for negotiable documents of title/securities). (3) Garage Sale Rule: For consumer goods, buyer takes free of security interest (even if perfected) if buys (a) for value, (b) for their personal/household use, (c) without knowledge of the interest, and (d) before financing statement has been filed. (4) Buyers who took collateral in manner authorized by the secured party take free of party's interest (express or implied) (5) Transferee who gets funds from deposit account takes the money free from interests attached to that account

Family Law (Children): What jurisdictional tests apply to court orders involving children?

ISSUANCE Child Support: UIFSA, original jurisdiction proper where first petition raised. Another state has jurisdiction to issue order if second petition filed before time to answer first expired + second state is child's home state + petitioner objected to first. Child Custody: Home state rule, court can issue custody order if state is child's home state or child was home in last 6 months, and parent continues to live there. Home state = lived there for six consecutive months at least, or since birth if too young. (a) Exception: Home state rule does not apply if no state accepts home state jurisdiction, and state has significant connection to child/parent + evidence is there. MODIFICATION Child Support: Issuing court continuing & exclusive jurisdiction unless no party resides there, or parties consent to new state. Child Custody: Issuing court continuing & exclusive jurisdiction unless no party resides there/child loses connection to state ENFORCEMENT Child Support: Original court has continuing jurisdiction to enforce. Other states can enforce if order registered with state Child Custody: Original court has continuing jurisdiction to enforce. Other states can enforce if order registered with state Note: If child abandoned or abused, court can exercise emergency jurisdiction. Note: Court with jurisdiction may decline to exercise it if it determines it is inconvenient forum, another court better (or if party sought forum through unjustifiable conduct; taking child)

Corporations (Formation): How is a defective incorporation handled?

If defective filing, court can use quasi-incorp if incorporators were unaware of the defect/tried to file in good faith: (1) De Facto: If relevant statute + good faith attempt + exercise of corporate privilege, de facto corporation found, treated as same as regular except in action by state (2) Estoppel: Common law, parties dealing with business are estopped from denying corp's existence (corp is also liable). Is only for contract cases, does not apply to torts victims

Corporations (Directors & Officers): What can a corporation indemnify a director or officer for legal expenses?

If someone sued in officer/director capacity, can seek indemnification for expenses from corp. 3 situations: (a) No indemnification: If director held liable to corp or received improper benefit, no recovery (b) Mandatory indemnification: Unless articles limit, must indemnify director who successfully defense on merits (c) Permissive indemnification: May indemnify if director unsuccessfully defense, if director acted in good faith and believed their conduct was in best interests of corp. Note: To decide which situation we're in, ask disinterested majority of board, committee, or independent counsel

Wills & Trusts (Will Mechanics): When is a will revoked?

In general: Testator with capacity can revoke at any time prior to death, by physical act, law, or subsequent instrument (a) By Law: Marriage after will has no effect on earlier will. But, UPC says new spouse takes intestate share as omitted spouse, unless will modified/omission intentional. Divorce or annulment revokes all gifts/appointments in favor of former spouse. But, will remains valid otherwise. Divorce must be final to apply. (b) Physical Act: Act taken w/ concurrent intent to revoke (e.g., burning, tearing, etc.) is effective, unless by mistake. Can be by proxy if done at testator's request and in their presence. Works to invalidate all codicils, but revocation of codicil keeps will. States split on efficacy of crossing out only some provisions. (c) Writing: All or part of will can be revoked/altered by later writing, if executed with same formalities as will. Can revoke expressly or if new instrument completely disposes property (inconsistency). If inconsistent in park, revokes only that part Presumptions: What court will assume about will's validity depends on nature and circumstances in which will found (a) If will is found in normal location without suspicious circumstances, presumed to not have been revoked. (b) If will last seen in testator's possession and can't be found or is found mutilated, rebuttable presumption it was revoked (doesn't work if last in possession of third party) (c) If will lost or destroyed and can overcome presumption of revocation, copy can be admitted to probate if one proves it is valid, cause of nonproduction (not revoked), and contents of will.

Wills & Trusts (Trust Administration): What is trust income, and what is trust principal? What power does a trustee have to define these? How do these concepts interact with trust expenses?

Income is accruement of value from trust assets, principal is trust assets themselves (akin to a loan, principal vs. interest). Different forms of trust gains are classified as one or other Classification: Net rental income/investment returns are income, and proceeds of sale/capital gains of trust assets are principal. If asset's value diminishes over time, is a liquidating asset; proceeds are 10% income, 90% principal. Same for mineral interests (oil/gas), 10% income, 90% principal. Adjustment: In most states, trustee has power to reallocate investment returns and characterize items as income. If trust calls for distribution of income, must give to beneficiary. Must do so impartially if several beneficiaries, unless trust says otherwise. Considers many factors on how to use power. Expenses to Income: Ordinary income tax and repairs/ expenses/insurance premiums assessed against trust income, along with 1/2 of regular trustee/agent compensation and 1/2 of all expenses for matters affecting trust interests. Expenses to Principal: Other expenses/extraordinary repairs and capital improvements are assessed against trust principal, including payment of debt principal, estate taxes, and environmental disbursements.

Agency/Partnership (Other Partnerships): What is a limited liability company (LLC)? What are its special rules?

LLC is hybrid kind of corporation and partnership. Taxed like a partnership (income "passes through" to partners), but liability shield of corporation. Can be member or manager run. To form, must certify w/ state name of LLC (include "LLC"), info for registered office and info for registered agent. Operating agreement is like partnership agreement, specified rules Management: All members have equal rights to vote, each can bind LLC if authority present. If run by manager, only manager has such authority. No personal liability for LLC's obligations. But, court can pierce corporate veil like with shareholders. Duties: All members (or managers) have fiduciary duties, but business judgment rule applies for duty of care. Any member has right to dissociation, same rules as in general partnership. Distribution: Profits/losses allocated on contribution in most states (fed law says equal shares), but distributions are not required. As with general partnership, financial rights are transferable unilaterally, but not managerial rights. Dissolution: If all members consent, event in agreement occurs, or 90 days pass w/out member, LLC dissolves. Court can order if conduct unlawful, goal not practicable, member oppressive. Must be wound up, no business other than that. Can bring claims during dissolution, 120 day deadline if notice given.

Agency/Partnership (Other Partnerships): What is a limited liability partnership (LLP)? What are its special rules?

LLP/RLLP has no partner personally liable beyond their contribution. Only the partnership is liable for its obligations. To form, need to file with state; partnership name (include LLP or RLLP), statement of LLP, and deferred effective date. To become LLP, LP or GP must vote to approve change. Default rule is all partners must approve. Note: Liability shield will not protect partner from own torts, but will protect co-partners that did not participate.

Wills & Trusts (Intestacy): What is non-probate property?

Life insurance, future interests (pass to beneficiary), inter vivos trusts/gifts, bank account trusts, deeds (if conditioned upon grantor's death), contracts do not pass through probate. Not governed by will OR by intestacy. Instead, removed from decedent's estate before distributing property. Note; Joint tenancy counts, right of survivorship takes the right out of decedent's estate, transfers to surviving joint tenant.

Corporations (Stock & Shareholders): How and where do shareholders vote?

Like board, shareholders take action at meetings, either annual or special. Must have annual meeting within 15 months after last, else shareholder can petition for one. Special meeting can be called by board, president, or 10% of outstanding shares. Notice: Shareholders must be notified in writing of meetings at least 10 days before. Notice can be waived in writing, or by attendance. Must state date/time/place, and purpose (if special meeting). Failure = meeting is voidable unless waived Procedure: Shareholders vote on directors and fundamental corporate changes, or whatever else board says they should. Need quorum, as determined by number of shares, not shareholders. Not lost if people leave the meeting. Thresholds: Need plurality to elect director, majority to remove director or approve fundamental corporate change. Majority is of shares entitled to vote, plurality is actual votes cast Note: In close corp, cumulative voting occurs where top finishers are elected, rather than each seat decided individually

Agency/Partnership (Other Partnerships): What is a limited partnership (LP)? What are its special rules?

Like general partnership, but general partner is manager, and limited partners only share in profits. To make, file certificate with partnership name (include "LP"), agent info, and general partner info; if not, regular GP. General Partners: For all purposes, follows same rules as a full partner in a general partnership (voting rights, jointly/severally liable, power to bind, indemnification, right to dissociate, etc.). Limited Partners: No management rights unless granted. But, needed for votes to amend partnership agreement, convert to LLP, dispose assets, admit new partner, excuse contribution. Only liable for contributions, not personally liable beyond that Distribution: Unlike GP, sharing profits based on contribution (benefits given to partnership), not number. All partners can consent to release obligation to contribute, but death or other disability does not release. Right to profits is transferable Derivative Suits: If limited partner makes demand of general partner to sue and is refused, can bring suit on behalf of limited partnership. Must be partner when suit brought. Dissociation: General partner rules follow normal rules. Limited partner has no right to dissociate before end of LP. Dissolution: Occurs on judicial order/filing with state, or upon event, consent of all partners, general manager dissociation + vote in 90 days. Must wind up; if can't cover debts, general partners must contribute to satisfy obligation according to contribution.

Corporations (Fundamental Corporate Changes): What special rules apply for specific kinds of fundamental corporate changes?

Merger or Consolidation: Both boards must give notice, seek approval of shareholders, then deliver articles to state. Effect is that surviving corp succeeds all rights/liabilities of other corp. Transfer: Applies if >75% assets or stock transferred. Both boards must give notice, seek approval of shareholders, then deliver articles to state. No survivorship liability (both corps still exist) unless same management, or merger in disguise. Conversion: Corp changes form to another (e.g., corp to LLC). Need board approval, notice, and shareholder approval. Also must deliver do to secretary of state. Appraisal applies Dissolution: If shares not yet issued, can dissolve by majority of incorporators/initial directors. If shares issued, need board act, notice, shareholder approval, and notice of intent w/ state. Results in wind up; must gather/liquidate assets, notify public & creditors, pay shareholders with pro rata shares

Family Law (Children): When are child custody decrees modifiable? How are they enforced? What if a child is relocated to another state?

Modification: Custody is modifiable, but burden of proof is on party seeking change. Usually modified if substantial/material change in circumstances, child's interest is overriding concern Relocation: If child's primary residence changes, notice usually given to other parent, court decides if permitted. Ask if change is in best interest of child, not intended to thwart visitation Enforcement: Custody enforced by contempt, habeas corpus, and suits in equity. Out-of-state decrees enforced if copy filed with court clerk (but original state keeps jurisdiction) Note: If child removed from original state, custodial parent must file order in new jurisdiction. Full faith/credit applies

Agency/Partnership (General Partnership): How is a general partnership run? How are profits/losses shared?

Note: Following are all default rules. Agreement can change. Management: Partners have equal rights to manage/vote, decide by majority. For matters outside ordinary course of business, need unanimous vote (e.g., admitting new partner). Each partner has right to inspect partnership's books/info. Sharing: Profits are shared equally by number, not contribution. Losses are shared the same as profits, if not specified. But, even if losses are specified, profits do not follow losses. Aside from sharing profits, no inherent right to compensation (but, right to be indemnified/reimbursed for partnership expenses) Lawsuits: Partnership can sue in own name, and partnership can sue a partner for breach (or vice versa) to enforce duties. Partner Rights: Partners can transfer rights to profits, but not managerial rights ("pick your partner"). To admit new partner, need unanimous vote of existing partners.

Corporations (Directors & Officers): What rules govern board meetings?

Notice: No notice needed for regular meeting, but 2 days notice needed for special meeting (no purpose needed). If no notice, meeting's actions are voidable unless notice is waived (1) in writing or (2) by attending meeting w/out objecting Quorum: Need majority of all directors (unless bylaws differ, but can be no fewer than 1/3) present for board to act. Can't give proxies power to vote, duties are non-delegable. Can "break" quorum if enough people leave meeting Actions: Board can act itself, set policy, supervise officers, create committees, etc. Limited on what authority it can delegate. Committee can act for board, but board is responsible, and committee can't declare distribution, fill board vacancy, recommend fundamental change, etc. Note: If quorum present, need majority vote of those present

Family Law (Children): What issues arise relating to parentage actions? What rules apply to unwed fathers? What is a paternity suit?

Parentage: Action brought to establish biological relationship between child and settle issues of paternity/maternity. If found, parent has right to custody/visitation, and duty to pay support. Note: Mother's husband presumed to be father if child born during marriage or within 300 days of marriage's end. To rebut, need clear/convincing evidence. Nonpaternity hard to find Unwed Fathers: Every child is lawful child of mother in most states. For unwed fathers, lawful child only if (a) parents married after birth, (b) father holds child out as his, (c) father consents to be on birth certificate or formally acknowledges paternity, or (d) court order establishes paternity. Paternity Suit: Child/mother/state can bring suit to seek child support. States vary in evidence needed, most states use blood and tissue sampling.

Agency/Partnership (General Partnership): How can one distinguish partner property from partnership property? When can such property be transferred?

Partnership: Can have capital (money for business) or property. Property belongs to partnership if acquired in its name, or in partner's name acting for partnership. Presumed to belong to partnership if purchased with partnership funds. Partners have no right to use partnership property except for partnership use Separate Property: Property presumed to be partner's if held in their name without sign they're acting for partnership, and partnership funds not used. Can rebut presumption. Untitled Property: If not titled, look to several criteria; who paid for it, how is it used, is it on partnership's books, close relations to partnership operations, how is it maintained, etc. Transfer: If in partnership name, any partner can transfer. If in partner's name, they can transfer. If partner lacked authority to transfer, can recover it except from bona fide purchaser. If no mention of partnership's interest, transfer free of partnership's interest if transferee gives value and has no notice of authority

Corporations (Formation): What is a pre-incorporation contract? Who does it bind, and when?

Pre-incorp contracts; spearheaded by promotor (person acting on behalf of corp not yet formed) to seek capital/needs of corp. Corp liable for contracts if it adopts them, either expressly or by accepting their benefits (e.g., through agents) Promotors: Jointly and severally liable for contracts, even if later adopted by corp. Can be released only if novation of all the parties, or agreement expressly relieves promotor of liability (in which case, no contract; only offer to corp) Note: Promotors have fiduciary relationship to corp and to other promotors, need fair disclosure and good faith

Family Law (Marriage): What agreements might couples make before, during, and after marriage? What is required for them to be valid?

Prenuptial Agreement: Agreement that addresses party rights upon death/divorce (mutual marriage is consideration). Under UPAA, can cover property, wills, choice of law, and anything else not violating public policy. Valid if voluntary signed writing with full disclosure of parties assets. Court may ignore clauses on alimony if spouse rendered public charge, or children Marital Contract: Agreement between spouses who intend to remain married. Alters/confirms marital rights/duties, or at separation/dissolution/death. Usually made to clarify property rights. Same principles of prenuptial agreements apply. Separation Agreements: After marriage, parties can agree to live apart and resolve economic issues/custody rights. To be valid, must be voluntary, need full/fair disclosure, and need separate consideration (usually exchange of mutual promises). Here too, court not bound by clauses relating to children. Can be merged w/ divorce decree, else remains separate contract Cohabitation Agreements: Can have agreements between unmarried cohabitants, but not if sex is only consideration. Note: If no choice of law provision, law of state where executed governs (or state w/ most significant relationship)

Agency/Partnership (Agency Liability): What are the rules of tortious liability in agency law under a theory of respondeat superior?

Principal liable for agent's torts, rules differ if agent is employee or contractor. Touchstone of difference is control, did principal have it? Look to nature of work (skilled = more likely contractor), supervision of work, who uses tools, nature and length of employment, party communications, etc. Employees: Principal liable if agent was acting in scope of employment (frolic vs. detour, motive to benefit employer, etc.). Not liable for intentional torts unless in job's duties, for employer's benefit, or employer specifically authorized it. Contractor: Principal not liable unless inherently dangerous activity involved, duty is nondelegable (keep premises safe for customers), or principal knowingly chose bad contractor. (a) Estoppel: If principal holds person out as employee and another reasonably relies on that, principal may be estopped from disclaiming status/avoiding liability. Note: Even if not vicariously liable, principal still responsible directly for own negligence/torts in hiring/training employee. Note: Absent respondeat superior, may be liable if agent has apparent authority which enables them to commit tort or conceal commission; close link between authority & conduct

Wills & Trusts (Will Execution): What is probate? How is an estate usually administered, and by whom?

Probate = proceedings of judicially determining will of the decedent. Personal representative is appointed to carry out estate administration. If named in will, person is executor. If not so named, they are administrator. Jurisdiction for probate is domicile at time of death, but ancillary jurisdiction for places where assets are located. Powers; Personal rep can manage estate assets, pay expenses, distribute property, give notice to claimants/heirs, and discover probate assets. Entitled to compensation. Creditors: Personal rep must give probate notice to creditors, who must then file claims within specific period. Order paid: (a) Administrative expenses, then funeral expenses/last illness, (b) Family allowances and debts given preference under law (c) Secured claims (liens, mortgages, etc.) (d) Judgments entered against decedent during lifetime, and (e) All other claims

Family Law (Marriage): What rights/duties to married couples have?

RIGHTS; Property: Married spouses can take property in tenancy by the entirety, if state recognizes. Also can acquire marital property Alienation of Affection: Action against third party for depriving spouse of marital relationship (abolished in some states). Need evidence of genuine love between spouses, and evidence of love being alienated by defendant's acts. Criminal Conversion: If spouse sleeps with third party, other spouse has cause for criminal conversion (adultery). Privacy: Courts can't regulate internal family affairs, marriage falls within constitutional rights of privacy. Also, gives spouses evidentiary privileges in certain situations. DUTIES; Support: Spouse liable to third parties for necessaries of other spouse, and for other's authorized purchases (agency theory) No Abuse: States have laws protecting against abuse, can seek protective order (ex parte) against violent spouse

Wills & Trusts (Alternative Trusts): What is a resulting trust?

Resulting trust arises by implication from settlor's conduct, if (1) purchase money resulting trust (seller gives title to someone else), (2) on failure of an express trust, or (3) on incomplete disposition of trust assets (excess corpus). Goal: Do what settlor would have done if they had properly effectuated intent. Settlor is beneficiary (if deceased, goes to successors in interest). Express trust fails if trust unenforceable or void, or if beneficiary dead or cannot be located. Purchase Money Resulting Trust: Presumed if beneficiary gives consideration for property, but title is taken in trustee's name. Could be for donor, creditor, etc. Must be for purchase of property (not improvements); burden on beneficiary to show they gave consideration, then rebuttable presumption of trust arises unless contrary intent proven (e.g., meant as gift or loan) --Note: No presumption of trust when parties are closely related (presumed to be gift), or if title taken for illegal purpose, or taken wrongfully (e.g., by fraud). Note: No implication if trust instrument specifically says what to do if trust fails, settlor was given consideration for trust, settlor created illegal trust, or cy pres is applicable for charity

Transactions (Attachment & Perfection): What is the scope of attached property? What are the exceptions?

Scope: Without after-acquired property clause, agreement only reaches rights in collateral debtor had at time of signing, unless collateral is rapidly depleted and replenished (e.g., accounts/inventory) or has readily identifiable proceeds. Exception 1: After-Acquired property clause, security interest attaches to new property as soon as debtor gets right to it. But, can't use for consumer goods or commercial tort claims. Exception 2: Identifiable proceeds automatically attached. Includes anything gotten on sale, exchange, or disposition of collateral, including second generational proceeds. Note: "Identifiable" means creditor can prove proceeds trace back to original collateral. In case of cash commingled with proceeds, look at bank account when proceeds deposited; lowest balance between then and now is proceeds. But, can't exceed amount initially deposited as proceeds. Future Advances: Agreement can say collateral will be security for present AND FUTURE advances creditor makes to debtor

Transactions (Formation & Types): What is a secured transaction? Who are the parties? What is a purchase money special interest?

Secured Transaction = Sale on credit or loan in which seller obtains lien on some/all of debtor's property as security. One who owes payment of obligation is debtor, creditor is the secured party/lender. Security agreement creates the interest; acts as contingent property interest, if default, springs to life PMSI: Purchas money security interest can occur if seller either (1) both sells the goods and retains security interest (seller-financed), or (2) loans funds to enable buying collateral, giving creditor security interest (financer-financed).

Corporations (Directors & Officers): What is a corporate officer? What duties does an officer owe to a corporation?

Selection: Selected and removed by board, which also sets their salary. Officer can resign by notifying board. Can be removed with or without cause. Shareholders don't choose. If resignation/removal is breach of contract, may have damages Officer = agent of corp, agency law determines authority and powers. Can take actions permitted by articles, bylaws, etc if within corporation's power (i.e., within scope of lawful purpose) but not if ultra vires. Agent officers can bind corp if authorized. Owes same duties of care/loyalty to corp as directors Authorization: Board or bylaws may grant officer broad authority or authority to take specific actions (needed for extraordinary acts). Authority may be apparent from position (e.g., president can bind on contracts for day to day business). But, if fundamental business change, must go through channels Unauthorized acts can be binding because of ratification, adoption, or estoppel. No particular officers needed, bylaws govern; same person can be several officers

Transactions (Priority): What is strict foreclosure? How does it differ from a resale? What rules govern the resale of collateral?

Strict Foreclosure: Creditor keeps collateral, doesn't resell it (a) Must send proposal to keep to any other creditor who sends notice to them, or perfected interests that filed. If other creditor objects within 20 days, must resell. (b) Also need debtor consent, either in authenticated record or by failing to object within 20 days of notice. (c) Can't do this with consumer transactions to satisfy part of debt (only for whole, otherwise seek deficiency) or if debtor has paid >60% of price on PMSI consumer good (must resell). Resale: Creditor sells/leases/disposes of collateral in condition repossessed. Sale can be public or private. Sale discharges subordinate security interests, but not superior interests. (a) Notice: Need notice to debtor/sureties, to other creditors who notified secured party or perfected by filing/notation. Must include type of sale/collateral, time/place of sale. (b) Every aspect of sale must be commercially reasonable, make effort to get best price. Secured party can buy the collateral at public sale, not at private unless collateral is type commonly sold in recognized market or widely distributed (c) Proceeds: money goes to repossession costs, then to pay foreclosing creditor, then lower priority creditors, then debtor. Higher creditors get nothing because interest remains (d) Remedies: Creditor liable for actual damages if it fails to follow rules. If fails to follow rules, rebuttable presumption that creditor gets no deficiency (sale would have equaled debt) (e) Redemption: Any time before resale, debtor/surety/other creditor can redeem collateral by fulfilling full obligation.

Conflict of Laws (Choice of Law): What are the choice of law rules for each substantive area of law? What is the typical result?

TORTS (1) Vested Rights: Ask where injury occurred. (2) Significant Relations: Ask where injury occurred, where other conduct occurred, common domicile of parties, etc. Balance against policy principles, goals of the two states. Result: Usually place of injury, absent common domicile. CONTRACTS First check to see if valid choice of law clause. Will be upheld unless (a) chosen state has no contacts, and there is better state that does not allow them; or (b) COL provision violates policies of most interested state. But, if no valid COL, then: (1) Vested Rights: If formation issue, where contract signed. If performance issue, where performance was to occur. (2) Significant Relations: Consider place of negotiation, formation, performance, subject matter, and domicile. Balance w/ state policies and expectations of the parties. PROPERTY (1) For real property, apply law of situs (where located). (2) For other property, apply law of transaction situs for inter vivos transfer. For inheritance, decedent's domicile at death. FAMILY LAW: (1) Marriage: Apply law of place where marriage held, unless couple there to get around prohibitory rule of another state. (2) Children: For legitimacy, use law of mother's domicile at time of birth. For paternity, use law of father's domicile. For adoption, use forum state law.

Transactions (Formation & Types): What are the different types of collateral? Which are tangible, and which are intangible?

Tangible: Movable at time security attaches & fixtures (CIEF): (1) Consumer Goods; Goods for personal/family/household (2) Inventory; Goods held for sale/lease, goods under service contracts, or business goods consumed quickly (3 Equipment; Used for business (serves as general catch-all) (4) Farm Products; Crops/livestock/supplies used in farming operation IF in possession of debtor who is a farmer Intangible or Semi-Tangible Things: (CCIIDDAG) (1) Chattel Paper: record of $ obligation, security interest/lease of specific goods (e.g., contract for car on credit) (2) Commercial Tort Claims; award if claimant is org or claim was for business/profession, reduced to duty to pay (3) Instruments: paper representing the right to be paid, like checks, promissory notes, certificates of deposit (4) Investment Property: investible goods, such as stocks, bonds, mutual funds, and brokerage accounts (5) Documents: paper representing the right to receive goods, like warehouse receipt, bill of lading, etc. (6) Deposit Accounts: account maintained with a bank, but only nonconsumer deposit accounts (e.g., business accounts) (7) Accounts: right to payment for property sold or services rendered (not evidenced by instrument or chattel paper) (8) General Intangibles: any personal property that doesn't fit elsewhere; patents, copyrights, trademark, payable intangible

Wills & Trusts (Trust Mechanisms): When is a trust terminated? Who can terminate a trust? What are a trustee's duties upon termination?

Termination: Trust terminates upon date specified or when all purposes or trust have been accomplished/become unlawful. Settlor's objections to termination are no bar if all beneficiaries agree, unless evidence of defeating trust's material purpose. --Note; If beneficiary is unborn or unascertained, they still must consent. Must be party appointed to represent their interest. Trust may terminate by law if is has no funding, or legal/ equitable title have merged. Trustee can terminate in some states if trust has $50K or less, and costs can't be justified. If trust terminates, trustee's duties continue to wind up the affairs of the trust and distribute the remaining trust property. If termination occurs, trustee must distribute trust property as agreed by beneficiaries.

Conflict of Laws (Recognizing Judgments): When does the full faith and credit clause demand recognition of judgments in other jurisdictions?

Test: Two steps, first to see if case proper, then defenses (1) Ask if rendering court had jurisdiction (or fully litigated issue of jurisdiction), issued final judgment on merits (no appeal left). (2) Ask if defenses apply; judgment was penal or obtained by fraud (not wrong law/policy). If either, FFC does not apply. Note: On merits includes default judgment, settlements. Use law of rendering state to decide if requirements were met.

Wills & Trusts (Will Mechanics): What rules apply for will incorporation?

Testator may incorporate outside document into will by reference, which treats doc as if it were written out in will. Must manifest intent to incorporate doc that existed at time of will's execution, and sufficiently describe the doc in the will Note: Many states/UPC have exception to existence req, can refer in will to list specifying personal property distributions that is to be written out/altered after will execution. Note: Will can dispose of property by referencing acts or events (even if in future). But, law may require certain transfer acts for, e.g., real property. Third party acts are in bounds Note: Conditional wills can say operative only on condition, but courts will construe as general, not conditional, if possible

Family Law (Marriage): How is property divided after marriage ends?

Three Approaches: (1) Community: Each spouse gets half of all marital property. (2) Equitable Div of All: Equitable division of all property. (3) Marital Division: Equitable division of marital property only. Two Steps (for third approach): Classification and Distribution Classification: Is property separate or marital? (a) Separate: Stuff owned before marriage, gifts/inheritance, income/exchanges of separate property, pain/suffering awards (b) Marital: Stuff gotten during marriage, earnings & lost wages, work benefits/pensions, damages to marital property Note: Separate property becomes marital if (a) commingled with marital property or (b) transmuted, clear intent to make it marital (e.g., putting it in spouse names). Note: Improvements to property w/ marital funds entitle other spouse to value added, even if property itself is separate. Distribution: Once marital pot defined, who gets what? (a) Court has discretion (unless agreement applies), but once divided, not subject to modification (contra alimony/custody). (b) Factors include party traits, duration of marriage, standard of living, party incomes/needs, economic fault (not marital) Note: Court may divide property in kind (split assets) or by contribution (one spouse gets $, another gets assets)

Corporations (Stock & Shareholders): What is stock in a corporation? How is it issued? What are the different kinds? What consideration is required?

To raise capital, corp will issue bond (borrowing money) or sell stock. Both are security investments to investor. Bond = debt security (promise to repay, transferable), stock = equity securities (becomes owner, not creditor). ISSUANCE Corp sells its stock, rules apply. Corp can choose to issue equal ownership shares ("common shares") or shares with rights divided into classes (must detail in articles). Can also restrict stock transfers, usually by right of first refusal. If valid, can reclaim stock from third party if restriction is conspicuously noted, or transferee had actual knowledge of it when bought TYPES Authorized - Shares described in articles of incorporation Outstanding - Shares that have been issued and not reacquired Unissued - Authorized but reclaimed, not held by shareholders CONSIDERATION Can issue shares for any property or benefit, as board decides. But, can get no less than par consideration (minimum issuance price). If no par, no minimum price. But if par set, can't "water" stock by issuing for less than par value. Under MBCA, par was eliminated, corp can sell for any valuation made in good faith Note: If (and only if) articles provide, shareholder may have right to preserve percentage of ownership via preemptive right, unless shares issued not for cash, within 6 months of incorp, or without voting rights but with distribution preference

Wills & Trusts (Trust Administration): What are the duties of a trust administrator relating to investments?

Trustee expected (under UPIA) to exercise reasonable care, skill, and causation when investing and managing assets as a prudent investor would. Look to entire portfolio to decide. Must consider all aspects, including market and trust's needs. Specific Duties: Trustee must diversity trust as needed, unless purpose of trust conflicts. If trustee has special skills/expertise, must use it in decision-making process (but, unskilled trustee can't excuse breach by inexperience). Note: Trustee usually can't use non-monetary "social" factors in deciding investments (supposed to be impartial), unless the investment would be promising despite the social aspect. Note: Trustee can delegate investment/management functions only if prudent trustee would do so; must be prudent in selecting agent, establishing scope of delegation, and reviewing the agent's actions periodically.

Wills & Trusts (Trust Administration): Who is a trustee? What duties do they have, and are they owed compensation? What powers do they have?

Trustee is caretaker of a trust. Trust does not fail if trustee dies or refuses appointment/resigns, court can appoint successor unless settlor clearly intended specific trustee required. But, no trustee may cause inter vivios trust to fail (no delivery) Duties: If not specified, court implies duties where intention is to create a trust. Anyone can be a trustee if they can acquire/ hold property, and can administer it (not minors/insane ppl) Compensation: Trustee can get reasonable compensation, as specified by trust. Also gets reimbursement for expenses. Removal: Court can remove on its own motion or upon settlor request, beneficiary request, or co-trustee request. Grounds include breach of trust, unfitness/failure to administer, change in circumstances, serious lack of trustee cooperation, etc. Powers: Trustee has powers conferred by trust's terms, state law, and implied as appropriate to achieve trust's purpose. Imperative/mandatory powers are those required by trust, whereas discretionary powers are those up to trustee's choice. Liability: Trustee can sue third parties as fiduciary, and does not incur personal liability for trust's contracts so long as they reveal their status as a trustee. Liable trust's torts, but is entitled to indemnification from trust if trustee was not in breach. Note: Co-Trustees may act by majority decision. All acts are reviewable by the court, and exercise of discretionary power is reviewed for abuse of discretion (court can intervene).

Wills & Trusts (Trust Administration): When is a trustee liable for breach of their duties? What are the remedies?

Trustee is not liable if they acted in reasonable reliance on trust's terms, beneficiary consented, or ratified act. Exculpatory clauses may relieve liability, unless act is reckless/in bad faith If trustee commits/is about to commit breach, remedies: (1) Can enforce specific performance of duties (2) Can enjoin trustee from committing breach (3) Can compel trustee to pay money or restore property (4) Can suspend or remove trustee Damages: Look to greater of amount necessary to restore trust property to what it would be w/out breach or trustee's profits Self-Dealing: If trustee self-deals, beneficiary can affirm (if trust got profit), set aside transaction, or get trustee's profits back. Note: Co-trustees are not liable for acts of other trustees they did not join in/took reasonable care in preventing.

Wills & Trusts (Trust Administration): What are the fiduciary duties of a trust administrator?

Trustees owe fiduciary duty to beneficiaries (in some states, only to the settlor if trust is revocable). Duties are: (1) To administer trust according to its terms in good faith in reasonably prudent manner, and to treat many beneficiaries in impartial manor. Can't delegate discretionary powers. (2) Loyalty; trustee can't deal with trust in individual capacity (self-dealing), buy or sell trust assets, borrow trust funds or loan personal funds to trust, use trust to secure personal loan. Prohibited transactions are voidable by beneficiary unless court/beneficiary approved it, failed to bring timely suit, etc. (3) Report; Trustee must give qualified beneficiaries trustee's contact info, respond to request for info on trust, and furnish annual accounting reports. Trustee must not commingle trust property with another trust's property (must earmark each). (4) Enforce/defend claim on behalf of trust, and preserve trust property by leasing land, collecting claims, investing, etc. Applies prudent investor rule (see later card).

Corporations (Stock & Shareholders): When is a shareholder liable for corporate debts?

Two situations: Either corporation has not been formed (no liability protection) or corporate veil pierced. (1) Is there a corporate veil? If de jure incorporation, de facto incorporation, or estoppel (for latter two, shareholder must not have known of lack of corporation), veil applies. (2) Can it be pierced? Can pierce corporate veil if (a) corporate formalities ignored and injustice resulted, (b) corp was inadequately capitalized at time of formation (not enough $ to cover liabilities), or (c) necessary to prevent fraud. Liable if no corporate veil, or veil pierced. Else, no liability. But, even if veil gone/pierced, usually courts only hold active shareholders liable; merely investing generally not enough. Note: Veil is much more easily pierced in torts cases.

Family Law (Children): What rules govern assisted reproduction?

Uniform Parentage Act (UPA) governs, but not in many states: (1) Maternity: UPA says parent-child relationship established by giving birth to parent (unless surrogacy agreement), court's adjudication of maternity, adoption, or father is married to woman who had child through assisted conception (2) Donors: Egg/sperm donors not parents of child under UPA, but some states allow rights if agreed to in writing. If consents to use after death, posthumous donor is parent (child inherits) (3) Surrogacy: Can be genetic (woman assists by providing own gametes) or gestational (woman assists by gestating gametes of another). Most states allow only the latter. Note: Gestation surrogacy agreements valid if in writing and approved by court, be voluntary, provision for healthcare cost, and provide reasonable promised consideration (Varies). Can be terminated at any time before embryo transfer. If terminated or invalid, gestational mother is mother of child

Corporations (Stock & Shareholders): What is a close corp?

Usually, shareholders have no direct control in management. In close corp, shareholders run corp directly (few shareholders, stock not publicly traded). Can have management agreement to vest power in shareholders in articles or by unanimous written shareholder agreement (must be noted on stock). If not close corp/no shareholder management agreement, shareholders only have indirect control via voting power. But, if close corp, some states impose special duties on shareholders, fiduciary duties to each other in addition to corp, can sue if some shareholders are oppresssing minority shareholders

Corporations (Stock & Shareholders): What is a shareholder? What rights and powers do they have in a regular corporation?

Voting: Anyone holding outstanding stock (authorized and issued) has one vote per share by default. Must hold by record date (fixed by board), but date can't be more than 70 days before meeting. No votes for treasury/unissued stock. (a) Can vote by proxy, if in signed writing given to corp (b) Can vote in aggregate by trust if signed writing given to corp, legal title given to trustee (10 year lifespan). Can vote in aggregate by agreement if signed writing (need not give to corp, and no max duration; no transfer of legal title). Inspection: Any shareholder has right to inspect corp records. Right is unqualified (if written demand made) for bylaws, board resolutions on shares, minutes of shareholder meetings, etc. But, must state proper purpose for board minutes, corp books and accounting records, and shareholder records. Derivative Suits: Shareholder sues to enforce corp's claims, not her own. Corp must always have been able to bring claim itself, and recovers winnings. Corp is joined as defendant, then must conduct impartial investigation to see if suit is in best interest. (a) Requirements: Need (1) shareholder status at time of claim, (2) demand from shareholder to corp to take action before bringing suit, and (3) fair/adequate representation of corp

Wills & Trusts (Will Mechanics): What is a contract will? When is relief available to the respective parties?

Will executed OR will not revoked as consideration for a contract. Contract law governs; need consideration, and in most states, writing is required. Joint execution doesn't raise presumption of contract will, need clear proof/intent. Revocation: Can revoke a contract will while both parties are alive, only becomes irrevocable upon first testator's death. No breach during testator's lifetime (unless clear repudiation). But, if testator dies in breach, remedy is to grant constructive trust Special Case: No remedy available for breach of contract NOT to revoke will unless first party dies in reliance on that contract. Constructive trust granted in favor of beneficiary if survivor disposes of property in breach after first party dies. Upshot: Look for cases where one party dies in compliance (doesn't revoke will), but second party then tries to make new will or dispose of property. Will find constructive trust (although new will is probated/valid). Merely revoking will isn't enough, because will can always be corrected before death. Note: Also look for damages; if one party revokes before death and other party is still alive, no damages! Non-breaching party can still change/revoke their will