Bar Exam: Wills and Trusts

Mistake in Execution of a Will

* Testator unaware of the nature of the instrument she signed (believed it to be something else). Raises question of testamentary intent, without which the will would be invalid. *the testator executed the wrong document as his will

Lack of Capacity

*Presumption is that the testator is sane. *Burden to prove lack of capacity is on the will contestant. Requirements for capacity: T must understand... 1) the nature of her act, 2) the extent of her property 3) the persons who are the natural objects of her bounty **alcoholism and drug addiction do not prove lack of capacity.**

Testamentary Intent

For a will to be valid, the testator must have had the PRESENT intention to make the particular instrument her will.

Fraud in the Execution (factum)

Fraud in the factum is a misrepresentation as to the nature or the contents of the instrument.

Revival of a revoked will

Generally concerns a will that was revoked by a subsequent instrument, which itself is revoked by physical act or subsequent instrument. If a subsequent will is revoked it would revive the first. A will may also be revived by reexecution or republication. A will revoked by a physical act cannot be republished.

Anti Lapse Statute

If a beneficiary predeceases a T, the gift usually lapses; however, California's anti-lapse statute saves the gift if the predeceasing beneficiary: 1) was kindred of T AND 2) left descendants who survived T.

Lapsed Gifts

If a will beneficiary dies during the testator's lifetime, the gift tot him lapses and the gift falls into the residuary estate as undisposed of property.

Statutory Presumption

In CA there is a statutory presumption that a provision in favor of one of the following people is the product of fraud or undue influence: 1) the person who drafted the instrument (and his relatives and associates) 2) a erson who is in a fiduciary relationship with the testator and transcribed the instrument 3) a testator's care custodian (or his relatives, cohabitant, or employees) **there is an exception for someone who had a personal relationship with the testator before she became dependent and provides services without remuneration

Attested will

In CA, an attested will must: i) be in writing ii) be signed by the testator iii) the testator's signing or acknowledgement of his signature must occur in the joint presence of at least 2 witnesses who sign the instrument DURING the testator's lifetime, AND iv) the witnesses must understand that the instrument is the testator's will

Right to Decedent's Community and Quasi-Community Property

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

Mistake as to Content of Will

It the Testator is ENTIRELY ignorant of the contents of an instrument, it is not admissible.

Interlineations

Not given effect is made to an attested will (unless the changes are sufficient to constitute a holographic codicil) Are given effect if made to a holographic will.

Fraud in the Inducement

Occurs when the testator intends to execute the instrument as his will and to include the particular contents of that instrument, but he is fraudulently induced into making the will or some gift therein by misrepresentations sat to facts that influence his motivation.

Charitable Trusts

Purpose must benefit the public Must have indefinite beneficiaries May be perpetual (RAP does not apply) Enforceable by attorney general, not settlor or beneficiaries Cy pres: if settlor's intended purpose is impracticable, unlawful, wasteful then court substitutes a new charitable purpose

Posthumously Born Relatives

Relatives conceived before the decedent's death but born thereafter inherit as if they had been born in the lifetime of the descendant.

Fraud-Contesting a Will

Require a showing that the testator was willfully deceived as to the character or content of an instrument, as to extrinsic facts that would induce the will or a particular disposition, or with respects to facts material to a disposition. Fraud invalidates a will only if the testator was in fact deceived by and acted in reliance on the misrepresentation.

Revocation by physical act

Requirements: 1) will must be burned, torn, canceled, obliterated, or destroyed; 2) must be accompanied simultaneously by a present intent to revoke 3) where the act of revocation is performed by someone else, the other person must act in the presence of the testator and at her direction

Step-Children and Foster Children

Same effect as adoption if: 1) the relationship began during the person's minority and continued throughout the parties' joint lifetimes, and 2) it is established by clear and convincing evidence that the step/foster paren would have adopted the person but for a legal barrier

Mutual (Reciprocal) Wills

Separate wills executed by two or more testators that contain substantially similar or "reciprocal" provisions.

Methods of Revoking a Will (3 methods)

1) by operation of law 2) by subsequent instrument 3) by physical act

Revocable Trusts

1) interest passes during life but becomes possessory at death 2) pour over from will to revocable trust a) trust may be established before, after or concurrently with will b) trust may be amendable and revocable c) gift is valid even if trust unfounded during the settlor's lifetime

Trustee's Liability

1) liable to beneficiaries for breach of trust 2) losses from one breach may not be offset against gains from another 3) defenses--laches or express or implied consent to the breach by beneficiaries 4) exculpatory clauses relieving trustee of all liability or liability for bad faith, intentional breach, or recklessness are void

Powers of Trustee

1) power to sell and lease unless limited by trust instrument 2) power to incur expenses--necessary and ordinary management expenses allowed; power to improve property usually not inferred 3) power to borrow money must be granted in trust instrument

Resulting Trusts

1) purchase money resulting trusts--person taking title did not supply consideration; sole duty is to convey title to one furnishing consideration **no resulting trust presumption if parties closely related** 2) failure of express trust--resulting trust arises with settlor as beneficiary 3) excess corpus --if trust property remains after purpose fulfilled, resulting trust for settlor arises

Will Substitutes

1) revocable trusts 2) life insurance trusts 3) totten trust bank accounts 4) life insurance *not a will, a contract, and the disposition is governed by the terms of the contract 5) deeds *a deed deposited in escrow, with delivery conditioned upon the grantor's death, may be a valid non testamentary transfer

Republication of Codicil

A codicil and the will to which it pertains are normally read together and treated as ig they constitute a single testamentary instrument executed on the date of the codicil or of the last codicil. The will is deemed to be republished or reelected with the codicil, so that the will is made to speak, or to speak again, as of the date of the codicil.

Holographic codicils and wills

A codicil is a testamentary instrument intended to modify, amend, or revoke an existing will. IT must be executed with the same formalities as a will. CA recognizes holographic wills and codicils. To be valid, the signature and material provisions of the holographic will or codicil must be in the testator's handwriting. The material terms are the gifts made and the names of the beneficiaries.

Incorporation by Reference

A document may be incorporated into a will by reference so that it is considered a part of the will. Requirements: i) the document must be in existence at the time the will is executed; ii) it must be sufficiently described in the will so that its identification is clear; iii) there must be satisfactory proof that the proffered document is the document described in the will.

Mistake as to Distribution

A duly executed statutory will would not be denied admission to probate based on a finding that the testator was mistaken as to how the will would dispose of the property.

Codicil

A later testamentary instrument that amends, alters, or modifies the will in some fashion. Must be executed with the same formalities required for the execution of a will.

Intestate Succession

Any part of a decedent's estate that is not properly disposed of by will passes to the decedent's intestate heirs as prescribed by statute. Community property is treated differently from separate property under the statute.

Common Law Presumption of Undue Influence

Arises when: 1) a confidential relationship exists between the testator and the beneficiary 2) the beneficiary participated in procuring, drafting, or executing the will and 3) the will provisions are unnatural and favor the alleged influencer California recognizes a confidential relationship whenever one party relies heavily on and places a more than normal amount of trust in another

Classic/Pure Per Stirpes

The division is always made at the child level, regardless of whether there are any living takers at that level. One share passes to each child of the decedent.

Harmless Error Doctrine

The harmless error rule states that if there is a harmless error made in the execution of a will, the will can still be considered valid and offered to probate. The proponent of the will must establish by CLEAR AND CONVINCING EVIDENCE that at the time the testator signed the will he intended the will to constitute his will. The harmless error rule will occasionally excuse errors on the signature and attestation requirement of the execution ceremony. However, the errors in the writing requirement are not usually excused. Not all states have adopted the harmless error rule.

Simultaneous Death of Decedent and Intestate Heirs

The intestate heirs must survive decadent by 120hours otherwise they are deemed to have predeceased the decedent for purposes of intestate succession.

Intentional Interference with an Expectancy

The plaintiff must prove that: 1) he had a reasonable expectation of receiving some interest 2) but for the defendant's interference, he would have received the interest 3) the defendant had knowledge of the plaintiff's expectancy and deliberately interfered with it 4) the interference was wrongful/tortious in its own right (e.g. fraud, undue influence) 5) the interference damaged the plaintiff

Probate Process

The process by which an instrument is judicially established as the duly executed will of a competent testator or where a decedent's heirs are judicially determined. Wills may be offered for probate by any person interested in the estate, including creditors or the executor named in the will.

Per Capita with Right of Representation

The property is divided into equal shares at the first generational level at which there are living takers. Each living person at that level takes a share, and the share of each deceased person at that level passes to his issue by right of representation.

Surviving Spouse/Domestic Partner's Waiver of Rights

The spouse/domestic partner can waive right to receive property before or during the marriage. To be enforceable: 1) must be in writing 2) signed by the surviving (waiving) spouse

Right to Decedent's Separate RPoperty

The surviving spouse/domestic partner takes 1/3rd of the decedent's separate party if the decedent is survived by: i) more than one child, OR ii) one child and the issue of one or more deceased children, OR iii) the issue of two or more deceased children The surviving spouse/domestic partner takes 1/2 of the decedent's separate party if the decedent is survived by: i) only one child or the issue of a deceased child,OR ii) no issue, but a parent or the issue of a parent The surviving spouse/domestic partner takes ALL of the decedent's separate party if the decedent leaves no surviving issue, parent, brother, sister, or issue of a deceased brother or sister.

Incorporation by Reference

To incorporate a document by reference: 1) it must be in existence at the time the will was executed 2) it must be sufficiently described in the will and 3) there must be proof that the proffered document is the one described in the will

Discretionary Trusts

Trustee has discretion to pay or withhold income or principal.

Revocation of a trust

Under the Uniform Trust Code (UTC) and by statute in several non-UTC states, a trust is presumed to be revocable unless the trust instrument expressly provides that it is irrevocable. The power to revoke lies with the settlor--all beneficiaries may consent to terminate a trust if no material purpose will be impaired. A trustee CANNOT unilaterally terminate a trust.

Reexecution of a will (revival)

a will may be reelected if the testator acknowledges her signature on the will and having witnesses attest to it.

DRR: Dependent Relative Revocation

an equity-type doctrine under which a court may disregard a revocation if it determines that the act of revocation was premised on a mistake of law or fact and would not have occurred but for the testator's mistaken belief that another disposition of her property was valid. The disposition that results from disregarding the revocation must come closer to effectuating what the testator tried (but failed) to do that would an intestate distribution.

Admission to probate requires that...

an instrument either dispose of property, appoint an executor, or revoke another instrument. A will CANNOT serve solely to disinherit an heir--to disinherit an heir, the decedent must give all her property to other person; if she does not do so, the property will pass by intestacy to the heir.

Attested Wills-Requirements in CA

i) the will must be IN WRITING ii) the will must be SIGNED by the testator iii) the testator must sign or acknowledge the will or his signature in the JOINT PRESENCE of at least 2 WITNESSES iv) the 2 WITNESSES must sign the will DURING THE TESTATOR'S LIFETIME v) the witnesses must understand that the instrument being witness is the testator's will

Intestacy Statute

if there is no surviving spouse or domestic partner, a decedent's intestate passes to her issue (lineal descendants). If the issue are of the same generation they take equally.

Issue-Definition

lineal descendants--includes and generation of descendants such as children, grandchildren, and great-grandchildren.

Honorary Trusts

not for charitable purpose, but not private beneficiaries who can enforce the trust (e.g. trust for pets, graves, etc.) Under UTC, enforceable for 21 years.

Spendthrift Trusts

provides that beneficiary may not voluntarily or involuntarily transfer his interest. not valid if settlor is also a beneficiary

Abatement

the process of reducing testamentary gifts in cases where the estate assets are not sufficient to pay all claims against the state and satisfy all bequests and devises. Following order: 1) property passing by intestacy 2) the residuary estate 3) general gifts to persons other than the testator's relatives 4) general gifts to the testators relatives 5) specific gifts to persons other than the testator's relatives 6) Specific gifts to the testator's relatives

Intestacy questions arise when....

there is a partial or total failure of a will. Any part of the estate of a decedent not effectively disposed of by will pass to the decedent's intestate heirs.

Per Stirpes

"Per stirpes" is a term used in wills to describe how property should be distributed when a beneficiary (who has children) dies before the will maker. Here's how per stirpes works. Fred leaves his house jointly to his son Alan and his daughter Julie. But Alan dies before Fred, leaving two young children. Fred's will states that heirs of a deceased beneficiary are to receive the property PER STIRPES: Julie will receive one-half of the property, and Alan's two children will share his half in equal shares. Per stirpes contrasts with "per capita," another way of distributing a dead beneficiary's gift. Here's how per capita works: Like the example above, but Fred's will states that the property should be divided PER CAPITA: Julie and the two grandchildren will each take an equal share - one third.

Duties of Trustee

1) care-standard is that of a reasonably prudent person managing own property 2) loyalty--no self dealing a) cannot buy assets from or sell assets to trust b) cannot borrow from trust or loan to trust c) cannot personally gain through position d) corporate trustee cannot buy their own stock (but can retain) e) if duty breached, beneficiary may: i. set aside transaction ii. recover profit iii. or ratify the transaction f) settlor can waive self dealing restrictions 3) duty to separate trust property--no commingling with own property or other trusts' property a) commingled property lost or destroyed presumed to be trustee's b) if commingled assets increase in value, presumed to be trust assets c) if commingles assets decrease in value, presumed to be trustee's 4) duty to perform personally--cannot delegate administration of trust 5) duty to preserve property and make it productive a) investments must be prudent; trustee must use reasonable care, skill, and caution i) trustee must diversify investments ii) investment decisions may be delegated if a prudent trustee would do so

Life Insurance Trusts

1) contingent beneficiary trust allowed (e.g. "proceeds to A, but if A does not survive, to B in trust for my children") 2) assignment of policy trust allowed (assign policy to party to hold in trust)

grounds for a will contest

1) defective execution 2) the will has been validly revoked 3) the testator lacked testamentary capacity 4) the testator lacked testamentary intent 5) the will or a gift therein is a product of undue influence 6) the will or gift therein was procured by fraud 7) the document was executed or a gift was made as the result of a mistake

Adopted Children

1) inherit form adoptive parents same as natural child 2) do not inherit from NATURAL parents--the relationship of parent/child is severed UNLESS i) the natural parent and adopted person lived together any time as parent and child, OR the natural parent was married to, a domestic partner of, OR cohabitating with, the other natural parent at the time the child was conceived and that parent died before the birth of the child; AND ii) the adoption was by the spouse or domestic partner of either of the natural parents of the adopted person or after the death of either of the natural parents 3) natural parents and relatives of natural parents do not inherit from or through the adopted person

Creation of Trust

A trust is a fiduciary relationship with respect to property whereby one person, the trustee, hold legal title for the benefit of another, the beneficiary. Creation of a valid express trust requires: i) property (must be an existing interest in existing property), ii) a trustee with duties (a trust will not fail for lack of a trustee--the court will appoint one), iii) a definite beneficiary (except charitable trusts--the beneficiaries are indefinite), iv) a manifestation of intent to create a trust by a settlor with capacity (can be manifested by written or spoken words or by conduct), and v) a valid trust purpose (any purpose that is not illegal or contrary to public policy)

Integration

A will can be written on more than one piece of paper. A will consists of all of the papers that were actually present at the time of execution and that the testator intended to constitute her will. *Extrinsic evidence is admissible to show which papers were intended to be integrated. *The requisite intent and presence of the papers at execution are presumed when there is a physical connection of the paper (i.e. a staple)

Undue Influence

A will is invalid if it is obtained through undue influence: which is mental or physical coercion that deprives the testator of her free will and substitutes the desires of another for hers. To establish undue influence, the contestant must show that: 1) influence was exerted on the testator 2) the effect of the influence was to overpower the mind and free will of the testator and 3) the product of the influence was a will that would not have been executed but for the influence --------------------------------- Usually proven by circumstantial evidence such as: 1) opportunity to exert influence 2) susceptibility of the testator due to age or physical condition 3) whether the beneficiary was active in procuring the will 4) whether the dispositions of the will provisions seem unnatural

Holographic Will

A will that is handwritten and signed by the testator but no witnesses. Valid if the signature and material provisions are in the testator's handwriting. If testator lacked "testamentary capacity" at any time during which the holographic will MIGHT HAVE been executed, the will is invalid unless it is shown that he had testamentary capacity.

Omitted Child

CA: protects children from being unintentionally omitted. If a decedent fails to provide for a child born or adopted after the execution of all of decedent's testamentary instruments, the child is to receive her intestate share of the decedent's property.

Support Trust

Cannot be assigned or reached without spendthrift clause

Mistakes of Omission in a Will

Cannot be corrected.

Constructive Trusts

Equitable remedy to prevent unjust enrichment. 1) theft or conversion 2) fraud, duress, undue influence, mistake, or interference with contract relations 3) breach of fiduciary duty 4) breach of fraudulent promise, promise by one in confidential relationship, promise concerning will or inheritance, promise to forgo foreclosure bid

Revocation by Written Instrument

Express REvocation: may be revoked in whole or in part by the express terms of a later will or codicil, whether or not the later will or codicil makes any disposition of property Implied Revocation: the terms of a subsequent instrument make an inconsistent disposition of property--the terms of the prior will are necessarily superseded or nullified

Ambiguities in Will

Extrinsic evidence is admissible to explain any ambiguity arising on the face of a will, as well as to resolve a latent ambiguity. 1) oral declaration at or around the time of execution will be admitted to show state of mint (from which intention can be interred) 2) declaration after execution are less likely because they may not accurately reflect the testator's intent at the time he actually executed the will.

Death of devisee or legatee

When a devisee or legatee dies after the testator executes his will but before the testator dies, the gift lapses. The failed gift, in the absence of a contrary provision, falls into the residue. If there is no residuary estate, the failed gift passes by intestate succession.

Ademption

When specifically bequeathed property is not in the testator's estate at death, the bequest is deemed; it fails. *doesn't apply to general or demonstrative legacies, only specific devises and bequests.