Practice Exam
Bertram had two sons, Jim and John. In 2008, Jim asked his father for $50,000 to start a new business. Bertram gave him $50,000 and put the following in writing, and signed it, and gave it to Jim, as he handed him the money, "You realize that this will count against your share when I die, signed Dad." Jim and nothing. Bertram died intestate in 2010 leaving an estate of $100,000. He was survived by Jim and John. How should Bertram's estate be distributed?
$25,000 to Jim; $75,000 to John. This is an advancement question, because the gift of $50,000 was accompanied contemporaneous writing signed by the testator evidencing that the money was to count against Jim's share of the estate. Accordingly, we must see what the estate would have been if the advancement had not been made, and then divide the remaining amount. Bertram died with $100K, but he would have had $150K if he had not given Jim the advancement of 50K. Thus, each son would have gotten 75K if no advancement had been made. Therefore, John should get his full 75K share from the 100K remaining at Bertram's death, and Him should only get 25K (which will bring his total 75K). Absent a writing creating an advancement, the sons would have split the remaining 100K evenly.
Raymond "Red" Reddington died in December 2016 leaving a valid will. The will provided that the residue of his estate would go to his friends Elizabeth Keen and Harold Cooper, neither of whom is related to Red. Unfortunately, Harold died in March 2016. How will Red's residuary estate be distributed in a jurisdiction not allowing a "residue of a residue?"
1/2 to Elizabeth, 1/2 to Red's heirs via intestacy. In states like MS, a failed residuary bequest passes by intestacy. Thus, Harold's share would lapse (he was not a relative of Red, so the anti-lapse provision would not apply), and it would pass to Red's heir via intestacy.
Adam Lambert validly executed his will in 2008. Among several other provisions, Adam left $7500 to David Cook. Under the will the residue of Adam's estate goes to Ryan Seacrest. In 2009, Adam became angry with David, and scratched out David Cook's name, and substituted Crystal Bowersox on the face of the will. How should the $7500 in question be distributed in a state allowing partial revocation by physical act?
All of it to Ryan Seacrest. The gift to David has been revoked, but the attempted gift to Crystal fails. You cannot add to a formally executed will, without formally executing another document making an amendment. Has this been a holographic will in a jurisdiction allowing holographs (like MS) the gift to Crystal would be valid, if it was written in the testator's handwriting. A failed gift, that is not residuary gift, falls into the residue. This the $7500 becomes part of the residue.
Brothers Pete and Repeat were sitting on a fence. Pete fell off, and died. Repeat was so shocked by his brother's demise, that a few seconds after Pete died, Repeat died of a heart attack. Pete's will gave all of his estate to Repeat if Repeat survived him. If not, Pete's estate would pass to Carla. How should Pete's estate be distributed, if Pete and Repeat did not live in a state apply the 120 Rule?
All to Repeat. Under the Common Law, Repeat survived Pete, even if only by a few seconds. Thus, under Pete's will, Repeat would take everything. NOTE: In a jurisdiction applying the 120-Hour Rule, "All to Carla under the 120-hour rule" would be correct, and Carla would take everything. That is because Repeat failed to sruvive Pete for at least 120 hours. In my opinion, this is the better outcome, because Repeat did not survive long enough to enjoy the benefits of Pete's estate. Furthermore, the property and money Repeat would inherit in a common law jurisdiction, would go through Pete's probate estate and then directly into Repeat's probate estate. This doubles the administrative process, and cost of probate, with no real benefit to Repeat. It is much better to have the property pass to Carla. I recommend that you include a clause in your wills defining survivorship as a meaningful period (something specific like 9 months).
Anna is insured under a life insurance policy that names Beatrice as the primary beneficiary, and Claude as the contingent beneficiary. Anna's will devised Blackacre to Beatrice and the residue of her estate to Xavier. Beatrice's will devised her entire estate to Zelda. Beatrice is not a relative of Anna. Unfortunately, Anna and Beatrice were killed in an auto accident. Anna was pronounced dead on the scene and Beatrice died some 25 minutes later in route to the hospital. The life insurance proceeds and Blackacre will pass as follows in a common law jurisdiction:
Both ill pass to Beatrice, and then to Zelda. A bad outcome. Anna clearly wanted claude and Xavier to take in the event Beatrice died before she did. Beatrice survived, but only long enough to pass Anna's property to Zelda, who was Beatrice's choice, no Anna's.
In 2010, Bozo, died leaving a will validly executed in 2003. One of the provisions of Bozo's will left "my property at 81 Mary Street" to Clarabelle. In 2005, Bozo's was judicially determined to be incapacitated, and a guardian was appointed to oversee his property. During Bozo's incapacity, the guardian was forced to sell all of the property at 81 Mary, in order to assure Bozo's well-being. The net proceeds from the sale of the stock totaled $550,000. Fortunately, Bozo recovered from his incapacity in 2008, and the guardianship was removed. Which of the following statements is most correct in a jurisdiction with he following statute: ... B. If specifically devised property is sold or mortgaged by a conservator or by an agent acting within the authority of a durable power of attorney for an incapacitated person or if a condemnation aware, insurance proceeds or recovery for injury to the property is paid to a conservator or to an agent acting within the authority of a durable power of attorney for an incapacitated person, the specific devisee has the right to a general pecuniary devise equal to the net sale price, the amount of the unpaid loan, the condemnation award, the insurance proceeds or the recovery. ... D. Subsection B of this section does not apply, after the sale, mortgage, condemnation, casualty or recovery, it is adjudicated that the testator's incapacity has ceased and the testator survives the adjudication for at least one year.
Clarabelle's interest in Bozo's estate was adeemed, because she was willed specific property which was not part of Bozo's estate at the time of Bozo's death. The statutory exception to the general rule of ademption does not applying this case, because Bozo recovered from his incapacity, and was competent for more than one-year. Thus, the specific bequest to Clarabelle is adeemed. The idea behind this statute is that Bozo recovered for long enough to realize that the property he had given to C was no longer part of his estate, and he could have amended his estate plan. His inaction creates a presumption that he intended for the property to be adeemed, and for C to get nothing in its place. NOTE: if he stayed under a conservatorship, he would not have the capacity to change his will, and he would most likely not know that the property was sold. Thus, the statute creates an exception to protect the beneficiary from ademption in that case.
In 2001, Fred created an irrevocable trust requiring the trustee to pay all of the trust income to Wilma until she reaches the age of 30. When Wilma turns 30, the trust will terminated, and all assets will be distributed to Wilma. In 2004, Fred died. In 2010, Wilma, aged 25, comes to your office to seek your advice. Wilma would like to terminate the rust early and get all the assets now, rather than waiting until she is 30. What advice do you give her?
Explain to her that, even though she is the sole beneficiary , the court will not terminate the trust if it determines that continuance of the trust is necessary to achieve any material purpose of the trust. Once the settlor or the trust is dead it is very difficult to terminate an irrevocable trust. Courts will allow an irrevocable trust to be terminated only when all beneficiaries and all trustees agree, and the trust no longer serves a material trust purpose. For example, an irrevocable trust to provide for B's education could be terminated when B has completed a terminal degree and convinces the court that the trust no longer serves a material purpose.
Ellen's will made the following residuary bequest: "All of the rest residue and remainder of my estate I leave to my nieces, share and share alike." Ellen had four nieces at the time of make the will. Two of the nieces, Mary Kate and Ashley, predeceased Ellen. Mary Kate died testate in 2005 and her will left her entire estate to Ashley. Ashley died intestate in 2006 leaving her husband and one child as her heirs. How should the residue of Ellen's estate be distributed assuming Ellen died in 2010 without any other kindred?
It should be divided equally between the two living nieces. This is hard one! The language is the will creates a class gift to the nieces. Had the nieces been individually named, it could be argued that the heirs of deceased nieces would take by representation. Because the gift was made to a group, which could expand or contract (Ellen could have had more nieces born after she made the will, and they would take, for example), it is considered as a class gift, and only surviving members of the class can take. NOTE: when you draft a will, be sure you understand whether your client intends to make a class gift, or not. You should be clear to include what happens at the death of a member of a class, as well
Homer and Marge had a son Bart. In 2007, Homer died when he ate too many doughnuts. In 2009, Marge married Moe. Later that same year, Moe adopted Bart. In 2010, Homer's father, Ed, died intestate. The Marge and Moe died a month later, also intestate. Who can Cart inherit from in a jurisdiction with the following statute: (1) For the purpose of intestate succession by or fro an adopted person, the adopted person is a descendant of the adopting parent and is one of the natural kindred of all members of the adopting parents family, and is not a descendant of his or her natural parent's family or any prior adoptive parent's family, except that: (a) Adoption of a child by the spouse of a natural parent has not effect on the relationship between the child and the natural parent or the natural parent's family. (b) Adoption a child by a natural parent's spouse who married the natural parent after the death of the other natural parent has no effect on the relationship between the child and the family of the deceased natural parent. (c) Adoption of a child by a close relative, as defined in s. 63.172(2), has not effect on the relationship between the child and the families of the deceased natural parents.
Marge, Moe and Ed. This problem represents the "step-parent" exception to adoption. Know it! I promise you will get a question about it on the exam!!! The statute says that, as a general rule, a child becomes the child of the adopting parent, and is cut off from her natural parent and her natural parent's family. It creates and exception, however, when one natural parents dies, and the remaining natural parent remarries someone who adopts the natural parent's child. Every state provides an exception for this type of step-parent adoption, but their application of the exception differs. The statute you have been provided (in this case, Florida's) has a broad exception that states that a child adopted by her step-parent is not cut off from her natural parents or their families. Thus, under this statute, Bart can inherit from his adopting parent, and from his natural mother, as well as his deceased natural father's family. Therefore, the above is correct. All of this, of course, can be amended by will. What does yours tate do about step-parent adoption?
Lulu owns the Carlton Arms Apartments with Rusty as a joint tenants with rights of survivorship. Lulu is also the owner of a $350,000 Individual Retirement Account (IRA) and a $1,000,000 life insurance policy each naming Maggie as the Beneficiary on her death. Lulu's validly executed will provides that the life insurance proceeds Apartments and savings account will all pass to Donna upon Lulu's death. The will is effective in passing:
None of the property specified in the problem. A will can only pass the property owned by Lulu at her death. The joint property passes by operation of law and is not governed by the will. The IRA has a beneficiary designation, and is a third-party beneficiary contract that is not governed by the will. The insurance policy also has a beneficiary designation that is not controlled by the will (otherwise insurance companies would have to read the wills of every deceased person they covered, rather than simply relaying on the beneficiary designation). All of these avoid probate and are not controlled by the will. NOTE: those of you who handle divorces must make sure that your client changes beneficiary designations on things like life insurance and retirement accounts.
Michael died intestate in 2009. He had never been married nor had he fathered children. His parents predeceased him. He was survived by his sister Pam, and his half-brother Dwight. In a state that treats half-brother's as 1/2 relations, how should Michael's estate be distributed?
One-third to Dwight and two-thirds to Pam. Because the state treats heals-bloods as 1/2 and whole bloods a whole, Pam would take twice the amount that Dwight takes. The easiest way to determine how much a half-blood in this situation takes is to give each whole blood 2 shares, and the half-blood one share. Here, Pam would get two shares, and Dwight would get one. Thus, Pam gets 2/3 of the estate, and Dwight gets 1/3. NOTE: Jurisdiciton differ in their approach to how 1/2 bloods take in intestacy (you can avoid this whole mess by making sure your client has an estate plan that details how they want their property distributed).
Donald Trump owned a building on Coliseum Dr. in Oxford, MS. In 2004, Trump executed a valid will which left his Coliseum Dr. property Ivanka. In 2006, Trump sold his Coliseum Dr. property to Cindy Lauper. Lauper paid $250,000 in cash and gave Trump a $700,000 promissory note secured by a trust deed on his Coliseum Dr. property. Lauper has paid $180,000 on the note and the current unpaid balance is $520,000. The $250,000 cash and the $180,000 payment were deposited in a bank account at First National Bank. Trump died in 2010 and Ivanka survived. How should Trump's estate be distributed in a state with the following statute: A specific devisee has the right to the remaining specifically devised property and: (1) any balance of the purchase price (together with any security interest) owing from a purchaser to the testator at death by reason of sale of the property;....
Only the remaining payments under the promissory note to Ivanka; the balance as the will directs. Trump gave Ivanka specific property in his will. At common law, if that specific property is not part of Trump's estate at his death Ivanka takes nothing. That is called "ademption." So, at common law, "Nothing to Ivanka, since her property has been adeemed" would be correct. The statute in this jurisdiction, however, creates an exception where there are remaining proceeds from the sale of specific property at the testator's death. The statute says that the specific beneficiary takes the remaining proceeds, but not any amounts already received by the testator. Thus, the above is correct. For example, if I gave you all my CC stock in my will, and I died owning no CC stock, you would get nothing. I could put a provision in my willing remedying that by saying: "in the vent that I own no CC stock at my death, you get cash equal to the value of 10 shares of CC stock not he date of my death."
When abatement occurs, the residuary beneficiary almost always takes:
Only what is left after satisfying the specific, demonstrative and general bequests to the extent possible & Nothing. See problem 9, which gives full explanation as to what happens in abatement.
Randy executed a valid will with the following provision: I leave my car to Simon. When Randy executed the will, he owned a 1970 Buick. At Randy's death, he owned a BMW.
Simon will get the BMW under the doctrine of Acts of Independent Significance. Wills are ambulatory, meaning that they cover property they is part of the estate when the will was executed, but that comes into the estate over the testator's lifetime. Thus, "my car" is interpreted to mean the car driven by T at his death, and not the one he had when he wrote the will. What if he had two cars (or 10)? If the will is silent, then the court will typically award the car that was normally driven by T. Some courts would give the beneficiary the choice.
Peter Griffin's will has a clause in it stating that any beneficiary contesting his will shall forfeit any amounts given to them under his will. Brain was named as a beneficiary of $40,000 in Peter's will, but he is concerned that the will was never validly executed. If Brian files a petition challenging the will in a jurisdiction that upholds no-contest clauses:
The court will hear her challenge, and he will not have to forfeit his interest in the estate, if he can show that there is probable cause fr the challenge. Even if no-contest classes are valid in the jurisdiction, the provision will not foreclose a claim with probable cause. The reason is that the court will not want a beneficiary to be afraid to file a challenge when there isa good possibility that the will should be overturned.
Miley Cyrus created a trust for the benefit of her friend Hanna Montana. The terms of the trust provide that Hanna's interest was not subject to voluntary or involuntary assignment. Which fo the following is true?
The provision will be effective and enforced, but Hanna's interest could be reached by her child, if that child had na unpaid child support order. The restriction is valid and will protect a beneficiary and the trust from attachment by creditors, except for children who are owed child support by the beneficiary. This is a great asset protection device, espeically when the beneficiary is a person who is not good at handling money or debt.
Paris Hilton's validly executed 2007 will stated that she would create a separate writing at a later date detailing her intentions regarding some of her items of personal effect. Paris in fact created a separate writing in 2009 leaving items of personal effect to various members of her family. The separate writing, in Paris' handwriting and signed by her, was found with Paris' will when she died in 2010. Which of the following best describes the effectiveness of this separate writing in a state which does not allow holographic instruments, but which has the following statute: A written statement or list referred to in the decedent's will shall dispose of items of tangible personal property, other than property used in trade or business, not otherwise specifically disposed of by the will. To be admissible under this section as evidence of the intended disposition, the writing must be signed by the testator and must describe the items and the devisees with reasonable certainty. The writing may be prepared before or after the execution of the will. It may be altered by the testator after its preparation. It may be a writing that has no significance apart from its effect upon the dispositions made by the will. If more than one otherwise effective writing exists, then, to the extent of any conflict among the writings, the provisions of the most recent writing revoke the inconsistent provisions of act prior writing.
The separate wiring will be effective to pass personal property other than intangibles, business property, or cash. The separate writing statute gives an exception to formal execution and incorporation by reference rules. The idea is to allow a testator to have a list of items like furniture, jewelry and photos that is amendable without having to go to an attorney or have a formal execution. If you practice in a state that does not allow holographic instruments, the separate writing is a great tool for your clients to use to make gifts of specific personal items (mom's engagement ring, the dining room table, etc.) It can be created after the will is made, and is effective in passing tangible personal items (not business assets, real estate, or intangibles like money or stock).
Which of the following statements is true about grantor trust?
The settlor cannot be the sole trustee and the sole beneficiary. Settlor can be a beneficiary and a trustee, but cannot be the sol beneficiary and the sole trustee.
Rick Flair's estate consists of sports memorabilia having a value of $150,000 and cash totaling $70,000. Flair made the following bequests in his will: 1. I bequeath all of my sports memorabilia to George "the Animal" Steele; 2. I bequeath the sum of $600,000 to Randy Savage; 3. I bequeath the sum of $100,000 to Dusty Rhodes; 4. All the rest, residue and remainder of my estate, I bequeath to Hulk Hogan. Assuming that all of Flair's debts have been paid and that none of the legatees are related to Flair, how should Flair's estate be distributed?
The sports memorability to George, 60K to Tandy and 10K to Dusty. This is an abatement problem. The testator gave more in his will than he died with. How do we divide such an estate? First, specific devisees take specific property, so George gets the sports memorabilia. Then general devisees take a pro rata share of the general estate. Here, decedent made 700K worth of general gifts, but only 70K remained at his death. Since Randy was to get 600K of the 700K given in the will, he should get 6.7 of the amount actually in the estate, or 60K. Duty was to get 100K of the 700K, so he will take 1/7 or 10K of the remaining 70K. The residuary beneficiary takes nothing, because there is nothing left to distribute. This is almost always the case when abatement occurs (there be no residue if the others gifts aren't satisfied). That is a big problem, because the residuary beneficiary is often the most important beneficiary (spouse, kids). Be sure to include a provision in your documents that accounts for a significant diminishment in the estate's value from the time it is executed, until the time of testator's death. Remember that in 2008 there was a huge crash in the stock market, and many estates lost huge value. I recommend a provision like this: "in the event my state falls below 100K, then all provisions of my will are void, and my spouse shall receive my entire estate."
In 1990, Tess executed a valid last will and testament leaving her entire estate to Bud. In 1993, Tess wrote "VOID" on the face of the 1990 will and executed another will leaving everything to Jim. In 1995, after a serious disagreement with Jim, Tess tore up the 1993 will. Tess was survived by Bud and Jim, neither of whom are related to Tess, and by Tess's parents. How should Tess's estate be disturbed.
To Tess's parents, equally. The wills have ben revoked, and there is no revival. Thus, Tess died intestate, and her parents are her heirs. You might have (should have) thought about how Dependent Relative Revocation could apply to this problem. If I give you a DRR question, it will not be a multiple choice question, but will, instead, be an essay question.
If the jurisdiction in the previous problem had allowed a "residue of a residue" then the surviving residuary beneficiary would have taken the entire residue.
True. Instates allow a residue of a residue, the entire residue will pass to the surviving residuary beneficiaries, even though a part of the residuary bequest lapsed (see the previous problem).
Which of the following is generally true about trusts?
Trust assets are presumed to be assignable, a trust can be created orally, and trusts can be used to avoid probate. A simple question showing the flexibility of trusts, and why they are an important tool in estate planning.
Sid conveys property to Trustee in trust "to pay Bertha the income for life." There is no provision for disposition of the corpus on Bertha's death. On Bertha's death:
Trustee holds the property in resulting trust for Sid or Sid's estate. A resulting trust is identical to a reversion in legal estates. Thus, when there is no gift over following a life interest in a trust, the property remains in trust for the grantor and the grantor's heirs. A construction trust is a remedy designed to keep a wrong-doer from benefiting from their misdeed.
Would your answer to the previous question change if Fred (the settlor of the the trust) was still alive?
Yes, if Fred is still alive, he and Wilma could terminate the trust without court approval. If the settlor, the trustees, and the beneficiaries all agree to terminate the trust, then they can do so without court approval. Think about who could sue to enforce the trust in this case. No one! Anyone affected by the trust has agreed to terminate it. A trust is a contact, and the parties to a contract can modify it upon agreements even if the contract says it is unmodifiable.
