Trust + Estates

What are the 3 ways for Will Revocation?

Three means of revocation 1) Revocation by Subsequent Writing - i.e. by subsequent writing executed with testamentary formalities 2) Revocation by Physical Act - i.e. by a physical act such as destroying, obliterating or burning the will 3) Automatic Revocation - Revocation by operation of law - marriage EPTL 5-1.1(a) - divorce EPTL 5-1.2, 5-1.4 - pretermitted heirs EPTL 5-3.2 (after-born children) i. No matter how revoked: The revocation of a will revokes all codicils thereto. EPTL 3-4.1(c).

Modern Approach to Equitable Deviation (NY EPTL 7-1.6(b))

Toward Modern Trend 1. Recurring fact pattern in modification cases->forces the issue of whether dispositive/distributive terms (like administrative terms) can also be modified: 2. E.g. Husband creates trust to pay "Income to my Wife for life, then principal to my children from former marriage." a. What happens when widow cannot live comfortably on the income from a trust created; asks court to permit invasion of principal for support b. Remainder beneficiaries object c. What can wife do? 3. Answer in NY - EPTL 7-1.6(b) 4. Unless otherwise provided by settlor, court may in its discretion make an allowance from principal to any income beneficiary whose support or education is not sufficiently provided for, whether or not such person is entitled to the principal of the trust or any part therefore; provided that the court, after a hearing on notice to all those beneficially interested in the trust is satisfied that the original purpose of trust cannot be carried out and that such allowance effectuates the settlor's intent. a. Interpreted narrowly, reserved for the only truly destitute in need income beneficiary and can't

T or F: Unlike trustee, a donee of an appointive power is NOT a fiduciary. No duty to manage the relevant property for the best interest. Failing to do anything is not a problem, for a donee.

True

T or F: 1. When you have revocable trust, the fiduciary duties run to the settlor, because he maintains control

True.

True or False: A trust can be considered both a discretionary trust that is spendthrift.

True.

T or F: For purposes of lapse/antilapse beneficiaries can be treated as (i) actually predecease T or (ii) can be treated as predeceasing T in various contexts (Homicide, Disclaimer/Renunciation, Simultaneous Death problems, etc.)

True. The default rules we are learning now--antilapse, lapse, etc--apply to BOTH circumstances.

legacy

cash left in the will (to legatee)

Duties to Intended Beneficiaries rule in NY

"In New York, a third party, without privity, cannot maintain a claim against an attorney in professional negligence, absent fraud, collusion, malicious acts or other special circumstances." Schneider v. Finmann However, in Schenider, NYCOA relaxes requirement. It retains the general requirement of privity in order to sue estate planning attorneys for malpractice, but it relaxes the requirement of privity (and thereby keeps estate planning attorneys in check) in 2 ways: 1) Estate (through personal representative) can sue 2) Intended beneficiaries and other third party individuals can sue if fraud or "other special circumstances," like collusion, malicious acts, etc.

Presence requirement for attestation (NY)

"Line of sign" 1. Minority rule (NY included) requires the testator to be capable of seeing the witness in the act of signing. He need not actually see the signing, but must be able to see them were the testator to look.

Due Execution of Will - Summary of NY requirements

* Will must be signed by the T (or by another person at T's direction and in her presence) * T's signature must be at the end of the will * T must sign the will (or acknowledge T's previous signature) in the presence of each witness (can be done separately with each witness) * T must "publish" the will (i.e. declare to witnesses that the document is her will) * 2 attesting witnesses must sign (with their addresses) at T's request within 30 days of each other.

What is a self-proving affidavit?

- Sworn statements by witnesses to notary that will was genuine + duly executed + T was competent/free from restraint. - Provides near conclusive evidence the will was duly executed. - Generally permits probate without appearance of either witness (and without the need to prove witness unavailability).

List some Trustee Fiduciary Duties: Subsidiary Rules

1. Duty to collect and protect trust property 2. Duty to earmark trust property 3. Duty not to mingle trust property with trustee property (EPTL 11-1.6) 4. Duty to inform and account to beneficiaries 5. Duty of impartiality a. "If a trust has two or more beneficiaries, the trustee shall act impartially in investing, managing, and distributing the trust property, giving due regard to the beneficiaries' respective interests." EPTL 11-A-1.3(b)

Hypo: A's will creates a trust to pay: "income to my daughter B for life, and on B's death, principal to such of B's issue as B appoints by will. If B fails to exercise this power, then principal to my friend Q." B later executes a will that makes no reference to the power of appointment and devises "all the rest and residue of my estate as follows: 40% to my son C, 40% to my son D, and 20% to my friend E." Then B dies. 1. What kind of power is this? 2. What is the appointive property? 3. Who are the takers in default of the appointment? 4. Who gets the appointive property under NY law? 5. Who gets the appointive property under the law of a majority jurisdiction?

1. This power is considered special, testamentary power of appointment. Timing is dictated by terms of the gift. 2. The appointive property is the trust principal. 3. The takers in default of the appointment are Q. 4. In NY, residuary clause would work to exercise the power of appointment. HOWEVER, E is not a permissible taker because the trust instrument itself states that it will can only go to B's ISSUE. Here, E is not an issue of B, so cannot take. Therefore, only C, and D take, split in half. 5. In majority jurisdiction, residuary clause would not work to take, therefore it would be default and taker in default is Q.

What are the 3 basic formalities for attested wills? In NY?

1. Writing 2. Signature 3. Attestation by witnesses WRITING Marks or symbols constitute writings if the name cannot be signed due to disability EPTL 3-2.1: Formal Requirements (a) except for noncupative and holographic wills authorized by 3-2.2, every will must be in writing.. SIGNATURE BY TESTATOR Signatures with assistance count under certain circumstances Signature by another or by proxy is allowed as long as it is with the testator's permission and in his presence a. Helps to serve the ritual function and the protective function—creates finality and distinguishes the will from previous drafts i. In some circumstances, a mark, cross, abbreviation, initials, or nickname can be sufficient, if it was intended to be the whole signature 1. If someone helps you hold the pen to sign, but you didn't ask them to, your signature doesn't count. *Subscription* a. Requires the signature to be at the end i. In some states, the whole will is void if there is stuff after the signature ii. In other states, only the post-signature writings are void, but the rest of the will is still enforceable. iii. IN NY --> EPTL 3-2.1: Execution, attestation, formal requirements i. Rest of the will counts, no effect given to writings BELOW the signature UNLESS 1. Needed to make sense of the rest of the will; or 2. Goes to testator's general plan for the disposition/administration of the estate (ex: "I hereby appoint Karen me executor.") ATTESTATION Means that the will is witnessed NY Requires two witnesses! Steps to attestation a. For Testator Signs or acknowledges signature (declares) but in the presence of the witness b. For Witness i. Witness signature or T's acknowledgement of T's signature; this requires the witness be in the presence of the testator ii. Attests by signing iii. Testator can sign in front of each witness individually, not all parties need to be together 1. Witness must sign within 30 days of each other iv. Note that under EPTL 3-2.1(b), the precise order need not be followed so long as all the requisite formalities are followed (to the Surrogate's satisfaction) as art of a continuing execution/attestation ceremony. NY is STRICT: EPTL 3-2.1 Formal Requirements 1. Signing (a)(1) It shall be signed at the end thereof by the testator or, in the name of the testator, by another person in his presence and by his direction 2. Materials that follow that testator's signature (other than attestation clause) are NOT given effect. See EPTL 3-2.1(a)(1)(B)

What happens when the estate has insufficient assets to pay debts as well as all of the devises?

NY EPTL 13-1.3 Devises are abated in the following order (default): (1) Intestate shares in property not disposed of by will (2) Residuary gifts (3) General gifts (and, depending on circumstances, demonstrative gifts) (4) specific gifts (and, depending on circumstances demonstrative gifts) (5) gifts to surviving spouse that qualify for estate tax Marital Deduction

NY process for (i) Execution, and (ii) amendment/revocation of a lifetime Trusts (this is part of nonprobate)

7-1.17(a) - Establishment (a) Must be in writing, and a. Executed and acknowledged by settlor and by one trustee (unless settlor is sole trustee), in manner required for recording a real estate deed, or b. Executed in presence of two witnesses who affix their signatures to the trust instrument. 7-1.17(b) - Amendment/ Revocation (b) Must be in writing and a. Executed by person authorized to amend/revoke trust, and b. Acknowledge or witnessed as required by paragraph (a) (unless otherwise provided in the trust) c. Written notice of amendment/revocation must be delivered to one other trustee within a reasonable time (if person executing amendment/revocation isn't sole trustee), BUT d. Failure to so notify does not affect validity of revocation/amendment, and e. No trustee is liable for relying on existing trust instrument prior to actual notice of amendment/revocation.

Hypo: T's will gives Blackacre to A, $10,000 to B, and the rest to C. At T's death, the estate consists of Blackacre, $10k, and funeral expenses and ordinary debts of $5k. What do A, B, and C receive?

A gets Blackacre (specific devise), B gets $5,000 (general bequest), and C takes nothing (residuary beneficiary).

Undue Influence

A donative transfer is procured by undue influence if the wrongdoer 1. Exerted such influence over donor that it overcame the donor's free will and 2. Caused the donor to make a donative transfer that the donor would not otherwise have made ii. Direct evidence of the wrongdoer's conduct and the donor's subservience is rarely available to establish the actual exertion of undue influence Elements of undue influence: In the absence of direct evidence, circumstantial evidence is sufficient to raise an inference of undue influence if the contestant proves: a. Susceptibility to undue influence or domination by another. More dependent Testator is, more likely testator is susceptible b. Opportunity: Influencer had opportunity to exercise influence. c. Disposition to influence (For personal benefit) and d. Result is unnatural Burden shifting: 1) Burdens starts on will proponent to make prima facie case of validity a. Easily done in most cases by showing due execution 2) Burden shifts to challenger to prove facts giving rise to a presumption of undue influence such as a. Existence of a confidential relationship i. Fiduciary, Reliant, Dominant-Subservient b. Additional suspicious circumstances: i. Testator in seriously weakened condition (mentally or physically) ii. Influencer directed testator to attorney of influencer's choosing iii. Influencer received bulk of the estate iv. Secrecy or haste v. Discrepancy from prior wills vi. Reasonable person would regard it as unnatural, unjust or unfair. 3. Burden shifts back to the will proponent (the putative influencer) to rebut the presumption of undue influence Bequests to Attorneys & Undue Influence a. Majority: i. Presumption of undue influence when an attorney drafter receives a legacy, unless the attorney is related to the testator b. New York: i. No per se rule against bequests to attorneys, but we do have the so-called "Putnam Scrutiny" Bequest in a will to the attorney who drafted the will (to the exclusion of natural objects of testator's bounty) is viewed with great suspicion ii. Attorney must submit an affidavit explaining facts and circumstances of the gift. iii. Surrogate (if not satisfied with explanation) must investigate to see if bequest is result of undue influence. **Undue Influence separate from NY Rule of Professional Responsibility 1.8(c), which concerns itself with Unethical Conduct** Rule 1.8 1. A lawyer shall not solicit any gift from a client, including a testamentary gift, for the benefit of the lawyer or a person related to the lawyer; or 2. Prepare on behalf of a client an instrument giving the lawyer or a person related to the lawyer any gift, unless the lawyer or other recipient of the fit is related to the client and a reasonable lawyer would conclude that the transaction is fair and reasonable. a. Related persons include spouse, child, grandchild, parent, grandparent, or other relative or individual with whom the lawyer or the client maintains a close, familial relationship.

NY - Revocation of Lifetime Trust by Will are trusts in NY presumed revocable or irrevocable?

A lifetime trust shall be irrevocable unless it expressly provides that it is revocable. In addition to the method set forth in 7-1.17, a revocable lifetime trust can be revoked or amended by an express direction in the creator's will which specifically refers to such lifetime trust or a particular provision thereof.

Adult Adoption in NY

ADULT ADOPTION 1. Adult adoption is often motivated by one of two goals a. Removing natural relatives' standing to contest a will b. Grafting someone onto a family tree to bring them within a class gift to decedents or heirs in an ancestor's will or trust. 2. But adult adoption raises problems because it is easier and cheaper than child adoption. 3. NY DRL §110: a. Allows for adoption of "another person" without any restriction on the age of the adoptive child/adoptee 4. BUT, case law establishes exception where relationship is "utterly incompatible with the creation of a parent-child relationship" because the two individuals are in a romantic relationship and are using adoption for financial purposes only. Adoption of Robert Paul, 63 NY2d 233 (NY 1984)

What is the EPTL definition of an advancement?

Advancement = An advancement is an irrevocable gift intended by the donor as an anticipatory distribution in complete or partial satisfaction of the interest of the done in the donor's estate, either as distribute in intestacy or as beneficiary under an existing will of the donor. Under common law, any lifetime gift to a child was presumed to be an advancement of the child's share Under EPTL 2.1-5(b) states that it must be in writing. A lifetime gift will be treated as an advancement only if there is a contemporaneous writing signed by the donor evidencing his or her intention that the gift by treated as an advancement, or by the donee acknowledging such intention. 1. Gifts to children are not advancements unless so stated in writing. 2. Presumption against advancements

Executor versus Administrator

An executor is a personal representative named by one who dies testate. An administrator is a personal representative chosen from a statutory list (typically surviving spouse, children, parents, siblings, creditors) in the absence of a designation in a will.

Antilapse Rules to applying to (1) Specific/Demonstrative/General Gifts and (2) Residuary Gifts

As to Specific/Demonstrative/General Gifts - Under Antilapse rules, such a gift will pass to predeceasing beneficiary's issue (unnamed by T) rather than lapsing to T's named residuary beneficiary. As to Residuary Gift - Under Antilapse rules, such a gift will pass to predeceasing beneficiary's issue (unnamed by T) RATHER than lapsing (i) to T's other named residuary beneficiary (if there is one) or (ii) to T's heirs/distributees in intestacy (if there is not)

Exoneration of Liens T's will bequeaths Blackacre to A; residuary to B. Blackacre is subject to a mortgage secured by a note on which T was personally liable. Does A take Blackcare subject to the mortgage, or is she entitled to have the note paid out of B's residuary gifts? common law? NY?

Common law doctrine - Note is paid out of B's residuary gift. NY EPTL 3-3.6 A takes Blackacre subject to the mortgage: No exoneration of liens!!! <-- Default Rule.

Hypo: Testator devises entire estate: one-half to son A, one-half to daughter B. B dies before testator, leaving a child, C. Testator dies, survived by only A and C. What happens to B's share if there is an antilapse statute in place?

Common law: B's share (1/2) lapses and passes by intestacy. So A and C split B's lapsed share, so A gets ¾ of the estate, C gets ¼ of the estate With abrogation of the "no-residue-of-the-residue" rule: B's share goes to A, so A gets the entire estate. With an applicable antilapse statute (as in NY): C takes B's share, so A gets ½ of the estate, C gets ½ of the estate.

O creates trust "to pay income to O for life, or, if in the trustee's discretion the income is not sufficient, portions of the principal to O for the term of her life and upon O's death, to pay the principal to B." Can creditors reach?

Creditors can reach the entire trust b/c it is a self-serving trust where settlor is beneficiary! Creditors of settlor-beneficiary O can reach the maximum amount that could be paid to O in the exercise of the trustee's discretion, even if the trustee doesn't actually exercise his discretion to make payments to O. This means: potentially, in such a case, a creditor of O could reach the entire trust

Duress

Definition = When undue influence becomes overtly coercive "A donative transfer is procured by duress if the wrongdoer threatened to perform or did perform a wrongful act that coerced the donor into making a donative transfer that the donor would not otherwise have made."

Can you exculpate your trustees from being negligent in Trust?

EPTL 11-1.7(a)(1) 1. "The attempted grant to an executor or testamentary trustee...of any of the following enumerated powers or immunities is contrary to public policy: a. (1) The exoneration of such fiduciary from liability for failure to exercise reasonable care, diligence, and prudence." b. You can't permit your trustees in NY to be negligent. (as contrary to public policy)

Who may make wills in NY? Who can file objections? (i.e. standing)

EPTL 3-1.1 - Every person eighteen years of age or over, of sound mind and memory, may by will dispose of real and personal property and exercise a power to appoint such property. Standing SCPA 1410 - Any person whose interest in property or in the estate of the testator would be adversely affected by the admission of the will to probate may file objections to the probate of the will or of any portion thereof EXCEPT that one whose only financial interest would be in the commissions to which he would have been entitled if his appointment as fiduciary were not revoked by a later instrument shall not be entitled to file objections to the probate of such instrument unless authorized by the court for good cause shown....

Who is a child under the NY intestacy statutes?

EPTL: §2-1.3(a) 1) adopted children 2) non-marital children - A non-marital child is a child whose biological parents weren't married to each other when that child was born or conceived. 3) posthumous children - Children conceived before, but born after, such estate becomes effective (death of decedent)

T or F: for elective share calculation, a disposition that is irrevocable is a testamentary substitute if it is effected before and during the marriage.

False, Only effected if it is DURING the marriage.

T or F: If husband and wife brought the house as a joint tenancy/tenancy by the entirety, but husband paid for the whole thing, wife cannot take.

False. Jointly Owned Property 1. You count half of its value as a testamentary substitute, no matter how much either spouse contributed to it 2. Houses are the most common type a. So, if husband and wife brought the house as a joint tenancy/tenancy by the entirety, but husband paid for the whole thing, still only counts as half for a testamentary substitute.

General Rule for beneficiaries named in will who dies before will goes to probate? (i.e. predeceased beneficiary).

Implied requirement that a beneficiary under a will MUST SURVIVE Testator in order to take gift. If beneficiary dies before T, his gift "lapses." Rationale: makes no sense to pass property to a dead person.

T had no children at the time he left his entire estate to his wife W. He later had two children, A and B, who survive him along with W. What are A's and B's rights in T's estate?

Intestate share! i. Surviving spouse gets $50k of the top and get ½ of the balance, Issue get other ½ of that balance ii. If Estate is worth $200k, W gets $150k, and A and B get $50k each.

Ex: "I give and bequeath all of my personal effects and clothing to Lee Strasberg...it being my desire that he distribute these, in his sole discretion, among my friends, colleagues and those to whom I am devoted." Is this valid?

a. Precatory language - suggesting instead of mandatory course of conduct; "it being my desire" is precatory b. No ascertainable beneficiaries: friends, colleagues, and persons whom she is devoted to is way too broad

T bequeaths his car to B. T later dies in a car crash in which his car is totaled. Does B take the insurance proceeds paid to the executor by reason of the destruction of the car? Or does the bequest adeem, in which case the proceeds go to the residuary taker? What is your authority?

NY EPTL 3-4.5 Where insurance proceeds from property which was the subject of a specific disposition are paid after the testator's death, such proceeds, to the extent received by the personal representative, are payable by him to the beneficiary of such disposition; and such proceeds retain the character of a specific disposition for all other purposes, including 12-1.2 and 13-1.3.

NonProbate Transfers - Revocable Trust - Minority Rule

NY EPTL 7-1.16 A lifetime trust shall be IRREVOCABLE unless it expressly provides that it is revocable. In addition to the method set forth in 7-1.17, a revocable lifetime trust can be revoked or amended by an express direction in the creator's will which specifically refers to such lifetime trust or a particular provision thereof.

Payable on Death Contracts

POD Designations of beneficiaries on contracts are generally accepted. 1. Estate of Hillowitz: A partnership agreement which provides that, upon the death of one partner, his interest shall pass to the surviving partner or partners, resting as it does in contract, is unquestionably valid and may not be defeated by labeling it a testamentary disposition. ii. Transferrable on Death (TOD) designations of beneficiaries are an accepted way of registering securities.

Where (partial) revocation by physical act is permitted, there's a big difference between whether Testator's pen marks are effective to:

Permit Testator to revoke (part of) a will? Potentially YES Permit Testator to provide a newly created substitute gift in the will? Usually NO (because not duly executed!)

What are the three bars to succession in NY? And what is succession?

Succession = ability to inherit from estate 1) Homicide / Slayer In re Mahoney - NY courts have adopted the Mahoney decision in Riggs v. Palmer Facts: Wife shot husband, court split husband's estate among his parents. Wife appealed. Holding = title passes as though slayer was predeceased, because equitable principle that slayer should not profit from her wrongful conduct This rule applies to nonprobate transfers as well as to intestacy and wills. Criminal conviction is not required, just preponderance of the evidence. i. US Inheritance is generally governed by status, not conduct, except for killings. 1. But some exceptions: EPTL §4-1.3 a. No inheritance by parent from child if, while child is under 21, the parent failed or refused to provide for, or abandoned such child (unless parental duties are resumed until death of child), or had parental rights terminated. 2) Renunciation (i.e. disclaimer) Occurs when someone in the family tree refuses to take in the estate. Reasons to disclaim: Taxes and Creditors 1. A person may disclaim interest because he knows he has a lot of creditors that the money must go to, or it will be heavily taxed, and he would rather have the money go to an heir who can take the whole thing free of creditors. a. Disclaimers will be treated as having predeceased the decedent. 2. In most states, an ordinary creditor cannot reach property disclaimed by a debtor who is not already in bankruptcy. a. If a bankruptcy petition is filed before debtor disclaims, courts hold that the disclaimer is ineffective. i. EPTL 2-1.11(e) <-- Renunciation 1. "Unless the creator of the disposition has otherwise provided, the filing of a renunciation, as provided in this section, has the same effect with respect to the renounced interest as though the renouncing person had predeceased the creator or the decedent. 2. If, pursuant to the preceding sentence, there would occur a disposition or distribution of the renounced interest by representation, then solely for purposes of applying 1-2.16, the renouncing person shall be treated as having died on the same date as, but immediately after, the decedent (not predeceased, so "takes" share for purposes of diving up) ii. You can disclaim either intestate share or a share from a will iii. Treat disclaimant as having pre-deceased the donor Examples: 1. Intestacy: a. Husband dies --> Wife and son survive --> son disclaims --> wife gets all 2. Wills, look to the will. a. "O gives '$10k to friend J and all the rest to my friend M." If J disclaims, then all the property goes to M." b. But, if O gives "all of my property to my friend J" and J disclaims? i. Would be put back into intestacy laws. 3) Simultaneous Death i. EPTL 2-1.6 1. Requirement of clear and convincing evidence of survival by 120 hours (5 days) (Default rule). a. Where receiving property depends on surviving the other person, it must be established by clear and convincing evidence that you survived such person by 120 hours. Otherwise, you will be deemed to have predeceased the other. b. If no such evidence, each person is treated as predeceasing the other, so gift passes to next taker in line. c. Requirement of survival by 120 hours applies to wills and intestacy and many forms of non-probate transfers, like life insurance and pension plans. ii. Practice point: Most well-drafted instruments require 30, 60, or even 90-day survival periods. iii. Janus v. Tarasewicz 1. Regardless of which standard of death is applied, survivorship is a fact which must be proven by a preponderance of the evidence by the party whose claim depends on survivorship

What is a class gift?

Rule: A class gift is a disposition to beneficiaries who take as members of a group. 1. A class gift is a gift to more than one individual that intrinsically includes the right of survivorship. The right of survivorship means that if the gift fails as to one member of the class, his or her share does not fall out of the class, but rather the failed share is re-divided among the other members in the class. The shares of the surviving members of the class are recalculated. ii. Indications of a class: 1. Class labels ("To A's children;" "to my brothers and sisters." 2. Dynamic shares 3. Note: It is important to look to see if the testator was group-minded iii. Indications of no class 1. Named individuals 2. Specified shares iv. Examples: 1. T: I leave my residuary estate to: a. "Rose and Ray, in equal shares." <-- No class b. "My cousins, in equal shares." <-- Class c. "My cousins, Rose and Ray, in equal shares." <--Seems more like class gifts T: "I leave half of my residuary estate to my cousin, Rose, and half of my residuary estate to my cousin, Ray." <-- Seems more like an individual gift.

Table of Consanguinity

Table that represents the degrees of relationship/kindship.

T or F: NY - Durable Attorney in Fact is the Default Rule, unless state otherwise

True

T or F: Under all intestacy statutes (all states), parents of the decedent are not heirs and do not take if the decedent leaves issue.

True

Can you use a notary in liue of the 2 witnesses requirement for attestation in NY?

Under New York law (EPTL 3-2.1) two attesting witnesses is necessary to prove a Will. However, if the capacity in which a person signs the Will is that of a notary public taking an oath, rather than a witness, the statute requirement has not been met. (In Re Postma - 895 NYS2d 778).

Why are Formalities important for Will?

Under SCPA 1408, Probate not allowed until the court is satisfied. 1. Before admitting a will to probate, the court must inquire particularly into all the facts and must be satisfied with the genuineness of the will and the validity of its execution. The court may, however, accept an affidavit of an attesting witness in the manner and under the circumstances prescribed in this article. 2. If it appears that the will was duly executed and that the testator at the time of executing it was in all respects competent to make a will and not under restraint it must be admitted to probate as a will valid to pass real and personal property, unless otherwise provided by the decree and the will and decree shall be recorded.

How to waive elective share? Who bears the burden of proving that the waiver done in prenuptial agreement was invalid? What must they show? Can the burden shift?

You can waive your right to the elective share, or a number of assets, in a written agreement. b. Permissible under NY EPTL 5-1.1.-A(e) i. To be effective, waiver must be in (1) writing and (2) signed by waiving spouse, and (3) acknowledged before "notary." 2. Waiver can be: a. Prenuptial or post-nuptial (can be done before or after marriage) b. Unilateral (executed only by person waiving) or bilateral in form (executed by both) c. Executed with or without consideration d. Absolute or conditional 3. What if surviving spouse wants to challenge validity of waiver? i. Typically, the party seeking to invalidate a prenuptial agreement bears the burden of proving fraud or undue/unfair advantage between the parties. BUT Burden Shifting can occur if factors below are met that will cause proponent of prenup agreement to have to prove freedom from deception/undue influence. i. Matter of Greiff: "A party challenging a prenuptial agreement, used to defeat a surviving spouse's right of election, may demonstrate by a preponderance of the evidence that the premarital relationship between the contracting individuals manifested "probable" UNDUE and UNFAIR advantage. In these exceptional circumstances, the burden should fall on the proponent of the prenuptial agreement to show freedom from fraud, deception, or undue influence." c. Factors on whether to shift burden (Buzen) i. Detrimental reliance on the part of the poorer spouse ii. Relative financial positions of the parties iii. The formality of the execution ceremony itself iv. Full disclosure of assets as a prerequisite to a knowing waiver v. The physical or mental condition of the objecting spouse at the time of execution ** vi. Superior knowledge/ability and overmastering influence on the part of the proponent of the agreement ** vii. The presence of separate, independent counsel for each party ** viii. The circumstances in which the agreement was proposed and whether it is fair and reasonable on its face ix. Provision for the poorer spouse in the will, Procedures for Exercising Rights 1. You can reverse your decision and change your mind about electing you share, if the decision doesn't affect anyone else. 2. Only a surviving spouse can claim an elective share, or their guardian, etc. Under EPTL 2-1.16, you only need to survive long enough to file the paperwork, EVEN if you die before the 120 hours required to even be considered a survivor in the first place. 3. You must file with the Surrogate's court and serve notice on the decedent's personal rep, within 6 months. a. Period can be extended upon showing of reasonable cause.

Classify these types of powers of appointment: a. "Income to A for life, principal to A appoints by will." b. "Income to A for life, principal to such of A's issue as A appoints by will" c. "Income to A for life, principal as A appoints by deed during A's life or by A's will" d. "Income to A for life, principal to such of B's issue as A appoints by deed during A's life or by A's will."

a. General testamentary power of appointment b. Special testamentary power of appointment c. Generally, presently exercisable power of appointment d. Special presently exercisable power of appointment.

Posthumous children in NY under intestacy statutes

i. Authority: 1. Inherit in intestacy as provided by EPTL §4-1.1(c) a. Distributeees of the decedent, conceived before his or her death, but born alive thereafter (i.e. posthumous children), take as if they were born in his or her lifetime. i. But see EPTL §4-1.3: 1. A genetic child is the child of his or her genetic parent or parents and, notwithstanding paragraph (c) of section 4-1.1 of this part, is a distributee of his or her genetic parent or parents and, notwithstanding subparagraph (2) of paragraph (a) of section 2-1.3 of this chapter, is included in any disposition of property to persons described in any instrument of which a genetic parent of the genetic child was the creator as the issue, children, descendants, heirs, heirs apparent, next of kin, distributees (or by any term of like import) of the creator *if it is established that* (among other things): a. Genetic parent, in written instrument, within 7 yeas prior to death: i. Consented to the use of his or her genetic material to posthumously conceive the child AND ii. Authorized a person to make decisions about its use after his or her death b. Authorized person takes timely action with respect to giving notice and recording the instrument c. Genetic child was in utero no later than 24 moths after the genetic parent's death or born no later than 33 months after the genetic parent's death. Summary: In New York, effective Nov 1, 2014, the law establishes that posthumous children may be considered distributees of their genetic parents for inheritance purposes, provided all criteria set by the law are satisfied. Among these criteria, the deceased parent must have indicated in a written instrument that he or she intended to have his or her reproductive cells, referenced in the New York law as genetic material, used to conceive a child no more than seven years before the death of the genetic parent. In addition, the written instrument must authorize the surviving partner to make decisions about the deceased's genetic material and be filed with the Surrogate's Court within the respective county of residency. Finally, the law requires that the genetic child was in utero no later than 24 months after the genetic parent's death or born no later than 33 months after the genetic parent's death. N.Y. Est. Powers & Trusts Law § 4-1.3 (McKinney). ***This applies to Intestate shares, Wills, and Trusts. Posthumous children will be considered in all of them if they follow the steps**

Heir What are heirs in NY called?

person designated by law of intestacy to take from someone who dies intestate In NY, heirs are called distributees.

bequest

personal property left in the will (to beneficiary)

Ascertainable Beneficiary Requirement

i. Requirement: 1. Beneficiaries are ascertainable if there is an objective method of determining their name. Which means determining who has standing to come into court and enforce the terms of the trust against the trustee 2. If the beneficiaries are too indefinite to be ascertainable, the trust will fail. ii. Why is the existence of a beneficiary critical? 1. Private trust v. Charitable trust 2. Need to have someone who can hold the trustee liable iii. What is an ascertainable beneficiary? 1. To my trustee to distribute to: a. "My trustees...to make disposal...of such article to such of my friends as they, my trustees, shall select." **Not ascertainable because what is a friend? b. "Those people my trustee chooses." ** Gives too much discretion to a trustee c. "Those of my children whom my trustee so desires." ** Acceptable because children are a defined set of persons. **. Don't need precise identity obtained, as long as it is fairly clear and an identifiable group of people when the times come iv. Ascertainable beneficiary is Different from the owner of appointment!! "I direct my trustee to pay income to my wife for life, then to distribute the trust principle to those persons she appoints by her will." a. This is acceptable b. One of the beneficiaries here is asking to make the decision. c. So, we make the distinction of who makes the decision trustee (who has fiduciary duties and can be called to task) and the power of appointment which is a discretionary power. d. The discretionary power can be yielded by the wife and if wife chooses not to select someone no one can call her to task. --No obligation for wife to choose someone, up to her, and there is no consequence for her if she chooses not to appoint someone.

What are some types of discretionary trusts?

i. Spray trusts O transfers property to X in trust to distribute all the income to one or more members of a group consisting of A, A's spouse, and A's descendants, in such amounts as the trustee determines ii. Sprinkle trusts The trustee must distribute all the income currently, but has discretion to determine which beneficiaries get it and in what amounts. Some discretionary trusts also authorize the trustee to accumulate income and add it to the principal iii. Support trusts In many discretionary trust the trustee's discretion is subjected to a standard of review, such as one that authorizes the trustee only to make distributions as is necessary for the beneficiary's support and maintenance.

Antilapse statutes and words of survivorship

i. The majority rule is that language such as "if he survives me" imposes a condition on survivorship—an intention contrary to the anti-lapse statute. - Means testator intentionally did not provide a substitute gift to devisee's descendants ii. The minority rule (UPC) is that words of survivorship are NOT enough to preclude the antilapse statute 1. Reflects the inference that words of survivorship might only be included because drafting lawyer used a will form. This rule has been harshly criticized. iii. New York Rule --> follows majority rule - "If she survives me" is enough to deactivate the anti-lapse statute.

Define the following terms: - Trust - Trustee - Beneficiaries - Settlor/Grantor/Creator - Fiduciary Duties - Testamentary Trust - Intervivos Trust - Deed of Trust - Decleration of Trust - Revocable inter vivos Trust

i. Trust: Management relation whereby trustee holds legal title and manages property in fiduciary capacity for the benefit of beneficiaries ii. Trustee: Person(s) who hold legal title; powers to sell trust property and replace it, etc. - Can also be a beneficiary, but not sole beneficiary iii. Beneficiaries: Person(s) who hold equitable title iv. Settlor/Grantor/Creator: Person creating the trust; can also be trustee and/or beneficiary v. Fiduciary duties: Duties owed to the beneficiaries to safeguard against mismanagement or misappropriation vi. Testamentary trust: Trust created at death (by will); always irrevocable vii. Inter vivos trust: Trust created during settlor's life; can be revocable or irrevocable viii. Deed of trust: Document creating inter vivos trust; settlor transfers legal title to trustee ix. Declaration of trust: Document creating inter vivos trust; settlor declares self-trustee x. Revocable inter vivos trust 1. Most flexible will substitute 2. Settlor can: a. Tailor dispositive and administrative provisions b. Retain power to revoke, alter, or amend c. Retain right to trust income/principal during life d. Direct where trust assets go at death.

devise

real property left in the will (to devisee)

descent

transmission through intestacy

Explain responsibilities of trustee in Support Trust.

"Such amounts as the trustee shall in his discretion deem necessary to support..." a. May consider a beneficiary's other income/resources. Ideally would be clear about this in trust document. 2. Trustee, in his/her discretion, may distribute trust income/principal as needed for beneficiary's medical, educational, or basic living expenses. 3. No assignment, no reaching by creditors. 4. Trustee needs to actively investigate the beneficiary's situation. a. As Trustee, you have the obligation to see if they need help or not.

1) "I leave my residuary estate to my cousins, in equal shares." T's cousins are Rose, Ray, and Ruth. Rose predeceases T, but leaves two children who survive T. What happens to Rose's share? 2) "I leave my residuary estate to my siblings, in equal shares." T's siblings are Rose, Ray, and Ruth. Rose predeceases T, but leaves two children who survive T.

1) Antilapse wouldn't apply and Ray and Ruth split Rose's share (NY EPTL 3-3.4 and normal class gift rules) 2) What happens to Rose's share? Rose's children take; antilapse saves her share for them; 3-3.3 trumps 3-3.4/usual class gift principles - What if Rose had no longer been alive at the time of execution of testator's will? Under 3-3.3(a)(3), no antilapse for the benefit of Rose's children. Rose (when dead) is NOT a "sibling," and so surviving members of class split the residuary estate (Ray and Ruth).

Policy goals for intestacy statutes

1) Effectuating decedent's probable intent 2) Protecting family 3) Advancing public policy

What are the 3 functions of probate?

1) Provides evidence of transfer of title 2) protects creditors 3) distributes to the decedent's property In NY, probate court is called the Surrogate's court.

Do Revocation-on-divorce statutes apply to nonprobate assets?

1) Revocable trusts --> Clymer v. Mayo --> Yes. 2) Life Insurance --> NY EPTL 5-1.4 --> Yes. Sveen v. Melin (U.S. 2018) - Applying Minn's revocation-on-divorce law to a life insurance beneficiary designation made before the statute's enactment does not violate the Contracts Clause of the Constitution. --> thus, ex-wife of benefiary doesn't take. But see Hillman v. Maretta (U.S. 2013) - where a beneficiary has been duly named, the insurance proceeds she is owed under the Federal Employee's Group Life Insurance Act of 1954 cannot be allocated to another person by operation of state revocation-on-divorce law --> state law is preempted --> ex-wife (named beneficiary) takes! (3) Pension and Retirement Accounts --> see Egelhoff v. Egelhoff (U.S. 2001) --> NO! (ex-wife takes!)

What are the four functions of will formalities?

1) Ritual or cautionary function - impresses the testator with the seriousness of the testament and assures the court that the instrument was deliberately intended to effectuate a transfer. Signature carries an air of finality. 2) Evidentiary function - provides the court with reliable evidence of testamentary intent, makes it reliable and genuine 3) Protective function - Attestation is mean to provide that a will was not coerced or deceptive. 4) Channeling function - Creates uniformity in organization, language, and content of wills. This allows courts to process estates routinely.

What must a testator be in order to be competent enough to make a will?

1) be an adult, 18 years or older & 2) be capable of knowing and understanding: a. the nature and extent of his property b. the natural objects of his or her bounty, and c. the disposition that he or she is making of that property, and must also be capable of: d. relating these elements to one another and forming an orderly desire regarding the disposition of the property. 1. In essence, a rational desire to control the disposition of your property. Knowing this is a final disposition and what your property is, knowing whom you are leaving it to. Some eccentricity is not enough to eliminate capacity a. Although the threshold is low, juries will frequently discard a will merely because they disagree with it, even if the threshold is met. If the jury finds it unnatural, it might just favor your family members

How does mental capacity to make a will compare with mental capacity required to: 1. Manage investments and make lifetime transfers (contracts/gifts)? 2. To marry?

1) you need less capacity to make a will 2) you need less capacity to marry

Major Testamentary Substitutes Included in New Estate

1. A) Gifts causa mortis --> Full Amount 2. (B) Gifts made within one year before decedent's death, EXCEPT gifts causa mortis or gifts of less than $15,000 (the then-current annual exclusion amount under tax laws) a. I.e., if you gift $50k, the $35k above the $15k limit will count toward the elective share. 3. (C) Totten/Savings Account Trusts. Money deposited in a savings account in the name of the decedent in trust for another person—to the extent decedent CONTRIBUTION (if owned with spouse, then conclusive presumption that testator deposited one-half the total amount; otherwise, SS has burden of proving how much testator deposited 4. (E) Real and other property passing through joint tenancy with right of survivorship/tenancy by the entirety; Property passing by POD contracts (these categories include jointly owned US savings bonds/federal securities) a. To the extent of decedent spouse's CONTRIBUTION (except where surviving spouse is the other party to the transaction). 5. (F)(i) Irrevocable trusts created on or after 9/1/1992 + during marriage, where decedent spouse retained lifetime interests in the possession of/enjoyment of/right to income from the property --> Full amount 6. (F)(ii) Revocable trusts made any time, whether or not decedent spouse retained beneficial interest (also trusts where power to consumer/invade/dispose of principal is retained)--> Full amount 7. (G) Pension plans and employee benefit accounts --> Full Amount 8. (H) Property held pursuant to general presently exercisable power of appointment. --> Full Amount 9. (I) Transfer of security registered TOD. --> Full Amount Exceptions: Major Exceptions to Testamentary substitutes **These do not affect surviving spouse's entitle to or amount of her elective share: 1. Irrevocable gifts, where decedent spouse retained no interest, made more than one year before death a. Includes irrevocable trusts 2. Irrevocable gifts of any sort (Gifts, trusts, trusts with retained interests) made before marriage 3. Life Insurance 4. Third-Party Trusts (that is, trusts created by someone other than decedent spouse), unless decedent spouse given general presently exercisable power of appointment

Per Capita at Each Generation (NY and UPC)

1. At first generation with a surviving descendant, divide A's estate into as many equal shares as there are surviving descendants and deceased descendants who leave surviving descendants (Note—this starts out the same way as Modern per Stirpes) 2. Allocate one such share to each surviving descendant at that generation 3. **POOL the remaining shares** 4. Divide the remaining shares in the same manner at the next generation, as if the surviving descendants who already got a share and their surviving descendants were no longer living. *creates horizontal equality*

Advancement in intestacy analysis

1. Calculate total Estate. 2. Add advancements for now as a claim by estate (treated as a Loan), 3. Then divide total number by number of shares 4. Deduce the giver's intent as a result. If the advancement is *MORE* than the share, then decedent's intent was that she was likely to give a minimum $ amount that was the advancement as a *GIFT*. In that situation, the distributee only keeps the advancement, and does not take in intestacy. Remove the distributee with the large advancement from the picture. If the advancement amount is *LESS* than the share - then treat as a LOAN. start over *loans are considered a "charge" against the inheritance*

English per stirpes (1/3 of the States)

1. Divide A's estate at the level of decedent's children, allocating one share to each surviving child and one share to each deceased child who leaves surviving descendants. 2. In the same manner, divide each share allocated to a deceased child among that child's children. 3. Continue until all shares are allocated. 4. The children of each deceased descendant represent their deceased parent and are moved into their parent's position beginning at the first generation below the designated person. *creates vertical parity*

Modern Per Stirpes (1/2 States)

1. Divide decedent's estate at the first level where there are living descendants, allocating one share to each surviving descendant at that level and one's share to each deceased descendant at that level who leaves surviving descendants. 2. Proceed as under English per stirpes (i.e., divide each share allocated to a deceased child among that child's children by allocating one share to each surviving child and one share to each predeceased child who leaves surviving descendants). 3. First look to see whether any children survived the decedent. a. If so, the distribution is identical to that under English per stirpes. b. If not, the estate is divided equally (per capita) at the first generation in which there are living takers, which is usually the generation of the decedent's grandchildren. 4. The root generation at which the decedent's estate is divided into shares is the one nearest to the decedent in which one or more descendants of the decedent are alive. Any deceased descendant in that level is represented by her descents using an English Per Stirpes distribution. *creates horizontal parity*

What are four main will substitutes Why are they called "will substitutes"?

1. Life insurance 2. Pension/retirement accounts 3. Bank, brokerage, and mutual fund accounts 4. Revocable inter vivos trust *** They are will substitutes because: (1) they are revocable and (2) pass property at donor's death with few (if any) lifetime benefits / interest to beneficiaries

Pour Over Wills and Revocable Trusts - How does a Pour over will work? What is the purpose of a pour-over will? What are the policy reasons behind allowing a pour-over will?

1. O establishes revocable intervivos trust, naming X as trustee 2. O then executes a will devising the residue of his estate to X, as trustee, to hold/dispose assets (probate) under the terms of the intervivos trust ["to X as trustee"] 3. O also names X, as trustee, as beneficiary on will substitutes (nonprobate assets). ["to X as trustee"] The pour-over will by will of probate assets into an intervivos trust allows O to establish an intervivos trust that can serve as SINGLE receptacle for ALL of O's probate and nonprobate property. To change estate plan later, the settler O need only amend his revocable trust. Policy Rationale: 1) promotes privacy 2) unifying property disposition under a single instrument (e.g. intervivos trust) Modern Approach: Allows bequests to a trust that was not funded during testator's lifetime - See NY EPTL 3-3.7.

Hypo: A's will creates a trust to pay: "income to my daughter B for life, and on B's death, principal to such of B's issue as B appoints by will. If B fails to exercise this power, then principal to my friend Q." B later executes a will that makes no reference to the power of appointment and devises "all the rest and residue of my estate as follows: 40% to my son C, 40% to my son D, and 20% to my friend E." Then B dies. 1. What kind of power is this? 2. What is the appointive property? 3. Who are the takers in default of appointment? 4. Who gets the appointive property under NY law? 5. Who gets the appointive property under the law of a majority rule jurisdiction?

1. This is a special, testamentary power of appointment. Timing is dictated by terms of the gift. 2. Appointive property is the trust *principal*. 3. Takers in default of appointment would be Q. 4. Who gets the appointive property under NY law? In NY, B's residuary clause would work to exercise this power (because donor doesn't state that you have to specifically reference this power), but what effect would it have? 40/40/20 split would thus not be permissible because E is not a permissible taker. Typically then, b/c the residuary clause of B's will shows that she intended C and D to have an equal split, then you would split by that proportion, and not include E. (If 60/40 split, then 60/40 split). So appointive property here gets divided half and half by C and D. 5. Who gets the appointive property under the law of a majority rule jurisdiction? Majority rule is that residuary clause would not be construed as a power of appointment, so it would pass to taker in default, which is Q.

Q: Let's say dad banks sperm and then dies, and his wife gives birth to twins 2 years after his death (and everyone complied with all the necessary steps). If paternal grandma dies intestate, would the two children be entitled to anything? Analyze: 1) what are the necessary steps in NY? 2) what is the relevant law? 3) application

1. the necessary steps for a posthumous child to be able to take intestate is that (1) genetic parent, in written instrument within 7 years prior to death consent to use of his sperm/her genetic material to posthumously conceive child and (2) authorized a person within the written instrument to make decisions about its use after his/her death (3) authorized person takes timely action with respect to giving notice and recording the instrument (filing in Surrogate's Court) and (4) child was in utero no later than 24 months after death or born no later than 33 months after death. 2. relevant law is that under language of NYEPTL, genetic child is a distributee of PARENT, not grandparent 3. so here, even if all the requirements are followed, cannot take in intestacy UNLESS the posthumous children were already in gestation before grandma's death and survive her by 120 hours!

Hypo: a. T dies and had three sons, A, B, and C, of which only A survived. b. A has a son, D c. B had two sons, E and F d. C had a son, G e. T leaves a will leaving everything to grandkids E, F, G (but disinheriting A and D). Can A challenge the will on the ground that T lacked mental capacity? Can D?

A can challenge, but D can't because he wouldn't have inherited.

H dies with an estate worth $600k. He leaves a will that gives $100k to his wife, W, and his residuary estate—worth $500k—in trust as follows: "Income to W for life, and upon W's death, principal to my niece, N." What happens if W claims her elective share?

Accelerate the remainder! the wife's action of claiming her elective share destroys the life estate & *accelerates* the remainder such that we are left with $100k gift to W and a $500k gift to N. Outright gifts! a. Treat wife as predeceasing the husband 2. So, we have a net estate of $600k, and W is entitled to $200k (1/3 of $600k). Since she is getting $100k under the will already, she is entitled to $100k under the will already, so she is only entitled to $100k more (her net elective share)—this will come from the only other beneficiary, N. N will get $400k outright. 3. W will want to consult with financial planners to decide whether getting her additional $100k outright is better than getting income from $500k in trust for life. a. If she chooses one option, forfeits the other. If the surviving spouse received a life estate in a trust, and the surviving spouse wanted to take the elective share, she relinquishes life estate, receives her gift now, and the residuary goes to the residuary recipient

Difference between ademption and abatement

Ademption: When specifically devised property is no longer in the testator's estate, the beneficiary's gift fails. ONLY APPLIES TO SPECIFIC GIFTS. If the specifically devised property is not in the testator's estate at the time of death (it could have been sold or destroyed), the gift is adeemed (i.e., it fails). This is also known as ademption by extinction. Ademption also applies if the specific bequest substantially changes in character. Demonstrative or general bequests are not subject to this doctrine, as it only applies to specific bequests. Abatement: A proportional diminution or reduction of legacies (gifts) when the funds or assets of the estate are insufficient to pay them in full. Some estates are too small to accommodate not only the administration expenses and creditors' claims but also all the different types of bequests to beneficiaries. To allocate scarce resources, certain gifts are reduced or eliminated. This process is known as abatement. The testator can make arrangements in the will to determine the order of abatement. If the testator has not made such provisions, states have rules that set the order of abatement. As previously discussed, the classification of the bequest is the key to arranging the order in which the gifts are abated.

three ways of Revocation of Will - NY

BY WRITING — EPTL 3-4.1 1. (1) A will or any part thereof may be revoked or altered by: a. (A) Another will b. (B) A writing of the testator clearly indicating an intention to effect such revocation or alteration, executed with the formalities prescribed by this article for the execution and attestation of a will. 2. Note the definition of "will" (EPTL 1-2.1) includes a "codicil." - A "codicil" is a supplement to a will, either adding to, taking from, or altering its provisions or confirming it in whole or in part by republication, but not totally revoking such will. *partial revocation allowed with writing BY PHYSICAL ACT — EPTL 3-4.1 1. A will may be revoked by: a. (A) An act of burning, tearing, cutting, cancellation, obliteration, or other mutilation or destruction performed by: i. The testator; or ii. Another person, in the presence and by the direction of the testator (must be in the presence of two additional witnesses). Requirements: a. Capacity to revoke b. Intent to revoke c. Satisfactory physical act Presumption: a. If no original will is found, then revocation. *partial revocation not allowed by physical act! REVOCATION BY SUBSEQUENT FORMAL WRITING 1. Requirements: a. Wills Act Formalities 2. Express Revocation: a. "I declare that this is my last will and testament and I hereby revoke all prior wills and codicils." 3. Revocation by inconsistency (Could be completely or partially inconsistent) a. EPTL 3-4.3 - A conveyance, settlement or other act of a testator by which an estate in his property, previously disposed of by will, is altered but not wholly divested does NOT revoke such disposition, but the estate in the property that remains in the testator passes to the beneficiaries pursuant to the disposition. However, any such conveyance, settlement or other act of the testator which is wholly INCONSISTENT with such previous testamentary disposition revokes it. b. E.g., of partial inconsistency: In 2003, T executes a will that gives all her property to A. IN 2008, T executes a will that gives her diamond ring to B and her car to C; it contains no words of revocation. iv. An oral will may be revoked by oral declaration in presence of two witnesses; a holographic will may be revoked in the same manner holographic wills are created. Summary: Revocation in New York - Two Ways i. By repeating Wills Act formalities 1. New Will 2. New writing—executed with formalities -*partial revocation allowed with writing ii. Physical act 1. Burning, tearing, cutting, cancellation, obliteration, or other mutilation/destruction a. By testator b. By someone else in presence and by direction of testator, with two witnesses present. iii. No partial revocation in New York

NonProbate Transfers - Joint Bank Accounts

Bank Account established where funds are owned by "A and B, as joint tenants with right of survivorship." Bank accounts held in joint tenancy, with right of survivorship, are will substitutes because the death of A or B, the survivor of them takes any funds remaining on deposit (the funds do not pass through probate).

Modification and Termination of Trust What if the settlor is dead?

Basics: 1. Trusts terminate in accordance with the terms specified in the trust instrument. a. Ex. "Income to A for life, then principal to A's children." So, when A dies, remaining principal will be paid to A's children and trust will terminate. 2. When can a trust be modified/terminated before its natural end? a. Modification or termination before natural end depends on whether the trust is revocable or irrevocable. Revocable Trust: 1. Trust can be revoked/amended at any time (in accordance with terms of trust), if settlor is alive. a. Remember: EPTL 7-1.16, trusts are irrevocable by default (minority rule) and must be made expressly revocable; methods of revocation are set forth in 7-1.17 and 7-1.16 (by will). i. 7-1.17(a) - Establishment 7-1.16 - allows you to revoke a trust by will Irrevocable Trust: 1. Normally not revocable or amendable 2. Revocation by settlor a. If settlor is still alive and all beneficiaries CONSENT, trust can be revoked or amended. Trustee cannot object. EPTL 7-1.9(a) i. To revoke: O, A, and all of A's children who are alive must all consent (we don't have to worry about appointing a guardian to represent the interests of any unborn children that A may later have). 1. Problems arise where A is a minor or incapacitated, or A has minor or incapacitated children who cannot consent on their own. What if the settlor is dead? (i) Claflin or (ii) Equitable Deviation doctrine.

T's will gives $5k to A, $10k to B, and the rest to C. At T's death, the estate consists of Blackacre. What do A, B, and C receive if (i) Blackacre is worth $30k, (ii) Blackacre is worth $10k?

Blackacre will have to be sold: If its worth $30k, then A gets $5k, B gets $10k, C gets $15k. If its worth $10k, then A gets $3.333k and B gets $6.666k, C takes nothing.

Spendthrift Trusts Explain

By default rule in NY --> all income interest is spendthrift, unless the settlor makes it otherwise in the trust itself. Two fundamental components: (1) Beneficiary of trust cannot voluntarily alienate her interest, and (2) Creditors of beneficiary cannot reach beneficiary's interest. What is the justification behind Spendthrift Trusts? a. Spendthrift trusts... allow the donor to so control his bounty, through the creation of the trust, that it may be exempt from liability for the donee's debts, not because the law is concerned to keep the donee from wasting it, but because it is concerned to protect the donor's right of property." - In re Morgan's Estate (Pa. 1909) "O creates trust 'to pay income to A for life, then principal to B.'" -O's creditors cannot reach this trust once O has created the trust (unless it is revocable), so if it is an irrevocable trust - creditor's cannot reach O's trust. -A can't sell/assign her interest (with certain exceptions) - A's creditors can't reach A's interest (with certain exceptions - BUT B can sell/assign his interest; B's creditors can reach B's interest (because not income interest, but RESIDUARY interest) Policy questions i. Q: If spendthrift trust law were to recognize a distinction between voluntary and involuntary creditors, on which side of the line would spouses fall? ii. A: trend in favor of disregarding spendthrift protections in the case of FAMILY creditors of the beneficiary but not in the case of tort creditors of the beneficiary. Scheffel v. Krueger (N.H. 2001) - pg.706 i. Criminal case - D is convicted (sexual assault of minor and uploading to internet), and civil case brought under tort claim 1. Doesn't matter. Spendthrift protection applies and tort creditors cannot reach the trust fund.

No-Contest Clause

Clause: The beneficiary forfeits his inheritance under a will if he contests the will and loses. Majority rule: If beneficiary had probable cause to contest on any basis, then no-contest clause is not given effect. Slightly different in New York. NY --> EPTL §3-3.5: Conditions qualifying dispositions; conditions against contest a. A condition, designed to prevent a disposition from taking effect in case the will is contested by the beneficiary, is OPERATIVE despite the presence or absence of probable cause for such contest, SUBJECT to the following: i. Such a condition is not breached by a contest to establish that the will is a FORGERY or that it was REVOKED by a later will, provided that such contest is based on probable cause ii. The following conduct, singly or in the aggregate, shall not result in the forfeiture of any benefit under the will: 1. The disclosure to any of the parties or to the court of any information relating to any document offered for probate as a last will, or relevant to the probate proceeding 2. The preliminary examination, under SCPA 1404, of a proponent's witnesses, the person who prepared the will, the nominated executors and the proponents in a probate proceeding and, upon application to the court based upon special circumstances, any person who may provide information with respect to the validity of the will that is of substantial importance or relevance to a decision to file objections to the will. 3. A proceeding for the construction of a will or any provision thereof. --Warning signs that a will contest is likely: a. Testamentary scheme makes radical departure from previous plans b. Multiple or blended families arising from multiple marriages c. Conditions on bequest likely to cause the beneficiary to bristle d. "Unnatural" disposition, such as omission of a close family member or an unexplainable distinction among family members of equal relation e. A huge estate

Cypres Doctrine

Comes during Modification of Charitable Trust EPTL 8-1.1(c)(1): Requirements of cy pres: 1. Whenever circumstances have so changed since the execution of an instrument making a disposition for religious, charitable, educational or benevolent purposes as to render impracticable or impossible a literal compliance with the terms of such disposition, the court may make an order directing that such disposition be administered and applied in such manner as in the judgment of the court will most effectively accomplish its general purpose, free from specific restriction, limitation or direction contained therein; provided, however, that any such order or decree is effective only with the consent of the creator of the disposition if he is living. ii. Requirements for cy pres to apply: 1. General Charitable intent 2. Impossibility/Impracticability/Illegality 3. Close Alternative iii. In re Neher 1. Wanted the gift to be as a memorial to the husband a. This case is helpful to determine what is "general charitable intent" b. NY COA determines that here, there was general charitable intent, not specific, based on the bolded language of the will. "I give, devise, and bequeath my home in Red Hook Village, on the east side of South Broadway, consisting of house, barn and lot of ground...to the incorporated Village of Red Hook, as a memorial to the memory of my beloved husband, Herbert Neher, with the direction to said Village that said property be used as a hospital to be known as "Herbert Neher Memorial Hospital.'""

Overview of Components of Will Doctrines

Components of Will Doctrines (1) Integration (2) Republilcation by Codicil (3) Incorporation by Reference (4) Acts of Independent Significance ----------------------------------------------------------- (1) INTEGRATION i. All papers present at the time of execution, intended to be part of the will, are integrated into the will. ii. In re Estate of Rigsby: Testator left two-page holographic will. First page was signed at bottom, second page (a list of personal property followed by named individuals) was not. 1. Held: Only the first page is a valid holographic will. Neither page refers to the other, and they contradict each other at times. Without clear intent, second page could easily have just been a working paper. (2) REPUBLICATION BY CODICIL i. A will is treated as re-executed ("re-published") as of the date of the codicil, whether or not the codicil expressly republishes the prior will, unless the effect of doing so would be inconsistent with Testator's intent. ii. New York does NOT recognize holographic codicils (3) INCORPORATION BY REFERENCE (Not permitted in New York!) i. UPC 2-510 1. A writing in existence when a will is executed may be incorporated by reference if the language of the will manifests this intent and describes the writing sufficiently to permit its identification ii. Requirements: 1) Language of will manifests intent to incorporate 2) Writing as in existence at the time the will was executed 3) Writing is sufficiently described to permit identification iii. Clark v. Greenhalge: 1. Kept a notebook where she would discuss disposal of property. Orally expressed designating a painting to Clark. Defendant sough retention of painting arguing the notebook meant nothing 2. Held: The bequests in the notebook were incorporated by reference, not the will. The codicil re-executed the will, and by then the notebook was already in existence. iv. UPC 2-513: Codified Clark. Allows a testator to dispose of tangible personal property by a separate writing, even if prepared after will's execution, provided that the will make reference to the separate writing. (4) ACTS OF INDEPENDENT SIGNIFICANCE i. If beneficiary or property designations are identified by acts or events that have a lifetime motive and significance apart from their effect on the will, the gift will be upheld under the doctrine of acts of independent significance. 1. Two Requirements: a) Definiteness of property: will must be clear about the precise property you are leaving b) Definiteness of beneficiaries: will must be clear about who is taking property under the will. ii. Ex. Testator's will devises, "the automobile that I own at my death to my nephew and $1k to each person who shall be in my employ."

Contracts to Make a Will / Contracts Not to Revoke a Will

Contracts to Make a Will and Contracts Not to Revoke a Will i. T makes a contract with A to leave everything to A at T's death if A will take care of T for life. T executes a will leaving her estate to A. Subsequently, A changes her mind and decides not to care for T. T rescinds the contract. Upon T's death, is A entitled under T's will? 1. Most courts will hold that breach of contract does not revoke a will ii. Law of contracts governs 1. If a party reneges his promise, contract law applies 2. If a party dies leaving a will that does not comply with the contract, the will is probated according to the Wills Act, but the beneficiary is entitled to remedy for breach. iii. EPTL 13-2.1: To make a valid contract, which grants a specific disposition in a will, the contract must be in writing AND signed by the party charged therewith. 1. Joint wills must expressly state that they are joint wills. b. Contracts not to revoke a will i. Usually comes up when there is a second marriage or joint/mutual wills 1. Worry that surviving spouse will favor his/her own children from first marriage. ii. Keith v. Lulofs—H & W each had a child from a prior marriage; they made "mirror image" wills leaving everything first to living spouse then to each child equally. After H's death, his evil wife inherited his estate, then executed a new will leaving everything to her daughter and disinheriting H's son. 1. Held: Mirror-image wills are not an irrevocable contract; there was never an agreement not to revoke. A contract itself must be established. iii. Contracts not to revoke are tricky, there is a lot of uncertainty on exactly what limits they establish. c. Joint/Mutual Wills - lesson: don't use them!

How to create a power of appointment? How to exercise a power of appointment?

Creation of Power of Appointment i. To create a power of appointment 1. All need to show is donor's intent to create a power of appointment 2. Is this prefatory language, or is this creating a trust, or is this creating a power of appointment? b. Exercise of Power of Appointment i. To exercise a power of appointment: 1. The donee must manifest an intent to exercise the power 2. The manner of expression must satisfy any formal requirements imposed by the donor; and 3. The appointment must be a permissible exercise of the power ii. Whether or not the donee has manifested an intent to exercise a power of appointment is a question of construction. ii. New York: EPTL 10-6.1(a) 1. An effective exercise of a power of appointment does not require an express reference to such power. A power is effectively exercised if the donee manifest his intent to exercise it.

O creates trust to "distribute to A as much of the trust income as the trustee, in his sole discretion, determines is appropriate and then at A's death, to pay the principal to B." Can creditors of beneficiary A access any part of this trust? Analyze

Creditors of beneficiary A cannot force the trustee to exercise his discretion as to payment of income, but can levy against amounts of income*** the trustee does --in fact-- decide to distribute to A (this is a so-called cutting off the distributions procedure). ***up to 10% of income and amounts of income in excess of that needed to support/educate A (assuming the trust is spendthrift as to income, which is the default under the statute!) So creditors can access

Dependent Relative Relocation

Def --> If the testator purports to revoke her will upon mistaken assumption of law or fact, revocation is ineffective if the testator would not have revoked her will had she known the truth. In short—it permits a court to probate a revoked will. Typical DRR Case 1. Testator revokes or partially revokes old will—usually through execution of codicil or new will—under belief that a new will/codicil is valid and effective, but new will/codicil is actually not effective for some reason a. If the court finds that Testator would not have destroyed the old will had she known the new will was invalid/ineffective, it will apply DRR and cancel the revocation. Thus, it it will probate the prior will.

Insane Delusions

Def = A false conception of reality that you hang onto even in the face of all evidence to the contrary. Contestant must show that will was product of insane delusion. Can apply to whole will, or just part of it. to prevail on an insane delusion claim: must show 1) Testator had insane delusion and 2) The will (or some part) was caused by the insane delusion. A person may have sufficient mental capacity to execute a will even while an insane delusion causes a particular provision to fail for lack of testamentary capacity. A person may have sufficient mental capacity to execute a will even while an insane delusion causes a particular provision to fail for lack of testamentary capacity. In re Strittamater 1. The testator had a split personality disorder and developed a hatred of men. However, she did seem sane in some instances, but her writings and actions dictate otherwise. She left her estate to the National Women's Party and petitioner seeks to set that will aside. 2. Will set aside because of her paranoiac condition.

Noncupative / Holographic Wills - NY

EPTL 3-2.2 - Noncupative and Holographic Wills A will is noncupative (oral will) when it is unwritten, and its provisions are clearly established by at least 2 witnesses. A will is holographic when it is written entirely in the handwriting of the testator, and is not executed and attested in accordance with normal statutory formalities. A noncupative or holographic will is valid only if made by: 1) member of the armed forces in armed conflict 2) a person who accompanies an armed force in armed conflict 3) a mariner while at sea A will authorized by this section becomes invalid: 1) if by armed forces member, 1 year following his discharge from armed forces 2) if by someone accompanying armed forces, 1 year following cessation of accompaniment 3) if made by mariner while at sea, 3 years after will was made - If any person lacks testamentary capacity at the expiration of the time limited for the validity of his will, the will continues to be valid until 1 year from when the person regains testamentary capacity. -Note that New York's courts will not allow holographic wills from any other jurisdiction even if such wills were legal in the jurisdiction in which they were created.

Revival of Revoked Will - NY

EPTL 3-4.6 i. Revival: When a testator tries to make a revoked will viable again ii. (a) If, after executing a will, Testator executes a later will that revokes or alters Will 1, a revocation of Will 2 does not, of itself, revive Will 1 (or a portion thereof). iii. (b) A revival of Will 1 (or a portion thereof) may be effected by 1. A codicil that incorporates by reference Will #1 (or portion thereof) 2. A writing declaring the revival of Will #1 (or portion thereof) executed + Attested in accordance with the normal formalities 3. A republication of Will #1 (to original or new witnesses), with re-execution and re-attestation of Will #1 in accordance with the normal formalities. iv. Majority Rule: More flexible: UPC §2-509 1. If Will #2 that wholly revoked Will #1 is thereafter revoked by a physical act, Will #1 remains revoked unless it is revived. Consistent with NY a. (Will #1 is revived if it is evident from the circumstances of the revocation of Will #2 or from Testator's declarations that Testator intended Will #1 to take effect as executed). <-- MORE flexible than NY 2. If Will #2 that revoked Will #1 in whole or in part is thereafter revoked by Will #3, Will #1 remains revoked in whole or in part, unless it or its revoked part is revived. a. (Will #1 -or its revoked part—is revived to the extent it appears from Will #3 that testator intended Will #1 to take effect). Consistent with NY.

Wills have relation to another jurisdiction

EPTL 3-5.1 i. Most aspects of disposition of REAL property are determined in accordance with the law of the jurisdiction where land is located ii. Many aspects of disposition of PERSONAL property are determined in accordance with the law of the jurisdiction where the decedent is domiciled at death 1. Other aspects of disposition of PERSONAL property are handled differently: a. INTERPRETATIONS of will - local law of jurisdiction where testator domiciled at time will was executed and b. Formal VALIDITY of will i. (c) a will disposing of personal property, wherever situated, or real property situated in this state, made within or without this state by a domiciliary or non-domiciliary thereof, is formally VALID and admissible to probate in this state, if it is 1. (1) in writing and 2. (2) signed by the testator, and otherwise executed and attested in accordance with the local law of: a. NY b. The jurisdiction in which the will was executed, at the time of execution; OR c. The jurisdiction in which the testator was domiciled, either at the time of execution or of death.

T or F: Living people can have heirs.

False. No living person has heirs (or in NY, distributees). Only heirs apparent.

Hypo: T's will gives $5k to A, $10k to B to be drawn from my Chase Bank Savings Account, and the rest to C. At T's death, the estate consists of Blackacre and $10k in the Chase Bank Savings Account. What do A, B, and C receive? If Blackacre is worth $30k? $4k?

First, because the Chase Bank Savings Account is still there with sufficient funds, this "demonstrative" gift is treated as specific (last to abate), so B gets money in the account. Second, Blackacre will have to be sold: (i) if worth $30k --> A gets $5k, B gets $10k, and $15k goes to C. (ii) if worth $4k --> A gets $4k, B gets $10k, and C gets nothing.

"I leave my car and $5k to my cousin Joe. I leave my residuary estate to my friends Patty and Selma, in equal shares." How would you solve if Joe predeceases Testator? If Patty and Selma predecease? What if only S survives T and P predeceases?

For General/Demonstrative/Specific Gifts: If Joe predeceases T, his gift lapses to the Residuary. If Patty and Selma both predecease T, their gifts lapse into intestacy to T's heirs (because they are both residuary beneficiaries). If only Patty predeceases T, but Selma survives T, can go common law or NY law. Common law --> no residue-of-a-residue rule. T's heirs would take P's share (void residuary gift goes to intestacy as opposed T's other residuary beneficiary) NY law --> P takes S share. EPTL 3-3.4 Note, the NY and common law rules above are the default rules. Can provide otherwise - T can say: "I give all the rest and residue of my property to my friends P and S, in equal (or 3:1, etc etc) shares, but if either or both do not survive me, then I give her (or their) share(s) to H." ^In that case, if P predeceases T, then P's share would go to H.

What is this an example of? O, with poor eyesight, ask her heir apparent, H, to bring her the document prepared for her will as a will so that she can sign it. H brings O a document that is not O's intended will, knowing it is not the document O wants

Fraud in the execution

What is this an example of? O's heir apparent, H, induces O not to execute a will in favor of A by promising O that H (who would likely inherit O's intestate estate) will convey the property to A. At the time H makes the promise, H has no intent to convey the property to A.

Fraud in the inducement.

Types of Powers of Appointment Define the following: 1. General Power 2. Special Power 3. Imperative 4. Discretionary 5. Presently exercisable 6. Testamentary 7. Postponed

General Power: A power that is exercisable wholly in favor of the donee, his estate, his creditors, or the creditors of his estate Special Power: Any power that is not a general power (i.e., a power not exercisable in favor of the donee, his estate, his creditors, or the creditors of his estate) (typically done to keep certain things within family lines) - essentially, it limits who the possible appointees are. --Exclusive special power: If it may be exercised in favor of one or more of the permissible appointees to the exclusion of the others ("To anyone or more" or "to such of") --Non-exclusive special power: If it must be exercised in favor of all the permissible appointees in equal shares. Imperative: Instrument creating power imposes on the donee a duty to exercise it Discretionary: Donee may exercise or not exercise power ---------------------------------------------------------- Presently exercisable --> If it may be exercised by the donee during his life or by his will at any time after the power was created b. The "or" should be treated as an "And" Testamentary --> If it is exercisable only by donee's will. Postponed --> If it is exercisable by the donee only after period of time or after the occurrence or non-occurrence of a specified event

Can a creditor of a donee reach the appointive property where power is a (i) General presently exercisable power (ii) Special power ?

General presently exercisable power Can a creditor of the *donee*of a general power reach the appointive property? ii. Property subject to general presently exercisable power of appointment can be reached by (i) donee's creditors or (ii) creditors of donee's estate, even if power is never exercised! iii. Since donee can appoint to herself at any time, she is effectively the owner of the appointive property, and so her creditors should be able to reach it - Similar to revocable trusts, where creditors can reach assets of revocable trusts because you retain power iv. But note: Property subject to general *testamentary* power cannot be reached by (i) donee's creditors or (ii) creditors of donee's estate (unless donor = donee). b. Special Power i. Can a creditor of the donee of a special power reach the appointive property? ii. Creditor of the donee (or donee's estate) cannot reach the appointive property (even if the donee exercises the power)! iii. Since the donee can reap no personal pecuniary benefit, neither can the donee's creditors iv. Note: No apparent exception even where donor = donee, unless power created to defraud donor-donee's creditors.

What happens when someone in the family tree is a minor?

Guardiansh of the person versus guardian of the property i. Guardianship 1. Serves a protective purpose; usually is a slow and expensive system of administration with meaningful restrictions. Must get a court order to change investments. ii. Conservatorship 1. Intended to replace guardianship; conservator takes "title as trustee" to the protected person's property along with investment powers similar to those of a trustee a. Appointment and court supervision still required. iii. Custodianship 1. See EPTL §7-6.1 --> Property can be transferred to X "as custodian for (name of minor) under the New York uniform Transfers to Minors Act." 2. Property may be transferred to a person, including the donor, as custodian for the benefit of the minor a. Custodians have discretionary power to expend "for the minor's benefit so much of the custodial property as the custodian considers advisable for the use and benefit of the minor, without court order. i. Has power to manage and reinvest property. iv. Trusteeship 1. This is the best option. It is the most flexible, and comes closest to dealing with the child as if the parents were alive. a. Trust can be tailored and extended beyond the age of majority until donor thinks child is competent to manage the property

Dawson v. Yucus: Testator devised ½ interest in a farm to her two nephews, W and B, whom she named individually. Said she wanted the interested to go back to her husband's side of the family. B predeceased, Wilson argues it was a class gift. what outcome?

Held: Not a class gift and it lapses into the residuary. Of her five nephews, T individually named the two she was closest with. Moreover, she made alternative provisions for predeceased gift devisees elsewhere in her will but not here. i. Takeaway is that what counts as a class gift is notoriously vague. Testator's intent was abundantly clear, yet court focused on what constitutes a gift. W argued for class gift because a class gift intrinsically includes the right of survivorship. The right of survivorship means that if the gift fails as to one member of the class, his or her share does not fall out of the class, but rather the failed share is re-divided among the other members in the class.

Trusts: Duty of Prudence and Duty to Diversify Talk about In re Estate of Janes i. Facts: $2.5M estate, 71% was Kodak stock, and the stocks got worse over time and there was no oversight. No diversification, which led to great loss of value of estate.

Holding: Bank's argument was that Kodak was a reliable investment at the time, blue-chip stock, and therefore they were acting prudently. Court says that this is too limited of an analysis, ignored "market reality that, with respect to some investment vehicles, concentration itself may create or add to risk" à fails PIR 1. Did not review alternative strategies 2. Did not do formal analysis of estate 3. No investment plan 4. Failed to conduct more than routine reviews of the kodak stock a. See pg. 637 ii. Prudent person rule of investment during the administration of the estate. 1. "A fiduciary holding funds for investment may invest the same in such securities as would be acquired by prudent persons of discretion and intelligence in such matters who are seeking a reasonable income and the preservation of their capital." iii. Progression of Considerations: Does a trustee have a duty to diversity the assets of a trustee when the language of the trust authorizes retention of a specific asset? 1. Yes, we still hold our trustees to a duty or prudence and to duty to diversify, even if there is a clause in the will that authorizes retention of specific asset. a. Fact specific inquiry

Def of Antilapse Statute

If a beneficiary of a specified relationship to T dies before T, but the beneficiary is survived by issue who survive T, the beneficiary's issue take the bequest. What counts as "specified relationship"? Traditional statute - apply to T's gifts to T's descendants UPC 2-605 - Applies to T's gifts to (1) T's grandparent or to (2) lineal descendant of T's grandparent NY EPTL 3-3.3 - Applies to T's gifts to *(1) T's issue or (2) T's siblings.* ^surviving issue take by represenation

EPTL Intestacy Provisions

If a decedent dies intestacy in NY, these are the takers under the NY intestacy statute (EPTL §4-1.1), in the following order: If a decedent is survived by: §4-1.1(a)(1): a spouse and issue --> Spouse gets $50,000 off the top and 1/2 of the remainder balance, the other 1/2 balance goes to the decedent's issue. §4-1.1(a)(2): a spouse and no issue --> spouse gets all. §4-1.1(a)(3): issue and no spouse --> decedent's issue take the whole by representation. §4-1.1(a)(4): one or both parents of the decedent , and no spouse / issue --> the whole to the surviving parents or parent. §4-1.1(a)(5): issue of parent, but no parent, spouse, or issue --> the whole to the issue of parents, by representation. §4-1.1(a)(6): one or more grandparents or the issue of grandparents, but no issue of parents, parents, spouse, or issue --> 1/2 to each side or all to the side with survivors), but not to issue more remote than grandchildren of grandparents. §4-1.1(a)(7): great grandchildren of grandparents, but no spouse, issue, parent, issue of parents, grandparent, children of grandparents or grandchildren of grandparents --> 1/2 each side per capita, or all to side with survivors § 4-1.5: Escheats to state

Prudent Investor Rule

Is this a DEFAULT rule? Yes. We expect compliance with this rule, unless the trust provides otherwise. a. Def: "A trustee shall exercise reasonable care, skill and caution to make and implement investment and management decisions as a prudent a prudent investor would for the entire portfolio, taking into account the purposes and terms and provisions of the governing instrument." b. Three Main Advancements to Prudent Investor Rule: i. Duty to diversify: EPTL 11-2.3(b)(3)(c) 1. Failing to diverse is prima facie evidence that you failed the PIR and are liable ii. Sensitivity to risk and return: EPTL 11-2.3(b)(3)(A) iii. Reversal of the non-delegation rule: EPTL 11-2.3(b)(4)(C) 1. Allows for delegation 2. Note, you may well be on the hook and liable if you are not sophisticated as a trustee and fail to delegate. Also if you do delegate, requires oversight and you are still on the hook.

Property held jointly with right of survivorship by decedent spouse + Surviving Spouse

No matter who deposited what, a joint account with a right of survivorship made by surviving spouse and decedent spouse will always count as half for a testamentary substitute. ii. So, if the account is now worth $100, only $50 is a testamentary substitute, even if the decedent spouse deposited the entire amount himself. This is a conclusive presumption which cannot be rebutted.

How do we know something is a trust?

Look to the intent of the language 1. The intent to create a trust requires one party to transfer property to a second party for the benefit of a third party 2. The same party can wear more than one hat so long as he is not the sole trustee and sole beneficiary 3. Note: Put the words "trust" and "trustee" if you intend to create a trust. i. Lux v. Lux: 1. "Any real estate included in said residue shall be maintained for the benefit of said grandchildren and shall not be sold until the youngest of said grandchildren has reached twenty-one years of age." a. Court said that despite the absence of the magic words "trust" or "trustee," nevertheless the language above manifests the intention to create a trust. 2. Unless a contrary intention appears in the will or such an appointment is deemed improper or undesirable, the executor would be named to the position of trustee. ii. Jimenez v. Lee 1. Facts: Plaintiff suing her father, with respect to 2 gifts that were given - $1k savings bond registered in the names of father and/or plaintiff and/or mother; and $1.5k in savings account in the names of defendant and his three children a. Father cashed the bond and closed the savings account and used the proceeds to reinvest in bank stock, taking title to that stock as a custodian, not as a trustee. b. Why does this matter? The reason is 2 fold, one is that if kids are to be considered trustee, then can only use trust funds for its stated purpose and will be bound by those purposes. And also implicates Statute of Limitations purpose, if father was deemed a custodian, SOL would run. c. Elizabeth wins this case, this is a trust and the father is considered a trustee, not a custodian. She was entitled to an an accounting and the proceeds of traceable to the bond. 2. A trustee must maintain records of his transactions so complete and accurate that he can show by them his faithfulness to his trust 3. All doubts are resolved against a trustee who maintains an inadequate accounting system.

Who bears the burden of proof with regards to mental capacity?

Majority Rule - Once proponent of will offers prima facie evidence of mental capacity (usually through due execution), challenger of will has burden or persuasion as to incapacity. There's a presumption of testamentary capacity. Minority rule - Once challenger rebuts presumption of mental capacity, proponent of will bears ultimate burden of persuasion as to testamentary capacity NY Rule - The *will proponent* has the burden of proving that the testator possessed testamentary capacity and the court must look to the following factors: i. Whether she understood the nature and consequences of executing a will ii. Whether she knew the nature and extent of the property she was disposing of; AND iii. Whether she knew those who would be considered the natural objects of her bounty and her relations with them.

What do we do when the donee leaves no express power of appointment, but does leave a residuary clause - i.e. clause that purports to dispose of any property that is not mentioned?

Majority Rule: a. Residuary clause in donee's will does not presumptively exercise a general or special power of appointment b. Variation on whether contrary intent may be shown with extrinsic evidence or only by reference to face of the donee's will. 2. Minority (NY Rule) --> No express mention in will is required to exercise power (Unless instrument creating the power of appointment (i.e., donor) required donee to exercise by specific reference to the power.) a. Residuary clause in donee's will exercises general power of appointment unless there is a contrary intent in the donee's will, and b. Residuary clause exercises special power of appointment to the extent the residuary devisees are permissible appointees of the power.

Mandatory v. Discretionary trusts

Mandatory trust - Trustee has to distribute all of the income that is generated, has no discretion on deciding whether to pay or not. i. If a trust is mandatory, a beneficiary can demand payment because it is a mandatory income. Discretionary trust - gives discretion to trustee - is this is a prudent time to give out income to beneficiaries? Basically substitutes trustee's judgment in place of settlor's judgment. i. Can decide on payments of income/principal,

For purposes of Formalities of Will, do the procedures set out in EPTL 3-2.1(a) need to be followed in the precise order?

No. EPTL 3-2.1(b) "The procedure for the execution and attestation of wills need not be followed in the precise order set forth in paragraph (a) so long as *all the requisite formalities are observed during a period of time* in which, satisfactorily to the surrogate, the ceremony or ceremonies of execution and attestation continue."

What do we do when the donee leaves no express power of appointment, but does leave a residuary clause - i.e. clause that purports to dispose of any property that is not mentioned

Minority (NY Rule) --> No express mention in will is required to exercise power (Unless instrument creating the power of appointment (i.e., donor) required donee to exercise by specific reference to the power.) a. Residuary clause in donee's will exercises general power of appointment unless there is a contrary intent in the donee's will, and b. Residuary clause exercises special power of appointment to the extent the residuary devisees are permissible appointees of the power.

Pretermitted Children Mechanics in NY

NY EPTL 5-3.2 a) If after-born child is provided for by settlement or mentioned in the will, statute doesn't apply. b) If after-born child is NOT provided for by settlement or mentioned in will: **If Testator had children when will was executed: -If other children NOT provided for --> after-born takes nothing. - If other children ARE provided for --> after-born child shares in gifts of other children. -But if only "limited provision" made for existing children, after-born takes intestate share. **If Testator had NO CHILDREN when will was executed, after-born takes intestate share. Hypo: I leave everything to my husband, if he survives me. If he doesn't survive me, I leave everything to my issue by representation." At time of the will execution, T has no children. Later, T has children. i. Statute doesn't convey any portion of testator's estate to these children. The children were "mentioned in the will"—T didn't forget about them. T preferred husband to take all (even in the event that future children were born). So husband takes everything since he is alive.

Interested Witnesses in Will (NY)

NYEPTL 3-3.2 (a) an attesting witness to a will to whom a beneficial disposition or appointment of property is made is a competent witness and compellable to testify respecting the execution of such will as if no such disposition or appointment has been made, subject to the following: 1) Any such disposition or appointment made to an attesting witness is void, unless there, at the time of execution and attestation, AT LEAST 2 OTHER WITNESSES who are NOT interested 2) Subject to subsection 1 above, any such disposition or appointment to an attesting witness is effective unless the will cannot be proved without the TESTIMONY of such witness, in which case the disposition or appointment is void. *If attesting witness whose interest is purged but would take under intestacy, the witness gets the lesser of the will or intestacy share* i. Anything voided by interested witness falls to the residuary estate, but if witness would have take under intestacy, we have to give her something. We pay out intestate share to witness from the residual estate. (RESIDUARY gift is what coughs up, not specific gift). b. General rule: If you do not have two uninterested witnesses, then gifts to interested witnesses are purged and go into the residuary. i. But if witness would take in intestacy, he or she gets the LESSER of the intestate share or will gift

Spendthrift Trusts in NY: Countervailing Forces 3 Remedies available for General Creditors 4 Remedies available for Special Creditors

Note: **Creditor can always seek to recover directly from beneficiary-debtor** 3 Remedies available for General Creditor 1) Percentage levy 1. Yes, up to 10% of "income or other payments" due. Only 10%. 2. See CPLR §5205(d) 2) Express income over amount needed for education/support of beneficiary 1. Yes: EPTL 7-3.4 2. Judged by "station in life" perspective, court will look to see how this beneficiary is living and normal comforts of life. 3) If Settlor is beneficiary or created a revocable trust 1. Yes, settlor's interest is available to creditors. EPTL 7-3.1(a); 10-10.6 a. Can reach maximum amount! 4 Remedies available for Special Creditors 1) Spousal and child support 1. Yes: EPTL 7-1.5(d) 2) Those Furnishing Necessaries 1. Yes: EPTL 7-3.1(b) (name/addresses of beneficiary) 3) Retirement funds 1. Yes: EPTL 7-3.1(b): spouses may reach through a qualified domestic relations order 4) Federal tax claims 1. Yes

T's will gives $5k to A, $10k to B to be drawn from my Chase Bank Savings Account, and the rest to C. At T's death, the estate consists of Blackacre, only. What do A, B, and C receive? If Blackacre worth $30k? $4k?

Now, because the Chase Bank Savings Account is no longer part of the estate, this "demonstrative" gift is treated as general, so B is in the same position as A. if Blackacre worth $30k --> A gets $5k, B gets $10k, and C gets $15k. If Blackacre worth $4k --> A gets $1.333k and B gets $2.666k, and C gets nothing.

What is this an example of? O deposits $ in savings account in name of "O, as trustee for A."

O retains right to revoke "trust" by withdrawing funds at any time during O's life. At O's death, any funds in account belong to A. (the funds do not pass through probate)

In NY, does "after-born child" include posthumously conceived children? In NY, does "after-born child" include grandchildren of the testator?

Omitted Pretermitted Children 1) No. NY EPTL 5-3.2 does not define "after-born child" to include posthumously conceived children. 2) No NY EPTL 5-3.2 does not define "after-born child" to include grandchildren of the testator.

What is precatory language?

Precatory language: 1. Precatory does not create a trust; it is merely an unenforceable moral obligation a. "To A and B, with the hope that they will do . . ." b. "I wish, I recommend, I suggest . . . " 2. Mandatory (Creates trust) a. "To A, for the use and benefit of X." b. Colton v. Colton example: "I recommend to here the care and protection of my mother and sister, and request her to make such gift and provision for them as in her judgment will be best."

Ademption definition what theory applies in NY?

used to determine what happens when property bequeathed under a will is no longer in the testator's estate at the time of the testator's death. Identity theory (NY): If the property is not in the estate, it is extinguished. Too bad so sad, we don't look at intent.

Q: Let's say dad banks his sperm and then dies, and his wife gives birth to twins two years after his death (and everyone complied with all the necessary steps). If paternal grandma dies on 9/2/2014 with a will leaving gifts to her "grandchildren" or "issue," would the twins be entitled to anything? Analyze: 1. what are the necessary steps in NY? 2. Application

Required Steps: (1) genetic parent, in written instrument within 7 years prior to death consent to use of his sperm/her genetic material to posthumously conceive child and (2) authorized a person within the written instrument to make decisions about its use after his/her death (3) authorized person takes timely action with respect to giving notice and recording the instrument (filing in Surrogate's Court) and (4) child was in utero no later than 24 months after death or born no later than 33 months after death. Yes, under EPTL 4-1.3(f), the twins would be entitled to share in them. Likewise, if paternal grandma left a trust with the remainder payable to her "grandchildren" or "issue," the twins would also be included (as long as the trust was still revocable on 9/1/2014 or was created on or after that date). Language of EPTL 4-1.3(f) states instrument of "creator or of ANOTHER." <-- different for intestacy distributee purposes in 4-1.3(b)

Fraud

Requires 1) intent to deceive 2) purpose of influencing the will, and 3) result of influencing the will Fraud in the inducement v. Fraud in the execution Fraud in the inducement - Occurs when a misrepresentation causes the testator to execute to revoke a will, to refrain from executing or revoking a will, or to include particular provisions in the wrongdoer's favor Fraud in the execution - Occurs when a person intentionally misrepresents the character or contests of the instrument signed by the testator, which does not carry out the testator's intent. Fraud differs from undue influence. Testator freely makes estate plan, but as a result of having been misled (not overcoming free will, which is undue influence).

T had no children at the time he wrote a will leaving his entire estate to his wife W, or if she does not survive, to his friend Z. W predeceases T. T is survived by their after-born children (children born after writing and signing of will) A and B, and by Z. What are the rights of A, B, and Z in T's estate?

Rights of Omitted After-born children section rights of A, B, and Z in T's estate? i. EPTL 5-3.2(a)(2) = intestate share. 1. When you die intestate and there is no surviving spouse, issue gets everything. 2. So A and B split half of the whole pot, and Z gets nothing!

Probate of Lost Wills

SCPA 1407—Proof of Lost or Destroyed Will A lost or destroyed will may be admitted to probate only if: 1) It is established that the will has not been revoked, and 2) Execution of the will is proved in the manner required for the probate of an existing will, and 3) All of the provisions of the will are clearly and distinctly proved by each of at least two credible WITNESSES or by a COPY or draft of the will

Ademption - four types of devises

SPECIFIC DEVISES A specific gift is a gift where the testator has a specific item in mind when he or she makes a gift, typically an item that he or she currently owns. Almost invariably the fit is modified by the word "my." b. Example: If the will says, "I give my car to Alice" the gift will be construed as a specific gift of the car that the testator owned when he or she executed the will DEMONSTRATIVE DEVISE a. General gifts from a specific source b. Ex. If the will says, "I give Dave $1,000 from my checking account at Chase Bank." The first starts out looking like a general gift ($1k) but then it looks like a specific gift (from my checking account at Chase Bank). Demonstrative gifts are a subset of general gifts and are treated as a general gift for construction purposes. GENERAL DEVISE a. Gift of general pecuniary value that is satisfied by using any item that fits the description of the gift. b. Example: Gift of cash RESIDUARY DEVISE a. Gift that gives all of the testator's property that has not otherwise been given b. Example: "I give the rest residue and remainder of my property to Elaine."

Half Blood Siblings in NY

Siblings that share one parent, instead of two. Relative of the half-blood is treated the same as a relative of the whole-blood. NY follows majority rule. EPTL 4-1.1(b). Thus, relatives of the half blood inherit the same share they would inherit if they were of the whole blood.

How can you "release" a power of appointment? Why would someone release a power?

a release is like a "relinquishment" of power. A donee can release testamentary power pursuant to EPTL 10-9.2 if all takers in default will benefit. EPTL 10-5.3(b). Why release power? 1. Tax reasons 2. Reasons of family harmony. a. Ex, see pg.842 - T devises property in trust for A for life, then as A by will appoints, and in default of appointment, to A's children equally. (i.e. a general, testamentary power of appointment). A could not make an enforceable contract to appoint to her children, but by releasing her power to appoint, she is effectively ensuring her children will get the property.

Elective Share in NY - Mechanics

The policy behind the spousal elective share is the partnership theory of marriage. Each spouse contributes in some way to the accumulation of wealth, he or she should be able to share in some of that. Default share is either 1/3 or ½ depending on the state. It is "elective" because it does not automatically go to the spouse; the spouse decides whether to take that share. Spouse could take what spouse is left under the will or could elect to take the 1/3 or ½ share. NY EPTL 5-1.1.-A greater of $50,000 or 1/3 of the net estate If net estate is $150,000 or more, then elective share will be 1/3 of the estate. If net estate is less than $150,000, then elective share will be $50,000. But if net estate is less than $50,000, then THAT amount is the elective share. Steps: (1) Calculate Probate Estate = Testate and/or Intestate Estate (2) Add Nonprobate Assets (i.e. lifetime transfers that qualify as testamentary substitutes) (3) Subtract Debts/admin expenses/funeral expenses (not taxes though!) (4) That equals your Net Estate. Now multiply that total by 1/3. (5) That equals your Elective Share. (6) Now subtract Assets passing "absolutely" to surviving spouse (will+intestacy+testamentary substitutes) (7) Total = Net Elective Share

Is Tortious Interference with Expectancy recognized in NY?

This is a tort, separate and apart from probate process. Def - Bad actor allegedly interfering with the rightful beneficiary's inheritance in a way that gives rise to a recovery in tort. NOT recognized in New York Plaintiff must prove (1) Existence of an expectancy; (2) Intentional interference with expectancy through tortious conduct (fraud, undue influence, duress); (3) Causation; (4) Damages

What happens if a general power is not effectively exercised by the donee, but the donor did not identify eligible takers in default? What happens if the donee of a special power of appointment failsl to exercise it, and there is no gift in default of appointment?

Traditionally, if a general power is not effectively exercised by donee, the appointive property passes to the takers in default of appointment or, if donor did not identify eligible takers in default, then reverts to the donor or the donor's estate. *note, under some modern authorities, the appointive property will pass to the donee's estate, unless the donee affirmatively refrained from exercising the power. If the donee of a special power of appointment fails to exercise it, and there is no gift in default of appointment, the appointive property may—if the objects are a defined and limited class—pass to the objects of the power. Otherwise, the property reverts to the donor or donor's estate. In NY, if there is no will (or no will that is effective), there is absolutely no argument that the residuary clause is in effect because there is no operative residuary clause. So then you analyze with the rules above.

Hypo: Teresa Testator, 74, has enlisted your services to draft her will. She would like to leave her estate to Fred, with whom she has been living for 2 years. Teresa's closest living relatives are 3 nieces. From time to time, the nieces visit their aunt, and they exchange cards at Christmas and on birthdays.

Ways to avoid a will contest: a. Independent lawyer (w/o beneficiaries' involvement/presence) b. Letter exchange with client, laying everything out in client's own language/handwriting c. Set forth reasons in the will d. Video discussion between lawyer and client e. Family meeting in which testator explains the plan f. Professional medical examination before executing will or trust g. Extra precautions at will execution: Disinterested witnesses who will present well when testifying in court, discussion in front of witnesses, who then sign affidavits) h. No-contest clauses: (+ including a small bequest to likely challengers to discourage them from contesting) i. Revocable inter vivos trusts and/or lifetime gifts j. Marriage; adoption Special concerns for drafting attorneys: a. Is drafting attorney a beneficiary in the will? b. Is drafting attorney a named executor in the will? c. Is drafting attorney named executor in the will and an attorney for the estate.

Equitable Deviation

When Settlor is deceased and parties want to modify Trust that he created. Equitable Deviation allows deviation from ADMINISTRATIVE terms of a trust is permissible where compliance with trust terms would defeat or substantially impair the accomplishment of the purposes of the trust on account of changed circumstances not anticipated by the settlor. 1. Deviation will not be permitted merely because it is "more advantageous to the beneficiary." 2. Ex: of allowable equitable deviation - trust was going to lose all its value if a sale didn't occur, so allowed sale of trust. What is Administrative as opposed to distributive? *the way the trust is managed, *the way money is invested, etc, **not dispositive or distributive terms (which talks about how money is paid out)!!

Claflin Rule

When Settlor is deceased and parties want to modify Trust that he created. General Rule: Modification/termination of Trust is allowed if all the beneficiaries consent and if there will be no interference with a MATERIAL PURPOSE of the settlor. - Allows Trustee to preserve the original design plan of the settlor, despite what the beneficiaries want, unless the proposed change doesn't interfere with what the settlor wanted. 1. In Claflin, allowing the son to inherit the money 9 years earlier than anticipated was a material purpose and violated the settlor's intent to restrain an heir from the money. 2. Another example: settlor sets up an educational trust, but the beneficiary drops out of school but gets a great job and makes great money--> no interference of material purpose, purpose of trust will not be accomplished 3. Or another example: trust for summer beach house, but all the kids move away and never get a chance to go the house because of remote geography --> no interference of material purpose, purpose of trust will not be accomplished Examples of material purpose? 1. Spendthrift - if its clear that the trust was set up as a spendthrift, will be a hurdle and can't materially interfere. (remember default in NY is that trusts are spendthrift) 2. Age-deferred 3. Support - if it is clear that the trust is being set up to support the beneficiaries over time, then can't materially interfere 4. Pure Discretionary - if its clear that settlor chose trustee to exercise discretion and to take unknowable situations into account, can't materially interfere

Can a surviving spouse elect against appointive property held by the decedent spouse subject to a general power of appointment? Can a creditor of the donee of a general power reach the appointive property? Can a creditor of the donee of a special power reach the appointive property?

Yes, for GENERAL, PRESENTLY EXERCISABLE powers of appointment. A surviving spouse can elect against appointive property held by the decedent spouse subject to a general power of appointment. EPTL 5-1.1-A(b)(1)(H): Includes this power as a Testamentary Substitute i. Any interest in property to the extent the passing of the principal thereof to or for the benefit of any person was subject to a presently exercisable general power of appointment held by the decedent immediately before his or her death OR which the decedent, within 1 YEAR of his or her death: 1. Released (with tax-related exceptions), or 2. Exercised in favor of any person other than himself or herself or his or her estate. Can a creditor of the donee of a general power reach the appointive property? - Property subject to general presently exercisable power of appointment can be reached by (i) donee's creditors or (ii) creditors of donee's estate, even if power is never exercised. - Since donee can appoint to herself at any time, she is effectively the owner of the appointive property, and so her creditors should be able to reach it - Similar to revocable trusts, where creditors can reach assets of revocable trusts because you retain power - But note: Property subject to general testamentary power cannot be reached by (i) donee's creditors or (ii) creditors of donee's estate (unless donor = donee). Can a creditor of the donee of a special power reach the appointive property? - Creditor of the donee (or donee's estate) cannot reach the appointive property (even if the donee exercises the power). - Since the donee can reap no personal pecuniary benefit, neither can the donee's creditors - Note: No apparent exception even where donor = donee, unless power created to defraud donor-donee's creditors.

T died in 2019. When T executed his will in 2006, he had four children (A, B, C, and D), and he bequeathed them each $200,000, and he left the residue of his estate (worth $1 million) to friend, Q. E, a fifth child, was born in 2008. F, a sixth child, was born in 2009. Do E and F have any rights in T's estate?

Yes. $200k * 4 = $800k, so E gets 1/(4+2) = 1/6 and F gets 1/6, each out of $800k. So E/F each gets $133,333

Does the 120 Hour survivorship requirement apply to will substitutes as well?

Yes. 1. 120-Hour Survivorship Requirement a. See EPTL 2-1.6(c): Applies to all will substitutes we cover in class b. Common law presumption of revocation c. Creditors' rights d. Revocation by operation of law (divorce) e. Note: Where a trust sets forth an express, particular method of revocation only that method of revocation is valid.

T dies in 2018. When Testator executed his will in 2006, he had four children (A, B, C, and D), and he bequeathed each of them $100,000, and he left the residue of the estate (Worth $1 million) to friend, Q. E, a fifth child, was born in 2008. Does E have any rights in T's estate? Hypo 2: Same as above, but A gets $100k, B gets $200k, C gets $300k, D gets $400k (total gifts equal to $1 M). Does E have any rights to T's estate?

Yes. E shares in gifts to other children, so spit 5 ways instead of 4. To calculate, originally portion of estate that was given to other children was worth (100k x 4) = 400k. So now, divide 400k in 5 ways, to get 80k each child. Each child, including E, takes 80k. Hypo 2: Yes. Total gifts equal $1M. Divide into 5 ways to get $200k for E. But, A only contributes 10%, B 20%, C 30% (because 300k/1M), etc.

Can you legally disinherit your children in NY?

Yes. What is the danger of leaving children out of your will? Will contest. Rights of Omitted (Pretermitted) Children Purpose of NYEPTL 5-3.2: protect children the testator unintentionally disinherited, not to provide a share for a child whom the testator did not wish to name as a beneficiary.

Do trusts need to be in writing in NY?

Yes. i. EPTL 7-1.17(a) 1. Lifetime Trusts ("Every lifetime trust shall be in writing" + executed in the presence of two witnesses who shall affix their signatures to the trust instrument.) ii. EPTL 3-2.1(a) 1. Testamentary Trusts ("Except for nuncupative and holographic wills authorized by 3-2.3, every will must be in writing")

DRR Problem T's typewritten will provides: "I bequeath $1,000 (crossed out) to my nephew, Charles Blake." T crosses out the "$1,000" and substitutes the "$1,500," writing her initials and date in the margin. After T's death, Blake contends he is entitled to $1,500, or in the alternative, $1,000. a) what result in a state that recognizes holographic wills? b) what result in a state that does not permit partial revocation by physical act? (like NY) c) what result in a state that permits partial revocation by physical act? Should the court apply DRR? d) what if T crosses out $500 instead of $1000. In a state that permits partial revocation, should the court apply DRR?

a) Probably no revocation because this probably would not be considered holographic will; handwriting w ill not suffice to show that this is a holographic will. So no change to will, and Blake only gets $1,000. b) same result, no change to the will. Blake would only get $1,000. o Can only do revocation by writing or physical act. gonna fail requirments by subsequent writing because no attestation and no formalities. o Furthermore, because this jurisdiction does not permit partial revocation, so the crossing out figure will be disregarded. o However, what result had T signed, two witnesses observed T modifications, and then witnesses signed the will? - One court had said that this was OK, that this was a "codicil" of the will right then and there. - What essentially court did ignored Article 3-2.1(a)(1)(b) [ignore anything after signature of the will] statute c) The crossing out will be effective in a jurisdiction that permits partial revocation by physical act, but is there a problem! Because the crossing out of the $1,000 only crosses out the $1,000, it doesn't substitute in the $1,500 because it is not properly attested and properly signed (no formalities of codicil seen here)! o so this is a frustration of her intent, so should the court apply DRR - would the testator prefer to keep the revocation, in which case she gets $1,000, or had she known about the law/fact that this would have resulted would have rather have just kept the $1,000 for Blake? - Because she was trying to increase the gift, it is likely that this testator would prefer to ignore the revocation and at the very least, give Blake $1,000 - BUT under no circumstances is Blake going to get $1,500! - Most likely outcome is that Blake gets $1,000 under DRR (court ignores partial revocation) d) Different in this case because it is harder to interpret her will. Because o Had she known about the ineffective decrease ($500 provision) in the writing, would she have rather have T get $500 or nothing at all?

Correcting Mistakes in Wills - 3 approaches

a) Traditional - Courts will not reform; and no extrinsic evidence allowed. b) Transitional - The court "has no power to reform" but court reforms anyway. c) Modern - Open reformation; extrinsic evidence is allowed. "The court may reform the terms of a governing instrument, even if unambiguous, to conform the terms to the transferor's intention if it is proved by clear and convincing evidence what the transferor's intention was and that the terms of the governing instrument were affected by a mistake of fact or law, whether in expression or inducement." ii. New York: NY courts will reform

Adopted children in NY under intestacy statutes

a. ADOPTED CHILDREN i. EPTL § 1-2.10: "Issue" includes adopted children ii. EPTL §4-1.1(d): Inherit in intestacy as provided by . . . iii. NY Dom. Rel. Law §117(1) 1. (a) The birth parents of the adoptive child shall be relieved of all parental duties toward and of all responsibilities for and shall have no rights over such adoptive child or to his property be descent or succession a. No rights of birth parents of adopted children 2. (b) The rights of an adoptive child to inheritance and succession from and through his birth parents terminate 3. (c) The adoptive parents or parent and the adoptive child shall sustain toward each other the legal relation of parent and child and shall have all the rights and be subject to all the duties of that relation including the rights of inheritance from and through each other and the birth and adopted kindred of the adoptive parents or parent. *Thus, Adoptive child and adoptive parents have full rights of inheritance from and through each other* b. INTRA-FAMILY ADOPTION - 2 step inquiry 1. §117(1)(e): If After Aug 31, 1987 death of decedent --> and (1) the decedent is the adoptive child's birth grandparent or is a descendant of such grandparent, AND (2) an adoptive parent (i) is married to the child's birth parent, (ii) is the child's birth grandparent, or (iii) is descended from such grandparent, then If YES to both, the rights of an adoptive child to inheritance and succession from and through either birth parent shall not terminate upon the making of the order of adoption. However, an adoptive child who is related to the decedent both by birth relationship and by adoption shall be entitled to inherit only under the *birth relationship* UNLESS the decedent is also the adoptive parent, in which case the adoptive child shall then be entitled to inherit pursuant to the adoptive relationship only. Note: There are only certain biological family members set out in the statute (birth grandparent or birth grandparent's descendants). 3. Hall v. Vallandingam a. Facts: Earl and Elizabeth were married and had four children, the plaintiff here. Earl died when the children were young and Elizabeth remarried a man named Kilgore. Kilgore adopted the four children. Earl's brother, who was childless, died intestate 25 years later and plaintiff argued they are entitled to part of the inheritance as blood relatives. Defendant argues that since they were adopted they lost all intestacy rights from their natural father's family. b. The right to receive property by devise or descent is not a natural right but a privilege granted by the State. Every State possesses the power to regulate the manner or term by which property within its domain may be transmitted by will or inheritance and to prescribe who shall or shall not be capable of receiving that property. c. Adoption is a "rebirth" into a completely different relationship. Once a child is adopted, the rights of both the natural parents and relatives are terminated

T bequeaths a fund to X in trust, to pay income to A for life, principal to B on A's death. A will prefer investments producing return classified as "income."' B will prefer investments producing returns classified as "principal." What result?

a. If the trustee invests in a stock that does pay a dividend, the income beneficiary may be advantaged at the expense of the principal beneficiary. b. If a trustee invests in a stock that does not pay a dividend but appreciates in value, the principal beneficiary may be advantaged at the expense of the income beneficiary c. Two solutions that enhance the trustee's ability to comply with her duty "to pursue an overall investment strategy" that is "reasonably suited to the entire portfolio: without worrying about the form of the return on investment (i.e., principal v. Income) i. Equitable adjustment (EPTL 11-2.3(b)(5)) 1. Traditional classifications of specified return as "income" or "principal" are retained, but the trustee is given the discretion to reallocate receipts to income or principal ii. Unitrust 1. In a unitrust, the "income" beneficiary is given some percentage of the value of the trust each year. (In NY, this percentage is 4% - see EPTL 11-2.4). The percentage can be fixed or set to some benchmark, and the corpus is usually measured by reference to a rolling average.

Non-Marital children in NY under intestacy statutes

i. All states today permit inheritance by a non-marital child from the child's mother. The rules respecting inheritance from the father, however, still vary. 1. SCOTUS has struck down statutes denying non-marital children inheritance rights from the father a. It is usually a condition that paternity be established. ii. Authority: 1. EPTL §1-2.10: "Issue" includes non-marital and marital children 2. EPTL §4-1.2: Inherit in intestacy a. A non-marital child inherits from his mother and his mother's side. <-- (no conditions) b. A non-marital child inherits from his father and his father's side IF: a) Court order of paternity, or b) Mother and father have executed an acknowledgment of paternity (thereafter filed with registrant), or c) Father has signed an instrument acknowledging paternity, provided - - Executed with deed formalities and filed within 60 days with putative father registry and department of social service notifies mother or other legal guardian, or d) Paternity has been established by clear and convincing evidence, which may include 1. Genetic marker test results, or 2. Father openly and notoriously acknowledged the child of his own (Father only has one year to change his mind about such acknowledgement iii. Non-Marital Parents inheriting from Child: 1. A father of a child born out of wedlock can still inherit from the child in New York so long as he complies with proof of paternity requirements - EPTL §4-1.2(b) 2. Mothers inherit automatically—EPTL §4-1.2(b).

Duty of Loyalty as Trustee

i. Dividing legal and beneficial ownership requires a fiduciary duty: 1. Duty of loyalty 2. Duty of care ii. Prohibits self-dealing and conflicts of interest iii. Enforced through the No-Further inquiry rule i. Prohibited actions (default) 1. buying trust property for personal use / or selling personal assets to the trust 2. Borrowing/lending trust property 3. Purchase of common investors 4. Transfers between trusts 5. Dealings with beneficiaries 6. Self-employment ii. No Further Inquiry Rule 1. Def - Once self-dealing or conflict between trustee's fiduciary and personal capacities is shown, there is no further inquiry and the transaction is voidable by the beneficiary (even if the transaction was otherwise taken in good faith and was reasonable/beneficial to the trust). 2. Self-Dealing: Hartman v. Hartle: Testator appointed sons-in-law to execute her will. One of them sells property (farm) to executor's spouse, sells it for profit. Testator's daughter challenges the transaction. a. Held: This was an act of self-dealing. Doesn't even matter if it was a fair price, it is invalid on its face. Easy bright line rule i. If trustee self-deals by buying property from the estate, the estate can demand it back or demand profits from the sale. They must return any benefit conferred on them. ii. Remedy- because this was a bonafide purchaser, can't unwind the sale, but can force the executor to account for the profits that were made, and to pay the share of the profits that were made 3. In re Gleeson's a. The lessor who is leasing the property to the lessee (Colbrook), the lessor also names Colbrook as trustee for the children as beneficiary i. C renews the lease to himself for another year ii. However he also increases the rent that he pays and also finds another tenant after a year 1. Holding - EVEN if the trust sustained no loss, even if the transaction was beneficial to the trust, the No Further Inquiry doctrine = doesn't matter and transaction is voidable. 2. Here, record shows that "trustee leased a portion of the real estate of the trust to himself as a partner of William Curtin and that petitioner received a share of the profits realized by him and Curtin from their farming operation of said real estate." à voidable. 3. What should Colbrook have done? a. If he couldn't find another tenant, he should have tried to get advance judicial approve to staying on an paying this rent. Exceptions to No Further Inquiry Rule : a. Consent of all beneficiaries or b. Court permission or c. Settlor-authorized transactions or i. E.g., trustee compensation d. Institutional trustee accounts

Define a) Express Private Trust b) Charitable Trust c) Resulting Trust d) Constructive Trust

i. Express private trusts - Trusts that are set up for personal use to effectuate some donative transfer - The only "true" trust ii. Charitable trusts - Do not need an ascertainable beneficiary iii. Resulting trusts: - Settlor O: "To X in trust to pay the income to A for life, and on A's death, to distribute the property to A's issue." a. A dies without issue. X is said to hold the remainder (i.e., principal) on resulting trust for O's heirs or devisees (as the case may be) - Whatever is left in the trust corpus after the beneficiary dies, is held in trust for a remainder man. - Equitable remedy iv. Constructive trusts - Trust that doesn't depend on any kind of intent by the settlor - An equitable remedy enforced by the courts - A way to disgorging unjust enrichment

What powers do trustees have in NY?

i. Fiduciary Powers 1. EPTL 11-1.1(b) states that you have to specifically state which duties you don't want the trustee to have. So, if you don't say anything all of the duties below will be applied to the fiduciary. 2. EPTL 11-1.1: By default, authorizes fiduciaries to undertake many activities, including: a. To accept additions to the trust from outside sources b. To invest and reinvest property (power and also a duty) c. If property not specifically disposed of, to collect rents from, manage, sell, mortgage and lease the property (for a period of up to 10 years) d. To make ordinary repairs e. To contest and settle claims in favor of/against the trust f. To vote shares of stock g. To execute instruments (assignments, contacts, deeds, bills of sale, etc.) h. To pay administration expenses 3. Certain powers are not included, and the trust must specifically grant them if desired, such as the power a. To borrow money b. To abandon trust property c. To engage in self-dealing d. To pay outlawed debts

Property held jointly with right of survivorship by decedent spouse + Third Party

i. Whatever the decedent spouse deposited counts as a testamentary substitute for the elective share. ii. The burden is on the surviving spouse to prove how much the decedent spouse put it in, otherwise it is assumed to be nothing. iii. The Third party still gets the money in the account, but to calculate the elective share we need to see how much counts as a testamentary substitute. iv. So, if the decedent spouse put in $100 and the third party (ex:brother) put in $100, and the account is now worth $1,000, then $500 counts as a testamentary substitute (only half). In this same example, if the decedent spouse put in the whole $200, then the entire account worth, or $1,000, is a testamentary substitute. And if the decedent spouse didn't put anything ($0), surviving spouse is not entitled to anything! so find the fraction

Q: (NJ) Both husband and wife retained the services of law firm to draft their wills. Both wills left their estates to the other spouse, with provisions if that spouse dies for the estate to transfer to their children, both legitimate and illegitimate. The parties signed a conflict of interest waiver. However, the firm missed a conflict by accident. The firm represented a mother in a paternity suit against the Husband. Firm decided it had an obligation to tell the wife that the Husband had an illegitimate child who could inherit her estate. Plaintiff sues the firm that he cannot disclose this info to his wife.

pg. 60: "Under NJ RPC 1.6, the facts support disclosure to the wife. The law firm did not learn of the husband's illegitimate child in a confidential communication from him. Indeed he concealed that information from both his wife and the firm. The law firm learned about the husband's child through its representation of the mother in her paternity action against the husband. Accordingly, the husband's expectation of nondisclosure of the information may be less than if he had communicated the information to the firm in confidence."

Nonprobate property

property that passes under an instrument other than a will; i.e. joint tenancy, life insurance, contract, intervivos trust, or deed. The distribution does not involve a court proceeding.

Probate property difference between person dying testate versus intestate

property that passes under the decedent's will or by intestacy; distribution may require a court proceeding A person dying testate dies with a will. His or her property passes pursuant to the terms of the will. A person who dies intestate dies without a will. His or her property passes pursuant to the intestacy statutes.