Wills & Estates Oultine [Outline]
Wills & Estates
Stanley Johanson, Fall 1994
Dapper, Mines, Oliver, Pichinson & Rowe
PART I: STUFF & THINGS
I. Restrictions on Testamentary Powers
A. Reasons for inheritance...
1. In a society based on private property, it is the least objectionable method of dealing with the owner's property upon his death.
2. Inheritance is the natural and proper expression and reinforcement of family ties (and families are good for society).
3. Family members have contributed intangibly to the wealth achieved by the testator.
B. Reasons against inheritance...
1. May grant wealth to donees w/o regard to competence and performance.
2. Transfer of great fortunes perpetuates wide disparities in the distribution of wealth, rigid class distinctions, and the concentration of economic power in the hands of the few.
Lewis v. State Bar of California Attorney Lewis had himself appointed administrator of Vacha's wife's estate (Vacha in prison) after wife died intestate. Lewis disbursed $20k to himself and did other bad faith things. Court sanctioned him. Court said Lewis made the following mistakes:
(1) failed to take measure to preserve the probate estate;
(2) failed to get probate ct approval for disbursements;
(3) failed to get ct approval for loan to himself;
(4) failed to keep accurate records.
Shapira v. Union National Bank Testator's will said son Daniel could take his share if he married w/i 7 yrs after death of testator to a Jewish girl whose parents are both Jewish. Daniel didn't and sued for his share claiming unconstitutional restriction on freedom to marry; cites Shelley v. Kramer to say that state (read Court) enforcement of private will provisions equal state action which restricts unconstitutionally.
a. Was the Court's enforcement state action?
(1) Probably not since the court is not restricting the right to marry. Besides, if mere enforcement of a will is unconst. then testator cannot be assured of enforcing his discriminations if the state could not. This would be a major extension of the 14th Am.
(2) On the other hand, if the testator were still living he could be influenced by changing circumstances.
b. What will Courts enforce regarding marriage?
(1) Total restraint on freedom to marry (divorce or separation) = against public policy, courts will not enforce.
(2) But, provisions encouraging separation or divorce may be enforced if it is shown that the dominant motive of the testator is to provide support in case separation or divorce occurs.
c. Shapira is really about what a will is:
(1) It's a piece of paper until it's probated.
(2) It's the duty of the court to uphold the testator's intentions w/i the limitations of law and public policy.
(3) Wisdom in judgment is not decided by the courts.
II. Professional Responsibility in Will Drafting and Estate Planning
PA. PRIVITY OF K = Defense to Negligence?
Ogle v. Fuiten privity of contract. Should we permit persons unnamed in the will, or persons named w/ gift conditioned on events which fail to occur, to bring an action for negligence against the drafting attorney?
1. Held: Privity of K is no defense to the att'y sued for negligence.
a. Modern trend: Att'y held liable for negligence to intended will beneficiaries even though no privity of K.
b. BUT, plaintiff must still prove all elements of negligence. Good allegation but difficult to find evidence since T is dead.
c. Texas Rule: Not settled by S/Ct, but 3 Courts of Appeals and long line of cases hold privity of K = defense to negligence.
2. Att'y's duty to update will to keep it w/i T's intentions
a. Heyer v. Flaig Att'y owes duty not only to T but also intended beneficiaries. Att'y's duty lasts until T's death. FACTS: Att'y's mistake was in overlooking omitted spouse statute which says that marriage after will is partially invalidated--spouse, by operation of statute, takes half. Att'y knew of impending marriage, yet failed to advise or account for its affect on will.
b. Negligence: Only if T's intentions proven, and it's proven that Att'y knew those intentions yet failed to act.
(1) T's Responsibility: Should let Att'y know if circumstances change. Will prepared for facts given at time of execution.
(2) Att'y's Responsibility:
(a) Should inform T of events that may change the degree to which the will tracks the client's intention. W/o this advice, Att'y is negl.
(b) If on retainer, Att'y may have duty to be proactive in tracking T's circumstances.
III. The Estate Planning Problem
A. Basic Considerations:
1. alternate executors
2. simultaneous death of H&W
3. "buzz" words which allow independent administration (see TPC Sec. 145: Empowers executor to act w/o intervention of court)
4. transfers to minors
a. guardianship
(1) types
(a) of person: resp. for custody & care
(b) of property: responsible for possession and management of child's property
(2) If named guardian dies...
(a) TPC ∍676: Ct appoints nearest ascendant in direct line (doesn't say which grandparents).
(b) TPC ∍680: minor >14 yrs old may choose, subj. to court approval
(c) TPC ∍681: Persons ineligible to be guardian
(d) TPC ∍690: Only one person may be guardian. Such person may be guardian of more than one, if to the advantage of ward.
(3) Who can be appointed?
(a) Trad'ly, not non-residents--at least as guardians of estate; this keeps assets w/i state.
(b) Guardian bonds--guardian must provide unless will excuses
b. trust for benefit of--most flexible (more later)
c. conservator: like guardian, but w/ only one annual trip to court
5. instructions in case of death of intended beneficiaries (otherwise state law defaults apply, e.g. anti-lapse statute)
6. final contingency (atom bomb clause)--all intended beneficiaries predecease--what charity?
7. "to descendants per stirpes" generally better than "to children" b/c more specific.
Note: If will says "to DNs per stirpes" and all T's children predecease, rule of construction says follow state's intestate distribution scheme.
a. TX: per capita by representation.
b. UPC: per capita by representation.
B. Why everyone needs a will...
1. Avoid intestate distribution
2. Make contingency for common disasters
3. Appoint guardians
4. Appoint executors
5. Waive bond
6. Create trusts
7. Simplify administration by TX independent administrator
8. Tax planning
IV. Community Property
A. CP States
1. Lousiana
2. Texas
3. New Mexico (UPC)
4. Arizona
5. California
6. Washington
7. Idaho (UPC)
8. Nevada (UPC)
9. Wisconsin
B. Spouse's Separate Property
1. consists of:
a. Property acquired prior to marriage (and all other property bought w/ income from those assests) is SP.
b. Property acquired during marriage by give, devise or descent is SP.
c. Recovery for personal injury is SP. EXCEPTION: medical expenses & lost wages.
2. Classification as SP under the following circumstances:
a. CP may be partitioned into SP: By written agreement, signed by both spouses. Tex Const. art. 16, ∍15. Tex. Fam. Code Ann. ∍5.52.
b. Tracing Principle: Assets purchased w/ SP are SP.
c. "Conflict of Laws" SP: Property acquired in CL state remains SP when couple moves to CP state.
d. "Quasi-Community Property"
(1) Texas:
(a) for purposes of division upon divorce: "Imported" SP is classified as CP if it would be CP had it been acquired in TX.
(b) Hanua v. Hanua: Q-CP principle n/a in probate
C. Community Property Defined
1. CP = property other than SP, acquired by either spouse during marriage.
2. CP Presumption: All property presumed to be CP, UNLESS clear and convincing evidence shows otherwise.
3. Income from SP
a. American Rule: Income from SP is SP.
b. Spanish Rule: Income from SP is CP. (TX, ID, LA; see below).
c. But note: Capital gains are SP.
(a) Example:
| YEA R | FACTS | SEPARATE PROPERTY | COMMUNITY PROPERTY |
|0 |H buys 400 shares of Varoom funds | 400 | 0 |
| |w/ SP. | | |
|1 |Varoom declares dividend of | 430 | 20 |
| |$1/share, for total of $400 ($240 =|400 original SP + |20 sh. = $160 ordinary income divided by $8|
| |capital gain; $160 = ordinary |30 sh. = $240 capital gain divided by $8 per|per share. |
| |income). Dividend disbursed as |share. | |
| |add'l 50 shares ($8/share). | | |
|2 |Varoom declares dividend of | 453.89 | 46.11 |
| |$1/share, for total of $450 ($225 =| |20 sh. from YR-1 + |
| |capital gain; $225 = ordinary |430 from YR-1 + |26.11 sh. = 20/9 + 430*(225/450)/9 |
| |income). Dividend disbursed as |23.89 sh. = 430*(225/450)/9. | |
| |add'l 50 shares ($9/share). |430 = $1/sh. * 430 SP sh. | |
| | |225/450 = % capital gain in total dist. | |
| | |9 = price /sh. | |
| | | | |
d. Spouses may agree that income from SP shall be SP.
e. Both rules subject to presumption for CP.
D. Classification of Assets as CP or SP
1. Inception of Title Rule: separate or community character determined at the time the asset is acquired.
a. Installment purchases begun before marriage
(1) Inception of title rule--SP
(2) Proration rule (CA): Property is part-CP and part-SP in proportion to the amount of the sale price paid out of SP before marriage and the amount of CP funds paid out after marriage.
(3) Example: Life insurance policy taken out before marriage. Under inception of title rule, the policy is considered SP, but CP is entitled to reimbursement. Under Pro Rata Share Rule, proceeds are CP proportionately.
(4) Business Acquired before marriage in which owner/spouse works after marriage:
(a) Some states treat appreciation in value of business as SP, provided that owner was compensated fairly for labor (the wages = CP).
(b) In California, appreciation is CP if appreciation is due to skills of spouse; but if appreciation is due to general market rise, then it's SP
b. Assets purchased during marriage--presumptively CP.
c. Assets acquired on credit during marriage
(1) Community credit presumption: Since either spouse may bind the community on a K, it is presumed that spouse has acted on community's behalf, even though
(a) SP is source of credit; and
(b) SP used as down payment.
(2) What it takes to rebut community credit presumption: The spouse must sign purchase agreement obligation as "S, for his separate estate" so that there's a clear indication that lender looked only to SP as basis of credit.
d. Community funds used to enhance value of SP--Reimbursement Claim
(1) Equitable claim possible for community funds used to enhance value of SP.
(2) Discharge of encumbrance: Penick v. Penick: Community reimbursment claim recognized only if claimant can show that expenditures of community > benefits rec'd by community.
(a) Examples (where benefits > expenditures)
i) property used as couple's home
ii) property produced community income
(3) Interest and Taxes: TX Cts apply balancing test on whether to grant reimbursement--expenditures > benefits.
(4) Improvements--Reimbursement based on enhanced value:
TX S/Ct: claim for reimbursement measured by the enhancement in value to the benefited estate.
(5) No reimbursement claim where expenditures maintain value: It must be shown that the expenditures increased the value of the SP so that it would be inequitable for the spouse to retain the increase w/o reimbursement.
(6) Burden of Proof on Claimant
(7) Separate funds spent on living expenses--gift to community
e. Community Reimbursement Claim--Amount to which other spouse entitled
(1) a reimbursement claim belongs to the community
(2) Death--spouse entitled to 1/2 of comm. reimb. claim
(3) Divorce--Reimb. claim subject to "Just and Right" equitable division.
If marriage ends in divorce, all CP subject to equitable division.
2. Effect of how title is taken
a. CL States: the manner in which title is taken determines ownership.
b. CP States:
(1) title is not controlling
EXCEPTION: title in spouse's name "as her sole and separate property." In order to override the general rule, if comm. funds used there must be evidence that the other spouse participated in the transaction.
(2) time of acquisition and source of funds determines whether CP or SP.
(3) CP presumption (any time during marriage).
3. Commingling of SP and CP; Tracing
a. Commingled bank account: While the CP presumption is difficult to overcome, the party claiming SP is aided by the presumption that community funds were withdrawn first, before separate funds.
b. Lowest intermediate balance principle: If balance of bank account falls below amount of SP, that "lowest intermediate balance" becomes the SP in the end.
4. Attempts by spouses to alter character of assets
a. Spouses cannot convert SP into CP by agreement
b. Gifts "to the community" are SP
E.g. W's dad gives land "to W and my son-in-law, H, to be held by them as community property."
H & W hold the land as TIC, each w/ undivided 1/2 share of SP since cannot impress donated property w/ community status.
c. Spouses can convert CP into SP: Agreement must be...
(1) in writing
(2) signed by both spouses
(3) voluntary
d. Spouse can make gift of interest in CP to other spouse
5. Management of CP
a. General Rule: Either spouse has power to manage CP.
(1) Exception (TX only)--Earnings: Each spouse has sole management power over earnings kept separate. If commingled, they are subject to joint management.
(2) Exception--Real property: Most J/Ds require both spouses to join in transfers or mortgages.
(3) Exception--Gifts: See fraud on spouse doctrine, etc.
6. CPWROS
a. 1980 TX. Const. Am. expanded scope of permissible agreements
(1) Spouses and persons about to marry can partition community to be acquired in the future as well as existing CP.
(2) Spouses can agree that the income from each's SP shall be that spouse's SP--common in prenuptial agreements
(3) If one spouse makes a gift to the other spouse, the gift is presumed to include the income from the donated property.
b. 1987 Const. Am.: CPWROS
(1) "...spouses may agree in writing that all or part of CP becomes the property of the SS on the death of a spouse."
(a) TPC ∍451: Right of Survivorship: Spouses can agree that all CP becomes property of SS upon death of the other.
(b) TPC ∍452 Formalities
i) Agreement must be...
a) in writing
b) signed by both
ii) Phrases sufficient to create ROS:
a) "w/ rt. of survivorship"
b) "will become property of the survivor"
c) "will vest in and belong to the survivor"
d) shall pass to the SS"
(c) TPC ∍454 Transfers Nontestamentary--Transfers at death per agreements of the type described above, are not testamentary transfers (not subject to provisions of code otherwise applicable to testamentary transfers).
(d) TPC ∍455 Revocation
i) If agreement provides for method for revocation, it may be revoked by that method; or
ii) If agreement does not provide for method of revocation, it may be revoked by
a) a writing, signed by both; or
b) a writing, signed by one S and delivered to the other S.
iii) Revocation may be as to specific property only, as allowable by agreement's terms and law.
(2) Joint tenancies as to real property
(a) Texas has no joint tenancy in land.
(b) Instead, TX has CPWROS (see TPC ∍451...)
(c) CPWROS poisons title b/c w/o probate there's no formal change in titled owner, thus, title insurance policy won't guarantee validity if one link shows CPWROS.
(d) Yet, CPWROS is simple and cheap.
(e) General exceptions in Texas title insurance policies: homestead rights, survivorship rights.
(f) Note: Even court order adjudging CPWROS agreement valid does not satisfy title insurance company.
(3) TPC ∍46 Joint Tenancies
(a) No legal obstacle to ROS if done in writing; but not a part of Texas legal tradition.
(b) If ROS not in writing, Decedent's interest shall pass by will or intestacy.
(c) But ∍46 does not trump ∍451...re: ROS agreements b/w spouses regarding CP
E. Special Classification Rules
1. Income from SP is CP.
a. Corporate distributions
(1) Cash dividends--CP
(2) All other corporate distributions--SP
(3) Capital gains--SP
b. Spouses may agree that income from SP shall be SP
c. Interspousal gifts--income presumed to be donee spouse's SP
2. Life Insurance Policies--Inception of Title Rule applies
a. 1st premium payment determines ownership
b. Policy acquired after marriage but while domiciled in CL state
(1) Rights to proceeds at death--SP (except in CA and ID, there it's Q-CP)
(2) Federal estate tax consequences--SP
(3) Division on divorce--Quasi-CP
3. Closely-held business interests
a. Stock owned before marriage--SP
b. Extent of reimbursement due community estate--community estate entitled to:
(1) reimbursment for time and effort expended by spouse to enhance her separate estate;
(2) beyond that reasonably necessary to manage and preserve the estate; and
(3) reduced by remuneration rec'd for spouse's time and effort in the form of salary, distributions, and other fringes.
c. Business incorporated during marriage
(1) community presumption applies
(2) SP can be established through tracing
F. Consequences of classification as SP or CP
1. Divorce
a. Just and Right division of CP
(1) Factors include:
(a) disparity of parties' incomes
(b) business opportunities
(c) earning capacities
(d) size of the parties' separate estates
(e) fault in breaking up marriage
b. Court may order SP set aside to support child.
c. CP not divided up in divorce proceeding
(1) Parties become TIC, each w/ undivided 1/2 interest.
(2) However, j & r division may be had through suit brought by either former spouse.
(3) If one spouse dies before suit for division brought, the deceased's estate owns 1/2 interest in TIC.
2. Managing the assets; creditors' claims
a. Each spouse has the power to manage his/her SP.
b. If assets belong to the community...(possibilities)
(1) H's sole mgmt CP
(2) W's sole mgmt CP
(3) joint CP
3. Death of Spouse
a. Intestate succession (assuming children)
(1) Separate real property: H inherits life estate in undivided 1/3 of W's separate realty; the remainder as to that 1/3 and outright ownership of the other 2/3 passes to the children. ∍38
(2) Separate personal property: H inherits 1/3 outright; other 2/3 passes to the children. ∍38
(3) CP: SS gets all CP if the children are also descendants of SS. If not, then SS left with only their original 1/2 share of CP, decedent's 1/2 goes to children. ∍45
b. Testamentary disposition: Each S has unrestricted power over his SP and his 1/2 interest in CP. [However, set asides may be satisfied out of SP or CP.]
G. Lifetime gifts of community property
1. Texas: allows one spouse to make "reasonable" gifts of CP w/o the other spouse's consent, subject to...
a. Fraud on the spouse doctrine: excessive or capricious gifts made w/ intent to defraud.
(1) actual fraud; or
(2) constructive fraud (no intent)
(3) constructive fraud factors:
(a) relationship to donor
(b) size of gift in relation to size of community estate
(c) whether spouse made whole out of remaining assets
i) from donor's 1/2 interest in CP; and/or
ii) from donor's SP
(4) Spouse's remedy for fraudulent gifts: 3 possibilities
(a) transfer set aside as to wife's half of c/p but the beneficiary has been allowed to keep H's one-half interest (most cases).
(b) transfer stands, with wife reimbursed out of
other assets in H's estate.
(c) transfer set aside in its entirety.
b. Illusory trusts--Land v. Marshall
(1) Land H created RIVT w/ almost entire community estate; named daughter as trustee. H reserved numerous powers. On death, H's trust became irrevocable, leaving a life estate to W, then 80 yrs old. W pissed b/c she can't spend corpus. Ct set aside trust as illusory b/c H retained full control over trustee.
(2) Scope of doctrine unclear in Texas (nothing beyond Land)
(a) In Land, H had full control over trustee.
(b) Degree of control required to be deemed illusory set aside found "control" trust made it illusory--like an elective share--trust was set aside.
(3) CL states: doctrine has been applied to joint bank acc'ts, gov't bonds, and other arrangements in which spouse has retained an interest plus a power to revoke.
c. Transfers subject to lifetime transfer rules
(1) Life insurance beneficiary designations
(2) Joint tenancy dispositions
d. Current practice--get spouse's joinder or consent
Avoids uncertainty
V. Common Law
A. No sharing of earnings
B. Inception of title rule--name on title determines ownership.
C. Elective share (SS chooses ES over will--usually 1/3 to 1/2).
1. Enforceable against all property owned by decedent.
2. Inter vivos transfers
a. Used to defeat elective share.
D. Set Asides for support of SS--generally the same as CP states.
VI. Set Aside Statutes
A. Distribution of set asides: come out of the gross estate, before the net estate is distributed to heirs/devisees.
B. Homestead laws:
1. Generally: Gives S right to occupy family home (or maybe family farm) for life. D has no power to dispose of homestead so as to deprive S of rights therein.
2. Homestead right is not a life estate--terminates when S quits it as principal residence.
a. SS must only intend to occupy as principal residence.
b. Showing of intent weakened by long-term lease.
3. Homesstead statutes vary: Texas is most liberal; some allow no homestead set aside at all.
4. Texas:
a. Constitutional definitions of homestead. Basic rules are set forth in TX Const. Art. 16, ∍∍50-52.
(1) Rural Homestead:
(a) up to 200 acres
(b) must include the house
(c) no $ limit on value
(d) if property size >200 acres, family may designate which 200 acres comprise homestead (may include all the oil wells).
(e) need not be contiguous
(2) Urban Homestead:
(a) up to 1 acre
(b) no $ limit on value
(3) Business Homestead: Part of Urban Homestead. Total land use must be < 1 acre.
(4) Whether urban or rural is a question of fact.
* Location w/i or w/o city limits is not controlling--other facts count.
(5) Requisite of family homestead: Actual or intended occupancy on behalf of a family.
(6) Homestead Exemption for a Single Person:
(a) Same as Family Homestead except rural is limited to 100 acres.
b. Consequences of Classification as Homestead: There are five; all apply to family homestead, only first and last apply to single person homestead.
(1) Free from creditors' claims (everyone alive)
Exceptions:
i) purchase money liens
ii) property taxes
iii) mechanics' and materialman's liens incurred in connection w/ homestead. 3 req'ments:
a) written K prior to work
b) signed by both spouses
c) K is recorded
(2) Both spouses must join in lifetime conveyance of homestead (even if it is SP of one spouse).
(3) Homestead passes at death free from creditors' claims if:
(a) Decedent is survived by spouse, minor children, or unmarried adult children.
(b) Even if property passes by devise to someone unrelated, the homestead passes unencumbered. (Someone in "a" above must be alive.)
(4) Right to Occupy Homestead.
(a) Surviving Spouse and minor children have exclusive rt. to occupy as long they want.
(b) If stop occupying, then they lose all homestead rights.
(c) Note that unlike "3" above, this right doesn't apply to unmarried adult children.
(d) Right to occupy is independent of title.
(e) Not extinguished by remarriage.
(5) Partial Exemption from real property ad valorem taxes (school, local) by $ amount fixed by legislature: extra exemption if over age 65.
c. Homestead protection attaches when land is "designated" as homestead.
(1) This is a question of intent, not a req'ment of formal declaration.
(2) Mere intention at some future date is insufficient; some overt act of preparation is required.
d. To Whom Delivered: TPC ∍272 requires this property to be delivered to:
(1) Always to the SS; if none, to kids or their guardian if minors
e. Duty to Set Aside: TPC 271(a) requires executor/administrator to set aside homestead prop protected by Const.
5. UPC
a. Homestead exemption is limited to $5,000
C. Personal Property Set-Aside:
1. Generally: Right of S (& sometimes minor kids) to have set aside certain tangible property of D enumerated in statute. Usually those items are also exempt from creditors' claims. (E.g. furniture, clothing, sometimes car & farm animals).
2. Texas:
a. Duty to Set Aside: TPC ∍271a requires administrator/executor to set aside exempt property.
b. To Whom Delivered: TPC ∍272 requires this property to be delivered to:
(1) If SS and NO kids, OR if all kids are SS's: To SS
(2) If kids only: To kids or guardian, if minors
(3) If SS and kids wh are D's but NOT SS's: D's kids get their share
c. Types of Exempt Property: TPC ∍42.001-.0002 allows survivors to set aside as exempt from creditors certain types of personal property:
(1) Home stuff: furniture, including heirlooms; food; clothes; jewelry not to exceed 25% of limit
(2) Work stuff: Farming or ranching vehicles or implements; tools, equipment, books, boats and vehicles used in trade or profession; commission for personal services, up to 25% of aggregate limit
(3) Sports stuff: 2 firearms; athletic & sporting equipment, including bicycle;
(4) Automobiles: 2, 3 or 4 wheeled vehicle for every person who holds a drivers' license or who relies on another to operate a vehicle for his benefit
(5) Animals: 2 horses, mules or donkeys and a saddle & bridle for each; 12 head cattle; 60 other livestock; 120 fowl; household pets
(6) Insurance: the present CSV of any policy to the extent that a member of the family of the insured (or a department of the insured single adult) claiming the exemption is a B of the policy
d. Limits of Exemption: TPC ∍42.002 sets limits on the total amount of the personal set aside exemption.
(1) Family limit: 60K
(2) Individual: 30k
(3) NOTE: Current wages and costs of professionaly prescribed medical aids are not included in amount of exemptions above.
(4) Exception to Exemption: property that is subject to a contractual lien is not exempt from the secured creditor
D. Family Allowance:
1. Generally: Authorizes the probate court to award for maintenance and support of S and kids, usually for fixed period (e.g. 1 year).
a. Only becomes significant when estate is insolvent and survivors need to take free of creditors.
2. Texas:
a. Duration of Support: TPC ∍287 allows SS/minor children to receive reasonable amount to cover expenses for 1 year
b. Amount authorized: TPC ∍287 allows reasonable expenses based on circumstances exisiting and expected to exist. Can be paid either in lump sum or installments
c. NOTE: Only probate estate is considered. Non probate assets, e.g., life insurance payable to SS does not count against her.
d. Exception: TPC ∍288 says no allowance is authorized for SS if SS has SP sufficient for support. Likewise, no allowance for minors if they have SP in their own right sufficient for their support.
(1) Example: H dies w/ CP assets = $1.24M, which goes to probate. W receives $500k life ins. proceeds (CP asset). W still entitled to family allowance b/c life ins. proceeds as well as the $1.24M probate estate are CP assets--not SP.
(2) Note: Most spouses do not petition for family allowance b/c sole benef. Family allowance most needed when D bankrupt.
(3) Family allowance helpful for heirs b/c it keeps more of the estate in one piece (as opposed to guardianships).
e. To whom paid: TPC ∍291 requires executor to pay:
(1) to SS if D leaves SS and no kids; or if D leaves minor kids who are all SS's;
(2) to Guardian of minors if SS and minor kids, some of whom are D's but not SS's
(3) to guardian of minors if no SS.
E. Procedure
1. Inventory
2. Appraisal
3. Petition the court for set aside
4. Court order issued
PART II: INTESTACY
VII. THE PROBATE ESTATE DEFINED
A. Nonprobate assets: interests in property passed at death other than by will/intestacy
B. Forms of Nonprobate transfers:
1. Survivorship estates
a. joint tenancy (w/ right of survivorship--JTWROS
b. tenancy of the entirety (only H & W)
c. joint bank accounts w/ ROS
2. Interests that pass pursuant to K (e.g. life insurance, employee benefits)
3. Property held in trust
4. Powers of appointment (Power to designate remainder beneficiaries of trust)
C. Net Estate Intestacy laws apply only to the net estate which is the gross estate less admin. expenses (burial costs...) and set asides (family allowance...).
D. Title clearing function--a major purpose of probate process.
E. Expectancy--not a property interest.
1. Cannot be transferred at law.
2. BUT, a purported transfer of an expectancy for consideration may be enforceable in equity as a K. Equity scrutinizes such transactions to protect prospective heirs from unfair bargains.
F. Adult Adoption
1. If T adopts a child, T's collateral kin may not be able to contest will since ordinarily they can inherit nothing by intestacy.
2. Often useful to prevent will contest.
3. Hence, if a person wishes to leave property to a friend, under some circumstances (gay friends or friends the collaterals hate) it might be wise to adopt the friend as a child.
4. NY: cannot legally adopt an adult lover.
G. Who are "children"
1. Illegitimate children
a. Trend: "Children" includes illegitimate children (UPC does).
b. TPC ∍42 complicated
c. Uniform Parentage Act: includes illegitimate children.
2. Stepchildren
a. General Rule: SC cannot inherit b/c definition of children does not include stepchildren.
b. Exceptions:
(1) Some states: SC inherits if D had no close blood relatives.
(2) CA: SC takes if:
(a) parent/child relationship began during SC's minority and continued through parties lifetimes; and
(b) C & C evidence shows that stepparent would have adopted but for legal barrier.
(3) Some states: constructive adoption possible.
3. Adopted children of heirs or devisees
a. No general rule exists.
b. Stranger-to-the-adoption rule:
(1) The adopted child is presumptively barred except when the donor is the adoptive parent.
(2) An old rule based on reverence for blood relationships.
c. Most states: adopted children are presumptively included in gifts by T to his "children," "issue," "DNs," and "heirs" of an intestate.
d. Two basic situations: Infant adoption and remarriage (See UPC or TPC Intestacy below).
H. Simultaneous death
1. Old Rule: A person succeeds to the property of decedent only if the person survives the decedent for an instant of time.
2. Uniform Simultaneous Death Act (majority rule): where there is no sufficient evidence of the order of deaths, the beneficiary is deemed to have predeceased the benefactor.
a. This is a default rule; provisions in will trump.
b. "sufficient evidence" often offered in form of expert testimony.
c. Life insurance: Proceeds distributed as if the insured survived the beneficiary.
d. Problem: USDA covers only deaths that are exectly simultaneous; survival by an instant causes the results that the statute was supposedly designed to prevent. The weakness lies in allowing expert testimony to be determinative evidence of order of death.
3. Texas: 120-hour rule. See below.
4. UPC: 120-hour rule. See bleow.
VIII. INTESTACY UNDER THE UPC
A. Intestate Estate (2-101)
Any part of D's estate not effectively disposed of by will, passes to heirs.
B. Spouse's Share (2-102)
1. If no surviving issue of D and parents dead, entire intestate estate (S takes all).
2. If no surviving issue of D, D's parents living, the first 50k + 1/2 of what's left.
3. If surviving issue of D, and all are also issue of S, S gets 1st 50K + 1/2 of what's left.
4. If surviving issue of D, one or more who aren't issue of S, 1/2 of the estate.
C. Spouse's Share in a Community Property Estate (2-102A)
1. As to separate property:
a. If no surviving issue of D and parents dead, entire intestate estate (S takes all).
b. If no surviving issue of D, D's parents living, the first 50k + 1/2 of what's left.
c. If surviving issue of D, and all are also issue of S, S gets 1st 50K + 1/2 of what's left.
d. If surviving issue of D, one or more who aren't issue of S, 1/2 of the estate.
2. As to CP: The 1/2 of CP which belongs to D passes to S.
D. See Spousal Protection under Set Aside Statutes. Provide support in addition to whatever other interests pass to S under intestacy statutes.
E. Heirs' Shares (2-103): Everything that doesn't go to a surviving spouse, passes to:
1. If D leaves surviving issue:
a. If same degree of kinship, they all share equally
b. If not same degree of kinship, they take by representation
2. If D leaves no surviving issue, then to D's parents equally.
3. If D leaves no surviving issue or parents, then to issue of parents by representation.
4. If D leaves no surviving issue, parents, or issue of a parent, then the estate is split equally between the paternal and maternal grandparents, or their surviving issue by representation. But if either side of the family is wholly dead, then the surviving side takes all.
F. 120 Hour Rule (2-104)
1. General Rule: Gotta survivie D/T by at least 120 hours; otherwise, statute considers deceased to have predeceased the T.
2. Presumption: If alleged survivor cannot prove survival by 120 hours, then statute coniders deceased to have predeceased the T.
3. Exception: The 120 hour rule does not apply when its application would pass an intestate estate to the state.
4. NOTE: This rule is not limited to intestate succession. This is just a good place to put it.
5. CAUTION: This is a default rule. A T can draft around it.
G. No Taker (2-105)--Laughing Heir Statute
1. If no takers related to grandparent or grandparent's issue, the intestate estate passes to the state.
H. Representation Defined (2-106)
The estate is divided into as many share as there are surviving heirs in the nearest degree of kinship and deceased persons in the same degree of kinship who left surviving issue.
Each surviving heir in the nearest degree receives one share; and
The share of each deceased person in the same degree is divided equally among the issue.
I. Half Bloods (2-107): Inherit the same share as whole bloods (majority rule).
J. Afterborn Heirs (2-108): Relatives of D conceived before D's death, but born after, inherit as if they'd been around to meet D in the flesh.
Posthumous children: Court-established rebuttable presumption is that the normal period of gestation is 280 days.
K. Child Defined (2-109)
1. Adoption
a. Adopted person = child of adopting parent, and not of natural parent, except as in b (below).
b. Adoption by spouse of the natural parent has no effect on the relationship b/w the child and either natural parent.
c. Remarriage adoption: Adopted child may inherit from both natural parents and adoptive parent.
d. Infant adoption: Adopted child may not inherit from natural parents.
e. Note: does not include stepchild
2. Marital status has no effect (illegitimate children included).
IX. INTESTACY UNDER THE TPC
A. ∍ 37. Passage of Title Upon Intestacy
1. Title vests immediately in the heirs upon death
2. BUT, vesting in the heirs is subject to payment of debts of the D, including delinquent child support payments. EXCEPTION to the BUT: Some property is not subject to the BUT via statute, e.g., set aside and homestead exemptions.
B. ∍ 38 Persons who take upon Intestacy
1. ∍38(a) If no SS...
a. to children and their DNs
b. then to parents.
c. then to brothers and sisters
d. then to grandparents and their DNs (then to next level of ancestor/ancestor's DNs ad infinitum)
e. Note: laughing heirs are possible per (d) above.
2. ∍38(b) If there's a SS...
a. If D has surviving spouse (SS) and descendants (DNs) (kids or their DN's see below)
(1) Personal property: S takes 1/3; the rest goes to Ks (equally, whether or not they are from this marriage) and their DN's.
(2) Real Property: S takes a life estate in 1/3; remainder to Ks and their DNs
(3) Note--TIC: SS must get appointed to be guardian of the property by the court for the kids (SS is natural guardian of the person, but NOT the property)
b. If D has SS BUT NO DNs (kids or their DNs)
(1) Personal Property: S takes all.
(2) Real Property: S takes 1/2; the other half passes by collateral distribution, EXCEPT that if D has NO surviving parents, bros, sisters, or their DNs, the SS takes all.
C. ∍ 45 Community Property: ALWAYS passes charged w/ the debts against it.
1. All CP passes to SS if:
a. D has no DNs; or
b. All D's DNs are also SS' DNs
2. If D has DNs who are not also DNs of SS:
a. SS gets 1/2 of CP; and
b. DNs get other 1/2 of CP.
D. Joint Property (Separate Property only): Unless the property says "w/ right of survivorship" or equivalent, D's death severs his interest: D's portion passes by regular intestate distribution for SP.
* This does not apply to CP held in JT.
E. ∍ 43 Determination of per capita and per stirpes distribution
1. Same degree: per capita
2. Unequal degree: per capita w/ representation
F. Who may inherit
1. TPC ∍41 Matters Affecting and Not Affecting the Right to Inherit
a. ∍41(a) Persons not in being
(1) Children and lineal DNs: posthumous child rule applies (280 day presumption applies).
(2) Everyone else: must be in being to take as heirs. (280 day presumption doe NOT apply).
b. ∍41(b) Heirs of whole and half blood
(1) Half bloods take 1/2 as much as whole bloods.
(2) This is minority rule (VA follows also).
2. Termination of parent-child relationship: Texas Family Code ∍15.07: Child retains right to inherit from and through its divested parent unless the court otherwise provides in the decree terminating the parent-child relationship.
3. TPC ∍42 Inheritance Rights of Children: "Child" includes adopted children for inheritance purposes.
4. TPC ∍40 Adopted Child
a. An adopted person inherits through the adoptive and natural parents (double inheritance possible).
(1) Exception: Inheritance rights of the adopted child as to the natural parents CAN be revoked by court decree (TXFamCode ∍15.07). Common in infant adoptions.
b. Natural parents and kin do not inherit through the adopted child.
X. INTESTATE DISTRIBUTION--Descendants/Representation
A. Types of Representation
1. Pure per capita: Each survivor takes in equal shares, regardless of degree or generation.
2. Per stirpes (by the stocks): D's property divided up into as many shares as children, then each child's DNs (no matter what degree) represent the dead child and take his share.
a. Distinction b/w strict per stirpes and per capita w/ rep. = only if no living takers at first generational level.
3. Per capita w/ representation (UPC & TX): Number of shares are determined at the 1st generation w/ any survivors, then, each stock is divided equally among the lines.
a. Texas' rule of construction: "per stirpes" = per capita w/ rep.
b. UPC's rule of construction: "per stirpes" = per capita w/ rep.
c. Restmt of Prop.: "per stirpes" = strict per stirpes
4. Per capita at each generation: Initial divsion of shares made at the highest level of issue alive, but the shares of dead persons on that level are treated as one pot and are dropped down and divided equally among the next generation. (Most people prefer this type of distribution.)
B. Will drafting Don't use the terms; rather, spell out what form of devise you want.
1. E.g. "strict per stirpes" intent:
Descendants. In making a distribution to the DNs of any person, the property to be distributed shall be divided into to as many shares as there are living children of the person and deceased children of the person who left DNs then living. Each living child (if any) shall take one share and the share of the deceased child shall be divided among his then living DNs in the same manner. A posthumous child shall be considered alive at the death of his or her parent.
2. E.g. "per capita w/ representation" intent:
Descendants. In making a distribution to the DNs of any person, the property to be distributed shall be divided into as many shares as there are living DNs in the nearest degree of kinship to the person and deceased DNs in the same degree who left DNs who are then living. Each living DN in the nearest degree of kinship shall take one share and the share of each deceased DN in the same degree shall be divided among his DNs in the same manner. A posthumous child shall be considered as being alive at the death of his or her parent.
PART III. THE PROBATE PROCESS
XI. The Steps to Follow assuming H dies, leaving a will (reference Supp. 1-5 to 1-10):
A. S files application for probate
B. notice of probate application posted 10 days prior to hearing
C. affidavit on proof of death & other facts executed by S
D. affidavit by subscribing witness to will
E. hearing is held, named executor must qualify (if will designates) and if qualified, posts fiduciary bond (unless waived by T's will) If no executor named in will, Ct appoints an administrator.
F. Ct issues order probating will and authorizing letters testamentary
G. W commences winding down of H's estate (this is compensated)
XII. Executor/Administrator's Basic Responsibilities:
A. Collects and inventories assets
1. Letters Testamentary/Letters of administration allows executors or administrators to give "valid binding receipt" to third parties
2. "Good faith" judgement of inventory must be filed w/court w/in 90 days generally.
B. Manages assets during administration
C. Clears title in the name of D's successors (this established the rights of inheritors to TITLED ASSETS (real property, stocks, bonds, cars, helicopters, Winnebagos... in the public record)
1. Common law exoneration of liens doctrine: presumption that T intends for all liens exonerated by residual estate funds. Heir inherits more than what D had at time of death.
2. UPC ∍2-609 (nonexoneration) Specific devises pass as they were owned, subject to any existing security interests at time of death, REGARDLESS of just debts clause in will. Heir gets exactly what D had at time of death.
3. Texas ∍1 of Vernon's: liens are exonerated since common law applies where it is not inconsistent with statute or Constitution.
4. Exoneration of liens from residuary estate won't impair creditors' rights; they always get paid.
5. No priority for paying off liens from other heir's inheritance. Heirs may have to sacrifice pro-rata portions to pay off liens.
6. If only titled asset is car, see ALTERNATIVES TO PROBATE
D. Receives and pays creditors' CLAIMS
1. NOTICE TO CREDITORS:
a. UPC ∍3801: notice by publication, published once a week for 3 weeks in gral circ. newspaper in county, advises creditors to present claims w/in 4 mos. of 1st publicatinon or be forever barred.
2. Pope (US 1988) bar on untimely claims where only notice by publication was required ruled unconstitutional as a violation of due process. Reasonably ascertainable creditors must receive actual notice by mail or otherwise.
a. Balancing of state's interests in expeditiously settling claims with creditors' interests in being paid
b. NOT a self-executing SOL, b/c the probate proceedings are State Action "adversely affecting legal property interests"
c. Nearly all states amended nonclaim statutes to conform with Pope. Tx has a postpone-claim statute instead of barred-claim statute.
3. TxPC ∍294- w/in 1 mo. of receiving letters, publish notice in newspapers of county advising creditors to present claims; file proof of publication w/ ct.
4. TxPC ∍298- w/in 4 mos. of receiving letters, notice must be given to
a. secured creditors if have valid security interest properly recorded prior to death of T, of prior to title vested in heir or devisee.
b. unsecured creditors if you have actual knowledge of their claims (this is Pope amendment to Tx stat)
c. proof of service of notice to be filed with court (reg. letter, certified mail, etc.)
5. LIMITATIONS ON CLAIMS BY CREDITORS
a. UPC ∍ 3803 if notice given, creditors have 4 mos. to collect, if no notice, creditors have 3 years from date of T's death to collect;
EXCEPTIONS FOR:
(1) creditors of mortgage pledges or liens --limited by value of collateral
(2) liability insurance collections --only to the extent of policy limits, and anything beyond policy limits follows rules above.
b. TPC ∍298 unsecured creditors' claims presented w/in 6 months are NOT BARRED, but rather POSTPONED, to be paid after timely claims discharged
(1) Adm/Exe has no discretion to pay claims if these are barred/postponed by general SOL
c. TPC ∍306 Secured creditors who file timely claims MUST SPECIFY whether these are treated as
(1) 306 (a)(1) matured secured claims, to be paid out in full, in the course of administration. This is the last chance for creditor to get paid, in line before all other creditors get paid.
(2) 306 (a)(2) fixed preferred liens against collateral limited to value of specific property (which could drop below value of debt). Once ∍306(c) preferred claim approved, no other claims against assets of estate can be made, specified prop held in security to pay off C
(3) Adm/Exe can always pay off debt as a matured claim in order to unencumber the collateral property, even when C choses the 306(a)(2) preffered lien status
d. Cessna (TX 1984) Cessna held lien against airplane destroyed in crash, filed "timely claim," but did not elect a matured secured claim under ∍306 (a)(1), though it noted in claim that property destroyed. Ct. does not infer a choice, and default rule means that if you do not specify, claim deemed untimely and treated as preferred lien against property.
e. Creditor should chose preferred debt if value of property has gone up since purchase, or if there's lots of equity (foreclose and make a profit); banks can avoid bad rap of kicking widow out of house. Chose matured claim status if interest rates have risen...
E. Pay the Taxman...
1. D's income taxes for year ending on date of death (Jan1-dateofD) and if D hasn't filed prior year's return, also might have to file for prior calendar year (if dies pre Apr 15)
2. ALSO estate's income taxes (on any income after death); gets new tax id # -new taxable entity created on date of death.
F. Distribute estate's remaining assets to those entitled
XIII. ALTERNATIVES TO FULL PROBATE (when you have titled assets)
A. inter vivos transfer Transfer title by
1. creating JTROS
2. creating Trusts while still alive
3. naming "payable on death" beneficiary designation on life insurance and other contracts.
B. small estate statutes amt to qualify for small estate ranges among states, eg Ill $6,000 including homestead, or Tx, $50,000 not counting homestead
1. value of estate determined by counting only probate assets, excludes pension, life insurance, homestead (sometimes), and exempt personal property
2. Affidavits by heirs allow collection of modest bank accounts, wage claims, transfer car titles
C. collection statutes for "small estates" (defined by each State's statutes), close relatives can collect personal property of D with affidavit]
1. title not transferred
2. TEXAS instead has TPC ∍137
D. file will without administration, file with Ct solely as a title document to clear title.
1. Texas: TPC ∍89(A) Muniment of Title proceeding, that allows for transfer of title without actually having to probate will.
E. independent administration, see below. UPC ∍3-715 allows supervised & independent administration. When no party demands court supervision of the personal representative, he may never have to return to the court after being appointed PR.
(if party demands, ct may supervise UPC ∍3-501)
F. universal succession, Civil law concept, now recognized in UPC ∍3-312 to 3-322, heirs or residuary devisees succeed to the title and assume all liabilities of D, and must pay legacies according to D's will. Upon request, (if all Hs are adults) the court issues statement of universal succession.
XIV. TEXAS' OPTIONS: ALTERNATIVES TO PROBATE
A. Alternatives (ranked in order of cost)
1. Informal Family settlement
2. Affidavit procedures for clearing title (see list below)
3. Small estate administration TPC ∍137, 138
4. Probate restricted to Muniment of Title, or for intestates, statutory heirship proceedings.
5. Statutory proceeding to determine heirship
6. Independent Administration with IE, (this is the most popular option.
B. Probate duties
1. duty and liability of will custodian ∍75: to file with clerk of court upon learning of T's death
a. will must be filed; prabate not required
b. court may hold custodian in contempt if doesn't file will after receiving Ct notice.
2. No will effectual until probated ∍94: filing alone WON'T prove title or right to possession
a. tort of will suppression used for clearing titled property, not to force widows into probate Ct
b. probate not required just because there is a will
RECAP AND EXPLANATION OF ALTERNATIVES IN TEXAS:
C. AFFIDAVIT PROCEDURES for clearing title
1. cars: Texas Motor Vehicle Certification of Title Act, (Vernon's ∍35) title passes by affidavit when administration of will unnecessary, or when there is no will. DPS issues standard form worded for "no will" cases, but this can be rewritten)
2. salary checks
3. very small estates
4. small bank accounts
D. SMALL ESTATE ADMINISTRATION TPC ∍137, 138
1. REQUIREMENTS ∍137
a. no PR requested or appointed
b. 30 days since T's death
c. Estate less than $50K (not including exempt property and homestead, only probate assets counted -- River Oaks estates ok...)
2. MECHANICS
a. FILE W/ CLERK OF CT an affidavit attesting to these reqmts being met, listing assets/liabilities of estate, names/addresses of devisees, signed 2 disinterested witnesses
b. No hearing required
c. Copy of certified affidavit used by distributees to delivered to creditors, function as letters testamentary.
d. WILL NOT affect disposition of property under terms of will or test'y doc.
3. SPECIAL HOMESTEAD RULE
a. This does not transfer title to real estates other that homestead
b. BFPurchaser takes free of any claim, as long as NO notice of undisclosed heir, though still subject to creditors' claims.
4. EFFECTS and ADVANTAGES of Affidavits
a. ∍138 legally protects persons releasing Estate's property based on affidavit,
b. ∍138 ... but distributees liable to persons having prior rights to property, or to PR if appointed.
c. lower cost, simple mechanism, no need for petition to judge or hearing
d. Affiants are sole heirs or devisees.
E. PROBATE OF WILLS AS MUNIMENTS OF TITLE ∍ 89(A)
1. Basically, this is DECLARATORY JUDGEMENT
a. certain contested issues may be resolved by decl. judgement
(1) who is a devisee
(2) questions of construction of will
2. REQUIREMENTS
a. Must have a will, Not avail for instestacy
b. No unpaid debts of estate other than secured liens on real estate, or if other debts exist,
c. ... Ct decides no administration is needed, property can be collected informally.
d. Will must be eligible for probate
3. ADVANTAGES
a. Effectively clears title to all real or personal property, since Muni of t creates link in chain of title
b. Reliance on order granting Muniment order will protect estate debtors releasing property
c. Works because in TX, title industry recognizes muniment (possible problem in other states)
d. Only one courthouse trip, avoids having to file inventory, only need hearing/application for probate, costs about $700..
4. MECHANICS
a. within 181 days of order of muniment, applicant must file affidavit stating which terms of will are fulfilled and which not, though failure to do this won't affect title to property passing under terms of will.
F. STATUTORY PROCEEDINGS TO DETERMINE HEIRSHIP ∍ 48, ∍54, ∍55
1. Applies
a. in cases of intestacy
b. omission of property in Will
c. no administration of estate
2. ∍48(b) Determine need for administration: If application for this proceeding done w/in 4 years of death, then Ct. decides if administration is necessary
3. ∍54 Judgement
a. declares names, residence of heirs
b. their respective shares/interests
c. reflect any deficiencies of proof
(in case judgement later modified)
4. ∍55 Effect
a. judgement final, but appealeable
b. Omitted heirs, not given proper notice, can within 4 years of proceeding get bill of review to correct distribution, recover her portion from other distributees (no 4 year limit if upon proof of fraud)
c. ∍55(b) BFPers without actual notice of omitted heir is protected, good faith transferors of funds or property also.
d. ∍55(c) If Ct's judges administration not necessary, then this statement is sufficient authority to transfer, purchase, dispose of property of estate.
G. NONSTATUTORY AFFIDAVIT OF HEIRSHIP, (when 4 year limit on heirship proceeding lapses, frontier spirit kicks in!)
1. family and friends record affidavits with county clerk reciting family tree
2. exception on hearsay rule
3. presumption as to validity sets in with time (let it get old and cold...cowboy)
4. Texas quirks...this transfer of title mechanism generally unavailable elsewhere
H. INDEPENDENT ADMINISTRATION WITH IE (THIS IS MOST POPULAR OPTION) ∍145 and subsequent ∍s (UPC also has ∍3-715, and 3-501)
1. ADVANTAGES
a. still is administration, not a substitute
b. less ct supervision
c. similar to Trust administration w/ great flexibility and less cost)
2. MECHANICS ∍ 145
a. T may appoint IE in Will, provide that Ct only record/probate will, and receive IE's inventory and list of claims
b. if T's will fails to appoint an IExecutor, or provide for an IA, all distributees may still agree to have IA
c. if T dies intestate, all heirs can agree to an independent administration, though must prove that ALL heirs represented
d. Ct will disallow an IA if
(1) T stipulated in will no IA
(2) will is silent on IA, and although distributees agree, Ct decides IA not in best interest of estate
3. IE DUTIES
a. ∍146 Pays, rejects claims as she would under orders of Ct.
b. ∍147 Subject to civil suits 6 mos. after IA created - removed from probate ct.
4. REMEDIES AGAINST WRONGDOING IE
a. historically, little could be done to prevent mismgmt. by an IE b/c of ct's absolute respect of T's wishes in naming the appointed IE
b. ∍149 - Requiring IE to give bond
(1) Will may waive bond requirement
(2) If it appears that IE is acting improperly, he may have to post bond
(a) Remarkably, can't be removed!
(b) If he provides 2xs the val. of the perso. prop., can continue misappropriating as before....
(3) O'Connor v. O'Connor (1959)
(a) relied on equity jurisdiction of cts to deal w/fiduciaries (got case out of probate ct.);
(b) authorizes the appt. of a receiver for the estate upon finding of misappropriation or other wrongful conduct;
(c) again, can't remove IE, but can take the assetes away from him
c. ∍149A Right to an Accounting
(1) any interested party (distributee or C) may request accounting any time 15 mos. after appointment of IE
(2) IE has 60 days to comply; if fails, can be removed
(3) successive acccountings may be required thereafter every 12 months
d. ∍149B Rt to Petition for Distribution
(1) interested party can petition for an accounting & final distribution of E
(2) BUT, only 3 years after IA created, or 12 mos after E and inheritance taxes paid, whichever comes LATER!
(3) burden of proof is on IE (disting. ∍ 152)
e. ∍149C Removal of IE
(1) May be removed for cause
(a) fails to file inventory/claims w/in 90 days
(b) "sufficient grounds" exist to show misapplied or embezzled E
(c) fails to make reqd accounting ∍149A or B
(d) proved guilty of gross misconduct/mismanagement
(e) becomes incompetent, is sentenced to Pen., or other legal incapacitation
(f) fails file timely notice -∍121A
i) Any court or interested person may move to remove for cause
(2) Removal order may direct disposition of assets or, another IE may be appointed pursuant to ∍154A
(3) IE defending removal in good faith and party seeking removal both are entitled to reasonable atty fees and expenses paid by Estate.
(weeuishewe a mary-chris moss)
f. CLOSING AN IA ∍151, ∍152
(1) pre 1955, no record of IA closing led to problems with title transfers
(2) ∍151 allows IE to end IA: files affidavit of final accounting
(a) affidavit "shall show:"
i) property administered by IE
ii) debts paid/still owed by E
iii) property remaining
iv) names/addresses of d'ees
(b) effect of filing affidavit
i) terminates IA and IE's authority
ii) still liable for mismanagement or false statements in affidavit
iii) 3rd parties now deal directly with distributees
iv) authorizes distribution directly to heirs by 3rd paties
(3) ∍152 allows distributees to end IA;
(a) used most often when distributees feel that IA has held on to assets too long; makes whether further admin. is nec. a justiciable issue
(b) distributee files apllication with ct.; after notice to IE and hearing, ct. enters order
(c) effect is same as for ∍151 closing
(d) burden of proof upon distributee to show no need for further administration
I. TEXAS' SPECIAL RULES FOR Administration of CP
1. TPC ∍155 No admin. necessary when D dies intestate and SS takes CP
a. Problems arise when titled assets in DS' name
(1) SS must proceed under small estate ∍137
(2) or under heirship proceeding ∍48
2. Qualified Community Administration, TPC ∍161 if SS does not take CP (eg see ∍45 distribution to D's issue from other marriage)
a. CA available to SS if
(1) D did not name executor
(2) named executor won't perform duties
(3) D died intestate
b. To do so, SS must first qualify in probate proceeding, and post bond.
c. QCA not widely used because 3rd parties often unfamiliar with this form of administration, reluctant to deal w/QCA
3. Powers of QCA ∍167
a. full and complete power as if sole owner
b. after paying debts, QCA acts as statutory trustee for owners of community estate
c. do not include mortgaging CP to secure debts or appropriating estate for individual benefit
4. Termination of CA ∍175
a. 12 mos. after filing bond, QCA may be terminated by SS or D's other heirs
b. partition and distribution of estate, discharge of QCA
PART IV. WILL PREPARATION
XV. Execution of Attested Wills
A. In general
1. Will is invalid unless follow formalities precisely
2. Rationale:
a. ritual: impress significance of act
b. evidentiary purpose: offers proof that instrument expresses T's intent, reduces chance of mistake or perjury
c. protects T against undue influence and other forms of imposition by providing competent disinterested Witnesses
d. channelling: provides safe harbor that assures T his wishes will be carried out
3. State legislature creates power to make a will, stipulates rules. Only FL and WI have said power to make will protected by Const. and apply test of reasonableness to restrictions
B. Who may make a will
1. ∍2-501: anyone over 18 of sound mind may make a will
2. TPC ∍57:
a. 18 or older;
b. married; or
c. member of armed forces
and of sound mind.
C. Execution Requirements
1. General
a. Signature: most courts take l;iberal position; first name, nickname, initials, even "Mom" held sufficient.
b. Presence (If statute requires it): Witnesses must be in presence of T.
(1) Line of sight: Some courts hold a W has not signed in T's presence if T could not see W. Must be able to see W.
(2) Conscious presence (Texas follows): W has signed in presence of T if was conscious of where W was and what he was doing (by sight, hearing, or general consciousness).
(3) Examples of no "conscious presence"
(a) Telephonic witnesses: NO, held not to be in T's presence.
(b) Where att'y left conference rm & T to another office before W2 signed: held not conscious presence.
(c) Oregon: where T dies after signing but before Ws sign; Ws leave at resucitation attempt, then sign 7 min. later.
c. Position of signature: some statutes require it at foot or end (old Wills Act req'd).
(1) Clause added beneath signatures
(a) Wills Act: invalidated whole will if signature not at very end of writing.
(b) Amended Wills Act: Only clause after signatures is disregarded. Rest of will OK.
Note: NY says anything below signature invalid unless disregarding would frustrate the intent of the will.
d. Publication: Some states require that Ws know that they are witnessing a will. (TX has no such req'ment.)
e. Substantial Compliance: minor defects shouldn't defeat a will as long as the document clearly establishes D's intent. No one but Australia follows this.
E.g. In re Peters Langbein theory of substantial compliance tested. T signed in front of Ws, but Ws didn't sign until 15 months later, after T's death. Ct says "substantial compliance" doctrine won't overcome unreasonable 15 mo. delay w/o extenuating circumstances.
2. TPC ∍59 Requisites of Will
a. Presence of witnesses: Ws do not need to present at the same time.
b. Will must be
(1) in writing AND EITHER
(2) signed by the T in person OR
(3) by another person for by his direction AND
(4) attested to by 2 Ws (> 14 yrs old) who sign in presence of T.
c. Position of signature: does not require T to sign at end of will.
(a) If handwritten clause beneath signature
i) valid so long as written prior to signing and proponent can prove.
ii) invalid if clause after T's signature and attestation of witnesses.
3. UPC ∍2-502 Execution
Will shall be
a. in writing
b. signed by the T or in the T's name by another by his direction
c. signed by at least 2 Ws, each of whom witnessed either
(1) T's signing or
(2) T's acknowledgement of T's signature or
(3) T's acknowledgement of the will.
D. Legislative Control
1. Power to make will wholly subject to legislative control; only 2 states (Wis. and Fla.) have said right to make will is const'lly protected and therefore restrictions and limits must be reasonable.
E. Recommended Method of Executing a Will
1. General: The Careful Lawyer should draw a will and have it executed in a manner that satisfies the formal requirements in all states.
2. Recommended steps:
a. If Will consisits of more than one page, the pages are fastened together securely; the will specifies the exact number of pages of which it consists
b. The lawyer shall be certain the T has read the will and understands its contents
c. The lawyer, the T, 2 disinterested Ws and a notary are brought together in a room from which everyone else is excluded. (No notary necessary if atty is notary); door is closed; no one enters or leaves until ceremony is complete.
d. Lawyer asks T three questions:
(1) Is this your will?
(2) Have you read it, and do you understand it?
(3) Does it dispose of your property in accordance with your wishes? After each Question, T answers in a voice that can be heard by Ws and notary; it is neither necessary nor customary for Ws to know terms of the will.
e. The lawyer asks T, "Do you request Ws to witness the signing of your will?" T answers "yes," and is heard by Ws.
f. The Ws should see T sign. T signs on the margin of each page of the will. (To prevent subsequent substitution of pages). The T then signs her name at the end of the will.
g. One of the Witnesses reads aloud the attestation clause.
h. Each W signs, and writes his or her address next to sig. The first W to sign writes underneath their signatures that the W's read the attestation clause and it is accurate. W then places initials immediately below this.
i. A self-proving affidavit, typed at the end of the will, is then signed by the T and the Ws before the notary public, who in turn signs and attaches required seal.
F. Proving Due Execution
1. Attestation Clause: An AC is a provision that appears immediately below T's signature line and immediately above signature lines for attesting witnesses, and recites in detail the performance of the statutory requisites for execution; although legally req'd, it is always included in a well-drafted will.
a. Prima Facie evidence: AC is prima facie evid. of facts recited therein; thus, it places burden of proof on contestant; useful when:
(1) W has bad memory
(2) W is a hostile witness
(a) if W testifies that T was not in the room when W signed, AC is enough to allow issue to go to the jury
(3) W is dead
b. Texas: TPC ∍84(b): Attested Written Will: If not self-proved, an attested written will produced in court may be proved:
(1) 1 W testify in open ct or in deposition
(2) If Ws dead or unavail, 2 Ws can verify the sig. of the W on the will or of T, in open court or by deposition.
(3) Attestation clause: creates presumption of proper execution.
2. Self-Proving Affidavits (SPAs)
a. General: Common method for proving due execution; a number of states have enacted SPA statutes under which T anbd W sign the will in the usual manner, and then sign a sworn affidavit (usually on separate shhet of papaer) before a notary; recites all elements of due execution and substitutes for live testimony of Ws.
b. Rationale: Due execution of will is usually proved after T's death by Ws testifying in court or by executing affidavits. If Ws unavailable, a SPA permits the will to be probated. Will is valid w/o a SPA, but SPA makes it easy to probate the will; SPA is the equivalent of a deposition ; eliminates need to locate Ws and secure their testimony.
c. Texas 2-step:
(1) TPC ∍59: 2-step process. T and Ws must sign will and then sign affidavit. Statute provides recommended form of affidavit that goes further than legally req'd in Texas b/c might be probated in another state. To wit, publication.
(2) Boren Tx S/Ct held that T's signature on SPA (separate sheet of paper) but not will was insufficient b/c not written with testamentary intent. BUT SEE Fleming
(3) Fleming Same facts but SPA on same paper as will. Held valid.
(4) Boren was a trap in Texas that no longer exists.
(5) Texas amended TPC ∍59
(a) Substantial compliance in the form and content req'd of a SPA is sufficient. Here, substantial compliance amounts to an affidavit that is subscribed and acknowledged by the T and subscribed and sworn to by the Ws.
(b) Signature on SPA considered a signature on the will if necessary to prove that the will was signed by the T or Ws, or both, but in that case, the will may NOT be considered a self-proved will.
d. UPC 2-504: 1-step process. Can combine the attestation clause and affidavit so signing will is the same as signing affidavit. 2-step process allowed and better in situation where have older will that want to make self-proving.
3. Choice of law as to execution
a. Usual rule: the law of D's domicile at death determines validity of will as to personal property; law of the state where real property located determines disposition of real property.
b. UPC ∍2-506: A written will is valid if executed in compliance w/ 2-502 or 2-503 or if its execution complies w/ the law of:
(1) the place where the will is executed at the time of ewxecution;
(2) the place where T is
(a) domiciled
(b) has an abode; or
(c) is a national
4. Safegurading WIll
a. Client keeps will: not recommended since many Ts will mark up wills w/ hare-brained modifications; in other cases, wills are never found.
b. Att'y retains will: client is given an unexecuted copy on which location of original is noted.
(1) Drawback: may have appearance of soliciting business; disapproved in Gulbankian (Wis).
c. Clerk of the probate court: many states have statutes allowing wills to be kept on deposit w/ clerk of the probate court (UPC 2-901); rare practice.
XVI. Special Precautions When Will Contest is a Possibility
A. Grounds for contesting will: Most will contests involve issues of testamentary capacity or undue influence;
1. Defective execution
2. Revocation of will
3. Lack of testamentary capacity
a. Insane delusion
b. Mistake
4. Undue Influence
a. Mental
b. Physical
c. Contrast supplication and bribery
5. Fraud
B. Who may contest: Standing. A person has standing to contest a will only if she is an interested party. To be an IP, the person must have a direct interest in the estate that would be adversely affected by the will's admission to probate. Examples:
1. Heir, or legatee under earlier will
2. Not creditors
3. Not executors or trustees named in an earlier will
C. When a will contest is likely:
1. Will that disinherits a child or spouse (aka unnatural distribution)
2. Divided family, and will favors either
a. Children over spouse; or
b. Spouse over children
3. Client has no close relations; i.e., heirs are remote.
4. T leads alternative lifestyle. Herpes simplex 12.
D. Precautions to take (summary):
1. T should give detailed explanation of disinheritance (see below)
a. Caution: testamentary libel
2. No contest clauses (see below)
3. Avoid drafter/beneficiary conflicts: Don't have beneficiary write the will; some states have presumption of undue influence (UI) if drafter is beneficiary.
4. Psychiartic report on mental condition of T:
a. Caution: this could backfire.
b. "competence was so questionable that they had to get a psyche report"
c. Bottome line: probably a bad idea.
5. Videotape: might be OK.
E. Detailed explanation of a disinheritance:
1. Caution: testamentary libel. It does not take a very provacative statement to support a judgment for libel. Plaintiff/jury can use this c/a as a means to redistribute the estate.
a. Brown v. Dufrey (NY) Disinherited ex-H recovered libel damages equal to 1/2 the estate.
2. Accuracy: All recitations need to be correct. Incorrect statements can be used to show T not competent.
3. Procedure: Can have T write letter or perhaps videotape her to show that this was her idea.
a. Use T's own words. Legalese bad. English good.
b. Jaworski solution: Letter written by T
(1) Disposition letter. The att'y requests client to write in own handwriting to att'y setting forth in detail the disposition the client wants to make.
(2) Consequences letter. Att'y responds, detailing consequences the disposition on heirs.
(3) Explanation letter. Att'y asks for second letter inswhich client details the reasons for the disposition.
(4) All letters kept as evidence.
F. No contest clauses (aka in terrorem clauses):
A will clause that provides that any person who contests the will shall forfeit all interests he otherwise would have received under the will; split of authority on validity.
1. Maj. Rule: In most states and under the UPC, a beneficiary who unsuccessfully contests the will does not forfewit her legacy if the court determines the beneficiary challenged the will in good faith and on the basis of probably cause.
a. Rationale: Don't want to discourage those who have a legitimate basis for challenging the will.
b. UPC ∍3-905: follows majority rule.
2. Minority rule (NY): Gives full effect to no contest clauses even if the losing contestant had probable cause.
a. Exception:
(1) forgery
(2) subsequent revocation by later will or codicil
(3) contest of provision benefiting drafter or witness
(4) contest brought on behalf of infants or incompetents
b. Rationale:
(1) Probable cause rule (majority rule) encourages litigation and shifts balance unduly in favor of contenstants
(2) Challenges put T's character, habits and personal traits in issue; a T should be allowed to protect her reputation as well as her dispositive plan.
3. Fla. Rule: Contest Clauses are always unenforceable.
a. Policy: not to discourage meritorious litigation
4. Tactics: The think twice approach: T must devise a reasonable amount to possible contestants so that they will have something to lose if they contested the will.
a. Lapper: In this case, there was a no contest clause, but it was useless b/c GC's were not left anything. Thus, they had every incentive to sue; provision merely lulled T into false sence of security.
G. Requirement of Capacity: Heirs/Devisees can challenge capacity by arguing incompetency
1. Rationale:
a. T's desires: Will should be given effect only if it represents T's true desires, and the insane may not know their true desires.
b. Not a person: Mentally incompetent is not defined as a person
c. Protect T's Family:
d. Public confidence that law is legitimate and reasoned.
e. Assurance: Assure sane that disposition will be carried out even if they later become insane and try to revoke
f. Protect society at large from irrational acts
g. Protects the incompetent from exploitation
2. Burden of Proof
a. TPC ∍ 88b: Puts burden on will proponent to show that T is of sound mind as a prerequisite to admission of will to probate.
b. UPC 3-407 (and NY): Applies rebuttable presumption of competency; thus, burden is on the contestant
3. Legal test: Statutes in most states merely specify that T must be of sound mind, leaving elaboration to CL
a. Requires diff. and lower standard than that required for K.
(1) Rationale for lower standard: protecting a dead man from economic loss is not a consideration
b. Incompetence is merely evid. of lack of testamentary capacity (TC), but does not result in directed verdict on the issue
c. Average intelligence not req'd
d. Estate of Wright: T held competent despite numerous eccentricities and bizzare behavior. T lived in shack w/ dirt and junk, drunk much of the time, picked thru garbage, lied about owning houses in Utah, played dead to scare neighbors, refused to speak to GC in street, stood up dinner invitations
4. UPC
a. UPC 2-501: Test consists of 4 issues:
(1) Did T understand nature of act he was doing? T must have acutal knowledge (mere capacity to understand is not enough); he must actually know he is making a will.
(2) Did T know the natural objects of his bounty? T must have capacity to understand (not necessarily have actual knowledge of) the relationship b/w himself and those persons who ought to be in his mind at the time of making the will
(3) Did T know the nature and value of his property? T must have the capacity to understand the nature and extent of his property.
(4) Did T understand the disposition he was making? T must have the capacity to interrelate the foregoing factors and form an orderly scheme of disposition
b. UPC 3-407: Rebuttable presumption of competency.
5. New York:
a. Rebuttable presumption of competency
b. Standard: incompetency has to "be or might be" the cause of the provisions in the will
c. Presumption of UI: where ben. writes will or institgates will making process
d. See insane delusion case below
6. Insane Delusion: A person may have sufficient mental capacity to make a will gen'lly, and yet suffer from an insane delusion which interferes with his ability to formulate a rational plan of disposition
a. Effect: may cause will (or gift) to fail on grounds of TC
b. Definition: occurs "where one persistently believes in supposed facts that have no real existence except in his perverted imagination, and against all evid. and probability, and conducts himself, however logically, upon the assumption of their existence."
(1) It is a belief in facts that do not exist, and which no rational person would believe existed
c. Test: Are there any facts from which T could have reasoned and reached his conclusion?
d. Mistake distinguished: an insane delusion is a belief not susceptible to correction by presenting the T with evid. indicating the falsity of the belief
(1) Ex: T mistakenly believes Son is dead and leaves all to daughter. Will is entitled to probate.
(2) UPC/Minority Exception: pretermitted child (UPC 2-302(b)): if T fails to provide in will for child solely b/c T believes child is dead, the pretermitted child receives intestate share
7. Atty's duty to determine competence: none, if T is visibly competent.
H. Undue Influence: A will or gift in a will may be set aside if UI--mental coercion that destroyed T's free agency and forced him to act on someone else's intentions
1. What UI is not:
a. solicitation of a will
b. ultimatum
c. persuasion
d. harassment
e. bribery
2. Effect: portions of will that are product of UI may be stricken and remainder allowed to stand if invalid portions can be separated w/o defeating T's intent
3. Test: Subjective Test measured at time of execution
a. Contestant must establish:
(1) existence of UI exerted on T
(2) effect: UI must have overpowered free will of T
(3) product: UI must have produced a will that wouldn't have been made but for UI
b. Burden of Proof: On the contestant
(1) exception: Burden shifts where
(a) a person in confidential relationship
(b) receives the bulk of T's property
(c) from a T of weakening intellect
(2) UI normally can be proved only by circumstantial evid.
4. Confidential Relationship
a. majority rule: mere existence of conf. rel. does not by itself raise presumption of UI unless ben. played active part in procuring the will
b. Bequest to Atty who did not prepare will: Gen'lly, atty-client rel. w/o more doesn't raise presumption of UI
c. Bequest to Atty who did prepare will: presumption may arise
(1) test: (factors)
(a) conf. rel. b/w T and atty
(b) atty helps write will
(c) suspicious circum.
(d) atty = ben.
(e) physical depend. on atty or on party who contacts atty to prepare will
(2) standard: clear and convincing evid. req'd to overcome presumption
(3) ABA Model Rule 1.8(c): A atty shall not prepare an instrument giving the atty any substantial gift except where client is related to donee
5. Physical Dependence: Alone, this factor does not raise presumption of UI
a. coupled w/ suspicous circum., it may give rise to presumption
b. E.g., (Tex Case): Will held invalid where 81 year old woman who was confined to nursing home writes a new will leaving all to nursing home instead of kids; will prep'd by atty contacted by nursing home. Ws are two nurses
6. Illicit Relationship: does not give rise to presumption, but is a factor
a. Ex: a man's mistress cajoles him, threatens to leave him if he doesn't make a substantial bequest to her; this does not amount to UI b/c it doesn't overcome his free will
XVII. Meretricious Relationships
A. In re Will of Moses: Old, crotchety, rich T and young atty were lovers. T went to another atty, who drafted will, leaving all to her lover. Ct. denied probate on grounds that lover exerted undue influence. Ct. invoked presumption of UI (atty-client rel. plus gift = presumption).
1. Possible precautions for T:
a. marry atty
b. adopt lover
c. RIVT
d. no-contest clause
2. Adult Adoption: adoption of adult may be useful in preventing a will contest
a. Rationale: only persons who have standing to challenge will are those would take if will were denied probate; if T adopts ben., T's collateral relatives might not be able to contest will b/c they wouldn't take anything via intestacy
(1) Adoptions upheld
(a) wealthy bachelor adopts sec'y w/ whom sexual rel. alleged
(b) 70 year old adopts 3 adults
(2) Adoption of adult lover not upheld
(a) but cf. Braschi v. Stahl (NY 1989) holding that surviving man of 10 yr homo. rel. was a fam. member and entitled to live in a rent controlled apt
b. Caution: incest is criminal offense
B. In re Kauffman's Will: T was independently wealthy. T left everything to male lover, including stock in CHC. Family contested on grounds of UI. Will denied probate. T left 9 successive wills, each giving more to lover. Ct. had to find all 9 were product of UI!
1. Held: Will invalid; instestate distribution
2. How to Avoid:
a. Letter to Family: but didn't work in this case
b. Revocable Trust: would solve concern family might have of having lover attend family board meetings
c. Buy-Sell agreement: give family option to buy stock from lover
C. How to Approach Situation like Kaufman
1. Declline Case: atty does not have to take case; potential for will conteswt is likely
2. Assume the worst and be candid w/ client
3. Keep Client Fully Informed
a. ask a/b relationship
b. ask if any relatives may contest
c. get extra-will statement of reasons
4. No-Contest Clause: give enough for relatives to "think twice"
5. recommend marriage or adoption
6. recommend IV trust or gift
7. write family to lessen shock (Caution: this gives advance warning)
D. Trusts as method of protecting estates: Types and Characteristics
1. Trust Defined: device whereby a trustee manages property for one or more beneficiaries; neither trustee OR ben. owns the property to exclusion of other
a. Legal Interest: owned by T'ee
b. Equitable Interest: owned by ben.
2. Creation of Trust:
a. Property owner transfers assets to a trustee, with trust instrument or will setting forth the terms of the trust. A property drafted trust will have 2 components:
(1) dispositive provisions, fixing the ben.'s interests; and
(2) administrative provisions, specifying the powers and duties of the trustee in managing the trust estate
b. Declaration of trust creates an inter vivos trust where the settlor is also the trustee. The only requirement is that donor manifest an intention to hold property in trust. Unless otherwise req'd by law, not even a writing is req'd. E.g.:
(1) personal property: no writing req'd b/c no other law requires it
(2) real property: statute of frauds requires a writing
c. Deed of Trust: Used to create a trust where the settlor is not the trustee. Settlor uses a deed of trust to literally transfer the property to another person as the trustee.
3. Parties involved
a. settlor: person who creates the trust
b. trustee: holds legal title to the trust property
c. beneficiary: hold equitable title
d. One person can wear more than one of these hats
4. Types of Trusts
a. Inter vivos: created during settlor's life
b. Testamentary: created by a will
5. Who may be a trustee?
a. may have more than one
b. individual or corporation
c. settlor can be trustee
d. third party
e. beneficiary
(1) EXCEPTION: If same person is both trustee and SOLE ben., there's no trust. To create a trust, the legal and equitable title must be separated.
6. Failure to name a trustee: a trust won't fail for want of T'ee
(1) ct appoints if trust doesn't
(2) ct appoints if named trustee won't assume or incapable to
7. Trustee Duties: Trustee is held to high standard of conduct, and has a duty to administer the trust solely in interest of b'ees. Duties include:
a. Investment decisions: Trustee has a duty to both classes of ben.s (income recipients and remaindermen)
b. self dealing sharply limited, sometimes prohibited
c. must preserve property (insure, not mix with his own)
d. must make property productive (invest)
e. pay income to b'ee according to terms
f. pays taxes on property, keeps records
g. cannot delegate trust duties
8. If NO Duties: When trustee has no duties to perform, there is no reason to have a trust and the trust fails; ben.s acquire legal title to the property
9. Remedies against Trustee
a. May be denied compensation
b. held personally liable
c. may be removed by court
10. Acceptance/Release:
a. law does not impose upon a person the office of trustee unless the person consents
b. Trustee can only be released from duties with consent of bens, or by court order
11. Beneficiaries Rights: B's have equitable interests in trust property.
a. Available Remedies:
(1) personal claims against T'ee
(2) equitable interests in property
(3) Trust protected from Creditors
(4) B'ees can recover trust property if T'ee bankrupt or wrongfully disposes
(a) can impose trust on proceeds from this wrongful sale
(b) but cannot recover from BFP
b. Successive Beneficial Interests: Most trusts create successive beneficial interests (e.g., income to A for life, then to A's children). Thus, creation of trust involves creation of one or more equitable interests as well as a present interest in the income. Today, most life estates and future interests are equitable rather than legal b/c they were created by trust.
E. Cases
1. Estate of Wright (CA 1936) - "testamentary capacity cannot be destroyed by showing a few isolated acts...unless they directly bear upon and have influenced the testamentary act"
2. Lee v Lee (MS 1976) - T had been placed under conservatorship b/c of age & physical incapacity; on one day he executed both a will and a deed;
a. held: deed was invalid for lack of capacity, but will was not;
b. general rule: takes less capacity to sign a will than to do any other legal act, including making a contract or a gift
c. appt. of guardian is only evidence of incapacity; jury may still find that T had a "lucid moment" during which he executed a will
3. Honigman (NY 1960) -loony old Mr. H thought his Mrs. was cheating on him, cut her out of will except for minimum statutory share.
a. held: Reverse Appellate ct's reversal of trial ct denial of probate. Record sufficient to show that Mr. H suffered insane delusion.
b. general rule: burden of proof of incapacity on challenger to probate
4. Lipper v. Weslow (TX, 1963) Lawyer-son of T helps T write will, disinheriting half-brother's children in favor of his own side of family. Disinherited g'kids challenge undue influence
a. held: insufficient evidence of UI, will's "unnatural disposition" upheld
b. no evidence rule -evidence insufficient for jury, but some UI evidence existed:
(1) atty-son drafted will, beneficiary
(2) lived next door, had house key
(3) bad blood towards disinherited bro.
(4) aging T, never read will
c. however, clause in will explained reasons for disinheritance,
(1) should have been in T's own words
(2) legalese raised suspicions as to what all son wrote w/out T
(3) factual errors feed jury's doubts create risk of testamentary libel
d. no contest clause useless here
(1) nothing at all left to plaintiff grandkids, so contest risks zip
(2) problem persuading T to leave "just a little something to keep 'em quiet"
5. Davis v Hunter (CT 1970) daughters allege T lacked capacity to make will and create RIVT that leaves bulk of estate in trust; Holding: plaintiffs lacked standing to sue, because:
a. during T life, only T or PR can modify trust, not challengeable
b. after death, daughters cannot challenge b/c will, if probated, appointed SS (W#2) as executor, so daughters are not economically interested parties
c. have standing only through intestacy, but cannot set aside will unless it is first probated
6. Weatherley v Byrd (TX 1978) only T has right to revoke trust; guardian cannot revoke when T judged incompetent unless shows Ct. that revocation is in T's best interest.
a. Important case as many trusts created to avoid assets' supervision by guardians
b. Can prevent appt of particular guardians by stipulating who you don't want in affidavit TPC ∍679B
F. Use of Revocable Trusts in Estate Planning
1. Introduction:
a. Typical RIVT: involved a deed of trust where settlor transfers assets to another person as trustee pursuant to writing in which settlor retains power to revoke, alter or amend the trust and the right to trust income during lifetime.
b. Example: If W does not know about business but daughter does, W & H can transfer business to RIVT with H as trustee for ben of W & H for H's life and on H's death for W's benefit and M becomes trustee
(1) i.e., an adaptable, useful planning entity
2. Reasons to create RIVT
a. Avoid probate (especially in states without IA)
b. Avoid will contests
c. Alzheimer's trust: management of assets for the old or impaired
d. CP states: Asset management: To avoid having to divide assets whose value will suffer if it is divided
3. Consequences During Life of Settlor
a. Property Management by Fiduciary: a third-party trustee may be selected to manage a funded revocable trust; the settlor may want to be relieved of the burdens of financial management.
b. Contrast-Custodianship: may also be used for property management but as agency relationship it terminates on disability or death of principal whereas RT continues during settlor's incapacity and can provide for disposition of trust assets at settlor's death.
c. Dealing with Incompetency (aka Alzheimer's trust): RT can be used in planning for contingency of incapacity; settlor may be co-trustee
(1) i.e., "When I lose competency, my daughter, M, whom I trust will become successor trustee and manage assets on my behalf."
d. Clarification of Title: RT useful in keeping separate and apart property that H or W want not to be commingled with their other assets; i.e., for property each brings to the marriage.
e. Income and Gift Taxes: NONE (tax neutral) under FIT and G/ET, assets in a RT are treated as still owned by the settlor; there are no tax advantages in creation of RT
(1) Rationale: Revocable trust is incomplete gift
4. Consequences at Death of Settlor: Avoidance of Probate
a. Costs: assets transferred during life to a RT avoid probate because legal title to the assets passes to the trustee, and there is no need to change the title to the trust assets by probate administration on the settlor's death.
(1) savings: court costs, atty fees, and executor's commissions incurred in probate
(2) costs: lawyers charge more to draft a RT that a will; trustee fees for third party trustee
(3) TEXAS: rarely used in TEXAS to avoid probate because we have IA
b. Delays: under RT income and principal can be dispersed to bens relatively promptly
c. Creditors: in probate, a ST stt of lims is applicable to creditors; there is no ST stt of lims applicable to RTs, rather it is normal; thus probate holds an advantage in this regard
d. Publicity: will is a public record; RT is not
e. Ancillary Probate: real property located outside domiciliary st must be probated in st where land is located; this land can be transferred to a RIVT changing title of land to trustee during owner's life.
f. Avoiding Restrictions Protecting Family Members: in some jurs, a funded RT may defeat a spouse's elective share in some circumstances; may also be used to avoid the need to pay a family allowance.
g. Avoiding Restrictions on Testamentary Trusts: as general rule, settlor of RIVT of personal property may choose the st law that is to govern the trust; UPC 2-602 provides same right for wills
h. Lack of Certainty in the Law: where RT is used a substitute for a will, the law may be more uncertain in solving a problem that arises
i. Avoiding will contests: a RT, like a will, can be contested for lack of mental capacity and UI; it is more difficult hwvr, to set aside a RT on these grounds.
j. Estate Taxation: there is no federal tax advantages to RT; assets are includible in GE of settlor under 2038.
k. Controlling Surviving Spouse's Disposition: RT provides assurance that the surviving spouse's property will be disposed of in accordance with a mutual estate plan
l. Community Property: spouse in CP st can dispose of by will only 1/2 of CP; it may be that assets require integrated mgmt; perhaps prefer all assets transferred at death of one spouse; i.e., allows unified management
XVIII. INTERESTED WITNESSES; MISTAKE
A. COMPETENCY OF WITNESSES: W's must possess certain minimum qualifications or their attestation may be legally insufficient, and the will may fail for lack of due execution
1. Competency: all jurs require that the W be competent; this generally means that at time of execution, the W must be mature enough and of sufficient mental capacity to understand and appreciate the nnature of the act she is witnessing and her attestation, so that, if need be she can testify on these matters in court.
a. Requirements: Must understand nature of act
(1) mature enoute
(a) Age: in some sts, stts provide that a person must be a certain minimum age to serve as an attesting W
(b) TEXAS: Must be 14 or over [TPC 59]
(2) Sufficient mental capacity
(a) Rationale: So that can testify if necessary
(b) UPC 2-505: Who May Witness
i) Any person generally competent to be a W may act as a W to a will
ii) a will or any provision thereof is not invalid bc the will is signed by an interested W
2. ESTATE OF PARSONS (Cal 1980: T's will was signed by 3 Ws, but 2 of the Ws were Bens under the will; after T's death, one of the Ws disclaimed her bequest in an effort to get out from under the interested W stt which voided all devises to Ws unless there were 2 other disinterested Ws; Ct hwvr held that functiono f interested W stt works at time will is executed, and thus W could not later disclaim interest to qualify as W; thus other W that was devised land lost the bequest
a. Note: Cal since adopted USP 2-505
b. TEXAS diff result: Only need one disinterested W
B. INTERESTED WITNESSES
1. Common Law: at common law, if an attesting W was also a Ben, the W-Ben was not a competent W.
a. Effect: If Ben was one of the two attesting Ws, the will was denied probate
2. Modern Law--Purging Stts: most jurs have "interested W" stts, or "purging stts" which provide that if an attesting W is also a Ben, the gift to the W is void, but she is a competent W and the will may be probated.
a. EXCEPTION--Supernumary rule: bequest to W not void if there are two other disinterested Ws
b. EXCEPTION--"WHICHEVER IS LEAST": if the W would also take under the intestacy stt, the W can take an amount equal to her intestate share.
c. Result: this type of purging stt never results in denial of probate of will, only that W-Ben loses legacy
3. TEXAS: TPC 61: Bequest to a Witness: If a person is a subscribing W and also a devisee, if the will cannot be otherwise established, such bequest is void . . . BUT [whichever is least rule] if the W would have been entitled to a share of the estate had there been no will, he shall be entitled to as much of such share not to exceed the value of the beuest to him in the will
a. Otherwise establishing the will:
(1) UPC by analogy: under UPC 84(b)(1), all we need is "the sworn testimony or affidavit of one or more of the subscribing Ws, taken in open court."
(2) Result: Becuase in TEXAS we need only 1 W to prove due execution, if other W is disinterested and can testify, due execution can be otherwise established and the gift to the W is NOT void.
(3) Self-proving affidavit: open question whether self-proving affidavit is enough to establish will within meaning of "otherwise established."
(a) Arg for: since SPA is a substitute for W's live testimony, the will can otherwise be established w/o resort to W-Ben's testimony (UPC by analogy)
(b) Arg against: SPA stt is procedural in its scope and purpose, and is merely designed to simplify the proof of wills in probate. The SPA stt was not intended to change the substantive law of TEXAS, or to overturn any other stt. Since today nearly all wills are self-proved, this would men that IW stt has been overruled as a practical matter; TEXAS courts should not give such a substantive effect to a purely procedural stt
b. EXCEPTION--TPC 62: Corroboration of Testimony of Interested Witness In TPC 61 situation, the bequest to the subscribing W shall not be void if his testimony proving the will is corroborated by one or more disinterested and credible persons who testify that the testimony of the subscribing W is true and correct, and such subscribing W shall not be regarded as an incompetent or noncredible W under PTC 59.
(1) Persons: corroboration not limited to the testimony of another attesting W. It can be any person who was present at the will execution ceremony (ie, supervision atty, a secretary)
(a) no other st has comparable provision; some others allow corroboration by a W
(2) Wilkerson v. Slaughter: (Tex 1965): T's will devised here entire estate to H & B, both of whom were attesting Ws; there was a third W and the execution ceremony was supervised by a notary public; at probate the third W testified as to due execution and the notary corroborated the testimony. HELD: the will in this case having been proven by another W and thes testimony having been sufficiently corroborated by another W . . . the bequest is not void."
(a) Note: presumably, even if 3rd W had died, the notary could be used to corroborate the testimony of H or B and save the gifts under TPC 62.
c. Rejected UPC: Rejected adoption of UPC rule totally aboshing the interested witness doctrine
4. UPC 2-505: Abolishes the interested W rule, neither the will or any of its provisions is affected by the fact that an attesting W is alos a Ben: 2-505(b). "A will or any provision thereof is not invalid bc the will is signed by an intersted W."
a. Rationale (in Official Commentary to UPC): the rule more often voids gifts to innocent family members aot reaching cases of improper overreaching
(1) change not meant to foster use of interested Ws; attys should continue to use disinterested Ws
(2) if substantial gift is left by will to W, gift can be challenged on grounds of undue influence
b. TEXAS: rejected adoption of this rule
C. NAMING ATTORNEY AS EXECUTOR: NOT automatically excluded from being executor, UNLESS suspicious circumstances exist: cts have held that an atty earns compensation as an executor, and therefore does not receive an unearned benefit and is not purged from being executor. Hwvr, atty can be found guilty of fraud if he does nto inform T of financial impact of being named executor.
1. Suspicious circumstances
a. Recent acquaintance of T and attorney, especially if T is vulnerable
(1) In re Estate of Weinstock (NY 1976): two attys (father & son) drafted a will for an 82-yr-old man they had just met and named themselves executors
(a) HELD: the attys were guilty of "impropriety" and "overreaching" that constituted constructive fraud on the T, preculding their appointment as executors
(b) Impact: A restrain on T's total power to name executor of choice
b. Routine practice of attorney to suggest self as executor
(1) State v. Gulbankian (Wis 1972): the court warned that a routine practice by an atty to name the atty as executor was suspicious and decided that it was unethical for the atty-drafter to suggest, directly or indirectly, that the atty be named as executor or lawyer for the executor.
2. Atty FOR executor: a clause in the will that an atty be named atty for the executor is merely a non-binding suggestion
a. Rationale: The executor has a lot of responsibility and is entitled to choose his own attorney.
D. MISTAKE IN EXECUTION OF THE WILL
1. In General: where it is claimed that there was amistake concerning a will, the admissibility of parol evidence to show the mistake and the type of relief available, if any, depends on the type of mistake claimed.
a. Mistake in execution: courts are more likely to accept parol testimony and grant relief than in the case of mistake relating to contents
(1) Rationale: mistake in execution relates to testamentary intent, an issue on which courts generall admit parol testimony
b. Compare--mistake as to revocation: relief much more freely given in situation of mistake as grounds for ignoring a revocation
(1) Rationale: revocation requires both an act and intent; since extrinsic evidence is admissible on the issue of intent to revoke, evidence is also admissible to show that the intent to revoke was based on a mistake.
2. Mistake in Execution of Will
a. Mistake as to Nature of instrument: ee always admissible to show that the T was unaware of the nature of the instrument he signed; such a mistake relates to the issue of testamentary intent, without which the will would be invalid.
b. Wrong will signed: situations where the wrong will is signed occur most often in "mirror" wills--wills containing reciprocal provisions. Some courts deny relief on grounds that T lacked testamentary intent bc she never intended to execute the document she actually signed [Pavlinko's Estate] HWVR, the better and modern view is that the court should grant relief since the existence and nature of the mistake are so obvious. [Snide]
3. In re Pavlinko's Estate (Pa 1959): Will denied probate: By mistake, H signed will prepared for W and W signed will prepared for H; w & H did not speak English and wisely decided to have atty draw up wills
a. Functional perspective taken by Court
b. Message: make sure client signs right will and don't expect court to bail you out
c. BUT SEE Snide (NY 1981): same facts as Pavlinko, yet NY ct admitted will to probate with stty formality, contemporaneous execution ceremony, no danger of fraud.
XIX. CONDITIONAL WILLS, HOLOGRAPHIC WILLS AND ORAL WILLS
A. CONDITIONAL WILLS: Perfectly legal, as long as not against public policy
1. Definition: will which expressly provids that it shall be operative only if some condition stated in the will is satisfied. Testamentary intent exists only if the condition occurs, and if it does not, the will fails for lack of testamentary intent.
2. Usually upheld: Court will look at testamentary intent of T, but even if language is clear, chances are the will will be upheld
a. Testamentary intent: Whether the conditional language means "if and only if" or whether it is merely what was on T's mind at the time and mrerely the inducement for writing the will
b. Presumption against intestacy: most cases assume the will is not conditional, applying a standard presumption against intestacy
c. EATON V. BROWN: T executed will saying she was planning on going on a trip, and if she did not return, this was her last reqeust. T went on trip, returned safely, and died 3 months later.
(1) I = whether "and if I do not return" language was a condition for probate;
(2) Held: will admitted for probate;
(3) Rationale:
(a) The conditional language just expresses what was on her mind and was the inducement for writing the will; she did not intent "if and only if"
(b) courts ALWAYS want to admit will for probate
(4) Arguments against holding:
(a) Language was explicit
(b) T could have changed if she had wanted to
d. HYPO: The [current will] to my children
[New will] I plan to marry Judy Jones in 3 months. This will be operative if I marry Judy before Jan. 28, 1992. [Trust income to Judy for life, remainder to my chidlren.]
(1) Is will effective? Yes, T drafted it. If c occurs, will is operative.
(2) What if marriage does not occur until 3/92, is will effective?
(a) under Eaton, yes
(b) But, language is precise
e. Succession of Montero (La 1978) (T, about to go into surgery for serious operation, wrote "in the event I do not come out OK" my estate is to go to 3 persons)
f. Mason v. Mason (W.Va. 1980) ("I am in the hospital for surgery and in case I do not survive everything belongs to Marvin.")
B. STATUTORY WILLS
1. Definition: perceiving a public demand for a legally drafted will that can be written on a preprinted form available at stationare stores, several sts have authorized stty wills--short wills with wording spelled out in a stt.
a. Purpose: to channel person to well drafted will form
C. HOLOGRAPH WILLS: About half the states recognize holograph wills, including TEXAS
1. Basic Requirements
a. Handwritten will: Must be written by T in his handwriting, however he writes (see below)
b. Signature: Must be signed by T (see below)
c. Date: a few states require this (see below)
d. Testamentary Intent (see below)
e. NO Witnesses: attesting Ws not required
2. UPC 2-503: [Holographic Will] A will which does nto comply with 2-502 is valid as a H will, whether or not witnessed, if the sign and material provisions are in the handwriting of the T.
a. "To": Must include the word "to" to include the material provision [some cases]
b. Signature: Must be there
3. TEXAS: TPC 60: where will is wholly in handwriting of the T, attestation f Ws is not required
a. Self-proved: Such a will may be made self-proved at any time during T's lifetime ny the attachment or annexation of an affi by the T to the effect that the doc is his last will; that he was at least 18 when executed . . .; that he was of sound mind; that he has not revoked the doc.
b. Otherwise prving the will: To be admissible to probate, Ws who know the T's writing must testify that the instrument was written by T's hand [TPC 84]
c. Surplusage Rule (see below): Valid in TX
d. Signature: TPC 60 has no signature requirement, but it must be read in connection with TPC 59, the general section on due execution of wills which does require a signature.
(1) Location: As w/ wills generally, signature in TEXAS does not have to be at the tail
e. Testamentary Intent: Oral testimony is admitted to determine testamentary intent
f. World's shortest valid will: "Mother takes all. Jay Koss"
4. Testators Handwriting: General Rule is that to be valid, will must be entirely in the T's handwriting
a. Proving the will: To be admissible to probate, Ws who know the T's writing must testify that the instrument was written by T's hand [TPC 84]
b. Partially typewritten: Generally, the will will fail if ANY typewritten words, UNLESS the will otherwise meets form and execution requirements
(1) EXCEPTION: Surplusage Rule: if the handwritten provisions make sense and form a complete will, the typewritten or printed words will be discarded as surplusage
(a) Plastic overlay metaphor: Pull up overlay with handwritten part on it; if it forms a complete will, OK
(b) Hotel stationery: OK to use, UNLESS T scratches out part of the letterhead and leaves some; then, must apply surlusage rule
(2) MAUL V. WILLIAMS (Comm App 1934): included in a holo will: "I am making a check for Mr. Maul which will enable him to pay all my bills. Mr. Maul is to have teh entire balance in Frost Bank and pay all debts out of same." After T's death this writing was found, and stapled to it was a check payable to Maul and by T. Issue to jury was whether check was to be a part of the H will. Jury said yes and lower ct denied probate bc not wholly in T's handwriting.
(a) HELD: Surplusage test: Extraneous printed words on check/holo were not necessary to complete will don't have to be in handwriting
(b) Prof: things this case was excellent job of lawyering
(3) Estate of Thorn (Cal): 11 page handwritten will; cabin called "Craighorn"; In will, T wrote "I devise CRAIGHORN (stamped) to my brother."
(a) HELD: will denied probate
(b) Different result: ct indicated that "my lodge in the Sierras, CRAIGHORN," would have been OK.
(4) UPC 2-503f: A H will is valid if its material provisions are in the T's handwriting
c. In re Estate of Johnson: ct found that handwritten portions of a printed will form, submitted as holo will, were insufficient to satisfy requirement that material proviosion be in handwriting of T; to be valid holo will, the handwritten portion must evidence T's testamentary intent when printed portion is eliminated
(1) Mulkins: dispositive language on the form, by itself was a complete disposition
(2) Compare In re Estate of Muder (Az 19888) in upholding H will ct stated that handwritten provisions may draw ty context from both printed and handwritten language on the form; we see no need to ignore the preprinted words when T clearly di dnot and stt does not require us to do so."
5. Testator's Signature: all states require that the holo will be signed by the T
a. Location: Most sts, including TEXAS, allow the holograph to be signed anywhere on the will
b. BUT Intent Problem: if H will not signed at the end there may be doubt about whether decedent intended his name to be a signature
(1) In re Estate of Fegley: (Colo 1978) court denied probate to a handwritten instrument reading "I Henrietta Fegley . . . declare this to be may last will." but not otherwise signed.
(2) Compare In re Estate of MacLeod: (Cal 1988) reaching contrary conclusion on virtually identical facts
c. Valid signature: Liberal position taken by courts as to what constitutes a valid signature; T's initials, first name and nickname have held to be valid signatures
(1) X: A "mark" signature is impossioble; T can write, as evidenced by the holographic nature of the will
d. TEXAS: TPC 60 has no signature requirement, but it must be read in connection with TPC 59, the general section on due execution of wills (see _____) which does require a signature. Hwver, as w/ wills generall, sig in TEXAS does nto have to be at the tail.
6. Date: Majority: No requirement of a date
a. Few states (CAL, MICH): Require date
b. Rationale: useful in determining which of two testamentary instruments was written later
c. TEXAS No requirement of date
7. Testamentary Intent: maker must have intended the writing to be a will
a. When issue arises: when a letter or an informal memo, entirely handwritten and signed, is offered for probate; perhaps the writer was only making stmts about a will or gifts that she intended to make in the future.
(1) Almost always a problem iwth holo will unless begins "this is my last will and t."
b. Present tense: Generally, must be written in the present as opposed to the future tense
c. Burden of Proof: Proponent of holographic will has burden of proving Ty intent
d. SOME CASE: Lady writes letter to atty--Dear atty, I want to make some changes in my will. I want Blackacre to go to Bill and Bob in equal shares. I want to add a legacy of $5K to Nell. Please make these changes, I will sign when I come to town. Velma. Velma dies 3 days later; letter is offered as holographic codicil to typed will
(1) Held: NO testamentary intent: not admitted to probate bc letter not written with t intent --thislooks like something requesting another instrument.
(2) Additional problem: Partial signature
e. IN RE RICHARDSON: Brother wrote letter to sister saying his health was ruined and he wanted to anticipate possibilities. "You and your children get everything." Asked sister to write him quickly; Letter offered for probate; Probate denied; No Ty intent, simply telling sister what to expect in will already written or planning to write; there is a certain ritual to wills and this just might have been a casual off-hand stmt.
f. TEXAS: Oral testimony is admitted to determine testamentary intent
8. GUNN V. PHILLIPS: Gunn left a note in his handwriting, except for "N.L. PHILLIPS," which was block rinted, providing: "I George Gunn, leave everything to N.L. PHILLIPS or his family, and I request that the handle my affairs."
a. Ty Intent?: Probably; not informally designates an E, supports finding that it is a will
b. Wholly in Handwriting of T?: Yes, req means wholly in his hand, not wholly in cursive writing; In actual case, Ws had to testify that the block printing was teh writing of T and they couldn't; thus case was revsed and remanded.
c. Sig of T?: Not signed at tail, but "I George Gunn" qualifies as a sig; no subjective intent requied for sig.
(1) Counter arg: "I George Gunn" was written for purpose of identification, not signature; TEXAS cts have held that there is no requirement that sig appear in particular locus.
d. Date?: No date, but not required in TEXAS; date can be helpful with H wills in event that more than one is found; some states require date
e. Does Will name an E?: Yes, informally. But there is no language in will that would satisfy request for Indep. Admin. or waiving bond; this also adds to issue of T's intent.
f. Problems in construction?: Language "or his family" is sometimes struck down bc will does not name an unambiguous ben. In Gunn, Court said T intended an alternative gift, and therefore not void for uncertainty.
g. What is "NLPHILLIPS" was typed?: Probate probably denied bc definition of H not met; this is not mere surplusage
9. When Holographic Will is Useful:
a. Short time: IF client needs will in a very short period of time.
b. Complex estate: where will requires a lot of drafting, write holo will until other is done. (Can also accomplishh this with a simple form will.)
c. Frequent codicils disposing of personalty not economic for client to have attorney prepare. Could just hand client pad and write amendments; instruct him to write, "this is a codicil, an amendment to my will. I give the items of tangible personal property listed below as follows:"
(1) Problems with this:
(a) T's tend to make dispositions of property beyond tangible person property/destroys ty plan
(b) T's include language that revokes prior wills
d. Emergency situations where atty can't meet with client, can handle chgs in will on interim basis remotely
e. List of desires of who gets what: handwritten list, event if not "legal." It is implicit to grieving family to have clear signal what to do wtih stuff; in TEXAS better to use typewritten, signed but unwitnessed list
D. ORAL (NUNCUPATIVE) WILLS: Stts in many jurs permit oral (nuncupative) wills in very limited circumstances;
1. Usual Requirements: stts vary greatly in detail as to circs under which oral wills are allowed
a. last sickness: Usually must be made during last sickness
b. Personal Property: used to devise personal property of small value and
c. Witnesses: At least 2, sometimes 3 witensses are required
d. Somes states: No other will: T does not already have a will
(1) Invalid oral partial revocation: in these states a later oral will would be an invalid oral "partial revocation" of earlier will
e. Some States: specific people: soldiers, sailors and mariners at sea
f. Some states: Ws must reduce the oral will to writing within a certain time
2. UPC: Makes no provision for oral wills
3. TEXAS: Allows oral wills
a. TPC 64: Capacity to Make a Nuncupative Will
Any person who is Comp to make a last will dispose of his personal property by a nuncupative will made under the conditions and limitations prescribed in this Code.
b. TPC 65: Requisites of a Nuncupative Will
No nuncupative will shall be established unless it be made
(1) in the time of the last sickness of the deceased,
(2) at his home or where he has resided for ten days or more next preceding the date of such will, except when the deceased is taken sick away from home and dies before he returns to such home;
(3) nor when the value exceeds $30, unless it be proved by credible W's that the T called on a person to take notice or bear testimony that such is his will, or words of like import.
c. Nuncupative codicils: TEXAS, unlike most states, allows a nuncupative codicil to an oral will
(1) Conner v. Purcell: last sickness at home requirement was satisfied where T made oral stmt in presence of three witnesses: "I want Edith Purcell and her daughters to get enough of my estate to buy a little home, not to exceed $12,000"
(a) Problem: Oral wills are not allowed for real estate, so case turned on whether T intended to give the cash or the house
XX. DESCRIPTION OF BENEFICIARIES
A. AMBIGUITY: need to be careful in use of language because of uncertainties or ambiguities in the will; in such a case there is no plain meaning that can be given to T's words.
1. Latent Ambiguity: when language of the will, though clear on its face in describing a beneficiary or property, is susceptible to more than one meaning when applied to the extrinsic facts
(1) When two or more persons/things meet the description in the will
(2) When no person or thing exactly answers the description in the will
a. Extrinsic evidence: the ct, in process of interpreting will, may admit and rely on extrinsic evidence to resolve ambiguity
(1) Rationale: it does not all anything to the terms of the will, merely makes the terms of the will more specific; concern is to find T's meaning as to the words she did use.
b. Example: T left will making gift to nephews and nieces. T had 1 nephew and 1 niece by blood; latent ambiguity due to plural reference; Court admitted extrinsic e and shared gift with 19 nieces and nephews by marriage.
2. Patent ambiguity: uncertainty appears on the face of the will
a. Extrinsic evidence: courts are split as to admissibility of extrinsic evidence to resolve this type of ambiguity; courts often simple dispose of the ambiguity by construtin the will w/o the benefit of extrinsic e
(1) Estate of Akeley (Cal 1950): the T purported to devise her estate by giving 25% to each of three charities; the court construed the clause to 1/3 shares to each charity on the theory the T intended to devise her entire estate.
3. Distinction: distinction bw LA and PA is of diminishing importance; many courts now admit ee where theres is any ambiguity
B. PLAIN MEANING RULE: Majority Rule: plain meaning in a will cannot be disturbed; the intentions of the T must be gathered from the language of the will itself w/o aid of extrinsic evidence, IF it is unambiguous;
1. Presumption: in some jurs the rule is not applied rigidly but plain meangin creates a presumption that can be overcome only be exceptionally strong e of another meaning
a. Re Herlichka: T deserted wife and 3 children; shortly thereafter he moved in with X and 3 children were born to them; in will T referred once to "my wife X" thereafter to wife and children; HELD T intended to benefit his lawful wife and legitimate children due to strong preference for prima facie meaning of "wife" and children".
2. EXCEPTION: Personal usage exception: exception that allows e to show that th eT habitually used words to refer to persons not indicated by their common meaning
a. Example: T left estate to "mother"--always used mother to refer to wife. Court allowed gift to wife under this exception.
3. Criticisms
a. artificial limitation: anytime you read a will and apply, you go outside of will to find meaning; thus rule is an artificial limitation
b. Wigmore stated that the fallacy exists in assuming that there is or ever can be some real or absolute meaning
c. Interpretation: process necessarily requires looking outside the text
XXI. REVOCATION OF WILLS: T always has the power to revoke his will at any time; if will not properly revoked, it is admitted to probate
A. REQUIREMENTS OF REVOCATION
1. Act
2. Intent
B. VALID METHODS OF REVOCATION (ACT):
1. By Subsequent Writing executed w/ Testamentary Intent: a later will or codicil may expressly or impliedly revoke an earlier will
a. Requirements: executed with testamentary formalities which revokes the prior will expressly or by inconsistency [UPC 2-507(1)]
(1) Intent: Requires present intent to revoke:
(a) Insufficient: Note by T to atty "please destroy the will I made" bc lacks present intent. The doc itself is not intended to revoke the will.
(b) Sufficient. Not the atty "I hereby revoke my will and you tear it up"
b. Revocation by Inconsistency--Codicils: in general, whenever we ahve two last wills and the second doesn't contain revoking language, read the second as a codicil and probate both; if T destroys the codicil, probate the first will; Hwvr, if T destroys the 1985 will, CANNOT probate codicil bc it revokes will and codicil.
(1) if I executes a will in 1985 leaving all to A, and then in 1987 executes a new will with no words of revocation leaving ring and car to B, the 1987 will is a partial revocation by inconsistency of the 1985 will.
c. Proper method: accdg to CB, the only proper way to revoke a will is by subsequent will that unequivocally revokes "all wills and codicils heretofore made by me"
2. By Physical Act: will may be entirely revoked by an act of destruction performed on the will by the T (or by another person acting at the T's direction and in the T's presence); destroying, obliterating, burning the will
a. By Physical Act: such as cutting, tearing, destroying, obliterating, canceling or burning with the intent and for the purpose of revoking it by the T or by another person in T;s presence and at her direction [UPC 2-507(2)]
b. Intent required: physical acct is inherently ambiguous; to be legally effective, the act must be accompanied by an intention to revoke; the act w/o intent does nto revoke the will; proof of intent must be found in word or conduct of the T, as recalled by others
c. Common law presumption of revocation: at CL if it is shown that thw ill was in possession of the T before death, and that the will cannot be found after death, a presumption arises that T destroyed the will with intent to revoke it.
(1) BUT, if disinherited heir had opportunity to destroy will during T's last illness or before her death, the court may be persuaded, depending on other evidence, that presumption is rebutted.
d. Thompson v. royall (Va 1934) where T intended to revoke will by destroying it, and Judge suggested she retain will for use in execution of new will; and T therefore revoked by written language on back of each page, in judges handwriting, and signed by T; HELD the attempted revocation is ineffectual bc T intended to revoke by subsequent writing and because cancellation on will does not in any way physically mutilate, deface or cancel any written parts of will.
(1) Note: might sue judge for negligence
e. Revocation by Proxy/Agent:if T writes a note asking atty to destroy the will and the atty does destroy the will, will is not revoked bc not destroyed in T's presence even though at his direction
(1) Phone: also not enouth if T calls atty up on phone; not in presence
(2) Minimum formalities: ie, legislature ahs minimum formalities that must be followed; mere intent not enough
f. Cancellation: in a state that does not recognize holographic wills, a note in the margin of th will "cancelled. Date. T." would not be an effective revocation bc cancellation does nto touch or defeace the will; HWVR, if state did recognize H wills, this would be a valid cancellation by subsequent writings. ie, valid in TEXAS; Canceled is the material provision--no Johnson problem that material provisions are not in T's handwriting
(1) Kronauge (Ohio 1972) not a valid cancellation; no H wills
(2) Example: if T wrote "VOID" across unexecuted copy typewritten copy of will; not valid revocation by physical act; executed copy not equiv to will itself; physical act must be on will itself
g. Copies of Will: canceling copies of the will is not a valid revocation of the will--no act done to the will itself
h. Tearing first page off will and replacing with new first page HELD: valid revocation first will by tearing; resulting new will would not be effective because it was never validly execution; thus neither will entitled to probate.
(1) Atty negligence? yes if state has abandoned prvity of contract rule still applies in NY and TEXAS)
i. Partial Revocation by Physical Act: allowed by UPC 2-507 and several st stts; some sts require subsequent instrument
(1) TEXAS: does not allow
(2) Reasons for prohibiting:
(a) canceling gift to one person necessarily results in someone else taking the gift, and this "new gift"--like all bequests--can only be made by an attested writing
(b) permitting partial revocation by physical act offers opportunity for fraud
(3) By Operation of Law: May occur as the result of a change in family circs of T: marriage, birth of issue or divorce (see next section)
C. WRONGFUL PREVENTION OF REVOCATION: if T is wrongfully prevented from revoking will, the equitable doctrine of constructive trusts is invoked
1. Requirements of Constructive Trust Doctrine
a. Wrongful Act
(1) Examples: murder, forcible restraint
(2) No enough: Negligence
(3) Who must commit wrongful conduct? even if B not present same result bc wrongful conduct of A lead to unjust enrichment of B
b. Unjust enrichment
2. Latham v. Father Divine: (TEXAS equiv = Pope v Garrett) T requests change in will from A & B to C & D; atty reads new will to T in hospital bed in presence of A & B; A & B prevent T from signing; T lapses into coma and dies; ct holds new will cannot be probated bc not signed and witnessed; first will not revoked this admitted to probate.
a. HELD: A & B hold in constructive trust for benefit of intended beneficiaries D & E. ie, we won't let A & B get away with this!
b. Thompson case: not appropriate for CT bc no wrongful conduct; just an unfortunate error of judgement
3. CASE: H&W divorce, W takes custody of K and H agrees to keep life insurance with K as benef, and where H remarries and changes benefit to W2, and then H dies
a. HELD: Equitable distribution of life insurance to K
b. Unfair: Here, doctrine is unfair, bc W2 did nothing wrong and still lost the money (tough)
D. ORAL REVOCATION: NOT Valid: an oral declaration that the will is revoked, without more, is inoperative in all states
E. UPC 2-507: REVOCATION by Writing or by Act: A will or any part thereof is revoked
1. (1) by a subsequent will which revokes the prior will or part expressly or by inconsistency; or
2. (2) by being burned, torn, canceled, obliterated or destroyed, with the intent and for the purpose of revoking it by the T or by another person in her presence and by her direction.
F. TEXAS: TPC 63: REVOCATION of Wills: No will in writing, and no clause thereof or devise therein, shall be revoked, except by a subsequent will, codicil or declaration in writing, executed with like formation, or by the T destroying or canceling the same (will), or causing it to be done in her presence.
1. Like Formality: Just means due formality--not the same way the first one was executed.
2. jNo partial revocation: TEXAS does NOT allow partial revocation (see above) [LEATHERWOOD]
a. Rationale: Partial revocation is the same as a new gift to residuary legatee, adn can't DO that without formal execution
G. PROBATE OF LOST WILLS:
1. In General: in absence of a stt, a will that is lost or destroyed w/o consent of the T, or is destroyed with the consent of the T but not in compliance with the revocation stt can be admitted into probate if its contents are proved; all jurs have stt allowing probate of will not there
a. Method of Proof: a lost will can be proved by a copy in the lawyer-drafter's office or by a secretary who typed the will or by other clear and convincing evidence
b. "In existence": a few stts prohibit the probate of a lost or destroyed will unless the will was "in existence" at the T's death adn destroyed thereafter OR fradulently destroyed during the T's life.
(1) NOTE: such a stt is arguably in conflict iwth the state's will revocation stt, since under it a will not legally revoked is nevertheless barred from probate. Courts have chosen to give effect to the will revocation stts and have gutted the proof stts by holding either that a will not lawfully revoked continues in "legal existence" until the T's death OR that a will destroyed by a method not permitted by the will revocation stt has been "fraudulently destroyed."
c. TEXAS: TPC 85 governs; must prove same way as written will, but also have to give reason original not produced and contents must be substantially proved by credible W.
(1) Prof: if you don't know who attesting Ws are, you don't have lost will case bc you cannot get to first base
(2) PTC 85: Proof of Written Will Not Produced in Court: A written will which cannot be produced in court shall be proved in the same manner as provided in the preceding section for an attested writtenw ill or an holographic will, and the same amount and character of testimony shall be required to prove such will as is required to prove a written will produced in court; but, in addition thereto, the cause of its non-production must be proved, and such cause must be sufficient to satisfy the court that it cannot by any reasonable diligence be produced, and the contents of such will must be substantially proved by the testimony of a credible W who has read it or heard it read.
d. "substantially proved" some sts are more demanding requiring clear and convincing e
H. DUPLICATE WILLS
1. In General: Both are admissible into probate, BUT both must be found at T's death, or there is a presumption of revocation
a. CL presumption of revocation: if T's copy of will cannot be found, presumption is revocation; seems that T intends actual will to be one left with atty but courts do not agree
(1) Solution: Must show mistake, or that T's house burned down, or something
b. Usual circumstance: Usually done at advice of atty who keeps one at office and gives one to T
c. Hypo: T has one will in safe deposit box and one at home; at T's death the will T took home cannot be found; both are in T's possession and control; ct remanded to figure out which T intended as actual will
2. Tactics: Do NOT do this
I. DEPENDENT RELATIVE REVOCATION AND REVIVAL: If the T purports to revoke his will upon a mistaken assumption of law or fact, the revocation is ineffective if the T would not have revoked his will had he known the truth
1. Typical case: T destroys hsi will under a belief that a new willis valid but for some reason the new will is invalid; if the court finds the T would not have destroyed his will had he known the new will was ineffective, DRR will cancel the revocation and probate the destroyed will
a. Example: T executes will devising his property to "Peggy Martin"; thereafter T learns that the legal name is "Margaret Martin" and decides to correct: T cancels old will by writing VOID across it, and executes new will devising property to "Margaret Martin"; BUT MM is one of two Ws to will so devise to her is ineffective; since it is clear that T wants MM to take his property, under DRR the revocation of first will is cancelled; the first will is probated and MM takes T's property under that will.
b. Rationale: DRR is aplied to carry out the T's presumed intent
PART V: EFFECT OF CHANGES IN CLIENT'S FAMILY SITUATION
AFTER WILL'S EXECUTION
XXII. MARRIAGE OR DIVORCE AFTER WILL IS EXECUTED
A. Divorce: Most States provide that a divorce revokes any provision in the D's will for the divorced spouse
1. Minority: Property settlement: in a few states, revocation occurs only if divorce is accompanied by a property settlement
2. UPC 2-508: Revocation by divorce: After executing a will, a divorce or annulment by T revokes any disposition or appointment of property, conference of gen'l or special power of apptmt, and nomination as executor, trustee, conservator, or guardian to former spouse, unless the will expressly provides otherwise.
a. Effect of this provision: property prevented from passing to former spouse is treated as if former spouse failed to survive T
b. Remarriage: provisions revoked by this section are revived by T's remarriage to the former spouse.
c. Separation is not a divorce for purposes of this seciton.
3. Texas: TPC ∍69 is same as UPC except no provision for how property passes when TPC ∍69 applies.
B. Life Insurance Proceeds
1. UPC: Most states (including UPC 2-508) do not extend divorce rules about wills to will substitutes/nonprobate assets like life insurance.
2. Texas.
a. TX is one of a few states that applies wills law to life insurance.
b. TFC ∍3.632: A contractual provision naming former spouse as beneficiary is ineffective unless:
(1) decree designates former spouse as beneficiary;
(2) insured redesignates former spouse as beneficiary; or
(3) former spouse is designated to receive proceeds in trust for the benefit of a child or dependent of either spouse
c. Who Takes (if designated beneficiary under the K doesn't take):
(1) proceeds are payable to alternative beneficiary, or if none;
(2) to the estate of the insured
C. Marriage:
1. General Rule: Majority of states have statutes providing that if T executes will, then marries, new spouse gets intestate share unless it appears that the omission was intentional or that the spouse is provided for in the will or will substitute.
2. Effect on Will: None. Will isn't revoked.
3. Common Law States:
a. Three basic options: In CL states, SS has three basic options. SS can:
(1) take elective share (aka forced share)
(2) take omitted spouse share (if she's been omitted) or
(3) take under the will
b. Elective Share Statutes
(1) Majority Rule: Gives the spouse an election to take a statutory share, usually 1/3 or 1/2 (aka widow's election) in lieu of taking under T's will.
(a) NOTE: statutory share is not limited to situations where marriage occurs after will is executued. When state has a statutory share, SS may elect any time.
(2) Some states: if SS elects against will rather than against intestacy, her elective share is less.
(3) A few states: SS has no right of election if D died intestate.
(4) Property Subject to Elective Share:
(a) Most states:
i) elective share applies to the net probate estate (probate estate less admin. expenses, debts, family allowance, homestead right, and exempt personal property).
ii) Illusory Transfer Test: Some non-UPC states will apply illusory transfer test in order to treat some inter vivos transfers as part of the estate from which SS may elect a share. E.g., In Newman v. Doyle. Ill. Ct. allowed SS to take an elective share out of assets placed in a RIVT by her dececeased spouse b/c the court held the RIVT illusory.
(b) Some states and UPC
i) ∍2-201 gives SS right to an elective share of 1/3 of T's augmented estate (SS may choose elective share over intestate distribution or will).
ii) ∍2-202 defines augmented estate to include certain lifetime transfers. Augmented estate = net estate plus:
a) any property T still retained incidents of ownership in despite fact that T had transferred to 3d party;
b) any property T held in ROS w/ a 3d party; and
c) gifts in excess of $3,000 in any one year given to 3d party w/in 2 yrs of death
iii) Exceptions to augmented estate:
a) any transfer is not counted in augmented estate if given w/ consent of SS; and
b) Proceeds of one of the following (when made payable to someone other that SS):
1. life insurance
2. accident insurance
3. joint annuity
4. pension plan
iv) Assets of SS also included in augmented estate, including certain pre-death transfers, to the extent the owned or transferred property is derived from the decedent.
a) Property derived from decedent includes:
1. any beneficial interest of SS created by D during D's lifetime;
2. any property appointed to SS by D's exercise of power of appointment;
3. any proceeds of insurance on D's life attributable to premiums paid by D;
4. proceeds of annuity Ks (D paid premiums);
5. pensions, disability compensation, and/or death benefits by reason of service performed by D;
6. property held by D and SS w/ ROS;
7. property held by D and transferred by K to SS b/c of D's death; and
8. value SS's share in CP.
b) SS's property is valued as of D's death.
c) Presumption: property owned by SS as of D's death is presumed to have been derived from D.
v) Valuation of Transfers: property is valued at date of death unless property was given irrevocably inter vivos, in which case it is valued at date transferee takes possession.
c. Omitted Spouse Statute
(1) UPC ∍2-301: Spouse who hasn't been included in D's will is entitled to her intestate share unless it appears from the will that the omission was intentional, or that D provided for SS outside the will.
(2) Optional: A qualifying SS has the option of taking under this statute, or under the elective share.
XXIII. RIGHTS OF ISSUE OMITTED FROM THE WILL
A. In general, except for Louisiana, it is possible for T to disinherit children. However, many states have pretermitted child statutes, designed to protect children who are accidentally omitted.
1. Example: Crumps Estate (Okla). T's only son predeceased him. The son left three children, all of whom survived T. T's will created a testamentary trust for benefit of 2 of the grandchildren, but not for the third. Applying the Oklahoma statute, the Ct. held the pretermitted grandchild took the pretermitted child share under the statute.
2. Attempts to disherit children rarely succeed; courts won't allow T to override statutes.
B. Pretermitted Child Statutes: designed to prevent unintentional disinheritance.
1. Majority Rule (UPC ∍2-302 and TPC ∍67): statute operates only in favor of children born or adopted after will's execution.
a. Rationale: concern is accidental omission/failure to update will. Assumes T considered existing family when executing will.
2. Minority Rule: Statutes apply to all children who were alive when will was executed as well as after-borns. This makes it tougher for T to disinherit, but it's possible as long as T specifically refers to the child she wants to disinherit.
a. Cutting out illegitimate children:
(1) In Peterson, the phrase "I declare I have no children" was held not good enough to disinherit. No indication that T remembered child and intended to disinherit child.
(2) Gardner: "I declare that I have intentionally failed to provide for any person not mentioned herein" held insufficient to bar claim.
(3) Suggestion: Include boiler plate specific provision.
E.g. "I fully understand who my heirs at law would be upon my death, and I expressly provide that in the event any person whomsoever should contest the validity of this will and establish in a court of competent J/D that he or she is an heir at law of mine, then I expressly give, devise, and bequeath unto such person or persons, the sum of $5.00 and no more." Court unambiguous intent to omit illegitimate child.
b. Negative Disinheritance: To disinherit a child, it is necessary that the entire estate be devised to other persons.
3. UPC ∍2-302: If T fails to provide for child born or adopted after execution of will,
a. Amount: the omitted child receives a share in the estate equal to that s/he would've received had T died intestate
b. When Statute Doesn't Apply: There is no pretermission of an after born/adopted child if:
(1) it appears from the will that the omission was intentional;
(2) T had one or more children when the will was executed, and devised almost all of the estate to the surviving parent of the omitted child; or
(3) T provided for the omitted child by transfer outside the will, and the intent that the transfer be in lieu of a testamentary bequest is shown by T's statements, amount of transfer, or other evidence.
4. TPC ∍67: According to Johansen, this statute is very long and complicated; accordingly, it ain't on the exam.
XXIV. DEATH OF BENEFICIARY BEFORE DEATH OF TESTATOR: ANTI-LAPSE STATUTES
A. Who died first?
1. Uniform Simultaneous Death Act:
a. The General Rule: Where there is no sufficient evidence of the order of death, beneficiary is deemed to have predeceased the Testator.
b. Exception for JTWROS: If JTs die with insufficient evidence of the order of deaths, then each JT takes her share.
2. UPC 120 Hour Survival Rule: UPC ∍ 2-601 provides that a devisee who does not survive the T by 120 hours is deemed to have predeceased the T UNLESS the will provides otherwise.
3. TPC ∍ 47:
a. General Rule: Same as UPC 120 hour rule except TPC won't apply if its application will result in an estate escheating to the state.
b. CP exception: If H & W die w/in 120 hours of one another, each 1/2 of CP is distributed as if each had survived the other.
c. JTWROS exception: Same as CP exception.
d. Insured and Beneficiary: 120 hour rule applies (insured deemed to have survived the beneficiary).
B. Anti-Lapse Statutes: Nearly all states have statutes which provide substitute takers of lapsed gifts under specified conditions.
1. NOTE: Anti-Lapse statutes are default rules which apply unless a contrary intent is indicated by the will.
2. UPC ∍ 2-605:
a. Scope of application: Applies only to a devisee who is a grandparent or a lineal descendant of a grandparent of the T. If devisee is not related to T, anti-lapse statute doesn't apply.
b. Effect of application:
(1) If the qualified devisee does not survive the T (or is treated as if she did not survive the T by operation of law), then the issue of the devisee take:
(a) issue of deceased devisee must surivive T by 120 hours
(b) issue of the deceased devisee take in equal shares if they are all of the same degree of kinship to the deceased devisee
(c) if issue of the deceased devisee are not of the same degree of kinship, then those of more remote degree take by representation
(2) UPC 2-606: Except as in 2-605, if a devise (other than a devise of the residuary estate) lapses, it becomes part of the residuary.
(a) Operates only if anti-lapse (2-605) and class gift rule do not apply.
3. TPC ∍68: applies if predeceasing beneficiary was a descendant of T's parent or T [note: no DNs of grandparents as in UPC]
a. Simply: Cousins are not w/i scope of TX anti-lapse statute [though they are under UPC]
b. 120 hour rule applies
XXV. Class Gift Rule
A. What is a class? [crucial question]
1. Majority: If devisees are named individually, then presumption that it is not a class gift.
2. Class member: CL says cannot be class member if dead at time of will executed, b/c presumed that T would not intend devise to dead person; BUT UPC 2-605 does not include this rule.
3. Examples:
a. "to A, B, and C, the children of my sister, S"--Ellet v. McCord: not a class gift b/c individual names appear.
b. ALR: most courts follow Ellet although Johanson says inequitable b/c the Ct should try to determine T's intention instead of applying mechanically applying "name" rule.
c. "to children of my sister, S, namely A, b, and C"--no class gift under the "name" rule
d. Dawson v. Yucus: Ct mechanically applies the "name" rule even in face of direct evidence that T intended to create a class gift. Johanson says this is typical result in American courts, even if it's inequitable.
B. What if class member dies before T?
1. Rule: If there is a devise to a class, and one class member predeceases T, the surviving members divide the dead guy's share.
2. Note: this is a rule of construction; not a statute. [only operates if will does not address].
3. Relationship to Anti-Lapse Statute:
a. TPC ∍68(a): Anti-Lapse Statute trumps class gift rule if
(1) dead class member is lineal descendant of T's parents [not cousins]; and
(2) dead devisee was alive when will was executed (in other words, if class member was dead when will was executed, class gift rule applies)
b. UPC 2-605: Anti-Lapse Statute trumps class gift rule if
(1) dead class member is lineal descendant of T's grandparents [cousins].
(2) NOTE: Under UPC, anti-lapse trumps class gift rule regardless of whether dead class member was dead or alive at time will was executed. Thus, anti-lapse always trumps class gift rule under UPC (assuming the dead class member is w/in scope of the anti-lapse statute)
c. Only where the Anti-lapse statute can't apply (e.g., devisee isn't related to T) does the class gift rule operate.
d. Example:
(1) FACTS: Jim bequests to "my children." Jake predeceases will execution. Jim dies.
(2) TEXAS: Class gift rule applies, and Kelsey takes the whole enchilada.
(3) UPC: Anti-Lapse statute applies, and Jake's descendants take his 1/2 share.
e. Remember: Anti-lapse statute is a default rule and class gift rule is a rule of construction--so both may be expressly overridden by will.
C. When does class close?...rule of convenience
1. Rule: class will close when any member of the class becomes entitled to possession and enjoyment of her share.
a. Exception: Gifts of income--class closes periodically as income is accrued; rule of convenience doesn't apply.
b. Exception: If no class members alive at T's death, it is assumed the T intended all class members, whenever born, to share--the class does not close to the until the death of the designated ancestor.
2. Gifts of specific sums: If a specific sum is given to each member of the class, the class closes at the death of the T regardless of whether any members of the class are then alive.
Examples:
a. T leaves "$20k to be divided by my grandchildren when they reach 18." T has 4 GCs, the oldest of which is 15 at T's death. A 5th GC is born 1 year after T's death. The class closes when the oldest reaches 18 (normal class gift rule operation). All 5 GCs are class members.
b. T leaves "5k to each of my grandchildren when they reach 18." T has 4 GCs, the oldest of which is 15 at T's death. A 5th GC is born 1 year after T's death. The class closes at T's death b/c the gift was in a specific sum.
3. Postponed Gifts: If gift to a class of remaindermen, the class will not close until the life tenant is dead, and it will not close unless one remainderman is entitled to possession.
a. Rule: Neither anti-lapse statutes nor class gift rule applies to future interests that are vested.
b. Example: T devises Blackacre to A for life, then to A's children. B & C are alive when T dies.
Chronologically...
T dies.
D is born.
B dies.
A dies.
B & C have vested remainders subject to open. When D comes along D becomes a member of the class, which doesn't close until A dies. B's DNs get his vested remainder under will or intestacy as opposed to losing out under class gift rule; the anti-lapse statute would not apply either.
4. Rule of construction; not a statute.
5. Life in being at T's death is includable w/i class.
a. "life in being" = child born w/i 280 days of T's death unless proven by C & C evidence that gestation took longer.
b. Example: In 1982, T executes will that devises Blackacre to A for life, then to children of my brother Bill. When T execute the will in 1982, B had 2 children: C & D. In 1984, B had another child, E. T died in 1986. She was survived by all of the above. In 1990, B had another child, F. A died in 1992. In 1994, B had another child, G. B and his 5 children are alll living. Who owns Blackacre? Answer: Class closed when one member of class could claim interest--when A died. C, D, E, & F are all members of the class. G is cut out b/c born too late.
XXVI. Basic Trust Law
A. Trust: neither trustee not beneficiary owns the trust property to the exclusion of the other.
1. Trustee owns the legal interest; has responsibilities of management.
2. Beneficiary owns the equitable interest and benefits flowing from the trustee's management.
B. Settlor: Property owner who creates the trust by transferring his assets into it.
1. Inter vivos (living) trust: created during settlor's life.
a. created by declaration of trust ( in which the settlor declare that he holds certain property in trust--settlor is trustee); or
b. deed of trust (in which the settlor transfers property to another as trustee)
2. Testamentary trust: created by a will.
C. Trustee: holds legal title to trust property and is under fiduciary duty to administer the trust solely in the interest of the beneficiary.
1. Owes duty of fairness to all classes of beneficiaries.
2. Trust won't fail for lack of trustee (court simply appoints).
3. If the trustee has no duties, the trust is said to be "dry" or "passive" and fails.
4. When a trust fails the beneficiaries acquire legal title to the trust property.
5. Law does not impose upon a person the office of trustee unless the person accepts.
6. Trustee may be released from office (liability) only w/ consent of beneficiaries or by court order.
D. Intent to create a trust: no magic words req'd to create a trust.
E. Precatory language: language which does not clearly indicate whether the T intends to create a trust or merely a moral obligation unenforceable at law.
1. No-no words: request, wish, hope, suggest
2. Note: equitable charge possible if it doesn't include precatory language [legally enforceable, but doesn't create a trust]: E.g. If T devises property to a person, subject to the payment of a certain sum of money to another person, T creates an equitable charge, not a trust.
E.g. I want...is enough to create an equitable charge.
Example: T dies leaving will that bequeaths entire estate to Rev. Armstrong, and requesting that A use the money to promote his TV ministry in the Midwest. A predeceases T. A's church argues that gift was intended to benefit TV ministry and that will s/b construed as having created a trust for the church's benefit. Ct held no trust. Although no magic words req'd to create trust, the will's language was merely precatory and thereby created no legal obligation.
F. Restraints on alienation
1. Trust law does not recognize the rule against restraints on alienation. Why? B/c of the trust restraints protect the beneficiaries from their own incompetence and folly.
2. Spendthrift trust: Beneficiaries cannot voluntarily alienate their interest, nor can their creditors reach their interest (including TIB).
a. Exceptions:
(1) child support*
(2) alimony*
(3) federal or state tax
(4) payment for necessary services or supplies (usually)
* Substantial minority refuse exceptions 1 and 2
b. Station-in-life rule: Creditors can reach only the amount in excess of what is needed to maintain beneficiary in his station of life.
c. Some states allow claimants to reach a certain % (usually 10-30).
d. A settlor cannot set up a spendthrift trust for his own benefit.
e. Spendthrift trust is a vehicle by which a settlor gives a gift to someone on the condition that they don't sell it (this is where judicial modification comes in).
f. Only protects $ which is in the trust; not income distributed from trust (though garnishment not possible)
g. Keough & IRA: normally not protected by spendthrift trust clause
G. Judicial modification: Even though sale of corpus prohibited by trust, courts may allow sale where not doing so would frustrate the intent of the settlor.
In re Pulitzer Where T's primary purpose was to provide income for his family adhering to directive not to sell stock when it was declining in value frustrated intent; thus, court allowed stock to be sold.
1. must show that the trust estate was in jeopardy
2. must show to stick w/ trust restriction would frustrate the primary purpose of the trust.
H. Trust income:
1. CL Rule: must be distributed to beneficiaries as it accrues, unless the will otherwise provides (shares adjust as classes expand/contract).
2. Example: "I give $10k to X as trustee to be distributed to my grandchildren as they reach the age of majority." Although the trust does not specify that income be distributed to corpus beneficiary the CL requires distribution of income as it accrues.
I. Use of Trusts in Estate Planning--suggestions for H & W
1. Trust income
a. mandatory v. discretionary distributions of income: trustee should have flexibility to make distributio as he deems necessary and appropriate.
b. Equal shares v. spray provision: Spray provision gives trustee flexibility to respond to differing degrees of need among beneficiaries.
c. Distributees: "children" or "descendants?": Descendants is broader and avoids ambiguities in defining "children."
2. Trust principal for emergency or educational needs: provide for meeting needs as opposed to specific amounts, and expressing such intent as explicitly as possible.
3. Termination of trust:
a. "Until my youngest child attains age 21"--Lux v. Lux wherein court held class open until the youngest of all then living children turns 21. Is this acceptable? Much clearer to say (and w/ better effect), "trust shall terminate when there are no living children of mine under the age of 25."
b. Age 21, rather 18, 23, or 25: When will child really be mature enough to deal responsibly w/ trust property.
c. Distribution on termination: to children or descendants? "DNs" avoids ambiguities. "Children" can limit to first degree.
4. Contingencies: What if child dies before trust terminates? Avoid class closing and anti-lapse problems--these are rules of construction/default rules that have effect only where settlor/testator fails to specify.
5. Equality of distribution: What if H & W die ten years from now? The children will be older--some perhaps beyond age of majority and past educational and other needs that the trust was intended to meet. Is this what's intended?
Possible Alternative: Catch up provision: make final distributions of trust to make up for disproportionate distributions based on differing needs [This is a possibility, not necessarily suggested.]
6. Create contingent trust for child of beneficiary who predeceases termination of primary trust. This avoids guardianship.
7. What assets will be included in the trust?
a. Tangible personal property? No, SS and others will want to use or liquidate.
b. Nonprobate assets: life insurance, employee death benefits? Yes, but mechanism to place in trust is often difficult. Ideally, put life insurance in trust by naming trustee as beneficiary of policy (but ins. co. don't like 'cause too lazy).
8. Who s/b trustee? Whoever you trust, BUT make sure to make provision for alternate(s) so that court doesn't get involved.
XXVII. Gifts tied to reaching a certain age
A. What is the issue?
1. Ace's version: Whether the class member's right to take was contingent on survival to specified age.
2. Dilbert's version: whether the gift vested immediately w/ enjoyment postponed or whether the gift is contingent on survival to the specified age.
3. Scrotum's version: it's a language thang.
4. Johanna & Steve: ????
B. How to tell the difference...
1. contingent gift:
a. if = at = when
b. to be paid...if
2. vested gift:
a. to be paid...at
b. payment of income prior to specified age (despite at, if, when)
C. Contingent class gifts not subject to Anti-lapse statute (b/c contingent, dummy).
1. E.g.: T bequeaths "the sum of $30k to the children of B who reach 21," and his residuary estate to his wife, Martha. At T's death, B has 2 children, C (age 7) and D (age 4). Three years later, E is born to B. Thereafter, C reaches 21.
a. What distribution is made to C? Rule of convenience says class closes when C reaches 21. When C reaches 21, he can immediately take $10k, the lowest possible distribution (1/3).
b. One year later, F is born to B; then D dies at age 20. Any distribution?
(1) D's estate gets nothing b/c gift was contingent on survival, which he failed to do.
(2) F gets nothing b/c class closed when C reached 21.
(3) C is entitled to an additional $5k when D dies b/c his the minimum share is now 1/2.
c. Will E take her share of the $30k? Yes, only if she reaches 21. If not, C will get the rest when E dies before 21.
2. E.g.: T bequeaths a fund in trust "to divide the fund among the children of B payable to each at the age of 21, and in the meantime, they are to receive the income." At T's death, B is alive and has 3 children: C (age 15), D (age 12), and E ( age 10).
a. 2 years later, B has another child F. What is F entitled to?
(1) F becomes a member of the class b/c it has not closed yet.
(2) F entitled to income, and share of principal.
b. 2 years later, C dies. Is C's administrator to demand immediate distribution of C's share?
(1) C does not lose the gift b/c it was vested, not contingent.
(2) But, C's estate not yet entitled to share of principal b/c that would prematurely close the class.
(3) C's estate gets the principal when C would've reached 21.
c. Would the answer to "b" be different if B had predeceased T (F not born)?
(1) On B's death, class closed.
(2) Since class is closed, there's no longer a reason to delay payment to C (in (b), payment had to be delayed b/c class had not yet closed).
3. If class gift is vested w/ enjoyment postponed, oldest class member becomes the measuring stick on when class closes, regardless of whether they survive to the specified age.
Part VI: WEALTH TRANSFER TAXATION
XXVIII. Gross estate (GE)
A. Valuation: Generally, FMV at date of death.
B. New basis at death rule: ∍1014: interests includible n the decedent's GE are new basis equal to their date-of-death value.
1. applies whether or not an estate tax return must be filed.
2. assets which have declined will receive a step-down basis.
3. CP state (∍1014(b)(6)): entire CP given new basis, even though only the deceased spouse's 1/2 community interest is includible in his or her GE.
C. What's included in GE?
1. GE > than probate estate
2. includes:
a. property owned at death (∍2033):
(1) all interests in property that pass by will or intestacy
(2) CP state: only decedent's 1/2 interest in community
(3) ∍2034: dower, curtesy, or elective share do not diminish what's included in GE.
b. Lifetime transfers w/i 3 years of death (∍2035): certain gifts made w/i 3 years of death plus any gift taxes.
(1) most gifts w/i 3 yrs are not includible
(2) transfers of interests in life insurance policy are includible (prevents deathbed gifts of life insurance policies which remove the proceeds from estate taxation).
(a) Note: transfer not complete if "incidents of ownership" remain w/ insured.
c. Lifetime transfers w/ retained benefits or controls: decedent retained either an economic interest in or power to control beneficial enjoyment of the transferred property.
(1) ∍2036(a)(1): transfers w/ a retained life estate
e.g.: Mary gives her house to her son John, but in the deed of gift reserves the right to possess, occupy, or rent the house for the rest of her life.
(2) ∍2036(a)(1): reciprocal transfers: H & W each set up irrevocable trust: "to pay the income to [spouse] for life, and on [spouse's] death to distribute the principal to the couple's descendants." Each is treated as having made a transfer w/a retained life estate.
(3) ∍2036(a)(2): transfers w/ a retained power to control beneficial enjoyment: the power to designate the persons who shall enjoy the property or the income therefrom.
e.g.: O transfers property to an irrevocable trust of which O is co-trustee. The rtustees are given a discretionary power to distribute income or principal among O's DNs. B/c of the retained discretionary power over income and principal, the value of the property is includible in O's GE even though O could not distribute income or principal to himself.
(4) ∍2038: transfers w/ a retained power to revoke , alter, amend or terminate the transfer. Thus, the vlaue of assets settled in a revocable trust is includible in GE.
(a) Also, discretionary power over principal = power to alter or amend.
e.g. A UGMA custodian has discretionary power to distribute the custodial property and its income for the minor's benefit.
(5) ∍∍2036 & 2038 must be consulted in any case in which the grantor wishes to name himself as a trustee. Care must be taken to insure that the trustee distribution and admin. powers do not result in the inadvertent retention of a power that triggers these Code provisions.
(6) ∍2037: transfers taking effect at death: applies only to transfers in which the trnasferor retained a reversionary interest whose value exceeds 5% of the value of the property,and then, only if someone's taking is contingent on surviving the transferor.
d. Non-testamentary transfers:
(1) Annuities; Employee death benefits (∍2039): Generally, death benefits paid under a qualified retirement plan are includible in the employee's GE.
(2) Property passing by ROS (∍2040):
(a) B/w spouses: In case of JT and T by the E b/w spouses, the qualified joint interest rule requires inclusion of 1/2 of the property's value in the decedent's GE, regardless of which spouse furnished the consideration for the property's acquisition.
BUT, inclusion of the 1/2 interest does not lead to greater taxes b/c of the marital deduction.
(b) survivorship estate b/w decedent and non-spouse: consideration furnished test applies. Test: the value includible is in proportion to the consideration furnished by the decedent for the property's acquisition.
(3) Property over which decedent held a general power of appointment: ∍2041 taxes property in the estate of the decedent who never owned the property and whonever transferred it, but who was given and held a power to appoint the property held at death to himself, his estate, or the creditors of his estate.
(a) Exception: property subject to decedent's special or limited power of appointment (as in trust property wherein decedent was trustee) is not taxed to decedent's estate.
(b) Exception: HEMS ascertainable std invasion power--If power is limited to "ascertainable standard relating to the health, education, support or maintenance of the beneficiary, the property subject to the power is not includible in the beneficiary's GE.
(c) Exception: invasion power limited to < $5,000 or 5% of the corpus in any one year.
(d) BUT: a power given a beneficiary to invade the trust "for her health, support, maintenance and comfort" = general power of appointment--leads to inclusion in GE.
(e) Other No-No words: welfare, benefit, well-being
(f) Bypass trusts:
i) A beneficiary can be given the following w/o causing the property to be taxed in the beneficiary's estate:
a) income interest for life
b) a power to appoint trust principal to herself limited by HEMS acertainable std
c) a power to appoint < $5k or < 5% of trust principal to herself in any given year
d) a special or limited power to appoint trust principal either during lifetime or by will
ii) beneficiary can be trustee so long as no general power of appointment
e. Life insurance:
(1) Life insurance proceeds not subject to FIT (∍101)
(2) ∍20: Proceeds includible in GE if
(a) insured held incidents of ownership w/i 3 years of death; or
(b) proceeds paid to insured's executor or estate.
(3) "Incidents of ownership" include the powers to:
(a) change the beneficiary
(b) pledge the policy as collateral
(c) assign the policy
(d) borrow against cash surrender value
f. Marital deduction qualified terminable interest property (∍2044): certain transfers for which a marital deduction was previously allowed. QTIP trust (see Marital Deduction).
XXIX. The Taxable Estate
A. Found by subtracting from the GE the deductions to which the estate is entitled.
B. Deductions (∍2053):
1. debts and other claims against the estate
2. funeral expenses
3. expenses of administration
4. taxes owed by decedent at death
C. Casualty loss deductions (∍2054)--loss of assets during estate admin. and not covered by insurance; rarely encountered unless imprudent personal representative/executor (in which case action for negligence lies).
D. Charitable deduction (∍2055): charitable bequests--no limit
XXX. Marital Deduction (∍2056)
A. Policy: Qualifying transfers from one spouse to the other should not be taxed at all, regardless of the amount transferred. Instead, the tax on such transfers s/b deferred until the death of the surviving spouse.
B. Consequences of the unlimited marital deduction: simplification of the gift and estate tax laws.
C. Marital estates < $600,000: saving estate taxes is no longer a reason to create a trust for the benefit of the surviving spouse.
D. Marital estates > $600,000: marital deduction can eliminate all taxes of the estate of the first spouse to die regardless of the size of the decedent's estate. [But, taxes are only deferred until SS dies.]
1. Estate stacking: results in substantial taxes on SS' estate b/c first spouse to die has stacked his right on top of SS w/o taking full advantage of the unified credit.
2. How to avoid estate stacking: use the marital deduction only to the extent needed to eliminate tax in 1st spouse's estate, and the leave the rest of his estate to the trustee of a bypass trust that takes full advantage of the unified credit.
a. E.g.: H's will:
(1) devises residence outright (No strings attached so that W can move if she wants)
(2) marital deduction gift outright to W pursuant to formula below
*(gift taxable as part of W's estate)
(3) bequeath residuary estate to trustee of bypass trust that gives W a life income interest only (and maybe limited powers of appointment) w/ trust principal passing (on W's death) outright or in trust to couple's DNs.
*(corpus not taxable as part of W's GE).
(4) Marital deduction gift formula: If my wife survives me, I give to my wife a cash legacy (or fractional share of estate) of the smallest amount that will result in no federal estate tax being payable by my estate, taking into account
(a) the value for federal estate tax purposes of all items in my GE which qualify for the deduction which pass or have passed to my wife in a form qualifying for the deduction otherwise than under this gift,
(b) the unified credit against the federal estate tax ,
(c) all other determinants of my estate's federal estate tax liability.
In making the computations necessary to determine the amount of this gift, values as finally determined for federal estate tax purposes shall be used.
(d) formula is self-adjusting in 2 senses:
i) takes into account other dispositions to the spouse that qualify for the marital deduction.
ii) takes into account the ownership interests and valuations actually encountered in the decedent's estate.
(e) Equations: (How to compute the marital deduction, cash gift legacy, and corpus of the credit shelter trust)
i) Marital Gift Deduction:
Gross Estate
- ∍ 2053 Deductions
- Smallest Marital Deduction needed to eliminate Tax
_________________________________
Largest Taxable Estate that will result in zero tax
+ Adjusted Taxable gifts
_________________________________
Tentative Estate Tax Base (should be $600K if you've done it right, stupid)
Tentative Estate Tax (find it on the chart, stupid--should be $192,800 if you've done it right)
_ Unified Estate Tax Credit ($192,800)
__________________________________
Federal Estate Tax (should be zero)
ii) Cash legacy amount
Smallest Marital Deduction req'd to eliminate taxes
- Value of items in GE that qualify for marital deduction other than under formula
____________________________________
Bequest produced by marital deduction clause
iii) Corpus of credit shelter trust
600K Largest possible amount of trust
- Adjusted taxable gifts
- specific bequests that do not qualify for the marital deduction
____________________________________
Amount of credit shelter trust
b. If the objective is to eliminate estate taxes in the first spouse's estate, the value of the residuary estate available to fund the bypass trust, as measured as of the first spouse's date of death, can never exceed $600k.
E. Interests that qualify for the marital deduction:
1. General rule: must be in a form that will be includible in SS' GE at SS' death.
Must not be a Nondeductible Terminable Interest (NDTI):
a. NDTI Rule: An interest in property is an NDTI only if, on termination of the SS' interest, the property passes to someone other than the SS or SS' estate.
b. E.g. life estate given to a SS, w/ the remainder to pass to other persons on SS' death.
c. E.g. 20-yr lease. D dies. Lease devised to SS after 5 yrs. Lease = terminable interest. Is it NDTI? No, no interest passes to someone other than SS or SS' estate (there's nothing to pass). Remember, the lease property is subject to true owner's reversionary interest, which will eventually be taxed in his estate.
d. Exceptions to NDTI rule:
(1) Limited Survivorship Exception (∍2056(b)(3))
(a) a devise is not a NDTI if
i) the condition of survival < 6 months; and
ii) the contingency (e.g. SS' death w/i specified period) does not in fact occur.
(b) Note: Language in will which makes SS' devise contingent on survival of probate--Courts look to applicable state statute to find probate deadline; if > 6 mos., then exception does not apply.
(2) Life estate plus GPOA exception (aka marital deduction power of appointment trust)--see below.
2. Outright (fee simple) transfers--qualifies whether the interest passes by will, by intestate succession, under the elective share statute, by ROS, pursuant to insurance K or employee death benefit plan, or under some other arrangement.
3. Marital deduction power of appointment trust:
a. Requirements:
(1) all trust income must be paid to the spouse at least annually (all state statute require this anyway)
(2) spouse must be given general power of appointment under which he can appoint trust property to himself or his estate (can be either inter vivos or testamentary power).
(3) power must be exercisable by the spouse "alone and in all events." A general testamentary power of appointment satisfies the "all events" req'ment even though it cannot be exercised by the spouse during lifetime.
(4) The spouse's interest must not be subject to a power in anyone else to divert the property to someone other than the spouse. Thus, the trustee cannot be given a discretionary power to distribute trust corpus to, for example, the couple's children.
b. Effect: This type of trust automatically qualifies for the marital deduction for the decedent's estate b/c it is all given to the SS. SS, however, must pay taxes out of her estate when she dies. No election req'd.
4. Estate trust:
a. the remainder intererst in the trust must pass to the spouse's estate at his death. (rarely used to qualify under marital deduction)
b. Effect: same as "c" above. It's just a different way of getting to the same point.
5. Qualified terminable interest trust (QTIP)
a. Requirements:
(1) all trust income must be paid to the spouse at least annually for life
(2) during the spouse's lifetime, no other person can be a permissible beneficiary of the trust
(a) trustee may have discretionary power to distribute trust principal to the spouse
(b) spouse may be allowed to invade trust principal
(c) spouse may be given a special or general power to appoint property by will
(d) BUT, no one may distribute trust property to anyone other than spouse
(3) an election must be made to have the interest treated as a QTIP.
b. Effect of election: property qualifies for marital deduction, but corpus is taxed in the SS's estate even though SS is given only a life estate. This is same effect as "c" and "d" above--it's just another way of getting to the same point.
c. When to use QTIP: It's a vehicle to provide support to the SS (thru the trust income) while also providing support to children of a former marriage (thru trust corpus).
d. Election: The will/trust itself need not specify it is QTIPable; the executor can elect at tax time as long as the trust satisfies the other requirements. OR, the T can so specify when the trust is created.
e. Partial Election: Statute allows executor to specify what portion of the trust is QTIPable. Executor may want to split in order to take full advantage of the full $600,000 exemption. See example p. 12-12.
E.g. Eleanor dies leaving a will that devises her residuary estate in trust: "The trustee shall pay all trust income to my husband Eddie and my daughter Eunice in equal shares. On the death of the survivor of Eddie and Eunice, the trustee shall distribute the trust principal to my then living descendants." In this form, the trust is not QTIPable, because Eddie is not entitled to all trust income for life. In a judicial reformation action, brought after Eleanor's death, pursuant to state law the single trust is divided into two trusts: one to pay the income to Eddie for life and then to Eunice for life if she survives him; and the other to pay the income to Eunice for life and then to Eddie for life if he survives her. The trust for Eddie is QTIPable.
XXXI. OUTLINE OF FEDERAL ESTATE TAX PROVISIONS
| Section |Description |
|+ 2033 |Property owned at death. |
|+ 2035 |Transfers of ins. policies w/in 3 yrs of death |
|+ 2036 |Lifetime transfers w/ retained control or enjoyment |
|+ 2037 |Transfers taking effect at death |
|+ 2038 |Revocable transfers (RIVT) |
|+ 2039 |Annuities and employee death benies |
|+ 2040 |Property held as JTWROS. |
|+ 2041 |Assets where D has gen'l powers of appointment |
|+ 20 |life insurance where D is the owner |
|+ 2043 |transfers for a partial consideration (gift part is counted in GE) |
|+ 2044 |QTIP (if D was ben. of trust income). D pays tax on principal. |
| |GROSS ESTATE |
|- 2053 |Expenses paid out of GE (debts and funeral expenses) |
|- 2054 |Deduction for casualty losses not covered by insurance |
|- 2055 |Charitable deduction |
|- 2056 |Marital deduction |
| |TAXABLE ESTATE |
|+ ?? |Adjusted tax. gifts made > 1976 (not otherwise included in GE) |
| |TENTATIVE ESTATE TAX BASE |
|x 2001 |FET Rate Schedule |
| |TENTATIVE ESTATE TAX |
|- |Gift taxes pd. on gifts made > 1976 |
|- 2010 |Unifed estate tax credit ($192,800) |
|- 2011 |Credit for state death taxes |
|- 2012 |Credit for pre-1977 gift taxes on property in GE |
|- 2013 |Credit for taxes on prior transfers |
|- 2014 |Credit for foreign death taxes |
| |FEDERAL ESTATE TAX |
XXXII. FEDERAL GIFT TAX
A. General Rule: If you give something away, gotta pay taxes on it, bozo! Gift valued at time of gift.
B. Summary:
1. Must file if give > $10K per year per donee.
2. 2 deductions:
a. marital deduction
b. charitable deduction.
3. Reaches any transfer w/ donative intent.
C. Partial Consideration: treated as partial gift to extent not covered by consideration. E.g. A sells land worth $50K to B for $25K. Gift = $25K.
D. Indirect Gifts: Taxable to extent of the gift. E.g., deft forgiveness or paying off another's loan.
E. Incomplete Gifts: Not taxable.
1. Defined: A gift is not complete until owner has parted w/ control so she cannot revoke or change gift for her benefit or for others' benefit.
2. Examples:
a. RIVT:
b. Irrevocable trust: If O creates a trust w/ income to O for life, and on O's death, the principal shall be distributed to such of O's issue as she appoints by her will.
F. Carryover Basis for Lifetime Gifts:
1. Donee takes basis of the donor
2. Exception: Goal post rule applies. If old basis is > than current FMV when donee sells property, then basis is the current FMV. In other words, basis can go down, but not up. In some more other words, donee can't take advantage of an increasing FMV, but isn't hosed by a decreasing FMV.
G. Reasons to give asset away prior to death, assuming it will appreciate:
1. escape transfer tax until it is sold (tax deferral)
2. shift income to lower bracket (progressive tax brackets make this reason more important)
3. satisfaction of being donor while still alive
H. Annual Exclusion (∍2503(b))
1. Purpose: Remove modest gifts from ambit of tax laws; simplification.
2. General rule: Taxpayer can exclude 1st $10k given to any donee in a calendar year.
3. Requirement: must be present interest, not future interest
a. Exception (∍2053(c)): Future interest gifts to minors qualify for the annual exclusion, if req'ments met.
(1) Rationale: outright gifts to minors are undesirable.
(2) Requirements for "∍2053(c) trusts"
(a) Property and income therefrom may be expended to or for the minor before 21 [Trustee must have power to expend all the income and principal.]
(b) Property and income to the extent not so expended:
i) will pass to donee at 21
ii) will pass, if the donee dies before 21, to her estate or whomever appointed by her gen'l power of appointment
(c) UGMA (Uniform Gifts to Minors Act): complies w/ above, so that a custodial gift under the UGMA qualifies for the annual exclusion
(3) E.g. X funds irrevocable trust, income to A for life, remainder to A's DNs--X gets exclusion for present interest in income to A, but not for remainder interest
b. E.g. If X in one calendar year gives A $12K; B $12k; and C $10K; her gift tax return will declare 2 gifts of $12k each, deduct 2 annual exclusions and report $4k in taxable gifts; gift to C not reported.
4. Medical and Education (Tuition) Exclusions (∍2503(e)):
a. In addition to the annual exclusion, money spent for medical or tuition expenses for anyone is excluded from the gift tax, no matter how much.
b. Limits:
(1) must be paid to service provider directly
(2) no living expenses
(3) no books, dorm, or food
5. Deductions
a. Marital deduction (∍2523): Unlimited gift tax deduction for qualifying marital gifts to donor spouse
(1) qualifying gifts
(a) outright gift to spouse
(b) marital deduction power of appointment
(c) estate trust
(d) QTIP trust
(2) split gifts: CP gift is 1/2 excludible by each spouse
E.g. H & W give $20k to A. All is excludible b/c they gave $10k each.
b. Charitable deduction: presumably unlimited
I. Computation of Gift Tax
1. progressive on the basis of cumulative lifetime transfers
2. procedure for determining annual gift tax:
a. apply tax rate table to cumulative gifts
b. subtract tax payable in previous years
c. E.g. Suppose O (who has never made taxable gifts in any earlier year) makes taxable gifts (i.e. gifts > annual exclusions) of $30k in 1984, and then makes taxable gifts of $40k in 1985. The gift tax on the 1985 gifts is determined by calculating the tax on cumulative taxable gifts of $70k and subtracting the tax payable on gifts of $30k.
XXXIII. The New Basis at Death Rule
A. ∍1014 Basis of property acquired from decedent
1. General: person acquiring property from decedent gets stepped up (or down) basis equal to FMV at date of death
2. What is "property acquired from decedent?"
a. by bequest, devise, or inheritance
b. both halves of CP get new basis at death (∍1014(b)(6))
3. Exception to carryover basis rule for gifts: Appreciated property w/i 1 year of death: If gift given w/i 1 year of donor's death appreciates, the donee gets benefit of stepped up basis.
B. ∍1015 Basis of property acquired by gifts and transfers in trust
1. Carryover basis, except if such basis is > FMV at the time of the gift, then basis shall be FMV (goal post).
XXXIV. Tax planning for Couples
A. Use exemptions of both spouses
1. Bypass (credit shelter) trust
a. $600k of trust property must not qualify for the marital deduction in the estate of the first spouse to die.
b. remainder could remain in bypass trust. Make partial QTIP election. Thus, remainder deductible as QTIP trust (this would be a solution if there's no formula clause used).
c. could give discretion to trustee to spray the income among family members, thus reducing income taxes during SS' remaining life.
2. Give away $600k: could forego use of bypass trust and simply bequeath $600k to people (often family) other than SS.
B. Equalizing estates
1. Total tax paid will be lower if both estates equal.
2. BUT: Equalization is not necessary the best solution
a. If spouses own > $1.2M, and the estates are equalized, the first spouse to die will have to pay some estate tax
(1) unless the first spouse to die took complete advantage of the marital deduction (the money tha would have been paid in taxes could be used to produce income and/or capital growth).
b. Income to SS from bypass trust may be wasteful.
(1) SS may not need income and it may be taxed at higher tax rate than if given to other family members.
Part VII: Estates and Future Interests
XXXV. Types of Estates
A. Life Estate
1. E.g., "to A for life"
2. Effect: A has possessory interest for life
3. Other examples:
a. "to A for life"
(1) A: has life estate
(2) O: has reversion
b. "to A for life, then to B"
(1) A: has life estate
(2) B: has remainder
c. "to A for life, then to B if B survives A, but if B doesn't survive A, then to C"
(1) A: has life estate
(2) B: has contingent remainder
(3) C: has contingent remainder
B. Fee Simple:
1. This is the whole enchilada. Conveyee gets everything.
2. Magic Words:
a. CL used to require "to A and his heirs" in order to covey a fee simple.
b. Every J/D (except North Carolina) has stopped following this CL rule. A gift "to A" is sufficient to convey fee simple.
c. NOTE: some gifts may still read "to A and his heirs" as a holdover. This gift gives to A a fee simple; it conveys nothing to A's heirs, despite the language.
d. Texas Statutory Presumption of Fee Simple:
(1) Tx Property Code ∍ 5.001(a) says any gift is presumed to be in fee simple unless the language of the conveyance expressly grants less than fee simple.
(2) No magic words are req'd to grant fee simple conveyance.
(3) BUT NOTE: effect of the statute is that magic words are required to grant something less than fee simple. If the precise words are not used, statutory presumption trumps, and the gift will be in fee simple.
C. Fee Simple Subject to Condition Subsequent
1. This is a grant of fee simple that can be terminated if the specified condition occurs.
2. E.g., "to A; provided, however, that if alcoholic beverages are ever consumed on the premises, the grantor, his heirs and assigns, shall have the right to reenter and retake the premises.
3. Coordinate future interest:
a. If held in the grantor, it is called a Right of Entry.
b. If held in a third party, it is called an executory interest.
4. The grantee's interest does not terminate automatically upon the specified condition; rather, the holder of the future interest must affirmatively exercise the right of reentry and take possession of the property.
5. Magic Words:
a. Conveyance is ususally phrased as: "to A; provided, however, that if X happens, someone can renter and retake the premises"
b. The conveyance must affirmatively grant the right to reenter. If it only gives the condition subsequent w/o also stating the right to reenter and retake, the courts will likely enforce the limitation as a restrictive covenant. The giver cannot get the property back. See Texas Electric Ry. Co. v. Neale (refusing to interpret a conditional gift as a fee simple with condition subsequent because the conveyance did not contain language of reentry, but enforcing the condition as a restrictive covenant instead).
D. Fee Simple Determinable
1. This is a grant of fee simple that lasts only so long as the specified condition does not occur.
2. E.g., "to A for so long as no alcoholic beverages are sold or consumed on the premises"
3. The interest terminates automatically if the condition occurs.
4. Coordinate future interest:
a. If held in the grantor, it is called a Possibility of Reverter.
b. If held in a third party, it is called an executory interest.
5. Magic Words: Key is to draft the conveyance with "durational language." Examples:
a. so long as
b. while
c. during
d. until
XXXVI. Types of future interests
A. Interests in the transferor. There are three types:
1. reversion:
a. is never created
b. a retained interest that arises by operation of law whenever the transferor has conveyed away a lesser estate than he had.
c. If retained in an inter vivos conveyance, it is always retained by the grantor.
d. If retained by a will, it is retained in T's heirs who are substituted by law for the dead transferor.
e. all reversions are vested interests (this does not mean, however, that all reversions will become possessory).
f. To determine when a transferor has a reversion--Rule of Reversions:
O, owner of a fee simple, will not have a reversion in fee simple if O tranfers a possessory fee simple or a vested remainder in fee simple; in all other cases where O transfers a present possessory interest, O will have a reversion in fee simple.
g. A reversion cannot be created in a transferee. If by deed or will a future interest is created in a transferee, it must be either a remainder or an executory interest.
2. possibility of reverter:
a. remains in the grantor who conveys a fee simple determinable.
b. E.g. O conveys to school board so long as used for a school. School board has a fee simple determinable; O has a poss. of reverter, which becomes possessory automatically upon expiration of the determinable fee.
3. right of reentry:
a. retained by the grantor who conveys a fee simple subject to a condition subsequent.
b. E.g. O conveys to school board, but if the land ceases to be used for school purposes, O has the right to reenter and retake possesion. The school board has a fee simple subj. to cond. sub.; O has right of entry, which O has the option to exercise or not.
B. Interests in a transferee.
1. There are only 2 types of interest granted in a transferee. One is a remainder, which becomes possessory automatically. The second is an esecutory interest, which is everything not defined as a remainder. Remainders arise out of gifts of life estates; everything else is an executory interest.
2. Remainder:
a. All future interests left over from life estates are remainders.
b. a future interest that can become possessory at the expiration of all prior interests simultaneously created.
c. a remainder cannot divest any prior interest in a transferee
d. Note: whether a remainder is vested subject to divestment or is contingent depends upon whether the conditional event is expressed as a condition subsequent or a condition precedent. Whether a condition is precedent or subsequent depends upon the sequence of the words of the instrument.
(1) if the condition is incorporated into the gift of the remainder, if it come "b/w the commas" setting apart the remainder, the condition is precedent.
(2) if the remainder is given and then words of divestment are added, the condition is subsequent.
e. Types: There are 2 types of remainders; vested and contingent.
(1) Vested Remainders
(a) indefeasibly vested remainder
i) a remainder certain to become possessory permanently
ii) E.g. O conveys to A for life, then to B. B or B's successor in interest is certain to take on A's death.
(b) vested remainder subject to open
i) vested remainder in a class that has not closed.
ii) E.g. O conveys to A for life, then to A's children. A has a child, C, alive at the time of the conveyance. C has a vested reminder subject to open. C or C's successor is certain to acquire a present interest at some time in the future, but C's share will be diminished if A has more children.
(c) vested remainder subject to divestment
i) held by an ascertained person and is subject to no condition precedent (as in contingent remainders), but is subject to a condition subsequent.
ii) E.g. O conveys to A for life, then to B, but if B does not leave any surviving children, to C. B has a vested remainder in fee simple subject to being divested by an executory interest in C.
(2) contingent remainders
(a) a remainder either (1) given to an unascertained person(s), or (2) subject to a condition precedent.
(b) E.g. O conveys to A for life, then to A's children. A has no children at the time of conveyance. The remainder is contingent b/c the takers are not ascertained.
3. Executory interest
a. Everything not a remainder is an executory interest. So, if the present possessory interest isn't a life estate, then the future interest is a remainder.
b. must, in order to become possessory, meet the following req'ments:
(1) divest or cut short some interest in another transferee (a shifting exec. int.); or
(2) divest the transferor following a certain period of time during which no transferee is entitled to possession (a springing exec. int.)
c. Almost always created in one of two forms below:
(1) Executory interest divesting a possessory fee upon an uncertain event.
E.g. O conveys to A, but if A dies at any time w/o children surviving him, to B. A has a fee simple subject to divestment by B's executory interest. B's executory interest is subject to a condition precedent--A's death w/o surviving children, and is not certain to become possessory.
(2) Executory interest divesting a vested remainder.
E.g. O conveys to A for life, and on A's death to B, but if B is not then living to C. Bhas a vested remainder in fee simple subject to divestment by C's executory interest. C's executory interest is subject to a condition precedent (B dying before A) and is not certain to become possessory.
XXXVII. Rule Against Perpetuities
A. Definition:
1. If a future interest might vest beyond the perpetuities period, the interest is void, and the granting clause creating it is stricken from the conveyance.
2. The perpetuities period is determined by the lives in being at the time of the grant plus the addition of 21 years after all these lives have ceased to exist.
B. Rule of logical proof: To sustain the validity of an interest, one must prove that the interest will necessarily vest or fail within 21 years after the lives in being have ceased to exist.
C. RAP does not apply to interests that are already vested! Thus, RAP never applies against an interest retained by the conveyor b/c these are all vested automatically.
D. Test Strategy
1. Step One: Identify all the present interests as if there were no RAP
2. Step Two: apply the RAP to see if any of the gifts fail.
3. Step Three: redefine the interests if any of the gifts fail.
a. A gift that fails is stricken from conveyance as if it were never there.
b. Other gifts are not affected by the RAP except to the extent that they might be changed via the elimination of the other gift.
(1) E.g.: "to A for life, then to B's heirs who reach the age of 25 years"
(a) The gift to B's heirs fails under RAP b/c it might vest beyond the perpetuities period. (I.e., if B and all her heirs except a 2 year old dies, the 2 year olds gift would vest 23 years after all the lives in being had died).
(b) The entire class gift to B's heirs fails b/c it violates RAP, and O, the original owner, now has a reversion (left over from the grant of the life estate to A).
MASTER INDEX
Community Property
Commingling of SP and CP 9
120 Hour Rule
defined 26
Exception 26
General Rule 26
Presumption 26
120 Hour Survival Rule 92
Administration
Texas Community Property 41
Adopted children of heirs or devisees 24
Adoption 27
Adult Adoption 23
Anti-Lapse Statute 92
Augmented estate 88
Beneficiaries 77
Latent ambiguity 77
Patent ambiguity 78
Bypass (credit shelter) trust 118
Bypass trusts 106
Cessna 34
Class gift
Gifts of specific sums 95
rule of convenience 95
What is a class? 93
When class closes 95
Class Gift Rules 93
Class gifts
contingent 101
future interests 96
Gifts of income 95
Postponed Gifts 96
Closely-held business 13
Business incorporated during marriage 13
Extent of reimbursement due 13
Codicil
Oral, Texas 77
Common Law 16
Elective share 16
Inter vivos transfers 17
Set Asides 17
Community Property 5
"Conflict of Laws" SP 5
appreciation in business 7
Assets purchased during marriage 8
Attempts by spouses to alter character of assets 10
Burden of Proof on Reimbursement Claimant 9
Capital gains--SP 13
Cash dividends--CP 13
Classification of Assets as CP or SP 7
Closely-held business interests 13
Commingled bank account 9
Community funds used to enhance value of SP 8
CP may be partitioned into SP 5
CPWROS 10
Defined (Texas) 6
Discharge of encumbrance 8
Earnings 10
Effect of how title is taken 9
Extent of reimbursement due community estate 13
Fraud on the spouse 15
Gifts 10
Gifts "to the community" are SP 10
Improvements--Reimbursement based on enhanced value 8
Inception of Title Rule 7
Income from SP 6
Installment purchases 7
Interest and Taxes paid by CP to enhance SP 8
Interspousal gifts 13
Joint Tenancies in Texas 12
Life Insurance Policies 13
Lifetime gifts of community property 15
Lowest intermediate balance principle 10
Management of CP 10
new basis at death rule 117
No reimbursement claim where expenditures maintain value 8
Proration rule 7
Quasi-Community Property 5
Real property 10
Recovery for personal injury 5
Reimbursement Claim 8
Separate funds spent on living expenses 9
Spouse can make gift of interest in CP to other spouse 10
Spouse's Separate Property 5
Spouses can convert CP into SP 10
Spouses cannot convert SP into CP 10
Spouses may agree that income from SP shall be SP 13
States 5
Tracing 9
Tracing Principle 5
Who gets reimbursement claim 9
Conditional Wills 69
Consequences of classification as SP or CP 14
creditors' claims 14
Death of Spouse 14
Divorce 14
Managing the assets 14
Consideration furnished test 105
Constructive trusts 82
Contingent gift 101
CPWROS 10
Cutting out illegitimate children 90
Davis v. Hunter 61
Divorce 85
Life Insurance 86
Revocation 85
Texas, revocation 86
UPC, revocation 85
Effect of how title is taken
CL States 9
CP States 9
Elective share 87
augmented estate 88
Illusory Transfer Test 87
UPC 88
Equitable charge 98
Estate of Wright 60
Estate trust 112
Estates
Fee Simple 119
Fee Simple Determinable 121
Fee Simple Subject to Condition Subsequent 120
Life Estate 119
Types 119
Estates and Future Interests 119
Executor, attorney as 67
Exoneration of liens 32
Expectancy 23
Family Allowance 21
Federal Gift Tax 114
Annual exclusion 115
Carryover Basis 115, 118
Charitable deduction 117
Computation of Gift Tax 117
gifts to minors 115
Incomplete Gifts 115
Indirect Gifts 114
Marital deduction 116
Medical and Education (Tuition) Exclusions 116
Partial Consideration 114
Forced share 87
Future interest
reversion 121
Future Interests 121
Executory interest 124
Future 119
indefeasibly vested remainder 123
possibility of reverter 122
Remainder 123
remainders, contingent 124
remainders, vested 123
reversion 121
right of reentry 122
right of rentry 122
Rule of reversions 122
General power of appointment 105
Gifts
community property 15
Fraud on the spouse 15
Illusory trusts 16
Joint tenancy dispositions 16
Life insurance beneficiary designations 16
life insurance policy 103
Transfers subject to lifetime transfer rules 16
Guardianship 3
Holographic Wills 69
Homestead
special rule 37
homestead exemption 17
Honigman 61
Illegitimate children 90
Illusory Transfer Test 87
Illusory trusts
CL states 16
Independent administration 35, 39
Intestacy
Illegitimate children 23
Infant Adoption 24
Remarriage Adoption 24
Stranger-to-the-adoption rule 24
Who are "children" 23
INTESTACY--TPC
Heirs 28
Joint Property 29
Per capita 29
Per stirpes 29
Vesting 28
INTESTACY--UPC
Adoption 27
Afterborn Heirs 27
Child Defined 27
estate, defined 25
general 25
Half Bloods 27
Heirs 26
No Taker 27
Representation Defined 27
Spouse's Share 25
Spouse's Share in CP j/d 25
Intestate Distribution
Will drafting 31
INTESTATE DISTRIBUTION, Generally
Per capita 30
Per stirpes 30
Joint Tenancies in Texas
Joint 12
Joint Tenancy in Texas 12
Joint 12
Keough & IRA 99
Lee v Lee 60
Letters of administration 32
Letters Testamentary 32
Life insurance 106
Life Insurance Policies 13
Lifetime transfers
grantor wishes to name himself as a trustee 104
reciprocal transfers 104
Revocable trust 104
transfers taking effect at death 104
transfers w/ a retained life estate 104
transfers w/ a retained power to control beneficial enjoyment 104
transfers w/ a retained power to revoke , alter, amend or termi 104
w/ retained benefits or controls 103
w/i 3 yrs of death 103
Limited Survivorship Exception 110
Lipper v. Weslow 61
Management of CP 10
Marital Deduction 107
Estate stacking 108
Interests that qualify 110
Lease--not NDTI 110
Marital deduction gift formula 108
Marital estates < $600,000 107
Marital estates > $600,000 107
Nondeductible terminable interest 110
Policy: 107
Marital deduction power of appointment trust 111
Marriage 86
Mistake in will execution 68
Nature of the instrument 69
Wrong will signed 69
Muniment of Title 35, 37
Negative Disinheritance 91
Non-testamentary transfers 105
consideration furnished test 105
Employee death benefits 105
general power of appointment 105
invasion power 106
Property passing by ROS 105
qualified joint interest rule 105
survivorship estate b/w decedent and non-spouse 105
Nondeductible Terminable Interest 110
Nonstatutory affidavit of heirship 38
O'Connor v. O'Connor 39
Omitted spouse share 87, 90
Oral Wills 69
Per capita 29, 30
Per capita at each generation 31
Per capita w/ representation 30
Per stirpes 29, 30
Texas' rule of construction 31
UPC's rule of construction 31
Perineum
female 39
Male 39
Personal Property Set-Aside 19
Pope 33
Possibility of reverter 122
Posthumous children
UPC Intestacy 27
Precatory language 97
Pretermitted Child 90
Pretermitted Spouse 90
Probate
Admin of TX CP 41
affidavit procedures 36
alternatives to 35
collection statutes 35
Creditors' claims 33
creditors' claims, limits 33
Executor/Administrator's Basic Responsibilities 32
exoneration of liens 32
heirship proceeding 38
income tax 34
independent administration 35, 39
Letters of administration 32
Letters Testamentary 32
Muniment of Title 35, 37
nonstatutory affidavit of heirship 38
Secured creditors 34
small estate 35
Small Estate Administration 36
Texas alternatives 35
universal succession 35
w/o administration 35
Probate Estate
joint tenancy 22
Net Estate 23
Nonprobate assets 22
Powers of appointment 22
tenancy of the entirety 22
Title clearing function 23
Probate process 31
Professional Responsibility 2
Negligence 3
PRIVITY OF K 2
T's intentions 3
QTIP 112
Qualified joint interest rule 105
Qualified terminable interest trust 112
Reasons for inheritance 1
Remainder 123
Restrictions on Testamentary Powers 1
Reversion 121
Revocable Trust
Consequences at Death of Settlor 63
Dealing with Incompetency 62
Revocable Trusts 62
generally 62
Revocation of wills 79
Right of rentry 122
Right of Survivorship (Texas) 11
Formalities 11
Phrases sufficient to create 11
Revocation 11
Transfers Nontestamentary 11
RIGHTS OF ISSUE OMITTED FROM THE WILL 90
Rule Against Perpetuities 125
Set Aside Statutes 17
Advantages of Homestead Exemption 18
Business Homestead 18
Distribution 17
exempt personal property, limits 21
exempt personal property, types 20
Family Allowance 21
Homestead 17
Homestead--Intent 17
Homestead--not life estate 17
Personal Property 19
Personal Property Set-Aside 19
Procedure 22
Rural Homestead 17
Single person exemption 18
UPC 19
Urban Homestead 17
Simultaneous death 24
120 Hour Rule 92
Uniform Simultaneous Death Act 92
Small estate administration 36
Stepchildren 23
Stepped Up Basis
117
Tax
Gross estate 103
Tax Computation 113
Tax planning for Couples 118
Taxable Estate 107
Deductions 107
Formula 107
The New Basis at Death Rule 117
To descendants per stirpes 4
TPC
Who may inherit 29
TPC Intestacy
Adopted Child 30
Half bloods 30
If no SS 28
If there's a SS 28
Inheritance Rights of Children 30
laughing heirs 28
Termination of parent-child relationship 30
Trust
basic law 97
Intent to create 97
Inter vivos (living) trust 97
Judicial modification 99
model example 99
Restraints on alienation 98
Settlor: 97
Spendthrift trust 98
Station-in-life rule 98
Testamentary trust 97
Trustee 97
Trust income 99
Trusts, generally 58
Uniform Simultaneous Death Act 24, 92
UPC Intestacy
Laughing Heir Statute 27
Vested gift 101
WEALTH TRANSFER TAXATION 103
Weatherley v Byrd 62
Why everyone needs a will 4
Will
Conditional 69
DUPLICATE wills 84
Execution 42
execution formalities 42
Execution req'ments, general 42
execution, proving 46
execution, UPC 42
Holograph 71
Holographic, Date 74
Holographic, testamentary intent 74
Holographic, Testator's handwriting 72
Holographic, Testator's signature 73
Holographic, when useful 76
Latent ambiguity 77
Lost 83
Lost wills, Texas 84
Mistake in execution 68
Oral 76
Oral codicil, Texas 77
Oral, Texas 77
Oral, UPC 77
Patent ambiguity 78
Plain meaning rule 78
Plain meaning rule, Personal usage exception 79
Publication 44
Revocation 79
Revocation b/c of mistake of law or fact 85
Revocation by cancellation 81
Revocation by Inconsistency--Codicils 79
Revocation by physical act 80
Revocation by proxy/agent 81
Revocation by subsequent writing 79
Revocation, copies of will 81
Revocation, oral 83
Revocation, Partial Rev. by Physical Act 81
Revocation, tearing 1st page off will 81
Revocation, TEXAS 83
Revocation, UPC 83
Revocation, wrongful prevention--constructive trusts 82
safeguarding 48
self-proving affidavit 47
Signature 43
signature, position 43
Texas Holographic 71
Texas, will req'ments 52
UPC Holographic 71
Who may make a will 42
witness, presence for execution 43
Will contest 49
capacity 52
grounds 49
insane delusion 54
no contest clause 51
standing 49
undue influence 54
Witnesses
Alternatives to Ws 66
Competency 64
Interested 65
UPC, no interested W rule 67
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