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Estates (Types of Revocation (Methods (Operations of law: (Testator…
Estates
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Types of Revocation
Methods
Operations of law:
- Testator divorces after making will--all provisions in favor of the ex-spouse become ineffective for all purposes, unless provision were intended to survive divorce.
- Surviving souse married testator after testator executed the will. Surviving souse is entitled to the value of the share she would have received if the testator had died intestate.
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Physical Act: burning, tearing, canceling, obliterating, or destroying the will or any part of it.
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Dependent relative revocation: testator revokes an old will with the intention that a newly executed will replaces it. If new will is not made or is invalid, some jurisdictions will admit the revoked will to probate. Need evidence of testator's intent.
Presumptions
Arise when the will is found after testator's death, but is mutilated.
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A prior will is revived upon undergoing all formalities, or if it is evident from the circumstances of the revocation of the subsequent will or the testator's contemporary declarations that the testator intended the previous will to take effect as executed.
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Beneficiaries
When a beneficiary dies before the testator, the person's gift lapses. Does not automatically pass to beneficiaries heirs, falls into residue.
Many states have anti-lapse statutes, which operate to save the gift when the beneficiary dies prior to the testator and leaves descendants.
If beneficiary, in any fashion, participates in the willful and unlawful killing of the testator, beneficiary receives nothing - Slayer Act statutes.
If testator fails to provide in will for any children born or adopted after the execution of the will, the omitted after-born or after adopted may receive a share to the decedent's estates unless omission was intentional or the testator has provided for the child outside the will.
A simultaneous death occurs when two or more people, one of whom is the beneficiary of the other(s), dies under circumstances where there is insufficient evidence to determine which party survived the other.
Under the UPC, a person who cannot be est. to have survived the decedent by 120 hours is deemed to have predeceased the decedent.
A person may Disclaim an interest in property under a will, must:
- Be in writing or other record;
- Declare the disclaimer;
Describe the interest or power disclaimed;
- Be signed by the disclaiming party; and
Be delivered or filed.
Bequest
Subject to ademption, satisfaction, advancement, and a spouse's elective share.
The Doctrine of Ademption applies to specific bequests that are not in the testator's estate at the time of death.
Satisfaction occurs when the gift has been satisfied by an inter vivos transfer from the testator to the beneficiary subsequent to the will's execution.
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An advancement is a lifetime gift made to an heir with the intent that the gift b e applied against the heir's share of the estate.
Surviving spouses are protected from disinheritance by elective share statutes - these provide the spouse an election to take a statutory share in lieu of taking under the will.
In most states, the amount is 1/3 of the net probate estate if the decedent is survived by issue and 1/2 if the decedent is not survived by descendants.
First, what type of Bequest?
Specific bequest or specific devise: gift of a specific article or other property, which is identified and distinguished from all other things of the same kind and is satisfied only by delivery of the particular thing. Use of words "my."
General bequest: payable out of the general assets of the decedent's estate and not in any separated or distinguished fund from other things of the same kind.
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Intestate Succession
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Parents, siblings and other collateral kin never inherit if the decedent is survived by children or more remote descendant such as grandchildren or great grandchildren.
Trusts
Trustee
Powers
- Settle or abandon trust claims;
- Exercise all rights and powers an unmarred individual has over his own property;
- Borrow money;
- Sell or lease trust assets;
Apportion trust income; and
- Incur reasonable expenses necessary to maintain trust property.
Duties
- Duty of loyalty and good faith;
-- No self-dealing, unless trust permits specific acts;
-- No personal benefit other than official compensation.
- No apparent conflict of interest;
-- Keep trust assets segregated from personal.
- Duty to preserve trust property and make it productive;
-- Objective standard of care unless superior skills warrant a higher standard;
-- Prudent investor rules governs:
--- Trustee is permitted to invest trust assets as would prudent investor, considering both the interest of life beneficiaries and remainderman. Trustee must consider both the investment's ability to produce a reasonable rate of income and the safety of principal;
--- Trustee must seek to diversify investments;
--- Standard is reasonable care, skill, and caution;
---Some state maintain a "legal list" approach of approved types of investments.
- Duty to dispose of wasting non-productive assets;
- Duty to maintain accounting of transactions;
- Duty to enforce claims and defend from attacks.
Because the trustee stands in a fiduciary relationship with the beneficiaries, trustees incur liability to the beneficiaries when duties are breeched.
Creation
- Settlor's capacity: similar to a testator's capacity to from will.
- Intent: present intent to create trust now, not in future, not particular words, just intent.
- Trustee: must have mental capacity to administer trust. Cannot be a minor or a mentally incompetent person.
-- Corporation can be a trustee. states statutes may impose additional requirements.
-- A settlor can create a trust naming herself as trustee.
- Res-trust property: settlor places title to the trust property and delivers to the trustee by...
-- an inter vivos transfer, or
-- a testamentary trust
- Identifiable beneficiary: except for charitable trusts, trust must have definite or ascertainable beneficiaries.
- Proper purpose: any purpose except an illegal purpose, a purpose the violates RAP, or a purpose contrary to public policy.
- Statute of frauds or statute of wills, if necessary.
A trust terminates automatically at the end of the trust terms or when all its purposes have been accomplished.
Modification of a trust can occur, but depends upon which party seeks modification.
- Settlor: can revoke or amend a trust unless the terms state it is irrevocable.
- Beneficiaries:
-- Modification conflicts with a materiel purpose of the trust: settlor's intent required.
-- Modification does not conflict with a materiel purpose of the trust: settlor's intent not required.
-- If all beneficiaries do not agree, a court can modify or terminate a trust when...
--- the trust could have been modified if all beneficiaries had consented, and
--- the interests of any non consenting beneficiaries will be adequately protected.
- Trustee: can terminate a trust when the property's value is less than $50,000 and the amount is insufficient to justify the const of administration.
Notice is warranted if:
Spendthrift Provisions
the beneficiary cannot voluntarily or involuntarily transfer his interest. Does not apply if the income has already been paid to beneficiary. Once in the beneficiaries hands, it is no longer protected by the trusts provisions and is fully owned by the beneficiary. Creditors can reach the beneficiaries income from the trust. A spendthrift clause does not protect against a claim by the government or a claim for child support or spousal maintenance or 4 necessary supplies or services rendered to the beneficiary. A settlor is not allowed to create its own spendthrift trust to avoid creditors claims
Discretionary provisions
Best additional power in the trustee to decide when to distribute income of the trust. if the beneficiaries interest stems from the discretionary provision, then the beneficiary has no "right" to income until the trustee distributes the income. The trustee's decision is subject to an abuse of discretion review
Classification
Express Trusts
- Arise from the intention of the property owner:
-- private express trust comprise most of the trust established by individuals
-- charitable trust resemble private expressed trust but have some significant,distinguishing characteristics
Express Trusts May be created by:
- An inter vivos Trust created by a declaration of trust by the property owner, stating the trustee holds the property as a trustee in trust.
- An inter vivos Trust created by transfer a property during settlor's lifetime.
- a testamentary trust Created by a will. In addition, "pour over" provisions in a will are allowed. Pour over provisions direct the transfer of property into a trust established either by the testator during his lifetime or buy another person rather than creating a brand new trust
Charitable trust have distinctive rules because of their substantial benefit to society. Are liberally construed to effectuate the purpose of the settlor.
- indefinite beneficiaries:
-- cannot be restricted to a small group of people.
- charitable purpose:
-- i.e. Relief a property, advancement of education, advancement of religion, promotion of health, performance of governmental and municipal purposes, and other purpose is beneficial to the community
-- purpose can be broad
-- Objective must be to benefit the public, although settlor can have a selfish reason such as reducing personal tax burden
- all against perpetuities limited application to charitable trusts.
-- trust may have a perpetual existence
-- if preceded by noncharitbale estate, the charitable interest must vest within the period of time proscribed by the RAP.
- Cy Pres Doctrine applies: when designated charity is not in existence at settlor's death, the court may redirect the trust to a purpose as near as possible to the charitable endeavor designated by the settlor.
- Termination: if the charitable trust cannot be performed as intended and the requirements for Cy Pres are not met, the charitable trust terminates in a resulting trust in favor of the settlor's estate results
Implied Trusts
- Arise by operation of law:
-- Resulting trust place property in the hands of rightful owners when circumstances require it, even though there has not been any wrongdoing on anyone's part.
-- constructive trusts deprive a wrongdoer from retaining improperly obtained property.
Constructive Trusts are an equitable remedy in cases involving wrongful conduct and unjust enrichment. May arise from theft, conversion, fraud, duress, or other situations requiring an equitable remedy such as breach of fiduciary duty.
Resulting Trusts Arise from failure of an express trust, from a purchase money resulting trust or from an incomplete disposition of trust assets.