Estates and Trusts – Spring 2008 – Table of ContentsI. Introduction to Estate Planning 1II. INTESTATE SUCCESSION 2

A. Share of Surviving Spouse [UPC and KSA]B. Share of Descendants: the below is the procedure for determining how to divide the prop. As such, if

there’s a surviving spouse, must look at statutes mentioned above to remove spouse’s share from this “pot.”1. Formula: [# of survivors] + [# of non-survivors w/ surviving issue]2. “Per Capita” = clean slate at each gen. level, all take equal.3. “Per Stirpes” = step into shoes of prior ancestor, split that share (trickling down effect)4. Systems:

a. English Per Stirpes: apply formula at child level; C gen. takes per capita, others per stirpes.b. Modern Per Stirpes: apply at 1st gen. w/ survivor; that gen. take per capita, rest per stirpes.c. UPC § 2-106: apply at first gen. w/ survivor; survivors at each gen. level take per capita.

Note: this is the one where there’s an “extra step” to determine “pot” that drops down.C. Share of Ancestors and Collaterals 3

1. Only comes up if decedent has no descendants (or at least none that survive)!2. Systems:

a. English Per Stirpes: apply at 1st gen. below comm. ancestor; they take per cap., rest per stirpes.b. Modern Per Stirpes: 1st gen. below comm. ances. w/ survivor; they take per cap., rest per stirpes.c. UPC §2-106: applied at 1st gen. below comm. ancestor w/ a survivor; each level takes per capita.

3. UPC § 2-103: Shares of Heirs Other Than Surviving SpouseD. Treatment of Potential Intestate Heirs: The Simultaneous Death Act and Posthumous ChildrenE. Factors Affecting Heirs Intestate Share [amt. / if receive at all] 4

1. Advancement: partial satisfaction of donee’s intestate share. a. Factor to considerwhether donor had legal or moral obligation to payb. If deemed an advancement, donee can: (1) keep it, taking $0 from estate; or (2) share in estate,

allowing value of advancement to be brought into the hotchpot. [hotchpot = prob. estate + advncmt]c. Multi-Generational Setting: if parent makes advancement to C who predeceases P, the advncmt’s

deducted from the shares of that C’s issue, but only if other children of P survive. Qualifications:i. Not bound by advancement if taking per capita (e.g., under UPC §2-106)ii. Not counted against donee’s descendants if UPC §2-109 applies, even if take per stirpes!

2. Release: full satisfaction of intestate share (forfeiting upwards)a. Decedent transfers prop. to donee, in exchange for donee’s release to any claim of D’s estate.b. If donee predeceases transferor, binding on donee’s descendants, unless they take per capita.

3. Assignment: prospective intestate heir xfrs prospec. intest. share to 3d p. (forfeiting outward)a. If xfr made prior to ancestor’s death not enforceable; unless assignment supported by consid.b. If assignor predeceases ancestor, assignment’s not binding on issue 5c. Transfers made after ancestor’s death are always valid, even w/o consid. [b/c is a gift]

4. Homicide: in absence of statute, 3 ways law can handle:a. Apply intestate succession literally killer gets property [bad policy]b. Treat killer as if never existed k. doesn’t get prop. [but bad b/c undermines intestate scheme]c. Constructive Trust Theory: k. holds prop. only as const. T for other intest. Heirs [best option]

5. Disclaimer: traditionally, can’t disclaim intestate share, unless statute allows it. 6a. If allowed, gen. rule is to treat disclaimor as if he predeceased T [then gen. schemes apply]

i. Qualificataion – if UPC § 2-1106(b)(3)(A) applies, disclaimor’s interest passes to his issue, rather than treating it as if he predeceased T (removes “strategy” concern)

III. WILLS 7A. Execution Requirements

1. Acknowledgment: used if T pre-signs; wit. must see sig. + T acknwldg. in pres. of all wit. together!2. Presence Tests: line of sight [sees or was able to]; conscious pres. [comprehends w/ any senses wit. signed]

3. Sig. Order: T first; fallback 1 continuous transac. [if all in same room + w/in reasonable time]4. Signature Requirements:

a. Symbols qualify only if T had intent at outset symbol would = his signature.i. Exception Doctrine of Ratification [p.8] b/c now T changed his intent.

b. Stamp/Typedineffective; but, if stamp+symbol, maybe some evid. of intent. symbol qualify.

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[ ] = dead

Assign. concerns arise only if made before ancest. dies

III. Wills A. Execution Requirements [Continued] – Signature Requirements

c. Assistance [always valid; T doesn’t have to request; only has to do some work] 8d. Proxy – when T only observes [here must request proxy; presence required]e. Placement – usually must be at bottom, even if not req., good evid. of T’s intent.f. Handwritten name, but no signature: not auto invalid, but Q of intent. If at bottom, rebuttable

presumption T intended written name to operate as signature.g. Additions after Signature [issue only arises if jurisdiction req. sig. be at bottom of will]

i. Added after T signedall above sig. valid, words below not unless merely admin./surplsg.ii. Added before T signedEntire will is invalid.

5. Disinterested Witness: interested witness = wit./devisee or spouse of deviseea. Gen. Rule: if any interested wit., entire will void (even if enough valid witnesses!)b. Basic Purging Statute: interest. wit. deemed to forfeit devise; will valid except for that devise.c. Super Purging Statute: forfeits only prop. in excess of either:

i. what would have received as would-be intestate heir [triple status]; orii. what would have received under prior valid will (if any).iii. Note: if either amt. is more, simply forfeit $0 b/c no concerns about undue influence.

d. Supernumerary Witness Statute: if enough valid witness w/o interested wit., treat 9interested wit. as if never a wit. at all and, as such, she forfeits nothing.

e. Disclaimers invalid for purposes of making a witness disinterested.6. Attestation Clause: not req., but good b/c raise rebut. presum. all done correctly.

a. Present Tense: signatures of witnesses presently acting as witnesses7. Self-Proving Affidavits 10

a. Past Tense: witnesses are pre-testifying that they did everything correctly.b. Not req., but raises conclusive presume. done right (but, non-procedural matters can be contested)

B. Execution of Holographic Wills1. Holographic Will: must be handwritten by T; no witness req. 2. 1st Gen. Statutes: entirely written, signed, and dated [even if word isn’t essential]3. 2nd Gen. Statutes: material provisions [tunnel vision approach – only sig. and material provisions]

a. Date is usually considered a “material provision.”b. Strip away all printed words, read only handwritten portion.

4. 3rd Gen. Statutes: material portions and extrinsic evidence allowed. 11a. “Portions” changenow, if date or introductory wording are printed, can still have probate

C. Revocation of Wills1. 3 Means of Revoking a Will:

a. Revocation by Subsequent Writing *best methodi. 2 Requirements: affirm. act by T [sign sub. will] unless valid proxy + intent to revoke.ii. Must still meet will requirements for the jurisdiction [e.g., must have witnesses!]iii. Doesn’t necessarily have to be a new doc. (e.g., writing on back of will may suffice)iv. 3 Forms of Writing: new will; codicil; doc. revoke prior will, w/o replace dispost. Provisv. 2 Methods of Revocation by Subsequent Writing:

a. Express Revocation: best b/c T’s intent clear; can revoke 1, or blanket revocation.b. Revocation by Inconsistency: later in time prevails, revoke to extent inconsistent.

vi. When Subsequent Writing Takes Effect (Competing Views):a. Common Law [Majority]: will only takes effect upon T’s death.b. Ecclesiastical Approach: will takes effect on other wills immediately.

vii. Partial Revocation: all jurisdictions allow partial revocation by sub. writing.b. Revocation by Physical Act 12

i. 2 Requirements: affirm. act by T to doc., unless proxy[request + presence] + intent to revoke.a. No requirement of witnesses.

ii. Burning/Tearing: by def., burn/tear doc., so don’t need contact w/ words to revoke.iii. Cancellation: by definition, you cancel words. Thus, majority rule is that there must be

contact w/ words to revoke by cancellationa. Exception UPC §2-507 [minority rule] – no contact required for cancellation either.

iv. Partial Revocation: partial revocation by physical act only recognized in some states.

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If part. revoke not recognized, probate entire orig. will.

a. Qualification: if thorough (e.g., T cuts ¶ out of doc.), would probate rest of will anyway. III. Wills C. Revocation of Wills 1. 3 means of revoking wills [continued]

c. Revocation by Operation of Law 12i. No intent requirement; instead, will revoked upon certain events [marriage, divorce, kids…]ii. Divorce: treat former spouse as if predeceased T; unless will says otherwise.

a. Relatives of former spouse devises not revoked; exception – UPC §2-804(b).2. The Harrison Presumption 13

a. 2 Factual Premises Trigger Presumption:i. Will last traceable to T’s possession; andii. Upon T’s death, will can’t be found or is found, but mutilated (torn, burnt, etc.)

b. Presumption: T revoked will or, if found mutilated, destroyed w/ intent to revoke. [rebuttable]3. Duplicate Originals: if 2d remains intact, T’s intent to revoke 1st, still carriers over.

a. Harrison presumption still applies, but is stronger if duplicate not found in T’s possession.b. Effect of Unexecuted Copies: no legal significance!

4. Ratification: T can request proxy to revoke will; but, ratification here is not allowed where theattempted revocation was invalid (e.g., T requests proxy, has intent to revoke, but not done in his presence)

5. DRR – Dependent Relative Revocationa. Rebuttable Presumption: T would’ve preferred to reinstate Will 1, rather than die intestate.b. Threshold Question: Do we even need DRR to resurrect Will 1?

i. Was will 1 properly revoked? [partial revoke by physical act; or holographic wills recognized?]ii. Was T’s intent to revoke conditional? [only applicable to Formula 1] Intent Factors:

a. Material diff. provisions: if provisions in Will 1 and 2 materially diff., we presume T’s intent was that Will 1 not continue to operate.

b. Physical Proximity of Wills: if found close together, shows act of revoking Will 1 was second-will minded (so that we would apply DRR).

c. Time Gap: the longer the gap, the less likely T’s intent was conditional.c. DRR Formulas 14

i. Formula 1: a. T revokes Will 1 b/c believes Will 2 will take its place [see cond. intent factors]; and b. Will 2 is invalid or was never made at all.

ii. Formula 2: a. T is motivated to revoke Will 1 by a belief that turns out to be false; andb. Will 2 contains a reference to this mistaken belief.

d. Reverse DRR: applies when later will is revoked w/ hope it will reinstate earlier will.6. Revival:

a. Premise: 1. Will 1; 2. Will 2, revokes Will 1 [either by express language or impliedly from inconsistent devises only]; (3) T revokes Will 2.

b. Issue Raised: When T revokes Will 2, does it reinstate Will 1?c. 4 Views:

i. English/CL View: no will takes effect until T dies. Thus, Will 2 never took effect, so Will 1 remains valid (no need to revive at all)

ii. Instantaneous View (Ecclesiastical Approach): Wills take effect immediately. Thus, Will 2did immediately revoke Will 1 so that, to reinstate, T must properly re-execute Will 1.

iii. Liberal, Instantaneous View: Wills take effect immediately (like Instantaneous in this way) so that Will 2 did revoke Will 1; however, when Will 2 is revoked, raises rebutttable presumptionthat Will 1 should be reinstated b/c was T’s intent (no requirement to re-execute).

iv. UPC § 2-509a. (a) If W2 wholly revoked W1, raises presumption W1 remains totally revoked; however,

if rebutted with evidence of contrary intent, W1 is reinstated.b. (b) If W2 partially revoked W1, raises presumption W1 is reinstated; however, if rebutted

with evidence of contrary intent, W1 remains partially revoked.c. (c) If W2 revoked W1, either in whole or in part, and later, W2 is revoked by W3, raises

presumption that W1 remains revoked; however, if rebutted by language in W3 that saysT intended for W1 to be reinstated, W1 is reinstated.

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III. Wills [continued]D. Components of a will: 4 docs.help determine what will comprises 15

1. Integration: when papers are integrated into the original willa. Requirements:

i. Physical Presence: papers must have been in existence at time of execution [see factors]ii. Intent: T must have intended papers to be part of the will.

a. If physical presence is established, raises rebuttable presumption of intent.2. Republication by Codicil: under doc, will treated as is executed on date of codicil.

a. To be valid, codicil must refer back to will w/ reasonable specificity.b. Codicil can effectively re-execute prior will that was missing req. formalities.

3. Incorporation by Reference: outside, indep. writing can be incorporated into will by referencea. Requirements:

i. Outside doc. must have been in existence at time will is executeda. *remember, codicil may have effect on a doc. to make it so that it was “in existence.”

ii. Will refers to outside doc. in present tense (as being in existence).iii. Will refers to outside doc. w/ reasonable specificity.iv. NOTE: outside doc. doesn’t have to be signed by T under doc. of incorp. by ref.

b. List Statute Exception – UPC §2-513: has the following deviations from incorp. by ref.:i. Can dispose of tangible pers. prop (other than $) by statement written before or after will;ii. Will must refer to writing, but doesn’t have to refer to it as being in existence at exec. time;iii. Writing must be signed by T.

4. Independent Legal Significance 16a. Doctrine allows an external event, condition, or doc. to ID a devise or devisee under will.b. Test: external event/doc. must be non will-minded.

i. Container Contents: more likely to work w/ locked container that only T has access to.ii. Another’s Will: usually treated as an event w/ independent significance.

c. List Statute Effect: also effect indep. legal sig. doctrine by deviating from requirements.E. Lapsed and Void Devises: death of devisee before death of T.

1. General Rules:a. Rule of Lapse [Trad. Rule] – if devisee predeceases T, devise lapses and goes back to T’s

estate either as residue or, via intestacy to T’s intestate heirs.b. No Residue of a Residue Rule [Minority, CL Rule] – if a residuary devisee predeceases T,

that devisee’s share passes to T’s intestate heirs.i. If 2 Residuary Ds – live D frozen at 1/2 and deceased’s share passes via intestacy.

a. Exception most states treat 2 residuary Ds as joint tenants w/ right of s’ship.i. BUT, if T says “1/2 residue to A, 1/2 to B” diff. result.

c. Class Gifts – class members treated as joint tenants w/ right of survivorship.d. Void Devises [CL Rule]–if D dead at time will executed or ineligible taker, devise void. 17

i. As w/ lapse, void devise remains w/ T either as residue or passes via intestacy.2. Anti-Lapse Statutes – keep devise from lapsing (don’t apply to void devises). Typically, give

devise to devisee in the person of his or her surviving issue.a. “IF” Clause: devisee predeceased T, related to T (usually kids); left surviving issue.

i. UPC §2-605 If Clause Variation – g-parent or lineal descendant of T’s grandparent.b. Exception: Words of Survivorship: T can negate anti-lapse by req. D to survive T.

i. UPC §2-603 (1990 revision of 2-605) mere words of s’ship in sufficient! 18ii. Common Accident Issue – Solution? Gift Over Clause + Defining “S’ship”

3. Class Devises: gift of lim. sum to body of pers. uncertain in # & ID at time made. Will split equally.a. Qualification even if T mentions group of specific names, may still qualify as class gift if

T gives finite sum to them w/ intent the $ only go to survivors.b. Class gifts never lapse. Negates no residue of a residue rule.

i. Anti-Lapse Statutes DO Apply! – although doesn’t technically lapse, if the “If Clause’ is met, a class member’s share may remain with that member in person of her issue.

F. Changes in Property After Execution of the Will1. Identity of Devises

a. Specific Devise: spec. item, distinguishable from rest of T’s estate.

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b. General Devise: spec. value, but not of particular item distinguishable from rest of estate.c. Demonstrative Devise: payable first from particular source, then out of T’s gen. estate.

III. Wills F. Changes in Property After Execution of the Will [continued]

2. Ademption by Extinction 18a. Identity Theory [maj. rule/applies on exam]: T’s estate doesn’t contain spec. item, devise adeems (fails)b. Only applies to Specific Devises.c. Applies regardless of T’s intent, but can be preempted by express language.d. Circumventing Ademption by Extinction – ways courts get around rule. 19

i. Replacement Rule: construe will at time of death [rather than execution]a. Stmt. of Rule–at death, is there something in estate that matches the devise?b. Exception: Intent can be used to negate rule so there is ademption, but this is only in

the minority of jurisdictions that apply the “intent theory”e. UPC §2-606(a) [KS]

3. Accession: when gift increases in val. Post-execution but pre-death 20a. If merely appreciation in value of item, devisee gets increased value.

i. E.g., interest on bond, interest on debt owed (C’s right), growing crops. on real prop.b. If increase = generated income, devisee doesn’t get increase (regarded as “diff.” from gift).

i. E.g., bank interest on flat sum of $, interest on amount due on debt, harvested crops.c. Stock Dividends: stock div. declared during T’s life don’t go to devisee. [treated as income]d. Stock Splits: addt’l stock gen. from stock split goes to devisee. [treat as apprec. of stock itself]

4. Ademption by Satisfaction 21a. Only applies to General Devises.b. Raises rebut. presum.T indented intervivos xfr. as early satisfaction (whole or part) of devise.

5. Exoneration of Liens: devisee receives prop. free of mortgage, what’s left pd. out of estate assets.a. Exception – UPC §2-607 – reverses presumption. T can negate w./ specific language.

6. Abatement [rules are fallbacks – if will says otherwise, follow instructions in will instead]a. Premise: issue arises when estate has insufficient funds to pay all debts and devises.b. Trad. View: pers. prop 1st, then real in following order: intestate; residue; general; specific. [8 rounds]c. Modern View: both real & pers. prop in following order: intestate; residue; general; specific [4 rounds]d. KS View: intestate [pers.]; int. [real]; residue [pers.]; res.[real]; gen. [both]; specific [both] [6 rounds]e. Under all views, abate final category pro rata. 22f. Treatment of Demonstrative Devises: 1st clause = specific devise; 2nd clause = gen. devise.

G. Restrictions on the Power of Disposition: T’s ability to devise how wishes, sub. to some limits!1. Rights of Surviving Spouse

a. Community Prop. System: income earned during marriage belongs to both.b. Separate Prop. System: income each earns is their own. Surviving spouse has some stat. rights:

i. Homestead: right to family home for life. [court can limit homes / acreage]ii. Pers. Prop. Set Aside: right to certain pers. prop items, up to X value.iii. Family Allowance: right to maintenance. Usually only 1 year.iv. Dower and Curtesy:

a. Dower = widow gets 1/3 LE in land. (only gets upon H’s death)b. Curtsey = widower gets LE in all wife’s assets (gets immediately, but upon birth of kid).

c. Elective Share UPC §2-202 23i. Mechanics of Calculating and Satisfying Elective Share Amountii. Effect of Waivers: enforceable, so long as not fraudulently executed 24

2. Rights of Omitted Spouse [statutes only apply if we have a post-execution marriage]a. Omitted Spouse Statute: entitled to what would’ve received had decedent died intestateb. Omission of “Generic Spouses” don’t qualify as an intentional omission of this spouse 25c. Rights of Omitted Spouse under UPC §2-301

i. Note that the statute even contemplates will that does mention spouse.3. Rights of Omitted Issue

a. Permitted Issue Statutes: allow kids born post-execution to take as if T died intestate.i. Codicil Issue: if born post-execution but pre-codicil that republishes will, regarded as being

alive when will was first written! As such, can’t invoke permitted issue statute!

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ii. Disinheriting Issue: unlike spouse, T can disinherit kids. Stop gaps issue down chain as well.a. BUT, stop gap doesn’t work up so if T disinherits GC, C can invoke perm. issue stat.

III. Wills F. Restrictions on the Power of Disposition [continued]

b. Rights of Omitted Issue under UPC §2-302 25IV. TRUSTS 27

A. Creation of a Trust [elements] 281. Intent to Create a Trust: derived from express language and surrounding circs.2. Necessity of Trust Property: trust can’t exist w/o trust property.

a. Mere expectancy can’t be subject matter of a trust – would need to made 2d declaration.i. A contract is more than a “mere expectancy” 29

b. The Issue of Profits: i. Profits from trust okay b/c are income, but can’t create a trust from profits not yet in existence.

3. Necessity of Trust Beneficiaries: 1 or more beneficiaries, ID’d w/ reasonable specificity!4. Necessity of Written Instrument:

a. Gen. Rule: SOF requires intervivos trust of real prop to be in writing; pers. prop. can be oral.i. However, there are situations where, though the oral agreement never created valid trust

to begin w/, law steps in to save the trust.b. Oral Inter Vivos Trusts of Land: here, no SOF issues b/c trust created by operation of law.

i. Resulting Trust: arises in only 3 situations:a. Failure to Create Express Trust: e.g., b/c beneficiaries not ID’s specifically.b. Failure of Express Trust to Dispose of All Trust Prop. 30c. Purchase Money Resulting Trust

ii. Constructive Trust: typically comes up in these situations (but not only)a. Prop. Obtained by Fraud: must have fraudulent intent at outsetb. Abuse of Confidential Relationshipsc. Property Obtained by Homicide

c. Oral Trusts for Disposition at Death: S chooses to dispose of prop. in particular way based, in part, on her reliance on T’s oral promise.i. Secret Trusts: Will: “to T” + Oral: “in trust for B” = Constructive Trust to B.

a. Extrinsic evidence allowed to present evidence of the trust (higher BOP)ii. Semi-Secret Trusts: Will: “To T in trust” + Oral: “for B” = Resulting Trust. 31

a. No extrinsic evidence permittetd.B. Discretionary/Spendthrift Trusts

1. Rights of Beneficiaries to Distributionsa. Support Trusts: need dictates floor and ceiling.b. Discretionary Support Trusts: need dictates ceiling only.

2. Rights of Beneficiaries’ Creditors: w/ mandatory trust, C can get in line, w/ discretionary trust,however, C can’t get in line. Instead, distribution by distribution basis, only when T exercises discretion!a. Gen. Rule: Discretionary clause bars creditors, even “super creditors” 32b. Spendthrift Trusts

i. 3 Forms of Spendthrift Clauses: no assignments; no attachments; both.a. Qualification: attachments language alone is invalid (violates pub. policy)

ii. Effect of Clause Cs can only go after assets after distribution made.iii. Generally, Spendthrift Clauses Enforced.

a. Exceptions: child support and alimony; tort claims; fed. gov’t; necessities.i. Unless state statute to the contrary/speaks exclusively on issue.

c. Self-Settled Asset Protection Trusts: can’t setup spendthrift or discretionary trust for yourself.C. Termination of Trusts 33

1. Gen. Rule: once trust established, is irrevocable.2. Exceptions:

a. Consent of Settlor and All Beneficiaries.b. Claflin Doctrine: if no material purpose is undermined and all beneficiaries consent.

i. Material Purpose = spendthrift clause, support trust; discretionary trust; age requirements.D. Revocable Trusts: Settlor can revoke trust (exception to gen. rule) if:

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1. Express language reserved power to revoke; and2. Settlor follows procedures he put in the document to revoke it.

IV. Trusts D. Revocable Trusts [continued]

3. Potential Issue: Did S retain too many rights so that it’s really an attempted will? 33a. Gen. Rule: Settlors have a lot of leeway to retain many powers, and still have valid trust.

i. Objective: look at rights retained, and if too substantial, not S’s intent/motive for retaining.b. Elective Share: though have a lot of leeway, will we regarded as invalid when elec. share at stake?

i. NO – Sullivan approach. (even if S’s intent was to circumvent elec. share!)ii. YES – Newman approach. (but, only invalid to extent necessary to provide for spouse)

c. Spendthrift Trust for Yourself = Over Retention. Thus, assets belong to estate when you die.4. Mechanics for Revoking Trust 34

a. Must be done in accordance w/ methods prescribed in trust doc. itself.b. No Harrison Presumption w/ Trusts.

E. Pour-Over Trusts: T of will wants assets of estate to pour-over into an existing intervivos trust.1. Incorp. by Reference [Minority]: will incorps. by ref. trust instrument in existence at time will executed!2. Independent Legal Significance [Majority]: will can dispose of prop. by referring to intervivos trust

that disposes of assets xfrd. to trust during life (act that has sig. apart from disposing of trust assets).3. UPC § 2-511: validates pour-over of probate assets into intervivos trust executed anytime.

F. Charitable Trusts: 1. Valid, Charitable Purpose Required – see list on p..34 and examples on p.352. Cy Pres Doctrine 35

a. If purpose becomes impracticable or obsolete, ct. can select alternative close to S’s intent.b. Exception? if S’s intent was “all or nothing.”c. Discriminatory Trusts: cy pres can be used (unless all or nothing intent).

3. Enforcement/Supervision of Charitable TrustsG. Powers of Appointment 36

1. General POA: exercisable in favor of others, donee, her estate, Cs, or Cs of D’s estate.a. Fallback Presumption – if doc. doesn’t specified, assume it’s general power.

2. Special POA: exercisable only in favor of others.3. Release of POA – voluntary release of POA. Assets go to TiD or, if no TiD, to Donor.4. Exercise of POA 37

a. Exercise by General Residuary Clause in Donee’s Will: i. Majority Rule: gen. clause does not exercise POA, whether power is general or special.ii. Minority Rule: gen. residuary clause does exercise POA if gen. power, but not special.

a. New York Variation: can also exercise special power if devisees are also objects.iii. UPC §2-608: gen. res. clause exercises POA only if either:

a. No TiDs; orb. T’s will manifests intent to include prop. subject to POA (blanket clause insufficient)

iv. Donor can always require specific reference.a. Here, using a blending clause insufficient b/c not specific. UPC § 2-704. 38

v. Effect of Anti-Lapse Statute: most courts extent anti-lapse to cover general powers.b. Limitations on Exercise of Special POA

i. Restatement 2d Prop: Donative Xfrs. §19.4ii. Sub. Category of Special Powers: Exclusive vs. Non-Exclusive Powers

a. Exclusive (Rst. fallback presumption) – donee can exclude entirely 1 or more objects.b. Non-Exclusive – donee must appoint some amt. to each object.

i. Majority Rule: can in essence exclude by giving only nominal amt.ii. Minority Illusory Appointment: each obj. must receive sub. amt.

c. Fraud on Special POA – appoint.in favor of non-object (or by circumvention) = fraud 39d. Ineffective Exercise of Power: 2 doctrines that can save an ineffective exercise of POA:

i. Allocation of Assets [Special Powers]ii. Capture [General Powers]

5. Failure to Exercise POAa. General POA goes to TiD or, if none, to Donor’s estate.

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b. Special POA TiD; or, if none, Potential Objects (equal shares); or Donor’s estate.H. Duties of the Trustee

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ESTATES & TRUSTSDeLaTorre, Fall 2011

I. Introduction to Estate PlanningA. Probate Process: process by which a court makes one of two decisions with regard to an estate’s assets:

1. the decedent’s assets should be disposed of via a valid will (either to all or some of the assets); OR2. the decedent died intestate and, as such, the assets will pass via intestate succession per that state’s

intestate succession statute.B. Functions of Probate: probate performs three functions:

1. it provides evidence of transfer of title to the new owners by a probated will or decree of intestate succession [documentation of title];

2. it protects creditors by requiring payment of debts; and3. it distributes the decedent’s property to those intended after the creditors are paid.

C. Probate vs. Non-Probate Property1. “Probate Property” – assets disposed of by the decedent, upon his or her death, either under the

decedent’s will or, in the absence of a will, by the intestate succession statute.2. “Non-Probate Property” – assets disposed of in a particular way because of some pre-death

transaction/arrangement rather than by will or intestate succession. The transfer is triggered by the decedent’s death, but the assets are not probate assets. Sometimes called “will-subs” or “will-substitutes” b/c resemble wills, but proper name is “non-probate transfers.” Examples include:a. Life insuranceb. Joint tenancyc. Pay-on-death provisionsd. Intervivos trust provisionse. Life estate remainder estates

D. Probate Procedure1. File Petition: can be filed by any “interested party,” including devisees, creditors, executor (if will),

or would-be intestate heir (if no will).a. Will = “Petition for Probate”b. No Will = “Petition for Administration”c. Statute of Limitations Considerations:

i. KS §59-617 – 6 months following decedent’s death unless someone fraudulently conceals the will in which case the 6 months begins when the interested party should reasonably have discovered the existence of a will.

ii. UPC = 3 years.d. Nonclaim Statutes: time limit within which creditors must assert their claims against the estate.

Unlike SOL statutes, time is triggered by notice (rather than decedent’s death). i. Kansas – C’s claim must be filed w/in 4 months following official notice by publication.

2. Personal Representative (PR) Appointed by the Courta. Will = PR is called an “Executor”b. No Will = PR is called an “Administrator”

3. Notice of Hearing: given to potential heirs, devisees, and creditors.4. PR Authorization Granted by Court

a. PR is authorized by the court for various duties; however, these must be approved by the probate court following a hearing.

b. Such duties include: inventory/gather decedent’s assets, manage assets during administration until final distribution, pay creditors (including payment of taxes), distribute assets to devisees.

5. PR Files Petition for “Final Settlement and Approval of Accounts” *again, requires notice.6. Court Discharges PR: after a hearing for final settlement and approval of accounts, the court

discharges the PR if it approves the accounts done by the PR.E. Contesting a Will

1. Anyone with a pecuniary interest in the will may contest.2. Must be done during the probate process (before PR is discharged).

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3. Kansas: a. §59-2225: will must be contested before probate process is over. b. Caveat: §59-226: if the will is being challenged on the grounds that it was superseded by a

later will, KS allows for the competing will to be presented, even after probate process is over.c. Question Remaining: Does §59-617 (provision requiring claims be brought w/in 6 months

following decedent’s death) still apply? still unanswered.II. Intestate Succession

A. Intestate succession statutes apply in 3 circumstances:1. Total Intestacy: decedent dies without a will; 2. Partial Intestacy: decedent has a will, but it doesn’t dispose of all of his or her assets. The statute

will apply to those assets that are untreated by the will; and3. Will or trust itself calls for application of the intestate statute. [“to my intestate heirs”]

B. Share of Surviving Spouse1. All statutes provide for surviving spouse and typically spouse gets all assets if there are no “issue”.

[Issue = direct lineal descendents – kids, grandkids ... *“Issue” & “descendants” are synonymous]. If there are issue, typically the spouse gets 1/2 and issue get the rest.

2. UPCa. §2-102(1) – spouse gets entire estate:

i. (i) if no surviving issue and no surviving parents of decedent; ORii. (ii) if all decedent’s surviving issue are also the surviving spouse’s issue and visa versa.

b. §2-102(2) – spouse gets the first §200K, plus 3/4 of the balance if no surviving issue of decedent, but a parent of the decedent survives the decedent.

c. §2-102(3) – spouse gets first §150K, plus 1/2 of the balance if all of the decedents surviving issue are also the surviving spouse’s issue, but the surviving spouse has additional surviving issue that are not issue of the decedent.

d. §2-102(4) – spouse gets first $100K, plus 1/2 of the balance if one or more of the decedent’s surviving issue are not issue of the surviving spouse.

3. Kansas §59-504–508: if decedent is survived by spouse and issue, spouse gets 1/2 issue get 1/2. If surviving spouse, but no issue – spouse gets all (and visa versa for issue, but no spouse).

C. Share of Descendants [a.k.a. “Issue”]1. Terminology

a. “Per Capita” = Clean slate at the particular generational level, everyone takes equal.b. “Per Stirpes” (By Right of Representation) = Keep vertical lines intact. Each person at a

particular generational level steps into the shoes of his or her prior ancestor and split whatever that ancestor would have taken had he or she survived.

2. Formula: # of survivors at a particular generational level + # of non-survivors w/ surviving issue.3. Three Main Systems [see handout] – states choose one of these three systems

a. English Per Stirpes – prior generation focused; keeps vertical lines intact. i. Formula – apply at Child Generation alwaysii. C generation takes per capita, all others per stirpes

b. Modern Per Stirpes – hybrid; per capita w/ representation.i. Formula – apply at first generation with a survivorii. First generation w/ survivor takes per capita, everyone else takes per stirpes.iii. General Rule : when we have at least one survivor at the child level, will get the same result

under both the English and Modern Per Stirpes systemsc. UPC §2-106 – a.k.a. “per capita at each generation”. Not prior generation focused.

i. Formula – apply at first generation with a survivorii. Survivors at each generational level take per capita.

4. “Stop Gap Rule” – once a surviving descendant gets something, it’s a stop gap for any other issue on down that particular chain.

5. In-Laws – treat in-laws as if they don’t exist for purposes of intestate succession. *But, watch out for fact problems that may involve the Uniform Simultaneous Death Act (see below).

See CN_3 for sample problems

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D. Share of Ancestors and Collaterals1. Most statutes prefer issue (vertical heirs, going downwards), so if there are any issue, they stop gap

the collaterals and ancestors from taking anything. Thus, any question of collateral/ancestors will only come up when there are no issue.

2. Terminology:a. “Ancestors” – those who came before you in your direct, vertical line [upwards, instead of

downwards for issue/descendants, meaning, parents, grandparents, great gps, and so on]b. “Collaterals” – someone who is related to you merely b/c you have an ancestor in common.

Common ancestor must be the same person, but need not have the same title to each of you.i. Brothers or sisters – your parent is the common ancestorii. First cousins – your grandparent is the common ancestor.

3. Ranking Collaterals: [see Table of Consanguinity on p.93] Q: as between two, competing collaterals, who is closer? Q2: will a further removed collateral still take by representation?a. Step 1: starting w/ decedent, count upwards until you reach the common ancestor.b. Step 2: pivot and turn downward to the collateral in question.c. Step 3: repeat for competing collateral. Whoever has the lower # is closer to the deceased.

4. Three Systems As Applied to Collateralsa. English Per Stirpes

i. Formula – apply to first generation below the common ancestorb. Modern Per Stirpes

i. Formula – apply to first generation below the common ancestor with a survivorii. If survivor at bro/sis level, then result will be same as result reached via English method.

c. UPC §2-106i. Formula – apply to first generation below the common ancestor with a survivor

5. UPC – Shares of Heirs Other Than Surviving Spouse: Any part of the intestate estate that doesn’t pass to the decedent’s surviving spouse, or if there is no surviving spouse, the entire estate, passes in the following manner: [see p.61]a. §2-103(1) – to the decedent’s descendants by representation; b. §2-103(2) – if there is no surviving descendant, to the decedent’s parents (split b/w if both alive,

or all to one if only one alive); c. §2-103(3) – if no surviving descendant or parent, to the issue of the decedent’s parents or either

of them by representation.d. §2-103(4) – if none of the above, but decedent is survived by one or more grandparent or

descendants of his or her grandparents, half of the estate passes to the decedent’s paternal grandparent (or their descendants), and other half to maternal side.i. But, if above doesn’t apply on either maternal or paternal side, the entire estate passes to

the decedent’s relatives.ii. Note that the furthest we go is grandparents for the common ancestor, so if only related by

great grandparents, the collateral heir gets nothing!E. Uniform Simultaneous Death Act

1. The “beneficiary” is required to survive the “donor” by 120 hours [5 days]. Otherwise, is deemed not to have survived the donor.

2. To rebut this presumption (if more than 120 hours, or a question), must do so by “clear and convincing evidence.”

F. Posthumous Children1. Presumptions:

a. If you are born no more than 280 days after the death of your alleged father, we presume you were “in gestation” when he died.

b. If you are born more than 280 days after his death, we presume that you were conceived after your alleged father died. This is, however, a rebuttable presumption (burden is on the child).

2. If you were in gestation, you are deemed to have been alive at that particular moment in time.3. Thus, if X devises “to my children who are alive when I die” and X has 2 children A and B who are

6 and 8 years old and child C who is born 279 days after X dies, all 3 children get equal share.

See CN_4 for sample problems

See CN_4 and handout for sample problems

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G. Advancement = partial satisfaction of your intestate share.1. An advancement is, in effect, a prepayment of the donee’s intestate share.2. Threshold Q: what was the decedent’s intent with regard to this transfer? Overall, is a jury Q to be

derived from all of the circumstances. A factor to consider is whether the parent had a legal or moral obligation to transfer this property. E.g., a. Tuition payments, but only for grades K-12 [thus, payment for law school = advancement];b. Payment of medical expenses;c. Size of the transfer [larger the amount, more likely it is treated as an advancement]

3. Basis for Doctrine: we assume that parents want to treat all children equally in the long run.4. Mechanics:

a. If a transfer is deemed an “advancement,” the donee has two options:i. Walk away – keep advancement, but get nothing from estate (b/c there’s no duty to repay it

– even if it’s more than what the donee would have received under the estate); ORii. Share in the estate and allow the value of the advancement to be brought into the “hotchpot”

b. Donee’s decision will be determined by his advancement versus his share of the estate after it is augmented by the advancement.

c. Hotchpot = probate estate + advancement.d. If donee chooses to participate, net with 2 goals:

i. Distribute entire probate estate; andii. All children end up with the same amount, in the long run (even though the tangible

distributions from the estate will be different).5. Treatment of Advancements in Multi-Generation Scenarios:

a. Rule: if a parent makes an advancement to a child, and that child predeceases the parent, that advancement is deducted from the shares of that child’s descendants if other children of the parent survive. *very important qualification to remember.

b. E.g., assume that parent has two children, C1 and C2. C1 has child GC1, C2 has child GC2. Parent makes advancement of $40K to C1. C1 dies. Later, parent dies. Probate estate is $60K.i. The hotchpot = $100K.ii. In long run, C1 and C2 would each get $50K, so GC1 only gets $10K from the estate in a

Modern Per Stirpes Jurisdiction.iii. Rationale? because under the Modern Per Stirpes method, GC1 would take by

representation, which means that GC1 literally steps into the shoes of C1.iv. Under §2-106 – courts could likely say that GC1 is not bound by the advancement b/c

would be taking per capita. 6. Advancements Under UPC §2-109

a. Requires a writing to evidence the decedent’s intent that the transfer be an advancement;b. If donee predeceases the parent, the advancement is not counted against that donee’s

descendants (e.g., GC1 in above example) – even if they take per stirpes.H. Releases = full satisfaction of your intestate share (forfeiting up to your ancestor)

1. Setting: Decedent transfers property to donee, but rather than an advancement, it is in exchange for a release of any claim to a share of the decedent’s estate. Looks like an advancement; but, instead of the transfer being in partial satisfaction of the donee’s intestate share, it’s in full satisfaction.

2. If the donee predeceases the transferor, the donee’s descendants will be bound by the release if take per stirpes, but not if they take per capita.

I. Assignments = transfer by a prospective intestate heir of his or her prospective intestate share to an outside third party. (forfeiting outward, to some third party)1. Transfers Made Prior to Ancestor’s Death

a. General Rule: not enforceablei. Rationaletoo prospective; as matter of prop. law, can’t convey something you don’t have

b. Exception: enforceable if assignment was supported by consideration supplied by the assigneei. Rationalecontract law.

See CN_5 for sample problems

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ii. Notes: a. Courts aren’t concerned w/ policy argument that this might encourage the assignee to

kill the ancestor (b/c if the assignor predeceases the ancestor, no right to inherit). b. Ancestor’s knowledge of the assignment, or lack thereof, has no bearing on issue of

whether the assignment is effective. Knowledge/consent by ancestor not necessary.c. Another General Rule: If the assignor predeceases the ancestor and the assignor has children,

the assignment is not binding on the assignor’s children! This is true even if the outside third party paid consideration for the assignment and even if that heir is taking per stirpes! [different from how we treat releases]i. Rationaleassignor doesn’t have right to unilaterally transfer the child’s property right.

2. Transfers Made After Ancestor Diesa. Always valid.b. Rationaleno longer is prospective (thus even property law would consider the assignment

valid) and no longer need consideration b/c can give a gift.c. Thus, any “issue” with assignments will only arise if made prior to ancestor’s death.

3. 2 Risks from POV of Third Party, X:a. If assignee predeceases the ancestor, X is not entitled to anything, even if he pd consideration;b. The ancestor can always disinherit the assignee by will (devising all assets to someone else).

J. Bars to Intestate Succession1. Homicide: the would-be intestate heir kills the ancestor to ensure he takes via intestate succession.

a. In the absence of a statute, there are three ways the law may treat this situation:i. Option 1: apply the intestate succession literally, so that the killer gets the property.

a. Issue – rewards the killer / encourages would-be heirs to kill;ii. Option 2: treat the killer as if he or she never existed.

a. Issue – undermines the intestate succession scheme (something legislature should do);iii. Option 3 [the Constructive Trust Theory]: allow legal title to pass to the killer under the

intestate succession statute, but only nominally (legal fiction) so that the killer holds the property only as constructive trustee for the other intestate heirs. [hybrid of options 1 and 2]a. Best option b/c preserves the integrity of the intestate succession scheme b/c it

technically, albeit via a legal fiction, does not interfere w/ the statute and b/c it does not reward the killer in the end.

b. Constructive Trust Theory Appliedi. Voluntary vs. Involuntary Manslaughter

a. Voluntary – apply constructive trust analysis; b. Involuntary – don’t apply constructive trust analysis (killer takes)

i. If killer argues insanity, also don’t apply b/c negates elements of intent.ii. Effect of Criminal Convictions on Subsequent Civil Proceeding

a. Finding of voluntary manslaughter or worse carries overb. Acquittals do not carry over (b/c of the lower b.o.p.)

c. Joint Tenancy: i. General Rule: If A only survives B b/c A killed B, joint tenancy of property is severed and

essentially becomes tenancy in common so that A (killer) only gets 1/2 and other 1/2 remains with B’s estate.

ii. A Compromise: killer would either get all or nothing. The majority rule is in-between. iii. Same analysis applies to:

a. Life insurance policies;b. Killer holds a remainder interest following Victim’s life estate;

iv. Homicide/Suicide Situationa. View 1: case law requires a conviction to apply the constructive trust theory, therefore,

the property passes to the killer’s estate and there is no sanction;b. View 2: if it can be shown in a civil action that the killer indeed killed the victim, the

killer forfeits as does his estate, just as if there was a conviction.

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2. Disclaimer: when the heir or devisee declines to take the property, the refusal is called a disclaimera. Traditional Rule: you cannot effectively disclaim your intestate share.

i. Rationale don’t want to undermine the intestate succession statute.b. Modern Rule: most states have changed this rule, but there must be a statute that affirmatively

does this for the traditional disclaimer rule not to apply.i. General Rule: if you disclaim, property passes as if you predeceased the ancestor.ii. Qualification: you can’t do anything that would qualify as acceptance prior to making a

disclaimer. E.g., gift is a home and you move in. Can’t then try to disclaim.iii. Example: O has 2 kids, A and B. B dies, survived by one child, C. Then O, a widow, dies

intestate. O’s heirs are A and C. A has four children. A disclaims. What result in…a. Modern per stirpes jurisdiction?

i. If A disclaims: If A disclaims, jurisdiction treats A as having predeceased O. Thus, first generation with a survivor is the GC level. A’s four children and B’s child C will all take per capita so each get 1/5.

ii. If A doesn’t disclaim: First generation w/ survivor is C level. Apply per capita to A and B each taken1/2. B’s 1/2 goes to C by rep. (per stirpes), then A gets 1/2.

iii. Policy Concern = Strategy Concern. If A disclaims, enhances his kid’s “share” at expense of C (B’s child).

b. UPC §2-1106(b)(3)(A) [p.134]: the disclaimed interest passes to the descendants of the disclaimed. Thus, the only thing that would pass to A’s kids is A’s 1/2 share.

c. Disclaimers and Creditors: As a general rule, disclaimed assets are off limits to the disclaimant’s creditors. Treat these assets as if they were never the disclaimant’s to begin w/ (which is one of the reasons people choose to disclaim in the first place).i. Limitation not effective against government creditors (IRS).

d. Effect of Disclaimer on Government Assistance Programs : It is against public policy to allow disclaimer of an inheritance that would enable party to be self-sufficient. Thus, if a party does this, we treat it as if he owned those assets and they are attributable to him on, for example, issue of Medicaid qualification. Troy v. Hart. In Troy, he was thus liable to gov’t for backed Medicaid for which he would not have been eligible, even though his disclaimer was effective (so ultimately, got worse of both worlds) – attorney could be criminally liable for this.

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III. Wills

A. Execution of Attested Wills1. General Requirements: each state has its own statutes that prescribe certain requirements that must

be satisfied in execution of will for will to be valid. 2. Traditional Rationale of Rigid Requirements:

a. Ritual Function: requirements impress upon the testator and the witnesses that this event has serious legal consequences; this is not a draft, but rather, the real thing.

b. Evidentiary Function: requirements help preserve reliable proof that this was the testator’s intent. Otherwise, might have to rely on faulty things to construct intent (e.g., bad memory).

c. Protective Function: requirements help protect testator from fraud, undue influence, coercion. 3. Majority View Traditional Approach: require literal compliance w/ execution requirements.4. Minority View “Dispensing Power”: notwithstanding strict compliance w/ execution

requirements, will might still be valid so long as it can be proved by clear and convincing evidence that it was the decedent’s intent for this to be a will. a. UPC §2-503 [p.226] – statute gives the courts the power to dispense with the execution

requirements so long as there is substantial compliance. 5. Acknowledgement: used in most jurisdictions as a fall-back option of validating the will when you

have pre-signed the will not in the presence of the witnesses or not in the presence of all of the witnesses together.a. To acknowledge means to announce that this is your name, that you wrote it, and to say to the

witnesses “please bear witness…”b. The caveat is that the witnesses must see the signature or have had the opportunity to see it and

the testator must acknowledge in the presence of the witnesses together at same time!6. Presence: 2 tests *note that the 2 tests don’t only apply to signing – can apply to other situations

where presence is required as well, for example – proxy for revocation of will.a. Line of Sight Test: the testator does not actually have to see the witnesses sign, but must be

able to see them if the testator were to look. [Testator must see witness sign, or be able to see]b. Conscious Presence Test: [more liberal than line of sight test]. Under this test, the witness is

in the presence of the testator if the testator, through any of the senses, comprehends that the witness is in the act of signing.

7. Order of Signing: a. General Required Order:

i. Testator must sign firstii. Testator must sign or acknowledge w/ all witnesses present at the same time.iii. Only then can the witnesses themselves sign.

b. Qualification: One Continuous Transaction Theory. A fallback theory. In the event that the order is not retained, may still be valid under this theory if the testator and witnesses all sign while in the same room and do so w/in a reasonable time b/c, as a practical matter, the witnesses did what witnesses are supposed to do (attest to what they’ve seen, but here, it’s just not attesting to what they’ve already seen – which is the rational for the preferred order).

c. UPC §2-502(a)(3) – “reasonable time” requirement. Time gap may also be a problem. 8. Signature:

a. Symbols [“X”] – qualify, so long as it was the testator’s intent at the outset that the symbol qualify as his signature. Initial intent and final product must match.i. E.g., Assume testator, Patrick, starts to sign but only gets so far as “Pat.” Won’t qualify.

b. Rubber Stamp/Typed Name: ALL states say this is ineffective, even if the testator himself stamps or types the name on the will. Rationale? high risk of fraud.i. Hypo: assume the testator stamps his name and in addition, marks an “X.” What result?

We ignore the stamp as if it doesn’t exist, and look at intent (see a above). However, the stamp might indirectly help establish intent.

See CN_8 for class examples.

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c. Ratification: same facts as last example, but after he signs “Pat,” he says “that’s good enough.” Here, will qualify under doctrine of ratification b/c he is changing his intent.

d. Assistance: all courts say that assistance, someone helping testator sign, qualifies.i. No requirement that the testator request assistance;ii. Testator must hold pen and do at least some of the work (even only 1% will suffice).

e. Proxy: applies if other person is doing all of the work and testator is only observing.i. Testator must request for proxy (unlike assistance);ii. Presence required – must be done in presence of testator.

f. Placement of Signature: some states, by statute, require the signature be at the bottom.i. Rationale? helps to establish intent, this is where most people sign things.ii. Even in states where not required, can help w/ question of intent.

g. Handwritten wills, no “signature”: If the only place the testator’s name appears is, for example, in his own writing as “I, Patrick, do hereby…” it presents a question of intent. So long as it can be shown that, when he wrote those words, he intended for it to be his legally, operative signature – will suffice.i. Note that if this handwritten name appears at the bottom of the will, triggers a presumption

in most jurisdictions that it was the testator’s intent this be his legally, operative signature.h. Additions after signature:

i. Setting: will with signature near bottom, but below that signature are the words “I hereby give Karen Smith my diamond ring.”

ii. Test: what was the status at the time of execution.iii. If in jurisdiction that requires signature come at end of will and the words truly weren’t

there until after the will was signed, we ignore the addition and everything that is above the signature is valid.

iv. Administrative Additions: If the additions say something administrative rather than dispositive, we ignore the words insofar as placement of signature is concerned, but unlike dispositive words, we honor the words for purpose of their administrative directions. (e.g., “I hereby appoint Emily my executor.”).

v. “Surplusage”: same result as administrative additions – ignore words for signature placement purposes and will is valid. (E.g., below signature the testator later wrote the words to the KU alma matter).

9. Requirement of “Disinterested Witness”a. General Rule : if one or more witnesses are interested, the entire will is void.

i. General rule operates so that it ultimately harms the witness/devisee and the will.ii. General Rule: to qualify as a valid witness, must be disinterested.iii. “Disinterested” = can’t be a devisee or a spouse of a devisee in the will (note that with

witness’s spouse, if the statute itself doesn’t say this, we imply it via case law).iv. Rationale: concern that if the witness is interested, might apply undue influence/coercion.

Purpose is to prevent fraud as of the frozen moment of execution (very time specific).v. Rule applies, regardless of whether there were enough valid witnesses. E.g., if the statute

requires 2 witnesses, and you have 3, only 1 of which is interested, entire will is still void!b. Purging Statutes : interested witness (X) deemed to have forfeited her devise so that she is

now a qualified witness and the entire will is valid, except for that portion devising to X.i. Purging statutes operate to help the will. ii. Variations on Purging Statutes [in some states]:

a. Instead of X deemed to have forfeited her entire devise, the purging statute operates so that X only forfeits the property that is in excess of either: i. (1) what X would have received as a would-be intestate heir [X has Triple Party

Status]; or, ii. (2) if there was a prior valid will (where X was a devisee but not a witness), what

X would have received under the prior will.

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iii. Triple Status Example: X has triple status (witness, devisee, and otherwise intestate heir). If decedent died intestate, X would have received an intestate share of $50K. Under the will, the decedent devised $70K to X. Under General Rule: entire will is void, so that X gets $50K (b/c now decedent

dies w/o a will) but anyone else in the will that is not an intestate heir gets $0. Under Basic Purging Statute: only the portion devising $70K to X is void, the

rest of the will is valid. Under Purging Statute Variation: will is valid, but X only gets $50K and is

deemed to have forfeited $20K (keeps her intestate share of $50K).iv. Prior Valid Will Example: Under Will 1 (where X was not a witness), X was

devised $50K. Under new Will 2, X was a witness and was devised $70K. Net Result: X only forfeits $20K (b/c this is the extent to which the Will 2 devise exceeds the prior devise).

v. Rationale? any undue influence that X may have or did cause only applies to the amount in excess of what she would have received.

vi. NOTE: if would-be intestate share or the amount under the prior will is more than the amount under the will for which X was a witness, X doesn’t forfeit anything b/c there’s nothing in excess and, as such, no concerns about undue influence.

iii. Supernumerary Witness Statutes: if there is an interested witness (X), in addition to the number of witnesses we need under the state’s statute, is another prong of some purging statutes that acts as an exception so that we treat X as if she had never been a witness in the first place and, as such, does not forfeit, period.a. Supernumerary Witness statutes operate to help the will and the witness/devisee.b. Ex.: state requires 2 witnesses. A, B, and C are all witnesses. A and B are disinterested,

but C is devised $70K and, as a would-be intestate heir, would receive $50K.i. Under General Rule: entire will is void, even though there are 2 valid witnesses

and the state only requires 2. Because C is an intestate heir, however, gets $50K.ii. Under Basic Purging Statute: C is deemed to have forfeited her share and only the

devise to C is void, the rest of the will is valid.iii. Under Super Purging Statute: C is deemed to have forfeited only the portion of her

share in excess of her would-be intestate share. Thus, the entire will is valid, but C only gets $50K b/c is deemed to have forfeited $20K.

iv. Under Supernumerary Witness Statute: C is deemed to have never been a witness in the first place and, b/c there were enough valid witnesses, the entire will is valid and C gets the full $70K share.

iv. Estate of Parsons [p.211]a. Facts: statute required 2 witnesses. Decedent had 3: Ward, Nelson, and Gower. Ward

is valid; Nelson is interested b/c of a $100 devise and Gower is interested b/c of a devise of real property. UPC §51, which applied in this state, contains a basic purging statute, but also a supernumerary witness exception. However, problem here is that there aren’t enough disinterested witnesses to meet the statute requirement of 2. To solve the problem, Nelson sacrificed herself for Gower by disclaiming her $100 devise. i. Would-Be Intestate Heirs’ Argument: statute looks at witnesses at the time the will

was signed. Thus, b/c at that time Nelson was interested, the will is invalid.ii. Witnesses Argument: Disclaimers relate back to the date of execution. Thus,

Nelson was a valid witness from the very date of execution.b. Issue: is N’s disclaimer effect. & does it relate back for purp. of making her valid wit.?c. Holding: A disclaimer is effective, but for purposes of witness execution, it doesn’t

relate back. Net result: Nelson and Gower have to forfeit, rest of will is valid. d. Rationale: purpose of a wit.execution statute is to prevent fraud and, as such, our focus

is very time specific. The fact she later disclaimed doesn’t solve our fraud concerns. 10. Attestation Clause: attestation clause recites will was duly executed. Not required, but good to

include b/c: (1) presum. all done right; (2) rebuttal evidence in event W later testifies against will.

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a. Present Tense: part of actual, execution process. Contains signatures of witnesses as witnesses.11. Self-Proving Affidavit: Allows the witnesses to “pre-testify.” In addition to signing the will itself,

the witnesses and the testator sign and attach a notarized affidavit, which states that all of the state’s execution requirements were complied with. Authorized by UPC §2-504, but not required.a. Past Tense: unlike attestation clause, backward looking. W’s are saying they did all correctly.b. Not required, but should always do so that when the will is probated, won’t have to call

witnesses to testify that it was properly executed.c. Effect: if done, is irrebuttable, conclusive presumption that all requirements were followed.

i. Qualification: the will can be challenged on non-procedural matters. Can’t challenge on basis requirements weren’t followed, but can challenge, for e.g., testator was mentally ill.

d. Must Properly Execute: don’t have to use a self-proving affidavit, but if you do, the will itself must be executed properly! E.g., In re Will of Ranney [p.226] – the witnesses didn’t sign the will itself. They did have an attestation clause, though not required, but failed to sign that as well; however, they did sign the self-proving affidavit. There wasn’t literal compliance with the execution requirements, however, state followed minority approach so ct. sent back to see if there was enough evidence to amount to “clear and convincing evidence” of decedent’s intent.

B. Execution of Holographic Wills1. Defined: a holographic will is a will hand-written by the testator and signed by the testator; no

attesting witnesses are required.2. Valid in 27 states; not in Kansas.

a. Note: in Kansas and other states that don’t recognize holographic wills, the will can be handwritten, but we must have the signature of witnesses and the testator. Only difference w/ a holographic will is that (1) we don’t require witnesses and (2) must be handwritten.

3. Advantage : if recognized, advantage is that the will does not have to be witnessed. 4. Extent Holograph Must Be Written by Testator’s Hand: [p.241]

a. First Generation Statutes: “entirely, written, signed, and dated” i. Require that everything be in testator’s penmanship regardless of whether the non-written

words are essential to the will.ii. The “Intent Approach” – if the word is there, the testator intended it to be there, and, as

such, it must be in the penmanship of the testator. iii. E.g.,

a. In Estate of Thorn: testator had real property he called “Cragthord,” which, after hand writing 1x, he stamped on the will thereafter. Proponent of will argued the stamped words were mere surplusage b/c was handwritten in initial description but court held will invalid b/c not everything was in testator’s penmanship.

b. In Estate of Dobson: testator took her signed, handwritten will to her banker to clarify it w/ him. To make the will clearer, the banker made handwritten notes in the margins all w/ consent of testator. Held invalid b/c not all in testator’s own handwriting.

b. Second Generation Statutes (1969 UPC): “material provisions” [tunnel vision approach]i. Require only that the signature and the material provisions of the holograph be in the

testator’s handwriting. ii. Testamentary Intent: under this approach, some courts were willing to look at the printed

(non-handwritten) language to establish testamentary intent others, however, were not. Thus, some courts struggled with wills that were partially typed and partially handwritten b/c sometimes a material dispositive provision was wholly or partially printed and sometimes the language that indicated testamentary intent was printed rather than written out by the testator. Most courts, follow approach laid out in Mulkins:a. Strip away pre-printed language and treat it as if it doesn’t exist; b. Focus exclusively on penmanship words that remain;c. Are these words enough to express the testator’s testamentary intent? If so, can say that

pre-printed part is not essential and, as such, will is valid.

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iii. E.g.,a. Estate of Johnson: Pre-printed words were “I hereby give” and “to.” When these were

stripped away, all that was hand-written was “Sharon Clements” “1/8.” Court held penmanship words weren’t enough to embody testamentary intent – will held invalid.

b. Estate of Muder: Printed words: I give to . Penmanship words “my wife Retha our home located in Douglas County.” Not much more than Johnson, but here court held the penmanship alone was enough to establish testamentary intent (even though no penmanship words saying “I hereby give/devise.”)

iv. Overall: more flexible than 1st gen. approach, but still falls short [e.g., b/c the date is “material” according to most holographic will requirements, must be handwritten and would be invalid if the date were printed].

c. Third Generation Statutes (1990 UPC): “material portions” and extrinsic evidence allowed.i. Change from “Provisions” to “Portions” – meant to allow the probate of a holograph even if

“immaterial” parts such as the “date” or “introductory wording” are printed. ii. Extrinsic Evidence Allowed (biggest change) –allowed to establish intent.

C. Revocation of Wills [the end of the wills cycle]1. Three Means of Revoking a Will

a. Revocation by Subsequent Writing [best method of revocation]i. Requirements: both must be true

a. Affirmative act by the testator (signing the subsequent will);i. Exception proxy: (1) at testator’s request; (2) in presence of testator.

b. Intent to revoke. ii. Revocation by subsequent writing still requires witnesses to be present (must meet

generally applicable will requirements for the particular jurisdiction). iii. NOTE: doesn’t necessarily have to be a separate document. Most courts would treat

writing on the back of the will as a subsequent writing if properly executed.iv. 2 Sub-Categories: Different ways the subsequent writing can revoke –

a. Express Language: the subsequent document revokes the prior document (will or devise) by express language. Can also be in the form of a blanket provision revoking all prior wills or one, particular will.

b. Implication/Inconsistency: implied from inconsistency in a subsequent document. i. Later will in time has priority (2nd will prevails by implication).ii. Revocation occurs partially and only to the extent of the inconsistencies.

v. Competing Views on Subsequent Writings: a. Ecclesiastical Approach: when will is executed, it takes effect immediately in terms of

its effect on other wills.b. Common Law Approach [majority rule]: when a will is executed, it only takes effect

upon the testator’s death.vi. Types of Subsequent Writings:

a. Codicil: subsequent document that refers back to the first with reasonable specificity and, as such, is not a separate, independent will but rather a part of the first will.i. Codicil depends on the original will for its life, but not visa versa.

b. Second Will: subsequent will that does not refer back to the original will.c. Effect of Codicil versus Second Will:

i. If testator revokes the 2d doc. first –has no impact on first will, regardless of whether a codicil or 2d will (unless in jurisdiction applying ecclesiastical approach)

ii. If testator revokes 1st doc first – very important if second document is a codicil or a will. If a codicil, revocation of the will impliedly revokes the codicil as well.

vii. Partial Revocation by Subsequent Writing: Every jurisdiction allows partial revocation by subsequent instrument (unlike partial revocation by physical act).

See CN_11 for class examples.

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b. Revocation by Physical Act *recognized by all states.i. Requirements: both must be true

a. Affirmative act by testator (some act done to the paper itself: burning, tearing, etc…);i. Exception proxy: (1) at testator’s request; (2) in presence of testator.

b. Intent to revoke.ii. Revocation by physical act does not require witnesses to be present.iii. Cancellation:

a. A cancellation is physically marking over the original words in the will. b. Contact Requirement [majority rule]: by definition, you cancel words (conversely, you

burn the document, so burning or tearing don’t require contact w/ words). As such, the marking on the document must come in contact w/ the words.i. Rationale? – helps establish testator’s intent to revoke. Notes in margins are

usually there to understand the document, not to cancel it.ii. Is traditional and still majority rule.

c. UPC §2-507 [minority rule] – no contact requirement for words/markings (treats in same manner of burning/tearing).

iv. Partial Revocation by Physical Act: only allowed in some states (unlike partial revocation by subsequent writing). But, entire revocation by physical act recognized by all.a. Qualification/Exception: If the partially revoked provision is destroyed and there’s

nothing else to ascertain intent (no photocopies, etc…) even jurisdictions that don’t recognize partial revocation by physical act will probate the rest of the will anyway and “give up” on the partially revoked part so that the net effect is that we basically “have” partial revocation if the testator did a thorough enough of a job w/ the physical act.

b. UPC §2-507 allows partial revocation by physical act.c. If jurisdiction doesn’t allow it (and testator didn’t do thorough enough of a job for

“qualification” to apply) we probate the entire original will and treat attempted partial revocation as if it never occurred.

d. Effect on Holographic Wills (if allowed) – whether jurisdiction recognizes partial revocation by physical act is moot w/ holographic wills b/c we allow the testator to make changes to a holographic will by installments over time (continuous evolution).

c. Revocation by Operation of Lawi. Revocation done for the testator by operation of law. As such, no intent requirement.ii. Typical Statute: will is revoked if a certain event occurs in the testator’s life subsequent to

the will – e.g., marriage, divorce, birth of child, etc… iii. Divorce: net result typically is that we treat the now-former spouse as if he or she

predeceased the testator. Qualification: unless will says otherwise.a. Relatives of Divorced Spouse:

i. Usually, devises to relatives of divorced spouse are not revoked; ii. UPC §2-804(b) – extends automatic revocation of devises to former spouse’s

relatives as well.iv. Marriage / Children: net result typically is that they get what they would have received

under intestate share. Qualification: unless left out intentionally or, sometimes, if included in other non-probate transfers.

2. HYPO [taken from Thompson v. Royall – p.255]a. Testator executes will and codicil, but later changes her mind. Her attorney comes with the docs

and she instructs him to destroy the documents to revoke them. However, instead, he instructs her to keep them intact for memo purposes. What result under the following fact variations?i. Scenario 1:

a. Additional Facts: (1) On the back of the will, the attorney writes “this will null and void;” (2) Testator signs below; (3) No witnesses

b. Result: Not an effective revocation b/c of lack of witnesses.

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ii. Scenario 2:a. Additional Facts: (1) On the back of the will, the attorney writes “this will null and

void;” (2) Testator signs below; (3) this time witnesses present!b. Result: Revocation is valid.

iii. Scenario 3:a. Additional Facts: (1) On the back of the will, the testator writes “this will null and

void;” (2) Testator signs below; (3) No witnessesb. Result: Revocation is valid, so long as jurisdiction recognizes holographic documents

b/c in such jurisdictions, holographic documents don’t require witnesses.

3. The Harrison Presumptiona. Presumption = testator revoked the will OR destroyed will with intent to revoke.b. 2 Factual Premises Trigger the Presumption:

i. The will in question is last traceable to the testator’s possession; ii. Upon testator’s death, the will in question can not be found OR is found, but in a mutilated

form (e.g., torn, burnt, etc…)c. Presumption is rebuttable.d. Note that if no one can testify that the testator is really the one who did the physical act –

presumption still arises (but again, it’s still rebuttable).

4. Duplicate Originals a. Setting: have 2, validly executed wills (used blue ink on both) – you never want to do this, but

if you do, some general rules apply.b. General Rule: testator’s intent to revoke a will carries over to duplicate originals, regardless of

whether the duplicate original remains intact. i. Harrison Presumption applies: if the 2 factual premises are met as to one of the duplicates,

we presume the testator also intended to revoke the second original, even if the second duplicate original is in the testator’s possession (however, presumption is stronger if second duplicate original is not in the testator’s possession).

5. Effect of Duplicate Unexecuted Copies: a photocopy of a will or any other unexecuted copy have no legal significance. As such, any physical act done to it is insignificant. However, unexecuted copies can be used as evidentiary support when needed.

6. Ratificationa. General Rule: ratification is not allowed in a case where we have an attempted revocation by

physical act done by someone other than the testator.b. E.g., testator requests a proxy, but the revocation by physical act is not done in his presence and,

as such, requirements for proxy are not met. As a backup argument ratification also will fail.

7. Dependent Relative Revocation (DRR): a. Can apply at micro level; e.g., to revocations of specific devises rather than entire wills. b. Threshold Question : Do we even need DRR to resurrect Will 1? Considering the following Qs:

i. Was Will 1 even properly revoked so that, although testator intended to revoke Will 1, that intended revocation was invalid and, as such, don’t need DRR to resurrect Will 1?a. If Will 1 is partially revoked by physical act does this jurisdiction even recognize

revocation by physical act so that it was effective? If not, no DRR.b. Is it a handwritten will? If so, does state recognize holographic wills?

ii. Conditional Intent: Was the testator’s intent to revoke Will 1 conditional? *Note – intent factors only apply to Formula 1 (see below), b/c under Formula 2, we have proof of the contingency by reference in Will 2 (see below).a. Are the provisions b/w the two wills substantially similar? If the provisions in Will 2

are materially and substantially different from Will 1, we presume the testator’s intent was that Will 1 not continue to operate in any event.

b. Physical proximity of Will 1 and Will 2.

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c. DRR Formulas: DRR applies in two situations:i. Formula 1: (1) Testator destroys or revokes Will 1 because he believes Will 2 will take its

place; and (2) one of two things are true: a. 1. Will 2 is invalid (never took effect b/c was improperly executed); or b. 2. Will 2 was never made at all.

ii. Formula 2: (1) Testator is motivated to and does revoke, or partially revoke, Will 1 by a belief that turns out to be false; and (2) Will 2 contains a reference to this mistaken belief [Will 2 must recite why Testator revoked Will 1].

d. LaCroix v. Senecal [p.260]i. Facts: Will 1 is validly executed and gives 1/2 “Nephew”; 1/2 Aurea. Later, testator

executes a codicil, with exactly the same provisions, but she put her nephew’s actual name. Problem? one of the witnesses to the codicil was Aurea’s husband and, as such, he doesn’t qualify as a disinterested witness. B/c of the purging statute, it won’t invalidate all of Will 1, but would cause the 1/2 devise to Aurea to be invalid.

ii. Net Result w/o DRR: Testator validly revoked Will 1, but second disposition to Aurea is invalid b/c she is purged from the devise.

iii. Holding: DRR applies. Testator’s intent to revoke initial residuary clause was conditional. e. Reverse DRR: When a later will is revoked w/ hope it will reinstate an earlier will (the exact

reverse of DRR). If intent is shown and other facts are right, DRR might apply to reinstate Will 2. E.g., Will 1, then Will 2, which expressly revokes Will 1. However, testator later tears up Will 2 thinking it will have the effect of reinstating Will 1. Most courts will use reverse DRR to reinstate Will 2. E.g., Estate of Alburn [p.264]

8. Revivala. Factual Premise:

i. Have Will 1;ii. Then, Will 2, which revokes Will 1 (by either express language or impliedly by inconsistent

devises only (b/c if revoked by physical act, revocation is always instant), and is itself valid.iii. Later, Will 2 itself is revoked by testator (w/ his intent to revoke)

b. Question raised: when testator revoked Will 2, does it have the effect of automatically reinstating Will 1, b/c, the only reason Will 1 is void is due to Will 2?

c. 4 Views on Issue:i. English/Common Law View: no will takes effect until testator dies. Thus, Will 2, which

purports to revoke Will 1, never took effect at all. Thus, Will 1 was never revoked and we don’t even need to reinstate.

ii. Instantaneous View (Ecclesiastical View): Will 2 takes effect immediately and, as such, Will 1 was revoked and remains revoked. To reinstate, must re-execute Will 1 w/ all proper requirements.

iii. Liberal, Instantaneous View: Same as Instantaneous view, BUT, Will 1 can be revived if the testator so intends.

iv. UPC §2-509: a. (a) If W2 wholly revoked W1, W1 remains totally revoked

i. Rebuttable Presumption: If evidence of contrary intent Reinstates

b. (b) If W2 only partially revoked W1, W1 reinstatedi. Rebuttable Presumption: If evidence of contrary intent Remains Partially

Revoked (start with opposite presumption from subsection (a)).

c. (c) Chain Application: If W2 revoked W1, either in whole or in part, and later, W2 is revoked by W3, W1 remains revoked.i. Rebuttable Presumption: If language in W3 says that T intends for W1 to be

reinstated Reinstated.

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D. Components of a Will: 4 doctrines that assist in determining what this particular will comprises: (1) Integration of Wills; (2) Republication by Codicil; (3) Incorporation by Reference; and (4) Independent Legal Significance. *note the last 2 permit extrinsic evidence to resolve the ID of pers. or prop. in will.

1. Integration: under the doctrine of integration, all papers present at the time of execution, intended to be part of the will, are integrated into the original will.a. 2 Requirements

i. Physical Presence: this page must have been in existence at the time of execution;a. Physical Presence Factors:

i. Pages are fastened before will is signed;ii. Testator initialed each page;iii. Internal coherence (e.g., plot follows from page to page w/o gaps);iv. Orderly scheme (e.g., consecutive page numbering, roman numerals, lettered ¶s…)

ii. Intent: testator must have intended the page in question to be part of the will.a. Intent Factor: If physical presence is established, raises rebuttable presum. of intent.

2. Republication by Codicil: under the doctrine of republication by codicil, a will is treated as reexecuted (republished) as of the date of the codicil.a. Codicil MUST “Refer Back” to the prior will w/ reasonable specificity (date, time, location …)b. Consequences of Republication by Codicil:

i. Later in time takes priority over earlier will;ii. Can effectively reexecute a prior will that was invalid by providing the missing formalities;

c. Note that it’s okay if the codicil happens to be on the same piece of paper as the will. See e.g., Johnson v. Johnson [p.297 / CN_16] Also, ok if codicil is holographic, so long as jurisdiction recognizes holographic codicils and those words alone make sense as a testamentary devise.

3. Incorporation by Reference: under doc. of incorporation by reference, any outside, independent writing that is in existence when a will is executed may be incorporated by reference if the language of the will manifests this intent and describes the writing sufficiently to permit its identification.a. Consequence of Incorp.by Reference: outside doc. is sucked in and becomes part of the will.b. 3 Requirements:

i. Outside document must have already been in existence at time will is executed;ii. Will refers to the outside document in present tense as being in existence;iii. Will describes the outside document with some degree of reasonable specificity.

c. Keep in mind that incorporation by reference can work in conjunction with other doctrines. E.g., in Clark v. Greenhalge, Testator had a memo which was written in 1972 and later amended in 1976. Then, in 1977, a will which gave all to Greenhalge, except the things T kept in the memo. Later, in 1979, Testator started to keep a notebook where she gave a painting to Ginny. Finally, 2 codicils in 1980 republished T’s 1977 will. HELD: the notebook qualifies as a “memo.” Note that under the doctrine of incorporation by reference, the notebook was not “in existence” at the time the will was executed b/c the will was executed in ’77 and the notebook didn’t come until ’79; however, b/c of the 2 codicils in ’80, we treat the will as if it were first executed in 1980 rather than 1970 under the doc. of republication by codicil, which solves the issue of existence under the doctrine of incorporation by reference.

d. “List Statute” Exception. UPC §2-513 (see p.278) is a deviation from the requirements under the incorporation by reference doctrine. i. Under that statute are the following deviations:

a. You can dispose of tangible personal property, other than money by a statement written before or even after the will is executed.

b. Will must refer to a writing, but it doesn’t have to refer to that document as being in existence at the time of execution;

c. Writing must be signed by testator (not required for incorporation by reference).ii. Called a “list statute” b/c it doesn’t have to be witnessed. iii. Doesn’t eliminate incorporation by reference. Instead, only applies if the above criteria are

met in those special circumstances.

See CN_15 for Republication by Codicil hypos.

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4. Independent Legal Significance: Under the doctrine of independent legal significance, an external event, condition, or document may be used to identify a devise or a devisee under a will. a. Premise: whatever T is conveying or person T conveys to, must be derived by an outside eventb. Test: the external event/document must have a non-testamentary impact / be non “will-minded”c. HYPO

i. Will reads “I leave all of my assets to my generic wife.” Later, T marries A. Although the outside event, the marriage of T and A, has an impact on the will, this impact is incidental to the reason that people get married (T and A’s marriage was not motivated by T’s will). As such, all of T’s assets go to A when T dies.

ii. Will reads “All my GM stock to A.” When T executes the will, has 10 shares; however, T later acquires 10,000 more shares and dies. A is entitled to 10,010 shares b/c, although the will is effected by T’s acquisition of the additional 10,000 shares, it was non-will motivated.

iii. Will reads “All of my assets to go in accordance with a memo I’ll leave my exec..” Here, ind.legal sig. will not work b/c the memo’s only purpose is to impact T’s will. Incorporation by reference also won’t work b/c memo wasn’t in existence at time will was executed.

d. Contents of a Container: i. Situation: Will reads “To X, whatever is left in container when I die.”ii. Locked Containers: if container is locked and T keeps the key, may work b/c when T

changes the contents, it’s an independent act. This is especially true with a safety deposit box (unless many people had access to the box).

iii. Unlocked Container: less likely to work b/c of high possibility for fraud.e. Another’s Will: if T’s will says, for example, “All my assets to any charitable trust established

by A’s will,” the “other’s will” is usually treated as an event w/ independent legal significance.f. List statutes (see above) also act as a deviation from independent legal significance doctrine b/c

even if the writing only has a testamentary impact on a will, it can still qualify under a list statute if all of the other requirements are met.

E. Lapsed and Void Devises1. Death of Devisee Before Death of Testator :

a. General Rulesi. Rule of Lapse (traditional rule): devise lapses upon devisee’s death and when Testator

later dies, those assets stay in T’s estate as either (1) residue or (2) intestate. Thus, the assets don’t go to the devisee, b/c he predeceased T, but also don’t go to the devisee’s estate. a. Hypo: T’s will reads “my watch to A (specific devise) and $10K (general devise) to B.

Residue to C.” A and B predecease T. Net Result when T later dies? watch and $10K go to C as residue. If C also died, the watch and $10K go to T’s intestate heirs.

ii. No Residue of a Residue Rule (minority, common law rule): if a residuary devisee predeceases T, that devisee’s share passes to T’s intestate heirs. a. Thus, if we have 2 residuary devisees, and only 1 survives T, the living residuary

devisee remains frozen at 1/2, and deceased residuary devisee’s share passes intestacy.b. Exception: in the majority of states, this rule has been overturned by statute or judicial

decision b/c it doesn’t carry out the average testator’s intent. In these states, the residuary devisees are treated as joint tenants so that if 1 predeceases T, the other devisee takes all by right of survivorship.i. Exception: assume that T’s will reads “1/2 residue to A, 1/2 residue to B.” A

predeceases T. Here, even in a state that has abolished the no residue of a residue rule, B remains frozen at 1/2 because of the specific language in T’s will.

iii. Class Gifts: if a member of the class predeceases T, the entire class devise goes to the surviving class members (class members are treated as joint tenants).a. “Class Gift” Defined: a devise to a generically designated group of people, all of whom

share a status, w/o identifying any of the members of the class by their individual namesb. Hypo: T devises “$10K to A’s children.” A’s child B, dies before T. At T’s death, T is

survived by another child of A, C. C takes the entire $10K b/c this is a class gift.

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iv. Void Devise (common law rule): where a devisee is dead at the time the will is executed, or the devisee is a cat or dog or some other ineligible taker, the devise is void. The same general default rules govern the disposition of void devises as govern lapsed devises. a. Hypo: T devises blackacre to X; however, unbeknownst to T, X is already dead. The

devise to X is void (not lapsed, b/c X was dead pre-execution) and, as such, blackacre remains w/ T’s estate either as (1) residue or (2) intestate.

b. Estate of Russell [p.388]i. Facts: T’s will devised “Everything to Chester Quinn and Roxy Russell.” Chester

is a human, Roxy is a dog. ii. Trial court allowed extrinsic evidence to show that T’s intent was for 100% to go to

Chester and then for Chester to take care of Roxy. iii. However, Supreme Court (and DLT) disagreed.

To determine if there’s ambiguity in a will, apply a 2-step process:o Threshold phase – is the language vague and ambigious on its face?o If so , only then can we consider extrinsic evidence.

Here, no such ambiguity. Instead, the will devises “1/2 to Chester, 1/2 to Roxy Russell;” however, devise to Roxy is void and, b/c the same default rules that govern lapsed devises govern void devises, Chester remains frozen at 1/2.

b. Antilapse Statutes: these statutes keep a devise from lapsing (applies to lapse only) and typically give the devise to the devisee in the person of his or her surviving issue instead of lapsing to T’s estate. i. The “If Clause” – generally, under these statutes, there’s an if clause that lays out certain

requirements that the devisee who predeceases T must satisfy for the statute to apply. The general requirements (if clauses) are:a. Named devisee must predecease T; b. Devisee bears a certain relationship to T (usually, kids);c. Devisee left surviving issue.

ii. UPC §2-605 (see p.393) a. “If Clause” – if a devisee who is a grandparent or a lineal descendant of a grandparent

of the testator.... b. Hypo: T devises “my home to my niece, A, residue of my estate to B.” A predeceases

T, leaving a child C who survives T. i. Under UPC, C takes the house in place of her mother, A b/c A is a lineal

descendant of T’s grandparents. ii. If, however, a statute’s “if clause” required the devisee to be a descendant of T, the

antilapse statute would not apply, the home would lapse back to T’s estate, and B would take the home as residue of T’s estate.

iii. Exception – Words of Survivorship: typically, the testator can negate the antilapse statute w/ express language in the will that requires the devisee to survive the testator.a. E.g., “I hereby devise to B, if B survives me.”b. Allen v. Talley [p.393]

i. Facts: Testator’s will read “I hereby devise all to my living brothers and sisters.” At time of execution, T had 5 living brothers and sisters. At T’s death, only 2.

ii. Issue: whether this language is enough to negate the antilapse statute.iii. One of the deceased sibling’s issue argued that this language meant living at the

time of execution, but the court disagreed and held instead that T intended only those siblings alive at the time of her death to take. As such, the devise to the deceased siblings lapsed, the other 2 took only 2/5 each and the remaining 3/5 remained in T’s estate as residue or intestate.

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c. Words of Survivorship under the UPC: under §2-603, the 1990 revision to §2-605 (above), words like “to A, if A survives me” are not enough! Instead, the testator must explicitly include language about the UPC statute. Thus, language like “no antilapse statute, including §2-603, shall apply” would work, but mere words of survivorship alone are insufficient.

d. Issue of Common Accident: i. Generally, the devisee is deemed to have predeceased T unless he or she survives

by more than 120 hours. ii. Problem from T’s POV: if devisee does survive by 120 hours, the property goes,

very soon after T’s death, to someone whom T did not intend. Although this can happen in any event, it’s rare for it to happen so close to T’s death.

iii. Solution? “Gift Over Clause” T can include language that defines survivorship by X number of days. E.g., “To A, if A survives me by 90 days, then to Y.”

c. Class Devisesi. Features of a Class Gift: a gift of a finite, aggregate, limited sum to a body of persons who

are uncertain in number at the time of the gift and the exact identities to be ascertained at a future time. The members all take in equal portions and, as such, the amount each member takes is dependant on the size of the class. Members have common characteristics and, often, it’s based on status (sometimes, as compared to the testator).a. Exception to “unnamed devisee” rule: if T mentions a group of specific names and

gives a finite sum to those people with the intent that the money go only to survivors, it may still qualify as a class gift.

ii. Class gifts don’t lapse b/c the class is not determined until the date T dies (same rule applies in an Ecclestical state).

iii. Survivor Rule: when you have a devise to a class, it goes exclusively to the members of that class that survive the testator (negates the no residue of a residue rule).

iv. Effect of Antilapse Statute on Class Devise: generally, if a class member predeceases, the entire gift passes to the surviving class. However, the majority rule is that antilapse statutes do apply to class devises (even though they technically don’t “lapse” per se). As such, it has the effect of essentially negating the survivor rule.a. E.g., Assume that T devises to her children. The children are a class. Also assume that

the applicable antilapse statute’s “if clause” applies to T’s issue. If one of T’s children predeceases T, but that devisee has issue of his or her own, that portion of the class gift would remain with T’s issue, in T’s grandchild/grandchildren.

F. Changes in Property after Execution of the Will

1. Identify of Devisesa. Specific Devise: a devise of a specific item owned by the testator that is distinguishable from

the rest of the testator’s estate.b. General Devise: a devise usually of a specified value, but not of a particular item that is

distinguishable from the rest of the estate.c. Demonstrative Devise: a devise that is payable first out of a particular specified source and, if

that source runs out before satisfying the devise, the remaining devise is payable from the testator’s general estate. E.g., “$2K to X, to come first out of my savings account with XYZ Bank and, if that is not sufficient, then from my estate.”

2. Ademption by Extinctiona. Applies only to specific devises: specific devises of real and personal property are subject to the

doctrine of ademption by extinction. b. Doctrine of Ademption by Extinction: if, when T dies, her estate contains no items specified by

the will, those devises adeems and, as such, fail.

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i. This is the traditional rule, and the rule that will apply on the exam! *Note that this is known as the “Identity Theory” of Ademption (minority view is the “intent theory” of ademption.)a. Exception – intent may be used to negate the replacement rule (see below).

ii. This is true, regardless of T’s intent.iii. Rule can be preempted by drafting.

c. Hypos:i. “My grandfather clock to X.” later, T sells the clock to Y. X gets nothing.ii. “$10K to X.” T dies and there’s only $9K in cash. Because this is a general devise,

ademption by extinction does not apply and, instead, T’s estate is liquidated to make up for the remaining $1K.

d. Ways to Circumvent Ademption by Extinction: b/c court’s feel that the doctrine is anti-intent, many have created loopholes to get around it:i. Characterize devise as general or demonstrative

a. E.g., “10,000 shares of GM stock” most courts say this is general versus “10,000 shares of my stock” would be characterized as specific.

b. E.g., “$10K, more or less, entered on my bank book” was held to be demonstrative.ii. Classify the intervivos disposition as a change in form, not substance

a. E.g., “my 100 shares of Tigertail Corp to A.” Later, Tigertail Corp. merges into Lion Corp., which retires the Tigertail stock and issues in its place 85 shares of Lion stock for every 100 shares of Tigertail. Most courts hold that corporate merger or reorganization is only a change in form, not substance, so that A takes the Lion stock.

iii. Construe the meaning of the wills as of the time of death rather than as of the time of execution.a. E.g., T devises “my Lincoln automobile”to A in her 1984 will. At her death, T owned

only a 1988 Lincoln. The Court allowed A to take the 1988 Lincoln. DLT calls this the “Replacement Rule” – at that moment-focused time of death, is there something in the estate that matches the devise in the will.

b. But see – in Morris a devise failed when T sold a diamond watch referred to in the will and bought another diamond watch worth approximately 5 times as much as the original. – Note that this is the minority rule. Finding here probably had more to do with the dramatic difference in value.

c. NOTE: although actual intent is generally irrelevant, it can be used to negate the replacement rule so that there is ademption! E.g., Morris.

iv. Create Exceptionsa. E.g., if T becomes insane or legally incompetent post-execution, usually (but by state

statue only), we say that there is no ademption by extinction so that if the item isn’t there, the devisee still gets either a replacement or the cash value.

e. UPC §2-606(a) (adopted in KS)i. Under this statute, a specific devisee has a right to the specifically devised property in the

testator’s estate at death and:a. (1) any balance of the purchase price owing from a purchaser to T at death by reason of

sale of the property;b. (2) any amount of condemnation award for the taking of the property unpaid at death;c. (3)any proceeds unpaid at death on fire or casualty insurance or on other recovery for

injury to the property;d. (4) property owned by T at death and acquired as a result of foreclosure;e. (5) real or tangible personal property owned by T at death which T acquired as a

replacement for specifically devised real or tangible personal property (extension of the “replacement rule” b/c here, the new item doesn’t have to be an identical match); and

f. (6) Catch-all Provision: if situation isn’t covered by (1) – (5), there’s no ademption if it can be factually established, as a matter of intent, that T intended the gift not to adeem.

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ii. Examples:a. T devises blackacre to X. Later, the state of KS condemns the property and assesses

blackacre to be worth $300K. T and KS enter into K under which KS will pay T 3, $100K installments. They pay 2, T dies. 1 payment is left outstanding. There is ademption to the extent of the $200K (the gift has adeemed $200K); however, subsection (1) of the statute saves ademption as to the outstanding payment - $100K.

b. T devises to A “my Ford car.” Later, T sells the Ford and buys a Rolls-Royce and a Honda. Maybe subsection (5) saves the devise; however, potential issue with that section is that it doesn’t define “replacement” and mentions nothing about intent.

c. T devises Blackacre to A and later sells and buys Whiteacre with the proceeds. A is entitled to Whiteacre under subsection (5).

d. Aunt Fanny Fox has a collection of Chinese snuff bottles. She devises her collection to Wendy Brown. At Aunt Fanny’s death, the snuff bottles are not found in her house and there are no records of how many snuff bottles there initially were. Wendy would have to prove under subsection (6) that ademption by extinction would be anti-intent.

3. Accessiona. Defined: when the property increases in value, post-execution, but pre-death.b. Issue Raised: is devisee entitled only to original gift, also the addt’l value that was created?c. Issue only arises when there is accession pre-death!d. General Rules:

i. If merely appreciation in value of the item, the increased value goes to the devisee.ii. If the increase is generated income pre-death, courts regard it as “different” from the

original gift and, as such, it does not go to the devisee.iii. If the increase in value involves post-death accession, it clearly goes to the devisee b/c the

“base asset” (the gift) becomes property of the devisee immediately upon T’s death.e. Hypos: Is the devisee entitled to the increase in value in addition to the base gift?

i. T devises “my bond to X,” which generates interest pre-death YES. X is entitled to collect interest on the bond.

ii. T devises $10K to X, which generates interest in the bank. NO. X is not entitled to collect interest on a flat sum of money.

iii. T devises interest on a debt owed (creditor’s right) to X. YES. X is entitled to the interestiv. T devises interest on an amount due on a debt to X NO.v. T devises Blackacre to X. At T’s death, Blackacre has immature growing crops YES. X

is entitled to, not only Blackacre, but also to the growing crops.vi. T devises Blackacre to X. At T’s death, there are harvested crops stored on prop. NO. vii. T devises Blackacre to X. At T’s death, the crops are mature and ripe (no longer growing,

but still attached to the ground), but haven’t been harvested. ?? no clear answer here.f. Stock Dividends (Majority Rule): stock dividends declared during T’s life don’t go to devisee.

i. Rationale: will has no effect until T dies. As such, income earned until T’s death is property that is separate and different from the stock devise. Under the majority rule, stock dividends are treated the same as cash dividends.

ii. The Majority Rule applies, even if it will dilute the devisee’s ownership rights in a corporation. E.g., will reads “16 shares of my corporate stock to X.” At time of devise, the corporation has only 2 shareholders, T and Y (who also has 16 shares), so that each have 50% ownership rights. Later, the corporation declares a 25% stock dividend, which would generate a 4 share dividend. T dies. X only gets 16 shares, but now, Y has 20. As such, X only has 40% ownership rights as compared to Y. Doesn’t matter under the majority rule.

g. Stock Splits (Majority Rule): additional stock that is generated from a stock split does pass with the base stock and goes to the devisee (stock splits are treated differently from stock dividends).i. Rationale: a stock split is appreciation of the stock itself. When stock increases in value, the

concern is that it might be more difficult to sell. So, the corporation will take back 1 share, and give the stockholder 2 shares back to make it more marketable. The courts view these 2 shares really as the single, initial share.

See CN_20 for review hypos.

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4. Ademption by Satisfaction- parallel to advancement a. Applies only to general devises. b. Reubttable Presumption: the doctrine raises a rebuttable presumption that T intended the

intervivos transfer to be an early satisfaction of an earlier devise (either in whole or in part).c. Hypos: T devises “$50K to my son, S, residue of my estate to my daughter, D.” After

executing the will, T gives S $30K. This raises a presumption that the gift was in partial satisfaction of the legacy so that S will take only $20K at T’s death.

5. Exoneration of Liens: a. Premise: T devises Blackacre to X. At T’s death, there is an outstanding mortgage on Blackacreb. Rule: under this doctrine, a devisee has a right to receive a devise of property mortgage free

and whatever is still owing is to be paid off by other assets of the estate.i. Exception: UPC §2-607 – under this provision, the presumption is reversed so that, as a

general rule, devisee receives Blackacre subject to the mortgage. But, this presumption can be negated by a statement by T that he wanted it to pass free of any mortgage.a. Such language must be specific! Not enough to have “I want all debts paid off” at the

top of the will. Instead, need language like “blackacre to A, mortgage free, w/ mortgage to be paid off from general assets of the estate” to negate the UPC presumption.

6. Abatementa. Factual Premise: the problem of abatement arises when the estate has insufficient assets to pay

debts as well as all the devises; some assets must be abated or reduced. By divvying up a limited pie among claimants of different priorities, abatement operates like bankruptcy.

b. Traditional View:i. Abatement Order under Traditional View : in the absence of indication in the will as to how

devises should abate or be reduced, devises abate in the following order:a. Personal Property Devises:

i. Intestateii. Residueiii. General Devisesiv. Specific Devises

b. Real Property Devises:i. Intestateii. Residueiii. General Devisesiv. Specific Devises

c. Modern View:i. Abatement Order under Modern View: in the absence of indication in the will as to how

devises should abate or be reduced, abate in the following order:a. Intestate (both real and personal)b. Residue (both real and personal)c. General Devises (both real and personal)d. Specific Devises (both real and personal)

ii. Under the modern view, there’s no preference for real property devises! d. Kansas View:

i. Abatement Order under KSA §59-1405: unless the will says otherwise:a. Intestate personal propertyb. Intestate real propertyc. Residuary personal propertyd. Residuary real propertye. General Devises (both real and personal)f. Specific Devises (both real and personal)

ii. Thus, in Kansas, we do favor land, but drop that preference when we reach general devises.

See “Abatement Examples” Handout for review hypos.

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e. Final Category Abated Pro Rata: under all views, when we get to the last category that we need, the devises in that particular category are abated pro rata.

f. Special Treatment of Demonstrative Devise: for purposes of abat., treat demonstrative devises as if devise were 2, sep.devises. E.g., T devises “$10K to X, paid 1st from A source, then out of my gen. estate.” We’d treat the first clause as a specific devise, the second as a general devise.

G. Restrictions on the Power of Disposition: T can dispose of assets as wishes, sub. to certain limitations.1. Rights of Surviving Spouse (Including Elective Share):

a. Two Basic Marital Property Systems:i. Community Prop.: income he earns belongs to both, income she earns belongs both (50/50)

a. Premise: marriage is a team effort.b. Adopted in 8 states (not in Kansas)c. Limitations on Community Property:

i. Applies only to income earned during the marriage. Doesn’t apply to intervivos gifts from outside third parties or any devises. Doesn’t apply to any property, including income, earned prior to the marriage.

ii. Separate Property: income that he earns is his, not theirs. Income that she earns is hers, not theirs. Generally, both have the right to dispose of their assets in any way they so wish.a. Adopted in 42 states, including Kansas.b. System doesn’t have any sort of built-in protection for non-income producing spouse.

Instead, we give the surviving spouse certain statutory rights that provides for a claim to certain types of family assets. Note that all are things that come off of the top, before we even consider devises under the will or intestate and elective shares:i. Homestead: stats. give surviv. spouse right to live in “fam.home” for life so that

decedent can’t dispose of home in way to deprive surviving spouse of homestead. E.g., W conveys home intervivos to X. X’s rights are sub. to surv. spouse’s. Court Has Discretion to Limit Homestead: the court, acting as a court of

equity, has a lot of power to choose the homestead (e.g., if there are multiple homes), and, even if only 1 home, the power to limit the acreage. o KSA §59-401:

Homestd outside incorp. city max. = 160 acres, plus improvements. Homestead inside incorporated city maximum = 1 acre. Property must have been occupied by decedent at time of his/her death. Prop. not available to decedent’s Cs. Exception attachment by one

who loaned decedent $ to purch. home in 1st place (mortgage holder/bank)

ii. Exemptions (personal property set-aside): right to have certain tang. pers. prop. items of decedent, up to certain val. (e.g., fam. bible, photos, videos, comp. disc..)

iii. Family Allowance: typically, statute allows the probate court to award a family allowance for the maintenance and support of the surviving spouse and dependents. Usually awarded on a year to year basis. Usually lasts thru period of admin.of estate (comes to end when estate closes)

iv. Dower and Curtesy: Dower: dower entitles widow to LE in 1/3 of husband’s qualifying land. Thus,

W becomes a 1/3 co-tenant for her life w/ someone else who has the other 2/3.o Attaches to land owned by H at any pt. during marriage, provided a FSA.o 3 Significant Limitations:

Only for her life – she can’t devise it by her own will; Only a co-tenancy w/ someone else; Begins only when he dies (i.e. she gets 0 if she predeceases him).

Curtesy: curtesy entitles the widower to a life estate in all of his wife’s assets.o Unlike dower, possessory rights begin immediately (rather than upon

spouse’s death); however, only after there is a child born out of that marriage.

b. Elective Share :

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i. Traditional Elective Share: trad. elective share is based on decedent’s probate estate (prop.disposed of by will or intestate statute). Thus, doesn’t include non-probate xfrs.a. Called “elective share” b/c surviving spouse has an election:

i. He or she can keep what’s coming to him or her under the will plus what he or she would be entitled to under the state’s intestate succession statute; OR

ii. If he dies first, she can reject what the will says and what is provided under the intestate succession statute and take instead, the elective share.

b. Potential for Abuse: b/c it’s based on the probate estate, husband could take all of his assets and put them in joint tenancy format or some other non-probate format.

ii. UPC Elective Share §2-202: here, the elective share is based, not on the traditional probate estate, but rather the “augmented estate.”a. 5 Basic Policy Premises

i. Partnership Model : UPC doesn’t recognize his and his and hers as hers.ii. Variable Percentage : % of elective share increases for each year married.iii. Title of Property not Determinative : just b/c it’s titled in only her name or only his

name, doesn’t mean it is definitely not marital property.iv. Property that passes to 3d parties by virtue of non-probate arrangements might be

regarded as part of the augmented estate.v. Ultimate goal is to give each 1/2 – no more, no less. Thus, we take into

consideration surviving spouse’s assets and some of those assets might properly be considered as “marital property” (she may already have some of her “half.”)

b. Mechanics i. Step 1: Calculate Augmented Estate. Augmented Estate = Sum Of:

Decedent’s Net Probate Estate (e.g., prop. disposed of by will or intestate) Decedent’s Non-Probate Transfers to Persons other than Surviving Spouse

o (i) POD accounts, TOD accounts, life insurance policies, joint tenancies, etc.o (ii) any transfer during marriage where decedent retained possession of, enjoyment

of, or income from the property and in which the decedent’s right to terminate at or continued beyond the death. [i.e, life estate remainders, inter vivos trust arrangement retaining interests, etc.]

o (iii) assets that passed during marriage and during 2-years immediately prior to death as a result of termination of a right or interest in or power over an asset that would’ve been included under (ii) if not terminated before death, and xfrs described in (ii) during marriage in which decedent retained an interest.

o (iv) transfers during marriage and during 2-years immediately preceding death to individuals other than the surviving spouse to the extent the aggregate transfers exceed $10,000. NOTE: irrevocable trusts w/ a 3rd party as the beneficiary are includable in the

augmented estate only to the extent they were set up during the marriage, if before or after then not included.

Decedent’s Non-Probate Transfers to Surviving Spouse (POD, joint tenancies, TOD accounts, life insurance policies).

Surviving Spouse’s Individual Assets and Non-Probate Transfers to Others that Would’ve Been Included in Surviving Spouse’s Augmented Estate

ii. Step 2: Determine Elective Share Percentage. See Chart only need to know how long they’ve been married. Note that the “elective share percentage” is not the same as the amount of

marital property. Instead, the elective share percentage is half of the marital property. As such, for example, if the couple were married 16 years, 100% is marital property, but the elective share percentage is 50%.

iii. Step 3: Calculate Elective Share Amount.

See “Brief Summary of the Elective Share under the UPC” Handout and CN_22.

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Elective Share Amt. = [Augmented Estate] X [Elective Share Percentage] Supplemental Elective Share Amount – if the elective share amount is less than

$50K, we will tack on (via statute) whatever it takes to get to $50K. The portion that is “tacked on” is the “supplemental elective share amount.”

iv. Step 4: Identify Sources to Satisfy Elective Share Amount. First satisfied from:

o (a) Property that goes from decedent to surviving spouse by will, intestate succession, and non-probate transfers and

o (b) The surviving spouse’s own individual assets and non-probate transfers from the surviving spouse to others, but only up to the “applicable percentage” (2X the elective-share percentage) of those assets and xfrs. *basically, we offset the surviving spouses elective share amount by his or her own assets, but only up to a certain percentage of those assets.

If not fully satisfied, then next by:o Property that otherwise would go from the decedent to others by will,

intestate succession, and non-probate transfers.o Note: this distribution is done on Pro Rated Basis!

If not fully satisfied, then next by: remain. balance pd. on pro-rated basis from:o (a) assets the decedent transferred to others during the marriage, but during

the last 2 years of decedent’s life, by virtue of a termination by the decedent of his or her interest in an arrangement that otherwise would have qualified as a non-probate xfr. to others by the decedent.

o (b) transfers to any non-spousal person that the decedent made, during the marriage but during the last 2 years of decedent’s life, to the extent these transfers to any one donee in either of the 2 years exceeds $10K.

c. Note that elective share amt. represents surviving spouse’s half of entire marital estate.

c. Effect of Elective Share Waivers i. General Rule: surviving spouse can waive rights to any allowances, wholly or partly,

before or after marriage by a signed waiver of agreement; as long as it is not fraudulently executed, no misrepresentation is involved, no duress, no undue influence, etc…

ii. Prenuptial agreement is like any other contractual agreement and, as such, is presumed valid in absence of fraud. In re Estate of Garbade [p.453]a. Party attacking validity has BOP to prove fraud to rebut presumption (high BOP)b. Only if met does the burden shift to other side to disprove fraud. Burden will shift to

proponent if the opponent can show the relationship was one susceptible to fraud or coercion. E.g., In re Grieff [p.454]

2. Rights of Omitted Spousea. Premise: Will Marriage No Change to Original Will. Must have a post-execution

marriage for these statutes to apply. Rationale? purpose is to protect forgotten spouses.b. Omitted Spouse Statute: surviving spouse is entitled to what he or she would have received

had the decedent died intestate.i. Must have a “post-execution” marriage for the statute to apply.ii. Example: In Estate of Shannon [p.462]

a. Omitted Spouse Statute at Issue: i. Must have post-execution marriage.ii. Exceptions:

If Testator omitted spouse intentionally and such intention is clear from will; If T provided for spouse by transfers outside will and the intent that such

transfers be in lieu of a testamentary provision is show either by statements made by T, from the amount of the xfr, or by other evidence;

If spouse made a valid waiver.

See CN_23 for good review examples and steps in greater detail. Also, see handout examples starting on p. 4 for review.

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b. Facts: Decedent made will in ’74 stating “I hereby intentionally omit all other living persons and relatives.” In ’86 he marries Lila, never adjusts will. Dies 2 years later.

c. Holding: Lila is entitled to share as an omitted spouse under the statute. Court held that the will’s language didn’t qualify as intent to exclude Lila b/c she wasn’t a relative at the time he wrote those words.

c. Intentional Omission of “Generic Spouses” – language such as “I hereby exclude any living relative or future spouse” won’t usually qualify as an intentional omission of a post-execution spouse. Overall, courts are unlikely to allow someone to disinherit “generic spouses.”

d. UPC §2-301 Entitlement of Spouse; Premarital Will [at p.465]i. (a) If we have a post-execution marriage, the surviving spouse is entitled to receive the

value of her intestacy share; however, in calculating that intestate share, we carve out:a. Any devises made to children from a prior marriage;b. Any devises to descendants of such a child.

ii. (b) To satisfy that amount:a. First take into account devises to surviving spouse from decedent’s will;b. Then abate devises to others that are not issue of the testator born before testator

married surviving spouse or a descendant of such issue.iii. Note that §2-301 is not just an “omitted spouse” statute. The statute also might apply even

when the spouse is mentioned in the will. The only way this issue will arise is if the will contains a generic reference (“to my future, generic surviving spouse”) OR if there’s a devise to some individual who later becomes the testator’s spouse.

3. Rights of Omitted Issue:a. Permitted Issue Statutes: typically provide for kids born post-execution and, like omitted

spouse statutes, provide that the omitted issue is entitled to take as if T died intestate.b. Disinheriting Issue

i. With kids, the testator does have the right to intentionally disinherit. Unlike a spouse (b/c w/. spouse, have protection in form of elective share – not same w/ kids).

ii. If you explicitly disinherit a particular issue, has the effect of automatically disqualifying anyone further down the chain from inheriting as well. In re Estate of Laura [p.481].a. However, stop gap idea works downward only. As such, if a grandchild is mentioned,

but not the child, the child can invoke the permitted heir statute.c. Effect of Codicil on Omitted Issue: because a codicil republishes a will so that the will is

treated as if first executed on the date of the codicil, if a child is born post-execution, but before a valid codicil, the child is regarded as being alive when that will was executed and, as such, child does not qualify under the permitted issue statute.

d. UPC §2-302 [at p.479-80]i. Factual Premise: T leaves a will that fails to provide for any of T’s children born or

adopted after execution of the will.ii. These omitted children may, however, still be entitled to receive a share of the estate if

certain things are true under the UPC statute:a. (a)(1) If all of T’s kids are born post-execution afterborns get what they would have

received had T died intestate.i. Exception – doesn’t apply if the will devises all or substantially all of the estate to

the surviving parent b/c we trust that parent will provide for the children.b. (a)(2) If the will provides for some kids, but not afterborns postborns are included

with those children that are named as if they are part of a class gift. As such, they receive the amount each would have received if T had given each child an equal share of the pot. i. If T made devises to then-living children under will the “Pot” is limited to the

amount of such devises. The children whom were then-living must chip in on a pro rated basis to get the afterborn his or her equal portion.

See CN_25; p.2 and p.481 of book for review.

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ii. If T did not make devises to then-living children under will not explicitly covered by statute, but can be read in 2 ways: Could stretch (a)(1) to mean that pro rata share of the pot here is $0 so that the

omitted child gets nothing; OR Could read beginning of subsection (2) to mean “only if” T devised to then-

living children under the will.iii. Exceptions –

(b)(1) if it appears from language in will that omission was intentional; (b)(2) if T provided for omitted child by xfr outside the will w/ the intent that

xfr be in lieu of any devise under the will.c. (c) If T mistakenly thought child was dead, treat that child as if she was an after-born.d. Gray v. Gray (page 528)

i. the will has to fail to provide for the kid and the kid has to have been born post-execution

ii. Exceptions if the omission is intentional the testator had one or more kids and devised substantially all his estate to the

other parent of the omitted child provided for child in a different way with the intent of it being in lieu of the

will iii. at the time the will was executed he already had two other kids and he devised all of

his assets to the kids mother. This means Jack is excluded from taking a share of the estate. There was an estate set up that was in lieu of the will.

iv. Held: Jack is not entitled to a share b/c the court applies a literal application of the statute

v.

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IV. TrustsA. Introductory Matters:

1. “Parties” to a Trusta. Settlor: the original property owner, who transfers that property to create a trust, essentially

making a gift of that original property to the trust for the benefit of the beneficiaries.b. Trustee: has the duty of management of the assets and owes that duty to the beneficiaries.c. Beneficiary: holder of the equitable title, receives ultimate benefits, and has rights of

enforcement against trustee in the event he/she breaches any trustee duties.d. Note that all three can wear multiple hats so that, for example, Settlor and/or Trustee could also

be a Beneficiary.2. When the Settlor transfers the property, it conceptually divides the title so that he conveys:

a. Legal Title to the trustee for the benefit of the beneficiaries.i. Not divided. Instead, all remains in trustee.

b. Equitable Title to the beneficiaries.i. Usually, the equitable interest is separated in terms of someone having a present interest and

another having a future interest.ii. Standard Example: “income generated by principle to A for her life, remainder to B.”

After A dies, trust is over and any remaining principle plus accumulated income goes to B.c. *as such, neither the trustee nor the beneficiaries own the property exclusively.

3. Sub-Categories of Trusts:a. Intervivos Trusts – take effect during Settlor’s lifetime;b. Testamentary Trusts – established by Settlor’s will and, therefore, takes effect when he dies.

4. Settlora. An intervivos trust may be created either by declaration of trust or by a deed of trust.

i. By Declaration – Settlor declares that she holds certain property in trust (thus, the Settlor herself is also going to be the Trustee).a. Doesn’t involve transfer or delivery.b. Intent Requirement: does require some manifestation of Settlor’s intent that she is now

holding these assets in trust (no longer her own).c. Statute of Frauds: if the trust involves real property, SOF will normally apply so that

the declaration must be in writing.i. However, if non-real property assets, declaration can be oral.ii. Note that, as a practical problem, oral declarations may present proof obstacles later

ii. By Transfer / Deed of Trust – Settlor transfers property to another person as trustee.5. Trustee

a. Can be one trustee, or several trustees.b. Can be an individual or a corporation.c. Trustee can be:

i. Settlor (declaration) ii. A third party (transfer)iii. Beneficiary

a. Qualification? trustee can not be the sole beneficiary. d. The “No Trust Fails for Want of Trustee” Rule: If Settlor intends to create a trust, but the

documents fails to name a trustee, court will step in as a court of equity and name a trustee.i. Same result if the named trustee declines to serve or if named trustee dies while serving.ii. Exception? If the trust document expresses Settlor’s intent that this particular trust be in

existence only for so long as X serves as trustee.e. Trustee can decline to serve.

i. However, if the trustee does accept at the outset, can only be released from duties if either:a. All beneficiaries consent to release trustee from responsibilities; orb. Pursuant to a court order.

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f. Summary of Trustee’s Duties. Trustee has the following duties:i. Fiduciary to act only for benefit of beneficiaries

a. Self-dealing prohibited: thus, trustee can’t purchase something from trust, or sell to trust. Even if the deal is fair / trustee thinks this is good for the trust.

ii. Safeguard assets and make assets productive so as to generate income for trust.iii. Distribute income and principle to beneficiaries in accord w/ principles of trust.iv. Keep trust assets identifiably separatev. Keep accurate records of all transactions and periodically make an account.vi. Act with reasonable prudencevii. Not to delegate Trustee duties to another.

6. Beneficiariesa. The enforcers of the trust.b. “Trust Pursuits Rule” (a.k.a. Proceeds Rule) – if the trustee, in wrongfully disposing of trust

property, acquires other property, the beneficiary is entitled to enforce a constructive trust on the property so acquired, treating it as part of the trust assets. Similarly, where the property ends up in the hands of a third person, unless the third person is a b.f.p. for value and w/o notice of breach of trust, beneficiary can go after that third party.i. E.g., Jimenez v. Lee [p.499] – mere fact that trustee sold trust assets to purchase Commerce

Bank stock did not end the trust.c. Creditors of Beneficiaries: generally, creditors can not attach the assets of the trust; however,

they can attach the beneficiary’s interest in the trust (essentially, step into shoes so that are the new beneficiary).

B. Creation of a Trust1. Elements of a Trust:

a. Intent to Create a Trust: there must be an intent, on part of Settlor, that there be mandatory obligations imposed on the Trustee.i. Intent can be derived from Language and Surrounding Circumstances.ii. Language: no particular form of words is necessary to create a trust and the words trust or

trustee need not be used; however, when language is not clear, can present problems.a. Simplest Form: “To T in Trust;” or “To T, as Trustee…”. However, these words aren’t

required to create a trust.b. Precatory Language: If the language is not as clear, it may be considered “precatory

language.” The issue that arises is whether, by this language, the testator intends to create a trust with legal duties imposed on trustee, or rather if the language is merely a moral obligation , unenforceable in a court.

c. Case Examples:i. T devised entire estate to his wife and then continued, “I recommend to her the care

and protection of my mom and sister, and request her to make such gift and provision for them as in her judgment will be best.” Holding: Wife took the estate not absolutely, but rather, subject to a trust for

the benefit of the testator’s mother and sister. Rationale: likely b/c of circumstances present in the case.

ii. “I wish, but do not legally require, the C permit D to live on the land.” Here, clearly precatory language. As such, not a valid trust.

b. Necessity of Trust Property: Because a trust is a method of disposing of, or managing, property it is said that a trust cannot exist without trust property.i. General Rules:

a. Mere Expectancy Cannot be Subject Matter of Trust – if this happens, courts treat it as a non-event.i. E.g., “I declare myself trustee of shares of stock in a corp. I may hereafter acquire.”

Even if he later acquires stock in that corporation, no trust b/c is regarded from the outset as a non-event.

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ii. Second Declaration Rule – In such a case, the Settlor would need to make a “second declaration” of his or her intent to establish a trust of that property in order to actually have a valid trust.

iii. Contract Qualification – a contract is more than a “mere expectancy.” E.g., Settlor enters into K with X to acquire property. S provides consideration

in form of cash in return for X’s promise to convey that particular property. Here, although S doesn’t yet own the property, S can establish a valid trust and there’s no need for a second declaration when S does acquire the property.

iv. Profits from valid trust are okay.v. HYPOS:

O orally declares to A: “I give you 5% of the profits of a musical play based upon Shaw’s Pygmalion, if I produce it and if there are any profits.”o No valid trust, if profits do come into existence, requires 2d declaration.

O orally declares himself trustee for one year of all stocks he owns, with any profits from stock trading to go to A. o Valid trust b/c O does already own the stock. Moreover, part to A is fine

b/c any profits it generates are income from the trust. A declares himself trustee for B of future season KU football tickets.

o No valid trust. With sports programs, not always a guarantee that you’ll get tickets each year so if A later does receive the tickets, not bound by promise b/c a trust was never created in the first place.

c. Necessity of Trust Beneficiaries: a trust must have one or more ascertainable beneficiaries.i. Rationale:

a. Need an Enforcer there must be someone to whom the trustee owes fiduciary duties; someone who can call the trustee to account. As a general rule, Settlor doesn’t have power to enforce! Once Settlor has set up trust, it’s regarded as a complete gift and, as such, Settlor no longer has standing to receive anything.

b. Balanced Conveyance remember that trustee gets legal title and beneficiaries get equitable title.

ii. Identified with Reasonable Level of Specificity. If the trust document is too vague as to ID of beneficiaries, the trust fails. Consequence? property goes back to Settlor via “resulting trust.”a. Bequest for Benefit of “My Friends” Fails. Unlike “relatives,” there’s no working

definition of “friends” or some legal, objective criteria to determine whether someone is your friend or not. Clark v. Campbell.

d. Necessity of Written Instrument: An intervivos oral declaration of trust of personal property is enforceable. Conversely, the SOF requires any intervivos trust of land to be in writing. And, of course, a testamentary trust must be created by a will. Nonetheless, under certain circumstances a court will enforce an intervivos oral trust of land or an oral trust arising at death. *Remember, these are situations where an oral agreement never created a valid trust to begin with, but the law steps in to save the trust.i. Oral Inter Vivos Trusts of Land

a. Generally, SOF requires conveyance of land to be in writing; however, SOF typically doesn’t apply to an interest that arises by operation of law. As such, no SOF issues in this type of situation b/c the law steps in to create a trust by operation of law.

b. Resulting Trust (handout): arises by operation of law when facts and circs. show that a person had intent to hold equitable title to property although legal title is w/ another.i. Can Only Arise in 3 Situations:

Failure to Create Express Trusto E.g., beneficiaries not defined w/ sufficient specificity, didn’t indicate a

trust purpose, or failed to comply with rule against perpetuities.

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Failure of Express Trust to Dispose of All Trust Propertyo E.g., “To T in trust in F.S.A., with the income to go to B for life.” When B

dies, it’s over and there’s no one to continue giving the income too. As such, the legal and equitable title are unbalanced.

Purchase Money Resulting Trusto E.g., A pays money to B, and B, in accordance with the agreement b/w

them, conveys certain property to C, rather than to A, even though A is the one who paid the consideration.

o Such a situation triggers a presumption that C holds the property for A. c. Constructive Trust: an equitable remedy court imposes to prevent unjust enrichment.

i. Typically Comes up in 3 Situations (but not an exhaustive list): Fraudulent Conduct

o E.g., T promises S that if S conveys property to T, T will apply property for benefit of B. At that very moment, T has intent of reneging and using property for his own benefit.

o Moment-Focused – remember that fraud means you lied from the outset. It is a lie from the very beginning. Lie=Fraud.

o If the lie occurs after the conveyance, it is merely a broken promise and not a lie. Therefore, there is no fraud.

Abuse of Confidential Relationships (e.g., parent-child relationship) Property Obtained by Homicide

o E.g., S is prospective intestate heir and murders his father. S will hold his intestate share under constructive trust for the other heirs and courts treat the situation as if S predeceased his father.

d. In BOTH Cases, “Trust” is Merely a Misnomer – with these trusts that arise by implication, there is no ongoing fiduciary relationship b/w trustee and beneficiary.i. Resulting Trust: the holder of the legal title (“trustee”) simply has the obligation to

convey the legal title to the holder of the equitable title (“beneficiary”). The beneficiary of a resulting trust is the person who had the implied intent to hold equitable title and thus is also the settlor. If the settlor has already died, the beneficiaries of a resulting trust are the settlor’s successors in interest; that is, the settlor’s heirs if the settlor died intestate or, if the settlor died testate, the beneficiaries of the settlor’s will.

ii. Constructive Trust: ct. decides that pers.w/ apparent full own’shp of prop. actually holds only legal title b/c it would be unjust for that person to retain the beneficial interest in that property. Then, the judgment of the court acts to transfer legal title from the evil property owner (“trustee”) to the person who would have owned the property, but for the property owner’s inappropriate conduct (“beneficiary”).

ii. Oral Trusts for Disposition at Deatha. Three Scenarios: common theme in each is that S chooses to have property disposed of

in a particular way based in part on her reliance on T’s oral promise.i. S devises by will Blackacre to T, but does so only after T has orally promised that

he will hold Blackacre in trust for B.ii. S devises Blackacre to T in a will executed one year ago. Now, T promises orally

that he will hold Blackacre in trust for B. iii. T is S’s only intestate heir. T promises that if S dies intestate, he will hold

Blackacre in trust for B.b. Generally, unenforceable b/c of either the execution requirements for wills or due to

SOF b/c involves land. As such, issue that arises in these situations is whether law recognizes an exception.

c. “Secret Trusts” Will: “to T” + Oral: “in trust for B” = Constructive Trust to B.i. General Premise: a will that purports to make an absolute gift but where there is

actually an agreement b/w the beneficiary and the testator that the beneficiary will

For good exam review, see cases from CN_28.

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hold the property in trust for a person the testator has separately indicated. If beneficiary retained the property, he would be unjustly enriched. As such, courts will establish a constructive trust for the intended beneficiary’s benefit.

ii. General Rule: in this type of situation, oral beneficiaries can present evidence of that trust. Qualification? must satisfy by clear and satisfactory proof (higher standard

of proof than normally required).iii. Must have a Will! If the portion that purports to make an absolute gift is not via

will, the secret trust exception doesn’t apply.iv. Have a higher burdon of proof b/c we are allowing a lot of outside extrinsic

evidence.d. “Semi-Secret Trusts” Will: “To T in trust” + Oral: “for B” = Resulting Trust.

i. Here, called “semi-secret” b/c at least we do have a writing indicating it’s some kind of trust. What is secret it it’s terms and beneficiary.

ii. Here, we don’t allow extrinsic evidence. Instead, we know that T isn’t supposed to have it so instead of using extrinsic evidence to ID B, it goes back to S via resulting trust (in form of S’s successors in interest).

C. Discretionary and Spendthrift Trusts1. Rights of the Beneficiaries to Distributions from the Trust:

a. Mandatory Trust – the trustee must distribute all the income.i. E.g., O transfers property to X in trust to distribute all the income to A. This is a mandatory

trust. The trustee has no discretion to choose either the persons who will receive the income or the amount to be distributed.

b. Discretionary Trust – the trustee has discretion over payment of either the income or the principal or both. Discretionary powers of a trustee may be drafted in limitless variety.i. Level of Discretion: even if the discretion is “absolute,” it’s always governed by the

implied standard of reasonable prudence (thus, never really total absolute discretion).ii. E.g., O transfers property to X in trust to distribute all the income to one or more members

of a group consisting of A, A’s spouse, and A’s children in such amounts as the trustee determines. The trustee must distribute all of the income currently, but has discretion to determine who gets it and in what amount.

iii. Support Trust: where the trustee’s discretion is limited by an ascertainable support standard (e.g. “such as amounts as are necessary to support my children in the style of living to which they are accustomed”).a. Need dictates both floor and ceiling.

i. Trustee is obligated to make distribution for beneficiaries’ needs; BUTii. Trustee cannot made distribution beyond those needs.

iv. Discretionary Support Trust – combines an explicit statement of discretion with a stated support standard (e.g., “such amounts as trustee shall, in his uncontrolled discretion, deem necessary to support my children in the style of living to which they are accustomed.”)a. Need dictates ceiling only.b. However, for all purposes, same as a support trust b/c courts hold that this “discretion”

is governed by an objective standard of reasonable prudence (rather than the trustee’s own, subjective discretion). Marsman v. Nasca.

v. Trustee’s Duties under Support Clause:a. Make distributions only to extent facts meet the need;b. Authority to make those distributions, but no more!c. Duty to make a reasonable investigation as to the beneficiary’s needs;d. Duty to inform beneficiary as to what’s available in the trust to meet those needs.

2. Rights of the Beneficiary’s Creditors a. Attachmentb. Garnishment

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c. Assignment d. Mandatory Trusts: Creditors can always attach and “get in line” before other Cs.e. Discretionary Trusts: because a beneficiary’s interest in a discretionary trust is a mere

expectancy, although a Creditor can technically attach the interest, this can only be done when there’s an exercise of the trustee’s discretion! Therefore, it’s really on a distribution by distribution basis and C must wait in line w/ other Cs.i. Because the beneficiary can’t compel the trustee to make a distribution, neither can the C

because he is in no better position than the beneficiary. As such, trustee can choose not to exercise discretion at all.a. Possible Exception? implied standard of reasonable prudence.b. NOTE: Here, talking exclusively about the “Expressly Total and Absolute”

discretionary trusts b/c in case of an expressly limited discretionary trust (e.g., need-based) beneficiary/creditor can compel distribution when the need is present.

ii. General Rule: Discretionary Clauses Bar Creditors, Even Super Creditors! This is true even if there’s a spendthrift clause on top of a discretionary clause. E.g., Shelley [p.550]

iii. What Constitutes an “Exercise” of Discretion? a. Generally, any manifestation of intent on the part of the trustee to release control of

assets in favor of the beneficiary is an “exercise of discretion.”b. Can also be dictated by the terms of the trust.

f. Spendthrift Trusts: one way to preempt this sort of attachment is via a “spendthrift clause.”i. 3 “Forms” of Spendthrift Clauses:

a. No Assignments Language: language in trust that prohibits the beneficiary from assigning his interest in the trust to some outside, third party.

b. No Attachments Language: language in trust that prohibits a creditor from attaching the beneficiary’s interest in the trust.i. NOTE: although this is conceivably possible (language prohibiting attachments,

but allowing assignments), most courts hold that this language is invalid b/c it violates public police. Rationale? allows debtor/beneficiary to pick and choose which of her creditors are paid.

c. Both: language that prohibits both assignments and attachments.ii. Effect of Spendthrift Clause C can only go after assets after distributions have been

made (can’t get in line early) – distribution by distribution (post facto / never prospective).iii. General Rule: spendthrift clauses are valid and honored.iv. Exceptions – Spendthrift “Bars” situations where spendthrift clauses are ineffective:

a. Child Support and Alimonyi. Income – spendthrift is no barii. Principal – discretionary clause is a bar.

b. Tort Claimsc. Federal and State Governments – not effective to protect against tax claims (tax liens).d. Necessities

i. A person furnishing necessary services or support (e.g., medical necessities and food) can penetrate a spendthrift clause.

e. Exception to the Above? if the state has a statue that speaks exclusively to this so that the courts can’t carve out their own exceptions. E.g., Scheffel.

g. Self-Settled Asset Protection Trustsi. General Rule: can’t set up a spendthrift or discretionary trust for yourself.ii. Rationale? shouldn’t be able to enjoy benefits of your property while simultaneously

avoiding creditors. The protective justification for allowing a donor to insulate a gift from the claims of donee’s Cs collapses when the donor and the donee are one in the same.

iii. Net Result? Creditor can reach the maximum amount that the trustee could pay the Settlor out of his or her discretion.

Review CN_30

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D. Termination of Trusts1. General Rule: once a trust is established, it is irrevocable.2. Exceptions:

a. Consent of Settlor and ALL Beneficiaries – if the settlor and all beneficiaries consent, an irrevocable trust may be modified or terminated. This is b/c no one else has any beneficial interest in the trust – including the trustee. Thus, the trustee cannot object. The right to modify or terminate with consent of all beneficial parties exists notwithstanding a spendthrift clause.

b. Claflin Doctrine – trust can be terminated or modified if no material purpose of the trust would be undermined by termination or modification and all beneficiaries consent. [p.573]i. Here, even if Settlor is dead, can get trust terminated if other elements are met.ii. Examples of “material purposes” that would prevent termination/modification:

a. Spendthrift clause – b/c material purpose is to protect beneficiary from himself.b. Support trustc. Discretionary trust – all discretionary trusts embody settlor’s intent to protect B.d. Age requirements – e.g., if trust requires holding P from B until she reaches 21.

iii. Example of things that are not a “material purpose”a. When a trust provides merely for successive beneficiaries, the settlor’s only “purpose”

is to provide successive enjoyment. Really it’s just a time schedule (one interest after another) and, as such, not a material purpose that would prevent termination.

E. Revocable Trusts1. Gen. Rule: inter vivos trust is irrevocable, unless power to revoke is expressly retained by settlor.

a. Must be done by express language in the trust document;b. The settlor must then follow the procedures that he himself put in the document to revoke it.

2. Potential Issue: did the settlor retain too many rights in the property? In these cases, some may argue that if there’s too much power over the assets, it’s really an attempted will rather than a trust; however, that will fails because of failure to satisfy the state’s will requirements.

i. General Rule: generally, courts give settlor’s a lot of leeway to retain many powers and still have a valid, enforceable trust. E.g., Farkasa. Farkas v. Williams [p.299] – Settlor retained lifetime benefits over corp.stock, upon his

death, beneficiary gets title. Settlor also retained right to vote stock in corp. decisions, right to sell, right to change beneficiary, and right to revoke. Even though settlor retained this power, court held it was an effective inter vivos trust (not attempted will).i. Rationale? under arrangement, his revocation was ineffective unless he followed

certain procedures, so the settlor did give up certain elements of control. Also, his administrative control wasn’t really determinative since those rights are subsumed by his right to revoke anyway and finally, he manifested an intent to create a trust.

ii. Overall, settlor can retain a LE and power to revoke and still create effective trust. *This is also the position of the Restatement.

ii. Effect of Elective Share: though gen. rule is a trust is valid, even if settlor “over-retains” power, will it be regarded as invalid when the surviving spouse’s elective share is at stake?a. Sullivan NO. Trust remains valid and wife has no rights to the assets as part of her

husband’s estate subject to her elective share, even if the settlor did this with the intent to circumvent the elective share statute.

b. Newman YES. The elective share is a special factor that could tip the balance in the opposite direction.

Overall, need to know distinction b/w 2 cases/positions.

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i. Kansas has followed Newman so that we could say in Kansas we have a “special interest” in protecting the surviving spouse’s interests generally (both elective share and intestate share).

ii. IF the court does apply this approach, the trust is only partially invalid so that it’s only invalid to the extent necessary to provide for the surviving spouse’s interest.

c. General Rule is to use the Objective test (used in Farkas and Sullivan). As such, we only look at the rights retained and whether they are too substantial, without regard to the settlor’s intent or motive.

3. Mechanics for Revoking a Trust: a. No Harrison Presumption w/ Trusts: if a will was last traceable to the Testator and we can’t

find it, the Harrison presumption assumes that the T destroyed w/ intent to revoke. No similar presumption w/ trust documents. We don’t revoke trusts by physical act, unless the trust document itself provides for such revocation.

b. Overall, can only revoke a trust if the document itself allows for revocation and if so, revocation may only be accomplished by the methods prescribed for in that document.

4. Spendthrift trust for yourself = over-retention. Assets will belong to your estate when you die.

F. Pour-Over Trusts: In general, an inter vivos trust exists and the testator of the will wants the assets of the estate to “pour-over” into that trust upon his or her death.1. General Premise: (1) Settlor sets up a revocable inter vivos trust naming X as trustee. Settlor

transfers to X, as trustee, his stocks/bonds. (2) Settlor executes will devising residue of his estate to X, as trustee, to hold under terms of inter vivos trust (i.e., pour-over from probate estate into trust)

2. Methodology of Pour-Over Trusts Validity: a. Incorporation by Reference (Minority/Old View): a will can incorporate by reference a trust

instrument in existence at the time the will is executed.i. Strictly applied, which limits its application (may read to result less reflective of T’s intent)ii. Document must be in existence at time will is executed.iii. Will must refer to trust document with reasonable specificity.iv. Also problematic b/c it allows the original assets of the trust to become fair game for Cs.

b. Independent Legal Significance (Majority/Modern View): a will may dispose of property by referring to an inter vivos trust that disposes of assets transferred to the trust during life (an act that has significance apart from disposing of trust assets). More flexible. i. More flexible, so likely more reflective of T’s intent.ii. One advantage is that the instrument doesn’t have to be in existence when the will is

executed; however, the trust must have some assets in it before T dies.iii. No possibility of pulling in original trust assets, so they won’t become open to elective

share and/or creditor’s claims.c. UPC § 2-511: validates a pour-over of probate assets into an inter vivos trust executed before,

concurrently, or after execution of the will. Doesn’t make original trust testamentary (thus, follows doctrine of independent legal significance); as such, doesn’t subject original assets to Cs (however, the new assets do go through probate and are subject to their claims)i. Statute negates incorporation by reference.ii. Can pour-over into an unfunded trust (unlike at common law). See Clymer v. Mayo.

G. Charitable Trusts1. Advantages Over Private Trusts:

a. Doesn’t have to comply w/ Rule Against Perpetuities.b. Cy Pres Doctrine – if settlor’s exact charitable purpose cannot be carried out, court may step in

and continue trust by directing the application of the trust property to another charitable purpose that approximates the settlor’s intent. Whereas a private trust terminates once the purpose ends.

c. Don’t need ascertainable beneficiaries. In fact, if the beneficiaries are too precise, it fails as a charitable trust and instead is a general trust. Instead, beneficiaries must be general.

2. Validity: a. Charitable Purpose: a charitable trust must have a valid, charitable purpose. Purposes include:

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i. Health (e.g., to set up a hospital);ii. Religion (e.g., to build a church);iii. Advancement of education (e.g., scholarships);iv. For the relief of poverty;

a. Rule: when a gift is mere financial enrichment, it’s only charitable if restricted to the poor. Shenandoah Valley Nat’l Bank v. Taylor. [p.729]

v. Government of municipal purposes;vi. Other purposes, the accomplishment of which are beneficial to the community.

b. HYPOS:i. Trust to pay law professor Charitable, b/c advances education.ii. Trust to build church for wealthy residents of Mission Hills Charitable, b/c it promotes

religion (doesn’t matter if they’re rich).iii. Trust for general benefit of lawyers not charitable.iv. Trust to benefic a particular political party not charitable.v. Trust to promote socialism Charitable, b/c it’s educational by exposing people to new

ideas and it improves the government by encouraging the exchange of ideas.c. A trust may be a valid charitable trust, even though the persons who ultimately benefit are

limited in number. The key is that the selection pool must be large enough so that we’re considering that community as a whole. Thus, a trust awarding scholarships for educational achievement is charitable, even if only one or two students will receive them, provided that the class of eligible recipients is broad. But a trust to educate one, particular person is not charitable b/c it doesn’t benefit the general public.

3. Modification of Charitable Trusts: Cy Pres: KSA 59-22a01. a. Premise: Settlor sets up a trust for a general purpose, but w/ a specific beneficiary. Later, the

intended purpose becomes either obsolete or impossible/impracticable to perform.b. Rule: under the doctrine of cy pres the court is empowered to step in as a court of equity and

selective an alternative that is as close as possible to the Settlor’s original intent (cy pres means “as near as possible”).i. Qualification – “All or Nothing Intent” if it’s be found that the Settlor’s intent was that

this charitable entity/purpose and only this one be the recipients, we won’t apply cy pres.ii. “for this purposes only”; or gift over: if charity gone, then gift to X; or “no cy pres.”

c. General Charitable Purpose: There must be a general charitable purpose for cy pres to even apply b/c otherwise, might indicate Settlor’s intent that cy pres not be available.i. E.g., Settlor sets up trust to be used as hospital in memory of her husband. This was held

general. It didn’t specify any specific type of medicine. Result? court applied cy pres to hold that the building could be used for administrative purposes (not even a hospital) so long as the administrative building was medical in some way. In re Nehr [p.738]

d. Cy Pres is not available merely b/c the assets could be put to better or more efficient/worthy uses. See e.g., The Buck Trust [p.743].

e. Discriminatory Trusts: i. Premise: have a charitable trust that limits use of assets on, for example, gender or race.

a. Public Entity: If it calls on a public entity to administer the trust, courts have held it violates the equal protection clause (in case of race). As such, most courts use cy pres.

b. Private Entity: might still have an issue if there are state statutes that prohibit private entities from discriminating. If so, courts would use cy pres. Evans v. Abney (774). – Settlor set up trust for an integrated park. The court held it was illegal and the assets went back to his estate.

ii. Exception? again, if settlor expresses all or nothing intent, no cy pres, trust fails, and we’d have a resulting trust back to Settlor or Settlor’s estate.

4. Enforcement and Supervision of Charitable Trusts

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a. Traditional (General) Rule: the Attorney General has the power to enforce a charitable trust or a co-trustee has power to enforce against a fellow co-trustee.

b. Special Category / “Exception” persons who have a special interest in the administration of the trust. Someone who is entitled to receive a benefit under the trust in a way that’s not available to the public as a whole has standing in many courts. E.g., Smithers v. St. Luke’s-Roosevelt Hospital Center (see p.751 and CN_34)

c. Herzog case: Trust set up for nursing program. The school got rid of their nursing program and was using the funds as general funds. Can the donor enforce the purpose of the trust? General rule: the donor of a charitable gift or trust does not have standing to enforce the terms of the gift or trust unless they have reserved the right to do so.

d. If trust states: “Settlor” has standing, maybe then settlor will have standing w/out exception.e. UTC §405(c) – allows the Settlor to enforce a charitable trust.

H. Powers of Appointment1. Defined: a power given by the original property owner (donor) that gives the recipient of that

power (the donee) the power to determine who is entitled to receive the final interest in the prop.2. The “Players” to a Power of Appointment:

a. Donor: original property ownerb. Donee: person who receives the power, has power to decide who ultimately will receive the

property and usually the power to determine the extent that party will receive (amount).c. Objects: the people in whose favor the power could be exercised (candidates).d. Appointees: People in whose favor the power is actually exercised. Chosen from objects.e. Taker in Default: named in doc. as those who will take prop. if donee fails to exercise POA.

i. Note that you don’t have to have a taker in default. As such, if the donee fails to exercise the power, the property would merely go back to the donor or donor’s estate.

3. General versus Special Powers: a. General Powers: a power that is exercisable in favor of others, but also in favor of the donee

himself, his estate, his creditors, or even the creditors of his estate.i. Fall-Back Presumption: if doc. doesn’t specify, presume it’s a general POA.ii. The donee of a general power can do anything with the assets b/c they are essentially his

and he would treat them as such. Thus, could : (1) appoint in favor of someone free of trust; (2) create a new power of appointment down the chain to a donee of his choice; or (3) appoint to a trustee for the benefit of some beneficiary (“appoint in further trust”).

b. Special Powers: a power that’s only exercisable in favor of others (thus, not exercisable in favor of the donee, his estate, his creditors, or the creditors of his estate.)i. Thus, unlike a gen. power, donee of a special power wouldn’t regard the assets as his own.

4. Testamentary versus Inter Vivos Presently Exercisable: powers of appointment may be created so as to be exercisable either by deed or by will or by deed alone, or by will alone.a. Testamentary: give donee power to choose by will, and only by will.b. Inter vivos: donee can exercise power at anytime, inter vivos. Usually through a TRUST.

5. Elective Share: assets off limits/not considered part of donee’s. estate for purp. of elec. share.6. If general power, but have not exercised power yet: Not donees property yet. 7. Donee’s creditors cannot get if donee doesn’t exercise that right, if only general power (unless he

goes through bankruptcy). Assets not attachable to creditors until exercises right to trust property.a. Creditors can go after asssets once exercised, even if given to a 3rd party, if donee had power to

appoint.b. Some state statutes reverse this rule: if intervivos and general power = creditors can attach. But

only if all of the debtor’s other property has been attached.c. Property that is subject to a special power is off limits.

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d. If debtor is donor and donee: Creditors can attach if donee has general power.8. If trust says needs to exercise power in writing, can only exercise in writing.9. If trust says property can only go to X, property can only go to X.10. Will be in donees estate if general power.11. Release of a Power of Appointment:

a. As a general rule, the donee of a testamentary power of appointment can not legally contract in advance that he will in the future make that appointment in favor of a particular object; however, the donee can achieve a kind of early exercise by simply releasing his power.

b. Release: a voluntary and conscious surrender by the donee of his or her rights under the power of appointment.i. Available in all jurisdictions.ii. Consequence? assets go to the TiD or, in absence of a TiD, back to donor/donor’s estate.

c. Seidel v. Werner [p.603] i. Facts: Steven owns LE + a testamentary POA, w/ his issue as TiD. Steven & wife divorce.

Under the div. settlement, Steven promises to exercise POA in favor of Frank and Anna (kids) in form of trust. When S dies, his will exercised POA in favor of new wife, Edith.

ii. Issue: B/c Steven agreed to exercise POA of F and S via divorce agreement and F and A are 2 of his issue (so they’re also TiDs), was this a voluntary abandonment of his rights under the power so that it was released and the assets go to his TiDs (all of his issue, so not just Frank and Anna, but including Frank and Anna rather than his current wife Edith)?

iii. Holding: Not a valid release. Although F and A cited some case law holding that if the owner of a power of appointment promises to appoint to persons who are also his takers in default, the court here found that even if they agreed with that authority, on these facts, the promise under the separation agreement was not synonymous with a release.

iv. Rationale: (1) language in div. agreement didn’t convey intent to be a release b/c was all in future tense; (2) effects of release diff. from effects under agreement b/c: (a) under agrmnt, prop. goes only to F & A, under release to all issue; & (b) div. agrmnt called for S to create trust for F & A but if it were a release, they’d take the property outright (free of trust).

v. Net Result: B/c he never exercised the power (K to do so in future is unenforceable) and because it wasn’t released, his will was the first valid exercise of the power so Edith takes.

12. Exercise of a Power of Appointment a. Exercise by Residuary Clause in a Donee’s Will

i. Setting: issue arises in 2 situations. There’s either a clause at the top of a will “I hereby devise all of my assets to .” OR there’s a general residuary clause at the bottom of a will.

ii. Key Factors: these are the key factors to look for when dealing w/ issue of whether a residuary clause in a donee’s will exercises a POA:a. Whether the power is general or special; andb. Whether the residuary clause is a “blanket” residuary clause (e.g., “all the rest and

residue to X” – versus a specific clause that actually refers to the POA or any POA).iii. Majority Rule: a blanket clause does not, in and of itself, exercise a power of appointment,

irrespective of whether the power is general or special. Need to reference POA to be effective. Rebuttal presumption if show intent to contrary of donee.

iv. Minority View: a blanket residuary clause does exercise a general power, but not a special power. (this is the rule in Massachusetts): B/c general power = more of donee’s.a. Qualification unless there’s language to the contrary that it’s not an exercise of a

general power.b. New York Variation Some states, including NY, take this minority view a step

further to hold that a special power of appointment may be exercised by a general clause if the residuary devisees are also the objects of the power of appointment.

v. IF DIES: POSSSIBLE THE WILL USES THE DECEASED POA AND SEND PROPERTY TO WHO DECENDENT WANTED THE PROPERTY TO GO TO.

vi. UPC § 2-608 : a general residuary clause expresses an intention to exercise a power of appointment only if either:

See CN_36 for addt’l detail

See p.612 of text.

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a. The power is a general power and the creating instrument doesn’t contain a gift over clause (no takers in default); or

b. T’s will manifests an intent to include the property subject to the POA (meaning, a blanket clause is insufficient).

c. EXCEPTION – this provision only applies if there is not a requirement that the POA be exercised by a reference or by an express or specific reference to the power.

vii. Beals v. State Street Bank & Trust [p. 813] a. Facts: T’s will established a trust for his wife. At her death, trust to be divided into 3

portions for each daughter, giving them a general testamentary POA, with the TiDs as their intestate heirs. One of the daughters partially released her power by limiting the objects to the testator’s descendants (instead of any of her intestate heirs). As such, it became a special POA. She later died without issue and her will contains a blanket residuary clause leaving the rest and residue to her sister’s issue. Note that b/c her sister’s kids would be the T’s grandkids, they are also “objects.”

b. Issue: Did the residuary clause of her will effectively exercise her POA? Note that if it does, her sister’s kids would take the entire share. However, if it did not, they’d only take 1/2 b/c would have to share with the other TiDs (descendants of T).

c. Holding: Although this case was tried in N.Y., the court held that the donor’s domicile applies and, as such, Mass. law applied. Mass. follows the minority view that a general residuary clause can exercise a general POA; however, her power had changed to a special POA. Yet, the court found that this was a special case where the residuary clause should still be held to exercise her power.

d. Rationale? was once a gen. power & her track record of dealing w/ power indicated that she regarded these assets as her own (whereas w/ a special power, you would not).

viii.Donor May Require Specific Reference: the donor can always include provisions that require the donee to exercise the power in a certain way so as to prevent an unintentional exercise of the power. For example, the donor can provide that the power can be exercised only by an instrument that refers specifically to the power. If this is the case, courts are strict in requiring such a ref.a. E.g., Estate of Hamilton: T gives wife POA in 1966 will. Later, revokes that will and

creates 1982 will, which still gives wife power. In both cases, T called for a specific reference to exercise power. Wife dies. Her will refers only to the 1966 POA. Court held that it didn’t exercise her POA b/c not a specific reference to the ‘82 will.

b. Blending Clauses: a blending clause is a blanket reference to all of your assets, including those over which you have a POA. Again, can come up in clause at top of will (“all of my estate, including assets to be disposed of by any POA I may have.”) or with a general residuary clause at the bottom of a will (“all the rest and residue of my estate, including assets over which I have a POA to .”). i. UPC § 2-704 – the mere use of a blending clause is ineffective to exercise the

power b/c it doesn’t make a specific reference.ii. Qualification if extrinsic evidence shows the donee intended to exercise the

power by a blending clause, then it’s okay.ix. Effect of Anti-Lapse Statutes on POA

a. Premise: A has a testamentary POA. A dies and in will has exercised power in favor of B; however, B predeceased A.

b. Majority Rule: although antilapse statutes typically don’t cover appointment, most courts will extend them to cover general powers, but not special POA.i. Only applies to general powersii. “If Clause” must still be satisfied.

c. Net Result: property would go to B’s issue (appointee’s issue), rather than TiDs.

b. Limitations on Exercise of a Special Poweri. Traditional Rule: OLD RULE:

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a. Maybe Can’t Appoint in Further Trust: donee of a special power can’t appoint in further trust, even if the beneficiary is an object, unless the creating instrument expressly permits appointment to a trust for the benefit of the objects of the power. As such, could only appoint the property outright to objects.

b. Maybe Can’t Create a New POA Down the Chain: Assume T gives A a power to appoint among A’s issue. Can A exercise the power by creating in his daughter, B, a LE + a special POA to appoint among B’s children (who are also objects of the original power)? Because A could appoint outright to B, seems he could; however; the older cases are split on this point.

ii. Restatement (Second) Property: Donative Transfers §19.4 a. Donee of a special power can create a general power down the chain to someone who is

an object of the special power.b. Donee of a special power can also create a special power in any person (even non-

object), giving that person the power to appoint to an object of the original special power. (thus, the donee is essentially delegating the POA).

c. Donee of a special power can create a special power in a trustee (appoint in further trust), with the trustee having the power to appoint to objects of the original special power (thus, the donee is essentially delegating the POA).

d. NOT DONATIVE TRANSFER: May just give property to object of special power.iii. Special Powers only: Exclusive versus Non-Exclusive Powers: Within the category of

special powers, special powers can be further broken down as either exclusive or non-exclusive powers. Look to language of the creating instrument to ascertain T’s intent as to whether exclusive or not.a. Exclusive: donee can exclude entirely one or more objects of the power.

i. Restatement §21.1 –fallback presumption, special powers presumed exclusive. b. Non-Exclusive: donee must appoint some amount to each of the permissible objects.

i. Premise: donee of a non-exclusive power gives only a nominal amount ($1) to A and the rest to B, so that he’s not technically excluding A, but essentially is. Majority Rule: donee of a non-exclusive special POA has the right, in essence,

to exclude an object by giving them only a nominal amount. Minority Rule = Illusory Appointment Rule: each potential object must receive

a substantial or at least a significant amount so as to avoid a constructive exclusion.

c. Fraud on a Special Power: the general rule is that an appointment in favor of a person who is not an object of the power is invalid. Similarly, an appointment to an object for the purpose of circumventing this limitation on the power is a “fraud on the power” and is void to the extent it was motivated by such purpose. Ex: If pass $ to object who then agreed to pass that $ on to a non-object = void b/c of purpose and intent.

d. Ineffective Exercises of Poweri. Allocation of Assets [Special Powers] under this doctrine, if the donee blends both the

appointive property and the donee’s own property under a common dispositive instrument (usually, donee’s will), the blended property is allocated to the various interests in such a way as to increase the effectiveness of the disposition w/ the goal of coming as close as we can to the devises that T intended (in terms of amount).a. Can’t BLEND IF: If language says: “$ to A from appoointive property;” and $ from

my sesparate assets to B”, can’t give A separate assets because demaractes which source the funds come from = CAN’T USE THIS.

b. BLEND: All of my proprety, including appointment powers, goes to A and B. B/C DOESN’T QUALIFY WHAT SOURCE $ COMES FROM.

c. Typically applies in cases involving an ineffective appointment to a non-object of a power or an appointment that violates the Rule against Perpetuities.

See handout

See CN_37 and Allocation of Assets handout for examples.

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ii. Capture [General Powers]: Try to appoint to 3rd party but appointment = ineffective but have blending language.a. General Rule : if the donee of a power makes an ineffective appointment, and the

donee’s intent can’t be given effect through allocation of assets, the general rule is that the property passes to TAKER In Default or, if none, to the donor’s estate – Not the donee or the donee’s estate. However, Capture is an exception to this general rule.

b. If violate rule against perpetuities; donee = dead; ect.c. Requirements: capture is triggered when the following 2 things are true:

i. Donee has a general power (doesn’t apply to special powers); andii. Donee used language that indicates an intent to assume control of the appointive

assets for all purposes (meaning, not merely to exercise the power, but in a way that claims ownership as if the assets were her own).

d. Net Effect of Capture: if the donee fails to exercise the general POA properly, but there’s been blending, the assets go to the donee’s estate rather than back to the donor or to the taker in default.

e. Seidel v. Werner i. General rule: the donee of a testamentary power cannot legally contract in advance

that he will in the future exercise this particular power in the future in favor of a particular object.

ii. This makes the contract not enforceable. iii. Qualification: can achieve an early exercise by releasing the power. When you

release your assets, they go to the taker in default.

13. Failure to Exercise a Power of Appointmenta. Failure to Exercise General POA: if the donee of a general POA fails to exercise the power:b. If violate rule against perpetuities; donee = dead; ect => fail to exercise general power properly.

i. Takers in Default (this is the general rule); or, if no takers in defaultii. Donor’s Estate.

c. Failure to Exercise Special POA: if the donee of a special POA fails to exercise the power:i. Takes in Default (again, the general rule); or, if no taker in defaultii. Potential Objects in equal shares (almost a sort of implied TiD); or, as a last resort…iii. Donor’s estate.

I. Duties of the Trustee1. Loyalty: trustee obligated to act primarily and only for the benefit of the beneficiaries of the trust.

a. Self-Dealing: one consequence of this rule is that the trustee can’t transact w/ the trust.i. Voidable: If trustee does engage in self-dealing, it’s voidable meaning, the beneficiaries

have the option of allowing the self-dealing transaction to stand or to reject it.ii. No Further Inquiry Rule: If T self-deals, no further inq. into fair, reasonable, good faith…

a. Qualifications: there are 2 exceptions to this, however, even if the below situations apply, the trustee is always subject to the general standard of reasonable prudence.i. Express Terms Authorize Self-Dealing: if terms of the trust authorize self-dealing,

the no further inquiry rule won’t apply;ii. Informed Consent by Beneficiaries: not voidable if beneficiaries consented to the

transaction, provided they were given full and fair disclosure prior to transaction.iii. Types of Self-Dealing:

a. Trustee selling his own personal assets to the trust;b. Trustee purchases assets from the trust;c. Conflict of Interest – a generic category b/c self-dealing is one type of conflict of

interest and is the most extreme example of a conflict of interest.i. In re Rothko. Not technically self-dealing b/c not selling own assets to estate or

buying from it, but transaction ultimately harmed the estate.

See Case 10 on p.826 for a good example.

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Duty of loyalty imposed on fiduciary prevents him from accepting employment from a third party who is entering into a business transaction with the trust.

ii. No Further Inquiry Rule Doesn’t Apply to Mere Conflict of Interest. Instead, court must look further to asses the various interests at stake.

iii. If property sold to BFP who doesn’t know that property was trust property, sold by trustee: Beneficiaries cannot get property back. Can only get $ back from trustee.

iv. Parties that are Synonymous w/ Trustee: if the trustee sells property from the trust to the trustee’s attorney or even employee, most courts hold it constitutes self-dealing and, as such, a breach of the duty of loyalty.

2. Prudencea. Concern?issues usually arise in cases where T makes investments that are unreasonably risky.b. Reasonable Prudent Investor Rule: trustee is under a duty to make the kinds of investments that

a reasonably prudent investor would make in dealing with his own property and assets.c. Must strike proper balance b/w risk and return (modern view).d. Duty to Diversify [the portfolio rule]–w/in duty of prudence, T must diversify investments.

i. There are some qualifications / exceptions – see CN_40.e. Note that, notwithstanding express language that gives the trustee “absolute discretion,” T is

always subject to the duty of reasonable prudence.f. Duty not to Delegate: can’t delegate, but can seek advice – T must still make ultimate decision.

3. Impartiality: Remember that, in the standard trust, there are “split beneficiaries” A gets income for life, principal to B. As such, issue that arises is that trustee must make decisions that generate income for the life estate beneficiary, but simultaneously needs to preserve principal for benefit of the remainder person beneficiary.

4. Subrules Relating to the Trust Propertya. Duty to Collect and Protect Trust Property – T has duty of obtaining possession of the trust

assets w/o unnecessary delay. In the case of a testamentary trust, the trustee should collect the assets from the executor as promptly as circumstances permit. In addition, T has a duty thereafter to examine the property tendered by the executor to make sure it’s what the trustee ought to receive.

b. Duty to Earmark Trust Property – T has duty to earmark trust property. To earmark property is to designate it as trust property rather than T’s own.i. Rationale? – IDs the assets as against other Creditors of the trustee; prevents unauthorized

transfers by providing notice to would-be buyers (if earmarked, buyer charged w/ notice so as to not qualify as a BFP); makes it impossible for T to later claim the asset as her own.

ii. Traditional Rule: if T fails to earmark and there’s later a loss of any kind, T strictly liable.iii. Mod. Rule: strictly liable only if causal connect.b/w failure to earmark & loss is established

c. Duty Not to Mingle Trust Funds w/ Others – T has affirmative duty to segregate trust assets.i. Traditional Rule: failure to do so results in strict liability for any loss.ii. Modern View: only strictly liable if causal connection is established.

5. Inform and Account to the Beneficiariesa. Must keep beneficiaries reasonably informed so that in a position to protect their interests. b. Must respond to beneficiaries’ request for info (subject to limitation of reasonableness).c. No general duty to provide beneficiaries notice pre-sale, but post-sale must account!d. Duty to Account and Keep Records – must keep records of all transactions. Has hearing where

T will give accounting and court will approve or reject. Beneficiaries can object. Effect of court approval? res ipsa effect (T not liable from that point – past). Gets a clean slate.

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