Misty Watson
Trusts and Estates Prof. Rosenbury Fall 2005
Trusts and Estates Outline
I. Introduction
A. The Mess of Family, Property, and Death
i. In re Vickie Lynn Marshall Handout (Pg. 1-2)
a) Anna Nicole Smith Case – Bankruptcy versus Probate Court
b) All federal courts, including bankruptcy courts, are bound by the
probate exception to federal court jurisdiction and the federal court is
required to regarding from deciding state law probate matters, no
matter how the issue is framed by the parties.
c) Probate courts determine an individual's property at death (Pg. 2-3)
d) No federal right to write a will, this is a state issue. States have
complete control over probate matters.
e) Think about the rationale of the court when deciding probate matters.
What facts are highlighted by the court?
B. Overview of the Probate Process 30-39
i. Probate and Nonprobate Property (Pg. 4)
a) Probate property is property that passes under the decedent's will or by
intestacy.
b) Nonprobate property is property passing under an instrument other
than a will.
ii. Administration of Probate Estates(Pg. 4-5)
a) Probate performs three functions

it provides evidence of transfer of title to the new owners by a
probated will or decree of intestate succession

it protects creditors by requiring payment of debts, and

it distributes the decedent's property to those intended after
creditors are paid
b) Primary or domicilliary jurisdiction is assumed by the probate court
where the decedent was domiciled at the time of death.
c) Ancilliary jurisdiction is the jurisdiction over the decedent's real
property
II. The Default: Intestate Succession
A. Introduction to Intestacy 59-62 (Pg. 5)
i. Intestate – dying without a valid will
ii. UPC 2-101 Intestate Estate – Any part of the decedent's estate not
effectively disposed of by will passes by intestate succession to the
decedent's heirs as prescribed in this Code, except as modified by the
decedent's will.
B. The Surviving Spouse
i. Share of the Surviving Spouse 62-65 (pg. 5-6, 10-11)
a) UPC 2-102 – Share of Spouse
b) UPC 2-103 – Share of Heirs Other than Surviving Spouse
ii. Who Qualifies as a Surviving Spouse 65-67 (pg. 6)
a) Bigamous Marriages, handout
b) In re Estate of Cooper, 433-438 (pg. 6-7, 11-12)

Homosexual partner of decedent attempted to claim a spouse's
elective share of probate estate.

The term “surviving spouse” cannot be interpreted to include
homosexual life partners. Homosexual activity is not a
fundamental right.
c) Unmarried Cohabitants, 65-67 & handout (pg. 7-8)

In re Estate of Vargas

Decedent was practicing bigamist. Court divided property
equally between both legal and putative spouse.

An innocent participant who has duly solemnized a
matrimonial union which is void because of some legal
infirmity has the status of putative spouse.

When the theories do not fit the facts, courts have customarily
resorted to general principles of equity to effect a just
disposition of property rights.
d) Sex Changes, 67 & handout (pg. 8-9)

In re Estate of Marshall G. Gardiner

Decedent was a post-operative male-to-female transsexual.
Court voided decedent's marriage to petitioner as they were
both considered male.

A marriage is a legal status, condition, or relation of one man
and one woman united in law for life, or until divorced, for the
discharge to each other and the community of the duties legally
incumbent on those whose association is founded on the
distinction of sex.
C. Descendants
i. Who Qualifies as a Descendant
a) Marital Children (pg. 19-20)

Marriage creates a presumption the children born of a marriage are
children of both spouses.
b) Nonmarital Children, 100-101 (pg. 12, 20)

At common law nonmarital children were not allowed to inherit
from either parent. Now a statute imposing a different restriction
on nonmarital children must have a substantial justification as
serving an important state interest not to violate the Constitution.

There is a presumption that fathers do not want children to inherit
that they did not known about or never acknowledged.
c) Adopted Children

Hall v. Vallandingham, 83-89 (pg. 12-13)

Children were adopted by their step-father cutting off their
inheritance rights through their deceased natural father's
family.

To construe the inheritance statute to allow dual inheritance
would bestow upon an adopted child a superior status.

UPC 2-113 – Individuals Related to Decedent Through Two Lines
(pg. 13)

UPC 2-114 – Parent and Child Relationship (pg. 13-14)

Had the UPC 2-114 been adopted by the Hall v. Vall court, the
children would have been allowed to inherit through their
natural father.

Minary v. Citizens, 89-94 (pg. 14-15)

Decedent adopted his own wife in order to conform to the
requirements of mother's trusts to decedent's heirs.

Adoption of an adult for the purpose of bringing that person
under the provisions of a preexisting testamentary instrument
when he clearly was not intended to be so covered should not
be permitted.

Oneal v. Wilkes, 94-99 (pg. 15-16)

Child's request for court to find that she was equitably adopted
was denied.

The first essential of a contract for adoption is that it be made
between persons competent to contact for the disposition of the
child. A successful plaintiff must also prove some showing of
an agreement between the natural and adoptive parents,
performance by the natural parents of the child in giving up
custody, performance by the child living in the home of the
adoptive parents, partial performance by the foster parents in
taking the child into the home and treating it as their child, and
the intestacy of the foster parent.

Note re: Same-Sex Couples, 113-114
d) Posthumous Children, 99-100

Woodward v. Commissioner, 102-111 (pg. 16-19)

Wife gave birth to twin girls. The children were conceived
through artificial insemination using the deceased husband's
preserved sperm.

Because death ends a marriage, posthumously conceived
children are always nonmarital children. A court finding of
paternity is a necessary prerequisite to inheritance right in the
estate of the deceased genetic parent.
ii. Share of Descendants, 73-77 (pg. 19)
a) English per stirpes

The English distribution per stirpes is to divide the property into as
many shares as there are living children of the designated person
and decease children who have descendants living. The children of
each descendant represent their deceased parent and are moved
into their parent's position beginning at the first generation below
the designated person.
b) Modern per stripes – Per Capita with Representation

Under modern per stirpes, one looks first to see whether any
children survived the decedent. If so, then distribution is identical
to that under English per stirpes. However, where no children
survive the decedent, then the estate is divided equally, per capita,
at the first generation in which there are living takers, which is
usually the generation of the decedent's grandchildren. In sum,
under modern per stirpes the decedent's estate is divided into
shares at the generational level nearest to the decedent in which
one or more descendants of the decedent are alive and provides for
representation of any deceased descendant on that level by his or
her descendants.
c) Per capita at each generation

If, under Section 2-103(1), a decedent's intestate estate or a part
thereof passes "by representation" to the decedent's descendants,
the estate or part thereof is divided into as many equal shares as
there are (i) surviving descendants in the generation nearest to the
decedent which contains one or more surviving descendants and
(ii) deceased descendants in the same generation who left
surviving descendants, if any. Each surviving descendant in the
nearest generation is allocated one share. The remaining shares, if
any, are combined and then divided in the same manner among the
surviving descendants of the deceased descendants as if the
surviving descendants who were allocated a share and their
surviving descendants had predeceased the decedent.
D. Ascendants and Collaterals
i. Share of Ascendants and Collaterals, 78-83 (pg. 20)
a) All persons who are related by blood to the decedent but who are not
descendants or ancestors are called collateral kindred. Descendants of
the decedent's parents, other than the decedent and the decedent's
issue, are called first-line collaterals.
b) Descendants of the decedent's grandparents, other than the decedent's
parents and their issue, are called second-line collaterals.
c) Table of Consanguinity – 79
d) Two basic schemes to determine who is next in line of succession

Parentelic System

Under the parentelic system, the intestate estate passes to
grandparents and their descendants, and if none to greatgrandparents and their descendants, and so on down each line
(parentela) descended from an ancestor until an heir is found.

Degree of relationship system

Under the degree-of-relationship system, the intestate passes to
the closest kin, counting degrees of kinship.
ii. Special Issues Regarding Half-bloods, 83
E. Advancements, 114-116 (pg. 20-21)
i. UPC 2-109 Advancements
a) (a) If an individual dies intestate as to all or a portion of his [or her]
estate, property the decedent gave during the decedent's lifetime to an
individual who, at the decedent's death, is an heir is treated as an
advancement against the heir's intestate share only if (i) the decedent
declared in a contemporaneous writing or the heir acknowledged in
writing that the gift is an advancement or (ii) the decedent's
contemporaneous writing or the heir's written acknowledgment
otherwise indicates that the gift is to be taken into account in
computing the division and distribution of the decedent's intestate
estate.
(b) For purposes of subsection (a), property advanced is valued as of
the time the heir came into possession or enjoyment of the property or
as of the time of the decedent's death, whichever first occurs.
(c) If the recipient of the property fails to survive the decedent, the
property is not taken into account in computing the division and
distribution of the decedent's intestate estate, unless the decedent's
contemporaneous writing provides otherwise.
F. Bars to Succession (pg. 21-22)
i. In re Estate of Mahoney, 126-132
a) Wife was convicted of husband's manslaughter. Appealed the
judgment stating that she could not inherit from her husband's death.
b) A constructive trust is nothing but the formula through which the
conscience of equity finds expression. Property is acquired in such
circumstances that the holder of legal title may not in good conscience
retain the beneficial interest. Equity, to express its disapproval of his
conduct, converts him into a trustee.
c) The principle to be applied is that the slayer should not be permitted to
improve his position by the killing, but should not be compelled to
surrender property to which he would have been entitled if there had
been no killing. The doctrine of constructive trust is involved to
prevent the slayer from profiting from his crime, but not as an added
criminal penalty.
ii. Disclaimer (22-23)
a) Sometimes a heir or devisee will decline to take the property, a refusal
that is called a disclaimer.
b) Drye v. U.S.

Drye attempted to disclaim property from his mother's estates due
to unpaid tax assessments so that the property would pass to his
daughter.

Under the relevant IRS Code, to satisfy a tax deficiency, the
Government may impose a lien on any property or rights to
property or rights to property belonging to the taxpayer.
III. Attempting to Manifest Intent: Wills or Testate Succession
A. Executing Wills
i. Testamentary Capacity
a) Mental Capacity

The Test of Mental Capacity (pg. 32)

To be competent to make a will, the testator must be an adult
and must be capable of knowing and understanding in a general
way (1) the nature and extent of his or her property (2) the
natural objects of his or her bounty, and (3) the disposition that
he or she is making of that property, and must be capable of (4)
relating these elements to one another and forming an orderly
desire regarding the disposition of property.

The test is one of capability, not of actual knowledge.

In re Estate of Wright, 141-146 (pg. 32-33)

Eccentric testator devised a house to a woman friend and a
house to his daughter.

The legal presumption is always in favor of sanity, especially
when all testamentary requirements have been completed.

Testamentary capacity cannot be destroyed by showing a few
isolated acts, foibles, idiosyncrasies, moral or mental
irregularities or departures from normal unless they bear
directly upon and have influenced the testamentary act. The
evidence must establish that the will itself was the creature or
product of hallucinations or delusions bore directly upon and
influenced the creation and terms of the testamentary
instrument.

The evidence must establish, in addition to the fact of the
existence of the hallucinations or delusions, the fact that by
reason of these hallucinations or delusions the testatrix devised
or bequeathed her property in a way which, except for the
existence of such delusions she would not have done.
b) Insane Delusion (pg. 33, 47)

Some courts have held that if there is any factual basis at all for the
testator's delusion, it is not deemed insane. The majority view,
however, is that a delusion is insane even if there is some factual
basis for it if a rational person in the testator's situation could not
have drawn the conclusion reached by the testator.

Insane delusion will normally only invalidate that part of the will
that was a result of the insane delusion. That property will pass
through intestate.

In re Strittmater, 149-150

Testator was feminist that left her estate to the NOW.

Decedent supposedly suffered from paranoia. Decedent hated
men to a neurotic degree.

In re Honigman, 150-156 (pg. 33-34)

Widow objected to the will on the basis of the testator's
alleged insane delusion that the widow was cheating on
him.

If a person persistently believes supposed facts, which have
no real existence except in his perverted imagination, and
against all evidence and probability, he is, so far as they are
concerned, under a morbid delusion; and delusion in that
sense is insanity. Such a person is essentially made or
insane on those subjects, though on other subject he may
reason, act and speak like a sensible man.
c) Undue Influence, 158-162 (pg. 34)

There must be coercion. It is only when the will of the person who
becomes a testator is coerced into doing that which he or she does
not desire to do, that is undue influence.

To establish undue influence it must be proved that

the testator was susceptible to undue influence

the influence had the disposition or motive to exercise undue
influence

that the influencer had the opportunity to exercise undue
influence, and

that the disposition is the result of the influence

Estate of Lakatosh, 159-160 (pg. 34-35)

Testator gave beneficiary power of attorney and the bulk of
decedent's estate. Court found that decedent suffered from a
weakened intellect.

When the proponent of a will proves that the formalities of
execution have been followed, a contestant who claims that
there has been undue influence has the burden of proof. The
burden may be shifted so as to require the proponent to
disprove undue influence. To do so, the contestant must prove
by clear and convincing evidence that there was a confidential
relationship, that the person enjoying such relationship
received the bulk of the estate, and that the decedent's intellect
was weakened.

A confidential relationship exists whenever one person reposes
a special confidence in another to the extent that the parties do
not deal with each other on equal terms, either because of an
overmastering dominance on one side, or weakness,
dependence or justifiable trust, on the other. Such a
relationship is not confined to a particular association of
parties, but exists whenever one occupies toward another such
a position of advisor or counselor as reasonably to inspire
confidence that he will act in good faith for the other's interest.

Restatement (Third) Third of Property: Wills and Other Donative
Transfers

8.3 Undue Influence (pg.35-36)

(a) A donative transfer is invalid to the extent that it was
procured by undue influence, duress, or fraud.
(b) A donative transfer is procured by undue influence if
the wrongdoer exerted such influence over the donor that it
overcame the donor's free will and caused the donor to
make a donative transfer that the donor would not
otherwise have made.
(c) A donative transfer is procured by duress if the
wrongdoer threatened to perform or did perform a wrongful
act that coerced the donor into making a donative transfer
that the donor would not otherwise have made.
(d) A donative transfer is procured by fraud if the
wrongdoer knowingly or recklessly made a false
representation to the donor about a material fact that was
intended to and did lead the donor to make a donative
transfer that the donor would not otherwise have made.

Lipper v. Weslow, 162-167 (pg. 36-37)

Lawyer drafted will for his mother. Will disinherited decedent's
grandchildren by another son.

The test of undue influence is whether such control was
exercised over the mind of the testator as to overcome her free
agency and free will and to substitute the will of another so as
to cause the testator to do what she would not have otherwise
done but for such control.

Proof of a confidential relationship, the opportunity, and
perhaps a motive for undue influence simply sets the stage.
Contestants must go forward and prove in some fashion that
the will as written resulted from the defendant substituting his
mind and will for that of the testator.

Bequests to Attorneys, 167-169 (pg. 37-38)

Many courts, concerned with the appearance of impropriety,
hold that a presumption of undue influence arises when an
attorney-drafter receives a legacy, except when the attorney is
related to the testator. The presumption can be rebutted only by
clear and convincing evidence.
d) Undue Influence and Sexual Relationships

In re Will of Moses, 170-174 (pg. 40-41)

An attorney's partner wrote a will for the attorney's lover.
When the will was introduced to probate, relatives challenged
the decedent's will stating that she was addicted to alcohol,
disfigured, ill, and in a romantic relationship with an attorney
15 years her junior.

The rule that where a fiduciary relationship has been
established, a presumption of undue influence arises, is not
limited to holographs, nor confined to wills otherwise prepared
by the testator himself. It encompasses with equal force wills
written for the testator by a third person. There is no sound
reason supporting the view that a testator, whose will has
become subservient to the undue influence of another, is
purged of the effects of that influence merely because the
desired testamentary document is prepared by an attorney who
knows nothing of the antecedent circumstances.

In re Kauffman's Will, 174-176 (pg. 41-42)

Decedent left estate to his lover instead of family. Lover had
been heavily influence in decedent's financial business.

In determining undue influence, the court is concerned with the
testamentary mind, intent, and purpose of the testator when the
instrument offered for probate was executed.

There are certain cases in which the law indulges in the
presumption that undue influence has been used, and those
cases are a will of a ward in favor of his guardian, or any
person in favor of his priest or religious adviser, or where other
close confidential relationships exist.
e) Fraud (pg. 43)

Fraud occurs where the testator is deceived by a misrepresentation
and does that which the testator would not have done had the
misrepresentation not been made. It is usually said that the
misrepresentation must be made with both the intent to deceive the
testator and for the purpose of influencing the testamentary
disposition. A provision in a will procured by fraud is invalid. The
remaining portion of the will stands unless the fraud goes to the
entire will or the portions invalidated by fraud are inseparable from
the rest of the will.

Fraud in the inducement occurs when a person misrepresents facts,
thereby causing the testator to execute a will, to include particular
provisions in the wrongdoer's favor, or to refrain from executing or
revoking a will.

Fraud in the execution occurs when a person misrepresents the
character or contents of the instrument signed by the testator,
which does not if fact carry out the testator's intent.

Estate of Carson, 186-187

Decedent was induced in to a fraudulent marriage by
beneficiary.

The court found that but for the beneficiary's fraudulent
conduct of a sham wedding to the testator she would never
have left him her estate.

Puckett v. Frida, 187-189 (pg. 43-45)

Nurse beneficiaries convinced testator that the family no longer
cared for her. Nurse isolated the decedent from her family and
friends.

False representations will constitute a ground for voiding a
will, even in the absence of proof that they were used to bring
pressure to bear upon the testator; but it must appear that the
person making such representations knew them to be false, that
they were made with the intention of deceiving the testator and
for the purpose of obtaining a bequest or, at least, of affecting a
testamentary disposition, and that he was deceived by such
representations and induced to act in reliance thereon by
preparing a will different from what he would have made but
for the misrepresentations and deception. Fraud sufficient to
invalidate a will may be predicated upon a false accusation that
one in a position to be the natural recipient of the testator's
bounty had been guilty of an act causing great displeasure to
the testator or had stirred up trouble in the family. Concealment
or suppression of facts may constitute fraud sufficient to
invalidate a will, in a case where there was a duty to disclose
such facts to the testator, as where a confidential relation
existed between the testator and the person accused of
perpetrating the fraud. But even concealment or
misrepresentation by a beneficiary for the purpose of deceiving
the testator does not invalidate a bequest if it appears that it
might have been made for some other reason.
f) Duress

When undue influence becomes overtly coercive, it becomes
duress. A donative transfer is procured by duress if the wrongdoer
threatened to perform or did perform a wrongful act that coerced
the donor into making a donative transfer that the donor would not
have otherwise made. Restatement 8.3(c)

Latham v. Father Divine, 189-193 (pg. 45-46)

Plaintiffs, decedent's first cousins, were not distributees of
decedent's will, which gave almost her entire estate to
defendants, cult leader and others. Plaintiffs claimed that
shortly prior to the death of the deceased she had attorneys
draft a new will in which plaintiffs were named as legatees for
a very substantial amount and that defendants' false
representations, undue influence, and physical force prevented
the deceased from executing the new will.

Where a devisee or legatee under a will already executed
prevents the testator by fraud, duress or undue influence from
revoking the will and executing a new will in favor of another
or from making a codicil, so that the testator dies leaving the
original will in force, the devisee or legatee holds the property
thus acquired upon a constructive trust for the intended devisee
or legatee.
g) Tortious Interference

Marshall v. Marshall, 194-197 & handout (pg. 46-47)

Anna Nicole Smith Case in Bankruptcy Court

Although Texas law does not specify the elements of a cause of
action for tortious interference with an expectancy, other
jurisdictions have clearly delineated the elements. A plaintiff
must prove (1) the existence of an expectancy; (2) a reasonable
certainty that the expectancy would have been realized but for
the interference; (3) intentional interference with that
expectancy; (4) tortious conduct involved with the interference;
and (5) damages.
ii. Statutory Requirements: Attested Wills
a) The Function of Formalities, 199-203 (pg. 48-49)

Formalities serve several functions:

The evidentiary function

the protective function

the cautionary function

the channeling function

The most basic formalities of an attested will are

writing

signature of testator

attestation of witnesses

UPC 2-502 – Execution; witnessed wills; holographic wills
b) The Requirements, 203-204

In re Groffman, 204-205

The dispute in this case centered on the fact that Groffman and
both witnesses were not simultaneously present in the same
room when testator signed or acknowledged his will.

The court refused to admit the will to probate at it did not meet
the statutory requirements that the witnesses must both be
present at the same time during the signature or
acknowledgment of the will.

Stevens v. Casdorph, 205-211 (pg. 49-50)

Testator was not physically present when will was signed by
witnesses. Nor did witnesses see testator actually sign the will.

While the law favors testacy over intestacy compliance with
the probate code are necessary in order to have a validly
executed will

Estate of Parsons, 211-215 (pg. 50-51)

Beneficiary to the testator's will was also a subscribing witness.
Witness attempted to disclaim property awarded under the will
in an attempt to validate the will.

Cal. Prob. Code § 51 states that all beneficial devises, bequests
and legacies to a subscribing witness are void unless there are
two other and disinterested subscribing witnesses to the will,
except that if such interested witness would be entitled to any
share of the estate of the testator in case the will were not
established, he shall take such proportion of the devise or
bequest made to him in the will as does not exceed the share of
the estate which would be distributed to him if the will were
not established.

The court held that Cal. Prob. Code § 51 looked only at the
time of execution and attestation of the will and that a
subsequent disclaimer was ineffective to transform an
interested witness into a disinterested witness.

Recommended Method of Execution, 215-220
b) Curing Mistakes

In re Pavlinko's Estate, 220-222 (pg. 52-53)

Husband and wife signed mutual wills. Both mistakenly signed




the other's will.

It may happen, even frequently, that genuine wills, namely,
wills truly expressing the intentions of the testators, are made
without observations of the required forms; and whenever that
happens, the genuine intention is frustrated by the act of the
legislature, of which the general object is to give effect to the
intention. The courts must consider that the legislature, having
regard to all probable circumstances, has thought it best, and
has therefore determined, to run the risk of frustrating the
intention sometimes, in preference to the risk of giving effect
to or facilitating the formation of spurious wills, by the absence
of forms.
In re Snide, 223-225 (pg. 53-54)

Husband and wife executed identical wills each mistakenly
signing the other's will.

The court held that the husband's will should have been
admitted for probate because: (1) although the husband
mistakenly signed the will prepared for the wife, the dispositive
provisions in both wills were identical; (2) the significance of
the only variance between the two instruments was fully
explained; (3) the will was undoubtedly genuine; and (4) the
will was executed in the manner required by statute.
UPC 2-503 Harmless Error (pg. 54)
In re Will of Ranney, 226-231 (pg. 54-55, 56)

Witnesses mistakenly signed the self-proving affidavit and not
the attestation clause of the will.

The court held that probate was proper where an instrument
substantially complied with the requirements of the probate law
even if it did not strictly comply with the law.

Substantial Compliance
In re Estate of Hall, 231-235 (pg. 55-56)

Joint will of husband and wife was not properly witnessed.

n contested cases, the proponent of a will must establish that
the testator duly executed the will. Mont. Code Ann. § 72-3310. For a will to be valid, two people typically must witness
the testator signing the will and then sign the will themselves.
Mont. Code Ann. § 72-2-522(1)(c). If two individuals do not
properly witness the document, Mont. Code Ann. § 72-2-523
provides that the document may still be treated as if it had been
executed under certain circumstances. One such circumstance
is if the proponent of the document establishes by clear and
convincing evidence that the decedent intended the document
to be the decedent's will.

Dispensing Power

Get rid of statutory requirements as long as document
reflects the intent of the testator.
ii. Statutory Requirements: Unattested Wills
a) Where Permitted, 236
b) The Requirements

Holographic Wills (pg. 57)

A holographic will is a will written by the testator's hand and
signed by the testator: attesting witnesses are not required.

To be valid, a holographic will must be written by the testator's
hand and signed by the testator. Out of this simple formulation,
however, arises two important interpretative problems:

(a) the nature of the requirement that the testator sign the
holograph, and

(b) whether the entirety, or if not, how much, of the
holograph must be in the testator's handwriting.

Kimmel's Estate, 237-242 (pg. 57-58)

The decedent died suddenly on the afternoon of the same day
that he wrote and mailed the letter to two of his children. The
letter instructed that if anything happened, the designated
property was to go to the two children.

While the informal character of a paper is an element in
determining whether or not it was intended to be testamentary,
this becomes a matter of no moment when it appears thereby
that the decedent's purpose was to make a posthumous gift.
Deeds, mortgages, letters, powers of attorney, agreements,
checks, notes, etc., have all been held to be, in legal effect,
wills.

Estate of Mulkins, 242

Although the court found that the printed portions of the will
were intended to be part of the will, it reject using an intent
approach. Instead, the court treated the preprinted language as
“mere surplusage.” The court held that the important thing is
that the testamentary part of the will to be wholly written by
the testator and of course signed by him.

Estate of Johnson, 242-243 (pg. 58-59)

Testator's will had both typewritten and handwriting
components. The court found that it was not a valid
holographic will and that extrinsic evidence to support the
testator's intent

The statutory requirement that the material provisions of a
holographic will be drawn in the testator's own handwriting
requires that the handwritten portion clearly express a
testamentary intent.

The omission of any of the requirements of the statute will not
be overlooked on the ground that it is beyond question that the
paper was executed by the decedent as his will while he
possessed abundant testamentary capacity, and was free from
fraud, constraint or undue influence, and there is no question of
his testamentary purpose, and no obstacle to carrying it into
effect had his will been executed in the manner prescribed by
the statute.

Estate of Muder, 243-244 (pg. 60)

Testator filled out preprinted form in his handwriting and
signed by only one witness.

A will which does not comply with Ariz. Rev. Stat. § 14-2502
is valid as a holographic will, whether or not witnessed, if the
signature and the material provisions are in the handwriting of
the testator.

Ariz. Rev. Stat. § 14-2503 (1973) allows printed portions of the
will form to be incorporated into the handwritten portion of the
holographic will as long as the testamentary intent of the
testator is clear and the protection afforded by requiring the
material provisions be in the testator's handwriting is present.

In re Estate of Kuralt (pg. 61)

The deceased and appellee maintained a long and intimate
personal relationship. Each desired to keep their relationship
secret. Although the deceased executed a formal will, that will
did not specifically mention any of the real property owned by
the deceased. Two weeks before his death, the deceased wrote
a letter to appellee.

Montana courts are guided by the bedrock principle of
honoring the intent of the testator.

When a second will does not make a complete disposition of
the testator's estate, the second will is more in the nature of a
codicil to the first will.
B. Will Components
i. Integration of Wills, 271-272 (pg. 62)
a) Under the doctrine of integration, all papers present at the time of
execution, intended to be part of the will are integrated into the will.
ii. Republication of Codicil, 272 (pg. 62-63)
a) Under the doctrine of republication by codicil, a will is treated as
reexecuted (republished) as of the date of the codicil: A will is treated
as if it were executed when its most recent codicil was executed,
whether or not the codicil expressly republishes the prior will, unless
the effect of so treating it would be inconsistent with the testator's
intent.
b) The fundamental difference between republication by codicil and the
doctrine of incorporation by referenced, is that republication applies
only to a prior validly executed will, whereas incorporation by
reference can apply to incorporate into a will language or instruments
that have never been validly executed.
iii. Incorporation by Reference (pg. 63)
a) UPC 2-510 Incorporation by Reference

Any writing in existence when a will is executed may be
incorporated by reference if the language of the will manifests this
intent and describes the writing sufficiently to permit its
identification.
b) Clark v. Greenhalge, 273-278 (pg. 63-64)

Testatrix executed a will referencing a notebook which made
bequests of specific property.

A properly executed will may incorporate by reference into its
provisions any document or paper not so executed and witnessed,
whether the paper referred to be in the form of a mere list or
memorandum, if it was in existence at the time of the execution of
the will, and is identified by clear and satisfactory proof as the
paper referred to therein.
c) Johnson v. Johnson, 279-285 (pg. 64-65)

Testator left a will containing three typewritten paragraphs. At the
bottom of the sheet of paper was a handwritten provision that was
signed and dated. The court found that the handwritten portion was
a valid holographic codicil and that it incorporated the prior will by
referenced and republished and validated the prior will as of the
date of the codicil giving effect to the testator's intention.
d) UPC 2-513 Separate Writing Identifying Bequests of Tangible
Property (pg. 64)
iv. Acts of Independent Significance, 285-286 (pg. 65)
a) UPC 2-512 Events of Independent Significance

A will may dispose of property by reference to acts and events that
have significance apart from their effect upon the dispositions
made by the will, whether they occur before or after the execution
of the will or before or after the testator's death. The execution or
revocation of another individual's will is such an event.
C. Will Construction
–
The goal in construing wills is to give effect to the testator's intent.
i. Dealing with Mistakes & Ambiguous Language (pg. 66)
–
In construing wills, there are two traditional rules
–
Plain Meaning or No Extrinsic Evidence Rule
–
Under the plain meaning rule, extrinsic evidence may be
admitted to resolve some ambiguities, but the plain meaning of
the words of the will cannot be distributed by evidence that
another meaning was intended.
–
No reformation rule
–
Reformation is an equitable remedy that, if applied to a will,
would correct a mistaken term in the will to reflect what the
testator intended the will to say.
a) The Traditional Approach, 365-366

Mahoney v. Grainger, 366-371 (pg. 66-67)

Testator desired for her numerous cousins to which she wanted
to distribute her property. Testator assumed that they would
inherit as her heirs; however, her aunt was first in line as a heir


and therefore took everything. Testator's attorney made a
mistake in not specifically naming the cousins and instead
putting the heirs as inheriting.

The court found that it would not allow the introduction of
extrinsic evidence of the testator's actual intent because the
plain meaning of the word “heirs” was obvious.

When the instrument has been proved and allowed as a will,
oral testimony as to the meaning and purpose of a testator in
using language must be rigidly excluded. It is only where
testamentary language is not clear in its application to facts that
evidence may be introduced as to the circumstances under
which the testator used that language in order to throw light
upon its meaning. Where no doubt exists as to the property
bequeathed or the identity of the beneficiary there is no room
for extrinsic evidence; the will must stand as written
Arnheiter v. Arnheiter, 371-374 (pg. 68)

Attorney erred in putting wrong street address on a devise of
specific property to beneficiary in testator's will.

A court has no power to correct or reform a will or change any
of the language therein by substituting or adding words. The
will of a decedent executed pursuant to statute is what it is and
no court can add to it.

Where a description of a thing or person consists of several
particulars and all of them do not fit any one person or thing,
less essential particulars may be rejected provided the
remainder of the description clearly fits. This is known as the
doctrine of falsa demonstratio non nocet.
Personal usage exception (pg. 67)
–
If the extrinsic evidence shows that the testator always referred
to a person in an idiosyncratic manner, the evidence is
admissible to show that the testator meant someone other than
the person with the legal name of the legatee.
–
Patent ambiguities
–
A patent ambiguity is an ambiguity that appears on the face
of the will.
–
In some states extrinsic evidence is not admissible to
clarify even a patent ambiguity, and the will or the devise
fails.
–
Increasingly, courts are allowing extrinsic evidence to aid
in interpreting a patent ambiguity.
–
Another approach is to construe the language of the will
without the aid of extrinsic evidence in a manner that saves
the devise.
–
Latent ambiguities
–
A latent ambiguity is an ambiguity that does not appear on
the face of the will but manifests itself when the terms of
the will are applied to the testator's property or designated
beneficiaries.
–
Two types of latent ambiguities
–
The first type occurs when a will clearly describes a
person or thing, and two or more persons or things
exactly fit that description. (equivocation)
–
The second type of latent ambiguity exists when no
person or thing exactly fits the description, but two or
more persons or things partially fit.
b) Reformation

Erickson, 374-387 (pg. 69)

Decedent had prepared will two days before his marriage. The
Connecticut statute revoked all wills made prior to the time of
marriage where there was no provision for the marriage.
Decedent's daughter appealed the admission of the will to
probate and decedent's wife appealed the exclusion of extrinsic
evidence of the decedent's intentions.

The question of whether a will provides for the contingency of
a subsequent marriage must be determined: (1) from the
language of the will itself; and (2) without resort to extrinsic
evidence of the testator's intent.

If a scrivener's error has misled the testator into executing a
will on the belief that it will be valid notwithstanding the
testator's subsequent marriage, extrinsic evidence of that error
is admissible to establish the intent of the testator that his or her
will be valid notwithstanding the subsequent marriage.
Furthermore, if those two facts, namely, the scrivener's error
and its effect on the testator's intent, are established by clear
and convincing evidence, they will be sufficient to establish
that provision has been made in such will for such contingency,
within the meaning of Conn. Gen. Stat. § 45a-257 (a).

Flannery v. McNamara, handout (pg. 70-72)

A husband's will bequeathed all his property to his wife. It
neither named a contingent beneficiary nor had a residuary
clause. The wife died survived by her husband and plaintiffs,
her sisters, who allegedly had a close relationship with their
brother-in-law who allegedly said that his property would have
been theirs.

If the meaning of the will is clear on its face, the judge cannot
consider extrinsic evidence to vary its effect.

Reformation of wills is presently prohibited in Massachusetts.
Courts have no power to reform wills. Hypothetical or
imaginary mistakes of testators cannot be corrected. Omissions
can not be supplied. Language cannot be modified to meet
unforeseen changes in conditions. The only means for
ascertaining the intent of the testator are the words written and
the acts done by him.
ii. Changes in Condition/Status of Beneficiaries

Death of Beneficiary before Death of Testator
–
If a devisee does not survive the testator, the devise lapses (that
is, it fails).
–
In nearly all states, antilapse statutes have been enacted that,
under specified circumstances, substitute another beneficiary
for the predeceased devisee.
–
Specific or general devise. If a specific or general devise
lapses, the devise falls into the residue.
–
Residuary devise. If the devise of the entire residue lapses,
because the sole residuary devisee or all the residuary devisees
predecease the testator, the heirs of the testator take by
intestacy. If a share of the residue lapses, such as when one of
two residuary devisees predeceases the testator, at common law
the lapsed residuary share passes by intestacy to the testator's
heirs rather than to the remaining residuary devisees.
–
Class Gift. If the devise is to a class of persons, and one
member of the class predeceases the testator, the surviving
members of the class divide the gift.
–
Void devise. Where a devisee is dead at the time the will is
executed, or the devisee is a dog or cat or some other ineligible
taker, the devise is void. The same general default rules govern
the disposition of void devises as govern lapsed devises.
b) Lapses, 387-388 (pg. 73)

Estate of Russell, 388-392 (pg. 73-76)

Decedent's will stated the her dog was to receive one-half her
residuary estate and the friend was entitled to receive the other
half. In the heir's suit to challenge the gift, the trial court
admitted, over the heir's objection, the friend's extrinsic
evidence that tended to show that the decedent did not want to
die intestate. The appellate court ruled that the intended gift to
the dog was invalid because a dog could not be a beneficiary
under a will. Moreover, the court ruled, again because the will
was clear and unambiguous, a trust such as the one found by
the trial court was not intended by the decedent and was thus
improperly imposed. Through intestate succession, the heir was
entitled to receive the one-half interest intended for the dog.

The paramount rule in the construction of wills, to which all
other rules must yield, is that a will is to be construed
according to the intention of the testator as expressed therein,
and this intention must be given effect as far as possible.

There is no room for application of the rule, that residuary
clauses are to be given a broad and liberal interpretation, if a
testator's language, taken in the light of surrounding
circumstances, will not reasonably admit of more than one
construction. If a testator used language which results in
intestacy, and there can be no doubt about the meaning of the
language which was used, a court must hold that intestacy was
intended.

A disposition in equal shares to two beneficiaries cannot be
equated with a disposition of the whole to one of them who
may use whatever portion thereof as might be necessary on
behalf of the other.

A dog cannot be the beneficiary under a will.

That portion of any residuary estate that is the subject of a
lapsed gift to one of the residuary beneficiaries remains
undisposed of by the will and passes to the heirs-at-law. The
rule is equally applicable with respect to a void gift to one of
the residuary beneficiaries.
c) Antilapse Statutes, 392-393 (pg. 76)

An antilapse statute applies to a lapsed devise only if the devisee
bears the particular relationship to the testator specified in the
statute.

UPC 2-605 Antilapse; Deceased Devisee; Class Gifts (pg. 76)

If a devisee who is a grandparent or a lineal descendant of a
grandparent of the testator is dead at the time of execution of
the will, fails to survive the testator, or is treated as if he
predeceased the testator, the issue of the deceased devisee and
if they are all of the same degree of kinship to the devisee they
take equally, but if of unequal degree then those of more
remote degree take by representation. One who would have
been a devisee under a class gift if he had survived the testator
is treated as a devisee for purposes of this section whether his
death occurred before or after the execution of the will.

Allen v. Talley, 393-399 (pg. 76-77)

Appellant nephew sued appellee surviving sister over the
construction of a will. The will contained one general provision
devising the entire estate to "living brothers and sisters.

The primary concern of the court in the construction of a will is
to determine the testator's intent. The intent of the testator must
be ascertained by reviewing the will in its entirety.

In the absence of ambiguity, the court must construe the will
based on the express language used. The court must determine
what the testator meant by what she actually said, and not by
what she should have said, giving the words used in the will
their common and ordinary meaning absent a contrary
expression in the will. If the court can give a certain or definite
legal meaning or interpretation to the words of an instrument,
the instrument is unambiguous; and the court may construe it
as a matter of law.
d) Class Gifts, 399-400, 404-405

Restatement 13.1 Class Gift Defined – How created (pg. 77)

Restatement 13.2 Class Gift Distinguished from Disposition to
Beneficiaries Taking as Individuals – How Created (pg. 77)

Dawson v. Yucus, 400-402 (pg. 78-79)

In the testator's will, a clause gave two named beneficiaries a
portion of her interest in a farm. One of those beneficiaries
predeceased the testator, and the surviving beneficiary filed an
action to construe the will, claiming that he was entitled to the
entire interest conveyed in the clause because that devise was a
class gift.

There is an exception to the rule that naming the individual
prevents the gift from becoming a class gift. The mere fact that
the testator mentions by name the individuals who make up the
class is not conclusive, and that if the intention to give a right
of survivorship is collected from the remaining provisions of
the will, as applied to the existing facts, such an intention must
prevail. This is in accord with the general rule applying to
construction of wills, that the intention of the testator, if clearly
manifested from the whole will, must prevail over rules of
construction. A gift to persons named is a gift to them
individually and not as a class, and the court will treat the gift
as one to individuals, unless reasons are found in the language
and structure of the will for deciding that the intent of the
testator, which is, of course, paramount to the rule, would be
best subserved by disregarding the rule and treating the gift as
one to a class.

The specification of an exact proportion in the subject matter of
the conveyance, which is to be received by each of the named
and described persons, is strongly indicative of an intent to
make a gift to individuals distributively whenever the
proportions so specified equal the entire subject matter given
by the limitation in question.

In re Moss, 402-404
iii. Changes in Property
a) Ademption, 405-406 (pg. 80)

Ademption applies only to specific devises.

A specific devise is a disposition of a specific item of the testator's
property.

A devise is general when the testator intends to confer a general
benefit and not give a particular asset.

A demonstrative devise is a hybrid; a general devise, yet payable
from a specific source.

A residuary devise conveys that portion of the testator's estate not
otherwise effectively devised by other parts of the will.

Under the traditional identity theory of ademption, if a specifically
devised is not in the testator's estate, the gift is extinguished.

Under the intent theory of ademption, of the specifically devised
item is not in the testator's estate, the beneficiary may nonetheless
be entitled to the cash value of the item, depending on whether the
beneficiary can show that this what the testator would have
wanted.

Wasserman v. Cohen, 406-410 (pg. 80-81)

The settlor established a revocable inter vivos trust that
conveyed to the beneficiary an apartment building. Before she
died, however, the settlor sold the property and never conveyed
her interest in the apartment building to the trust. The settlor's
will devised all property in her residuary estate to the trust to
be disposed of in accordance with the trust's provisions. The
beneficiary argued that the trustee should be ordered to pay her
the proceeds of the sale of that apartment building.

When a testator disposes, during his lifetime, of the subject of a
specific legacy or devise in his will, that legacy or devise is
held to be adeemed, whatever may have been the intent or
motive of the testator in doing so. The focus is on the actual
existence or nonexistence of the bequeathed property, and not
on the intent of the testator with respect to it. To be effective, a
specific legacy or devise must be in existence and owned by
the testator at the time of his death.

In regard to the conveyance of real estate, the practice of
determining whether a devise is general or specific is the
proper first step in deciding questions of ademption.

UPC Approach, 410-412 (pg. 81-82)

UPC 2-606 Nonademption of Specific Devises, etc.
b) Abatement, 414-415 (pg. 82)

In the absence of any indication in the will as to how devises
should abate or be reduced, devises ordinary abate in the following
order: (1) residuary devises are reduced first, (2) general devises
are reduced second, and (3) specific and demonstrative devises are
the last to abate and are reduced pro rata.
D. Revoking Wills
i. Revocation in Entirety, 251-252 (pg. 83-84)
–
All states permit revocation of a will in one of two ways
–
by a subsequent writing executed with testamentary formalities, or
–
by a physical act such as destroying, obliterating, or burning the
will
–
An oral declaration that a will is revoked, without more, is inoperative
in all states.
a) UPC 2-507 Revocation by Writing or By Act (pg. 84)
b) Revocation by Inconsistency (pg. 84)

A subsequent will wholly revokes the previous will by
inconsistency if the testator intends the subsequent will to replace
rather than supplement the previous will. A subsequent will that
does not expressly revoke the prior will but makes a complete
disposition of the testator's estate is presumed to replace the prior
will and revoke it by inconsistency. If the subsequent will does not
make a complete disposition of the testator's estate, it is not
presumed to revoke the prior will but is viewed as a codicil.
c) Harrison v. Bird, 253-255 (pg. 85)

The deceased executed a will in which she named the will
proponent as the main beneficiary and executor. The decedent's
attorney retained the original will and the will proponent had a
copy. Prior to her death, the decedent called her attorney and
advised him that she wanted to revoke her will. The attorney, in the
presence of a witness, tore the will into four pieces. The attorney
wrote the decedent a letter informing the decedent that he had
revoked the will and that he was enclosing the pieces of the will.
The court held that, while the attorney did not lawfully revoke the
will when he destroyed the will without the presence of the
decedent, a rebuttable presumption that the decedent had revoked
her will arose upon the failure to find the will among the
decedent's possessions, which the will proponent failed to
overcome.

If the evidence establishes that the decedent had possession of the
will before her death, but the will is not found among her personal
effects after her death, a presumption arises that she destroyed the
will. Furthermore, if she destroys the copy of the will in her
possession, a presumption arises that she has revoked her will and
all duplicates, even though a duplicate exists that is not in her
possession. However, this presumption of revocation is rebuttable
and the burden of rebutting the presumption is on the proponent of
the will.
d) Thompson v. Royall, 255-259 (pg. 85-86)

The only question presented by the record was whether the
testatrix's will had been revoked shortly before her death. The
notations in question were not wholly in the handwriting of the
testatrix, nor were her signatures thereto attached attested by
subscribing witnesses; hence under the statute they were
ineffectual as some writing declaring an intention to revoke. The
faces of the two instruments bore no physical evidence of any
cutting, tearing, burning, obliterating, canceling, or destroying. The
heirs argued that the notation written in the presence, and with the
approval, of the testatrix, on the back of the manuscript cover in
the one instance, and on the back of the sheet containing the
codicil in the other, constituted canceling within the meaning of
Va. Code Ann. § 5233 (1919). The proof established the intention
to revoke but the testatrix failed to carry out that intent as required
under the statute.

To effect revocation of a duly executed will, in any of the methods
prescribed by statute, two things are necessary: (1) the doing of
one of the acts specified, (2) accompanied by the intent to revoke,
the animo revocandi. Proof of either, without proof of the other, is
insufficient.

Mere writing upon a will, which does not in any wise physically
obliterate or cancel the same is insufficient to work a destruction of
a will by cancellation, even though the writing may express an
intention to revoke and cancel. This appears to be the better rule.
ii. Partial Revocation, 258-259 (pg. 86-87)
a) Partial revocation by physical act

Although UPC 2.507 and the statutes of many states authorize
partial revocation by physical act, in several states a will cannot be
revoked in any part by an act of revocation; it can be revoked in
part only by a subsequent instrument.

The reasons for prohibiting partial revocation by physical act are
two.

First, canceling a gift to one person necessarily results in
someone else taking the gift, and this new gift – like all
bequests – can be made only by an attested writing.

Second, permitting partial revocation by physical act offers
opportunity for fraud.
iii. Dependent Relative Revocation, 259 (pg. 87)
–
The doctrine of dependent relative revocation is this: If the testator
purports to revoke his will upon a mistaken assumption of law or fact,
the revocation is ineffective if the testator would not have revoked his
will had he known the truth.
–
The doctrine is one of presumptive intent, not actual intent.
–
With rare exceptions, courts have held that Dependent Relative
Revocation applies only
–
where there is an alternative plan of disposition that fails or
–
where the mistake is recited in the terms of the revoking
instrument or, possibly, is established by clear and convincing
evidence.
a) LaCroix v. Senecal, 260-264 (pg. 87-88)

The niece of the testatrix, who was left nothing, brought this action
for a declaratory judgment as heir and next of kin. She challenged
the validity of the will and codicil of her aunt, claiming that the
failure of the codicil left the aunt intestate.

Conn. Gen. Stat. § 6952, so far as material, provides that every
devise or bequest given in any will or codicil to a subscribing
witness, or to the husband or wife of such subscribing witness,
shall be void unless such will or codicil shall be legally attested
without the signature of such witness; but the competency of such
witness shall not be affected by any such devise or bequest.

Where the intention to revoke is conditional and where the
condition is not fulfilled, the revocation is not effective. It is a rule
of presumed intention rather than of substantive law. It can only
apply when there is a clear intent of the testator that the revocation
of the old is made conditional upon the validity of the new.

When a testator repeats the same dispositive plan in a new will,
revocation of the old one by the new is deemed inseparably related
to and dependent upon the legal effectiveness of the new.
iv. Revival, 267-269
a) Estate of Alburn, 264-267 (pg. 88)

Respondents argued, and the trial court found, that the testatrix had
destroyed the most recent will she wrote under the mistaken belief
that she was reinstating a prior will.

The doctrine of dependent relative revocation is based upon the
testator's inferred intention. Under the doctrine, the destruction of a
later testamentary document is intended to be conditional where it
is accompanied by the expressed intent of reinstating a former will
and where there is no explanatory evidence. Of course if there is
evidence that the testator intended the destruction to be absolute,
there is no room for the application of the doctrine of dependent
revocation.
b) UPC 2.509 Revival of Revoked Will (pg. 88-89)
v. Revocation by Operation of Law, 269-270 (pg. 89)
a) UPC 2-804 Revocation of Probate and Nonprobate Transfers by
Divorce; No Revocation by Other Changes of Circumstances (pg. 8990)
E. Restrictions on the Power of Disposition: Family Protection
i. Protection of the Spouse
a) Marital Property Systems, 417-419 (pg. 90-91)
–
Two basic marital property systems exist
–
Separate Property
–
Community Property
–
The fundamental principles of the community property
system is that all earnings of the spouses and the property
acquired from earnings of the spouses and property
acquired from earnings are community property. Each
spouse is the owner of an undivided one-half interest in the
community property. The death of one spouse dissolves the
community. The deceased spouse owns and has
testamentary power over only his or her one-half
community share.
–
Community Property States
–
Arizona, California, Idaho, Louisiana, Nevada, New
Mexico, Texas, Washington, and Wisconsin
–
Alaska has enacted a statute to allow married couples to
choose between community or separate property.
b) Rights of Surviving Spouse to Support, 419-424 (pg. 91-92)
c) Rights of Surviving Spouse to Elective Share (pg. 92)


Rationale, 425-428
–
All but one of the separate property states give the surviving
spouse, in addition to any support rights mentioned above, an
elective share (sometimes called a forced share) of the
decedent's property. Traditional statutes provide the surviving
spouse with an election
–
(1) The spouse can take under the decedent's will, or
–
(2) the spouse can renounce the will and take a fractional
share of the decedent's estate.
–
The primary policy justification for the elective share is
that the surviving spouse contributed to the decedent's
acquisition of wealth and deserves to have a portion of
it.
–
A second but more narrow policy justification is to
provide the surviving spouse with adequate support.
Property Subject, 438-439
–
The original elective share statutes gave the surviving spouse a
fractional share(now usually one-third of the decedent's estate,
which implicitly meant the probate estate.

Sullivan v. Burkin, 439-442 (pg. 92-94)

The widow's claim was that the inter vivos trust was an
invalid testamentary disposition and that the trust assets
constituted assets of the estate. The court concluded that the
trust was not testamentary in character and that the husband
effectively created a valid inter vivos trust. The assets of
the inter vivos trust were not to be considered in
determining the portion of the estate of the deceased in
which the widow had rights. The surviving spouse was
denied any claim against the assets of a valid inter vivos
trust created by the deceased spouse, even where the
deceased spouse alone retained substantial rights and
powers under the trust instrument. For the future, however,
as to any inter vivos trust created or amended after the date
of the opinion, the estate of a decedent, for the purposes of
§ 15, was to include the value of assets held in an inter
vivos trust created by the deceased spouse as to which the
deceased spouse alone retained the power during his or her
life to direct the disposition of those trust assets for his or
her benefit. The widow here obtained no right to share in
the assets of that trust when she made her election under §
15.

The rule the court now favors will treat as part of the estate
of the deceased for the purposes of Mass. Gen. Laws ch.
191, § 15, assets of an inter vivos trust created during the

–

marriage by the deceased spouse over which he or she
alone had a general power of appointment, exercisable by
deed or by will. The objective test will involve no
consideration of the motive or intention of the spouse in
creating the trust. The court will not need to engage in a
determination of whether the spouse has in good faith
divested himself or herself of ownership of his or her
property or has made an illusory transfer or with the factual
question whether the spouse intended to surrender complete
dominion over the property. Nor will the court have to
participate in the rather unsatisfactory process of
determining whether the inter vivos trust was, on some
standard, "colorable," "fraudulent," or "illusory."
Bongaards v. Millen, 442-445 (pg. 94-96)

Plaintiff's mother-in-law created a trust and conveyed to the
trust certain real estate. The trust provided that upon the
mother-in-law's death, plaintiff's wife would become the
sole trustee and sole lifetime beneficiary. Plaintiff's wife
stated in her will that she had intentionally not provided for
plaintiff, who sought a declaration following his wife's
death that the trust and a bank account were part of the
elective share estate. The trust property at issue was not
subject to plaintiff's elective share because the trust was
created by a third party, the mother-in-law. When a third
party created a trust and placed property in the trust, the
property was not being removed--artificially or otherwise-from the elective share estate.

Trust assets are treated as assets of a deceased spouse for
purposes of determining a surviving spouse's elective share
if the deceased spouse was both the donor and donee of a
general power of appointment that was exercisable by the
donee alone, unless the controlling statute provides
otherwise. Assets in a trust created by a third person are
specifically excluded, even though the deceased spouse
may have held a general power of appointment.
Various tests to determine nonprobate property subject to the
surviving spouse's elective share

Illusory transfer test

intent to defraud test

present donative intent
Statutory Schemes, 445-451 (pg. 96-97)

The UPC

The central idea of the 1990 UPC elective share is to
add up all the property of both spouses and split it
according to a percentage based on the length of
marriage.


The purpose of the augmented estate is no longer to
protect against fraud on the widow's share. It is instead
to implement the partnership theory of the elective
share by increasing the entitlement of a surviving
spouse in a long-term marriage in cases in which the
marital assets were disproportionately titled in the
decedent's name.

Step One: determine the elective-share percentage
based on the number of years the couple has been
married

Step Two: determine the value of the augmented
estate

Step three: determine the elective-share amount
Waiver, 451-453 (pg. 96)

The right of election allows the surviving spouse to take his or
her statutory share in spite of the decedent spouse's will.

Every separate property state recognizes the validity of
premarital agreements, enforcing waiver of the right of
election.

Uniform Probate Code 2-213 – Waiver of Right to Elect and of
Other Rights (pg. 96-97)

In re Estate of Garbade, 453-454 (pg. 97-98)

The decedent's wife executed an antenuptial agreement
containing a waiver of her right to elect against decedent's
estate. After decedent died, his former wife filed notice of
her election to take her share of decedent's estate alleging
that the waiver of her statutory right to elect against
decedent's estate was procured by fraud, misrepresentation,
duress, imposition, or undue influence.

A duly executed antenuptial agreement is given the same
presumption of legality as any other contract, commercial
or otherwise. It is presumed to be valid in the absence of
fraud. The party attacking the validity of the agreement has
the burden of coming forward with evidence of fraud,
which, in the absence of facts from which concealment may
reasonably be inferred, is not presumed.

The absence of independent counsel does not of itself
warrant setting aside the agreement.

In re Grieff, 454-455 (pg. 98)

The wife had entered into reciprocal prenuptial agreements
with her husband waiving the statutory right of election.
The husband died making no provision in his will for the
wife and leaving his entire estate to his children from a
former marriage.

A party challenging the judicial interposition of a
prenuptial agreement, used to defeat a right of election,
may demonstrate by a preponderance of the evidence that
the premarital relationship between the contracting
individuals manifested probable undue and unfair
advantage. In these exceptional circumstances, the burden
should fall on the proponent of the prenuptial agreement to
show freedom from fraud, deception or undue influence.

Whenever the relations between the contracting parties
appear to be of such a character as to render it certain that
either on the one side from superior knowledge of the
matter derived from a fiduciary relation, or from an
overmastering influence, or on the other from weakness,
dependence, or trust justifiably reposed, unfair advantage in
a transaction is rendered probable, it is incumbent upon the
stronger party to show affirmatively that no deception was
practiced, no undue influence was used, and that all was
fair, open, voluntary and well understood.
d) Rights to Community Property, 455-458 (pg. 99)

Community property in the U.S. is a community of acquests:
Husband and wife own the earnings and acquisition from earnings
of both spouses during marriage in undivided equal shares.
Whatever is brought with earnings is community property.

Separate property includes property acquired before marriage and
property acquired during marriage by gift or inheritance.

In Idaho, Louisiana, and Texas, income from separate property
is community property.

Almost all community property states follow the theory that
husband and wife own equal shares in each item of community
property at death. They do not own equal undivided shares in the
aggregate of community property.
e) Multi-State Couple, 458-462 & handout (pg. 99)

The classic conflict of laws rules used to determine which state law
governs marital property are these:

The law of the situs controls problems related to land.

The law of the marital domicile at the time that personal
property is acquired controls the characterization of the
property ( that is, as separate or community)

The law of the marital domicile at the death of one spouse
controls the survivor's marital right.

Moving from a Community Property State to a Separate Property
State

The Uniform Disposition of Community Property Rights at
Death Act, enacted in 14 property states, provides that
community property brought into the state (and all property –
including land in the state – traceable to community property)
remains community property for purposes of testamentary
disposition, unless the spouses have agreed to convert it into
separate property. Each spouse has the right to dispose of onehalf of the community property by will. Under the Uniform
Act, community property brought into the state is not subject to
the elective share.
f) Omitted Spouses, 462-266

In re Estate of Shannon, 462-465 (pg. 99-100)

Deceased husband as an unmarried widower executed a will
that named respondent daughter as executrix and sole
beneficiary. The will contained a disinheritance clause.
Deceased husband married deceased wife. No changes were
made to the will and deceased husband died.

Cal. Prob. Code § 6560 reflects a strong statutory presumption
of revocation of the will as to the omitted spouse based upon
public policy. Such presumption is rebutted only if
circumstances are such as to fall within the literal terms of one
of the exceptions listed in Cal. Prob. Code § 6561. The burden
of proving the presumption is rebutted is on the proponents of
the will.

UPC 2-301 Entitlement of Spouse; Premarital Will (pg. 100-101)
ii. Protection of Children
a) Intentionally Disinherited, 466-469 (pg. 102)

Protections from Intentional Omission

The Domestic Approach

There is no requirement that a testator leave any property to
a child, not even the proverbial one dollar.

The law does not favor cutting children out of the parent's
estate when there is no surviving spouse.

A will disinheriting a child virtually invites a will contest.

Family Maintenance Statutes

Eligible dependents such as children are entitled to receive
such financial provision as it would be reasonable in all
circumstances of the case for the applicant to receive for his
maintenance.

Lamberff v. Farmers, 469-473 (pg. 102-103)

Plaintiff was daughter of the decedent. She sued for support
under the will as her father had not included her within the
will, but had provided for his two sons. Court analyzed whether
the three children had the ability to support themselves and
opportunities for advancement. While the daughter was better
off than the sons, the court found that if the father had
supported her she would have had more opportunities for
advancement. The court awarded her $20,000 out of a estate
valued at $209,522.76.
b) Pretermitted Child Statutes, 473-474

Azcunce v. Azcunce, 475-479 (pg. 103)

Appellant was born after the execution of her father's will, but


before the execution of a codicil to the will. Both the will and
codicil failed to provide for her. Appellant alleged that she was
entitled to a statutory share of her father's estate under Florida's
pretermitted child statute.

As a general rule, the execution of a codicil to a will has the
effect of republishing the prior will as of the date of the codicil.
Although this is not an inflexible rule and must at times give
way to a contrary intent of the testator, it always applies where
the codicil expressly adopts the terms of the prior will.
UPC Approach, 479-481

UPC 2-302 Omitted Children (pg. 103-104)
In re Estate of Laura, 481-483 (pg. 105-106)

Respondent named heirs presented the testator's will to the
probate court. The probate court approved the order of the
master barring the excluded heirs from inheriting any portion
of the testator's estate. On appeal, the excluded heirs argued
that the probate court erred in: (1) ruling that the testator did
not revoke his will when he drafted an unexecuted codicil; and,
(2) ruling that the testator's great-grandchildren were not
pretermitted heirs under N.H. Rev. Stat. Ann. § 551:10 (1974).
The court affirmed the ruling barring the excluded heirs from
inheriting any portion of the testator's estate.

N.H. Rev. Stat. Ann. § 551:10 protects a testator's heirs against
unintentional omission from the testator's will. It provides:
Every child born after the decease of the testator, and every
child or issue of a child of the deceased not named or referred
to in his will, and who is not a devisee or legatee, shall be
entitled to the same portion of the estate, real and personal, as
he would be if the deceased were intestate. The statute creates a
rule of law that the omission of a child or issue of a child from
a will is accidental unless there is evidence in the will itself that
the omission was intentional. The statute is not a limitation on
the power to make testamentary dispositions but rather is an
attempt to effectuate a testator's presumed intent. It prevents
forgetfulness, not disinheritance.

A testator who specifically names one heir in an effort to
disinherit him has referred to the issue of that heir for purposes
of the statute. If a testator has a predeceased child who is
neither named, referred to, nor a devisee or legatee under the
testator's will, then the naming of the next degree of issue in
the line of descent will successfully preclude issue more
removed from the testator from invoking the statute. On the
other hand, where an issue of a child is named, referred to, or a
devisee or legatee, but the testator's child is neither named,
referred to, nor a devisee or legatee, then the testator's child is
pretermitted, provided the child has not predeceased the

IV.
testator. A testator's reference to an heir need not be direct to
exclude the heir under N.H. Rev. Stat. Ann. § 551:10.
Estate of Treloar, 483-484 (pg. 106-107)

The executor argued that the trial court erred in finding that the
heirs were pretermitted heirs under N.H. Rev. Stat. Ann. §
551:10. The appellate court noted that the purpose of the
statute was to prevent a mistake or unintended failure by the
testator to remember the natural object of his or her bounty. To
be a pretermitted heir, a child could not be named in the will,
referred to in the will, or be a devisee or legatee under the will.
The executor argued that the reference in the 1998 will to
revoking all prior wills and testamentary instruments coupled
with evidence of the prior will, which specifically named a
daughter, and the testator's handwritten changes to it,
demonstrated that he had his daughter in mind when he
prepared the 1998 will. Extrinsic evidence was inadmissible to
determine whether the statute applied.

The purpose of N.H. Rev. Stat. Ann. § 551:10 is to prevent a
mistake or unintended failure by a testator to remember the
natural object of his or her bounty. The statute does not create
merely a presumption that pretermission is accidental, but a
rule of law. This rule of law is conclusive unless there is
evidence in the will itself that the omission was intentional.

To be a pretermitted heir, a child must not be named in the
will, referred to in the will, or be a devisee or legatee under the
will. The Supreme Court of New Hampshire has previously
interpreted the phrase "named or referred to" to require clear
evidence that the testator actually named or distinctly referred
to the heir personally, so as to show that he had the heir in his
mind.

Extrinsic evidence is inadmissible to determine whether N.H.
Rev. Stat. Ann. § 551:10 applies. The court's task is not to
investigate the circumstances to divine the intent of the
testator; rather, it is to review the language contained within
the four corners of the will for a determination of whether the
testator named or referred to the respondents.

To establish an intent to exclude a child from a will, it is well
established that there must be a reference in the will to the
child himself. It is not sufficient to infer that the child was not
forgotten because a sibling or other relative was remembered in
the will.
Trusts
A. Trust Definitions, 485-88 & 299, 316-22 (pg. 109)
i. A trust is, generally speaking, a device whereby a trustee manages
property as a fiduciary for one or more beneficiaries. The trustee holds
legal title to the property and, in the usual trust, can sell the trust property
and replace it with property thought more desirable. The beneficiaries hold
equitable title and, in the usual trust, are entitled to payments from the
trust income and sometimes from the trust corpus too.
B. Trust Requirements
–
A trust ordinarily involves at least three parties: the settlor, the trustee, and
one or more beneficiaries. But three different persons are not necessary for
a trust.
–
No particular form of words is necessary to create a trust.
–
The sole question is whether the grantor manifested an intention to create
a trust relationship.
i. Valid Purpose, handout
ii. Settlor, 489-90, & Settlor’s Intent, 498
–
The person who creates a trust is the settlor or trustor. The trust may
be created during the settlor's life, in which case it is an inter vivos
trust. Or it may be created by will, in which case it is a testamentary
trust. An inter vivos trust may be created by a declaration of trust (in
which the settlor declares that he holds certain property in trust) or by
deed of trust (in which the settlor transfers property to another person
as trustee.
a) Lux v. Lux, 498-99 (pg. 110-112)

The testator executed a will that left the residue of her estate to her
grandchildren. Any real estate was to be maintained for the benefit
of the grandchildren and was not to be sold until the youngest had
reached 21 years of age.

There is no fixed formula as to when a testamentary disposition
should be classified as an outright gift or a trust. The result reached
depends on the circumstances of each particular case. A trust is
created when legal title to property is held by one person for the
benefit of another. Such a relationship cannot be created by will
unless the beneficiaries of the trust are identifiable. However, no
particular words are required to create a testamentary trust. The
absence of such words as "trust" or "trustee" is immaterial where
the requisite intent of the testator can be found.
b) Jimenez v. Lee, 499-503 & 116-20 (pg. 112-113)

Plaintiff daughter appealed a decree of the Circuit Court, Marion
County (Oregon), which dismissed her complaint against
defendant father to compel him to account for assets that the
daughter alleged were held in trust by the father as trustee for her.
The court found that the father breached his duty to the daughter to
administer the trust solely in the interest of her as beneficiary
where he never provided any accounting and used some of the
money for purposes other than the daughter's educational needs.

Where donors do not expressly direct a defendant to hold a gift "in
trust," this is not essential to create a trust relationship. It is enough
if the transfer of the property is made with the intent to vest the
beneficial ownership in a third person.

A trustee's attempt to broaden his powers over the trust estate by
investing the trust funds as custodian violates his duty to the
beneficiary to administer the trust solely in the interest of the
beneficiary.

It is the duty of the trustee to keep full, accurate and orderly
records of the status of the trust administration and of all acts
thereunder. The general rule of law applicable to a trustee burdens
him with the duty of showing that the account which he renders
and the expenditures which he claims to have been made were
correct, just and necessary. He is bound to keep clear and accurate
accounts, and if he does not the presumptions are all against him,
obscurities and doubts being resolved adversely to him. He has the
burden of showing on the accounting how much principal and
income he has received and from whom, how much disbursed and
to whom, and what is on hand at the time.
c) Hebrew University v. Nye, 503-08 (pg. 113-116)

Plaintiff university filed suit against defendant executors, seeking a
declaratory judgment determining the ownership of certain books
and other articles making up a library that belonged to the decedent
and for an injunction. The decedent inherited a large library from
her late husband, a professor. During her lifetime, she told the
university that she was making a gift of the library to it and even
went so far as to attend a luncheon in her honor and make a formal
announcement of her gift. However, she never actually tendered
possession of the library to the university, although she did prepare
it for shipping. Upon her death, the decedent bequeathed the bulk
of her estate to a charitable trust or foundation. The university was
not mentioned in the decedent's will.

A gift which is imperfect for lack of a delivery will not be turned
into a declaration of trust for no better reason than that it is
imperfect for lack of a delivery. Courts do not supply conveyances
where there are none. This is true, even though the intended donee
is a charity.

There is a well-recognized distinction between a gift inter vivos
and a declaration of trust; a single transaction cannot be both.

To support a factual conclusion of an executed inter-vivos gift,
there must be a donative intention and at least a constructive
delivery. The donative intention need not be expressed, nor the
delivery made, in any particular form or mode. For a constructive
delivery, the donor must do that which, under the circumstances,
will in reason be equivalent to an actual delivery. It must be as
nearly perfect and complete as the nature of the property and the
circumstances will permit.

For a constructive delivery, the donor must do that which, under
the circumstances, will in reason be equivalent to an actual
delivery. It must be as nearly perfect and complete as the nature of
the property and the circumstances will permit. The gift may be
perfected when the donor places in the hands of the donee the
means of obtaining possession of the contemplated gift,
accompanied with acts and declarations clearly showing an
intention to give and to divert himself of all dominion over the
property. It is not necessary that the method adopted be the only
possible one. It is sufficient if manual delivery is impractical or
inconvenient.
iii. Trustee, 490-93 (pg. 109-110)
–
There may be one or several trustees. The trustee may be an individual
or a corporation.
–
The trustee may be the settlor or a third party, or the trustee may be a
beneficiary.
–
It the settlor intends to create a trust but fails to name a trustee, a court
will appoint a trustee to carry out the trust.
–
To safeguard the beneficiary against mismanagement or
misappropriation by the trustee, the trustee is held to a fiduciary
standard of conduct. The fiduciary obligation in trust law comprises
duties of loyalty, prudence, and a host of subsidiary rules that reinforce
the duties of loyalty and prudence.
–
Under the duty of loyalty, the trustee must administer the trust
solely in the interest of the beneficiaries; self-dealing (wherein the
trustee acts in the same transaction both in fiduciary capacity and
in an individual capacity) is sharply limited and often prohibited
altogether.
–
Under the duty of prudence, the trustee is held to an objective
standard of care.
–
Important subsidiary rules include:
–
1) the duty of impartiality between classes of beneficiaries such
as the income beneficiaries (who are interested in income and
high yields) and the remaindermen (who are concerned about
preservation of principal and appreciation in values),
–
2) the duty to keep the trust property separate from the trustee's
own property
–
3) the duty to inform and account to the beneficiaries. If the
trustee improperly manages the trust estate, the trustee may be
denied compensation, subjected to personal liability, and
removed as trustee by a court.
–
Trusteeship entails three relatively distinct functions:
–
Investment includes not only the initial selection of securities or
other assets, but also the tasks of monitoring the investments for
continuing suitability, investing new funds, and voting the shares.
–
Administration includes the range of accounting, reporting and tax
filing.
–
Distribution is sometimes mechanical, but trust investments often
bestow upon trustees the discretion to spray, sprinkle, invade,
accumulate, terminate, and so forth. Distribution, therefore,
requires interpreting and applying the sometimes complex
language of the trust instrument; and it commonly involves contact
with the current beneficiaries, in order to keep abreast of their
needs and circumstances.
iv. Property, 508-09 (pg. 118)
–
The usual definition of a trust includes three elements: a trustee, a
beneficiary, and trust property. Since a trust is a method of
disposing of, or managing, property, it is said that a trust cannot
exist without trust property, often called the res.
–
The trust res may be one dollar or once cent or it may be any
interest in property that can be transferred.
–
Resulting Trusts
–
A resulting trust is an equitable reversionary interest that arises
by operation of law in two situation
–
where an express trust fails or makes an incomplete
disposition, or
–
where one persons pays the purchase price for property and
causes tittle to the property to be taken in the name of
another person who is not a natural object of the bounty of
the purchaser.
–
Once a resulting trust is found, the trustee must reconvey the
property to the beneficial owner upon demand.
a) Unthank v. Rippstein, 509-11 (pg. 118-119)

Shortly before his death, decedent wrote a letter to respondent
donee, in which he acknowledged that he would send her monthly
payments for a period of five years, even in the event of his death.
Respondent first attempted to probate the writing as a codicil of
decedent's will, and then filed an action for payments already
matured, as well as having sought a declaratory judgment in the
remaining payment. On appeal, the court determined that the
writing was insufficient to establish a voluntary trust, because a
voluntary trust would have divested decedent of the exercise of
further dominion.

Three things must be shown before a court of equity will declare a
trust to exist, and enforce it: First, that the words of the testator
ought to be construed as imperative, and hence imposing on the
trustee an obligation; secondly, that the subject to which the
obligation relates must be certain; thirdly, that the person intended
to be the beneficiary under the trust be also certain.

The principal difference between a voluntary trust and a gift lies in
the fact that in the case of a gift the thing given passes to the
donee, while in the case of a voluntary trust the equitable or
beneficial title passes to the trust. Absent a completed gift of the
equitable title, no trust is created, for an imperfect gift will not be
enforced as a trust merely because of its imperfection. A gift
cannot be made to take effect in the future, for the reason that a
promise to give is without consideration. Neither can the donor
retain the right to use and enjoy the property during his lifetime
and direct its disposition after his death in any manner other than
by the making of a will.
b) Brainard v. Commissioner, 511-12 (pg. 120-121)

In 1927, the taxpayer declared a trust of his stock trading during
1928 for the benefit of his family upon certain terms and
conditions. During 1928, the taxpayer carried on the trading
operation and determined his compensation at $ 10,000, which he
reported on his income tax return for that year. The profits
remaining were then divided in equal shares among his family
members, the amounts were reported in their respective tax returns.
The question presented on review was whether the taxpayer
created a valid trust, the income of which was taxable to the
beneficiaries under § 162 of the Revenue Act of 1928, 26 U.S.C.S.
§ 162. The court affirmed, concluding that the taxpayer's profits
were not impressed with a trust when they first came into existence
because the taxpayer only made a gratuitous declaration to his
family. The board found that the trust first attached when the
taxpayer credited them to the beneficiaries on his books. This act,
the court found constituted the taxpayer's first expression of
intention to become a trustee of the fund. Prior to that time, the
declaration could not have been enforced because there was no
consideration.

An interest, which has not come into existence, or which has
ceased to exist cannot be held in trust. A person can make a
contract binding himself to create a trust of an interest if he should
thereafter acquire it; but such an agreement is not binding as a
contract unless the requirements of the law of contracts are
complied with. If a person purports to declare himself trustee of an
interest not in existence, or if he purports to transfer such an
interest to another in trust, he is liable as upon a contract to create a
trust if the requirements of the law of contracts are complied with.
An expectancy cannot be the subject matter of a trust and that an
attempted creation, being merely a promise to transfer property in
the future, is invalid unless supported by consideration.

The act of acquiring the property coupled with the earlier
declaration of trust may be a sufficient manifestation of an
intention to create a trust at the time of the acquisition of the
property. Mere silence, however, ordinarily will not be such a
manifestation.
c) Speelman v. Pascal, 512-16 (pg. 121)

Defendant appealed the grant of summary judgment for plaintiff,
contending that the delivery of an agreement did not constitute a
valid, complete, and present gift to plaintiff by way of assignment
of a share in future royalties when and if it was collected from the
exhibition of the musical stage version and film version of a play.

All that need be established to make a valid gift of property is an
intention that the title of the donor shall be presently divested and
presently transferred.
v. Beneficiary, 493 & 518-19 (pg. 121-122)

The beneficiaries have a personal claim against the trustee for
breach of trust.

Necessity of Trust Beneficiaries

It is said that a trust must have one or more ascertainable
beneficiaries.

There must be someone to whom the trustee owes fiduciary
duties, someone who can call the trustee to account.

The beneficiaries of a private trust may be unborn or
unascertained when the trust is created.
b) Clark v. Campbell, 519-22 (pg. 122)

Decedent passed and under the terms of her will bequeathed
certain property to her "friends." Her "friends" as purported heirs,
commenced suit against the state and sought to recover under the
will. The court discharged the complaint. The court held that: (1)
the bequest was invalid because it was a bequest to an indefinite
person; (2) the term "friends" was too indefinite because it had no
accepted statutory or controlling limitation and was not precise at
all; and (3) the bequest was not a power to substitute the will of the
testator for the will of the trustees to the undefined class of
"friends" was irresponsible.

By the common law there cannot be a valid bequest to an indefinite
person. There must be a beneficiary or a class of beneficiaries
indicated in the will capable of coming into court and claiming the
benefit of the bequest. This principle applies to private but not to
public trusts and charities.

The word "friends" unlike "relations" has no accepted statutory or
other controlling limitations, and in fact has no precise sense at all.
Friendship is a word of broad and varied application. It is
commonly used to describe the undefinable relationships which
exist not only between those connected by ties of kinship or
marriage, but as well between strangers in blood, and which vary
in degree from the greatest intimacy to an acquaintance more or
less casual.
c) Searight’s Estate, 522-28 (pg. 123)

The decedent bequeathed the sum of $ 1000 for the care of his dog,
which was to be paid to the dog's caretaker at the rate of 75 cent
per day. In determining the inheritance tax due from the estate of
the decedent, trial court found that levying a tax on successions to
property did not levy a tax upon the succession to any property
passing to an animal; that the $ 1000.00 bequest to the dog was
therefore not taxable; and that the remainder of the $ 1000.00, if
any, after the death of the dog was taxable in the hands of the
remaindermen. The court held that a tax based on the amount
expended for the care of the dog could not lawfully be levied
against the monies so expended, since it was not property passing
for the use of a "person, institution or corporation."

A limitation of property on an intended trust is invalid when, under
the language and circumstances of such limitation, the conveyee is
to administer the property for the accomplishment of a specific
noncharitable purpose and there is no definite or definitely
ascertainable beneficiary designated; and such administration can
continue for longer than the maximum period; and destructibility
of the trust is absent.

Pets (pg. 124)

The main doctrinal impediments to providing at death for one's
pets or other domestic animal are two.

Pets are themselves property and hence ineligible to take
under a will. An outright bequest to a pet animal is void.

Pets do not qualify as a beneficiary whose existence can
validate a trust.

There are at least two ways around this problem:

Honorary trusts – An honorary trust may be for any
specific, designated purpose that is not capricious.

In drafting an honorary trust, care must be taken not to
offend the Rule Against Perpetuities.

Statutory Reform – Several states have enacted statutes that
permit a trust for a specific, noncharitable purpose to
endure for a given amount of time.
vi. Writing?, p. 528 (pg. 128-129)
a) Hieble v. Hieble, 528-30 (pg. 128-129)

A constructive trust was properly decreed given the trial court's
undisputed finding that the son had in fact agreed to reconvey the
disputed property to the mother upon her request, and given the
trial court's proper finding that a confidential relationship existed
between the son and the mother.

A constructive trust is not a legal relationship but an equitable
remedy, whereas an express oral trust does constitute a legal
relationship.

Under Connecticut's Statute of Frauds, Conn. Gen. Stat. § 52-550,
oral agreements concerning interests in land are unenforceable. In
Connecticut, however, the Statute of Frauds does not apply to
trusts arising by operation of law.

Pertaining to the constructive trust issue, the bond between parent
and child is not per se a fiduciary one; it does generate, however, a
natural inclination to repose great confidence and trust.

Where a confidential relationship has been established, the burden
of proof rests on the party denying the existence of a trust -- and
then, by clear and convincing evidence to negate such a trust.

It is unnecessary to find fraudulent intent for the imposition of a
constructive trust. Whether there be fraud at the inception or a
repudiation afterward, the whole significance of such cases lies in
the unjust enrichment of the grantee through his unconscionable
retention of the trust res.

Where the owner of an interest in land transfers it inter vivos to
another in trust for the transferor, but no memorandum properly
evidencing the intention to create a trust is signed, as required by
the Statute of Frauds, and the transferee refuses to perform the
trust, the transferee holds the interest upon a constructive trust for
the transferor, if the transferee at the time of the transfer was in a
confidential relation to the transferor.
b) Olliffe v. Wells, 530-33 (129-130)

The will declared a trust too indefinite to have been carried out,
and plaintiffs were required to take by way of resulting trust,
unless the facts agreed showed such an executable trust for the
benefit of others. The testatrix had orally made known to the
executor her intention that the residue be disposed of and
distributed by him for charitable uses at his discretion. Intentions
not formed by the testatrix and communicated to the executor
before the making of the will could not have had any effect against
plaintiffs. Plaintiffs could not have been deprived of their equitable
interest that accrued to them directly from the testatrix by any
conduct of the devisee executor, nor by the testatrix's intention,
unless legally signified in writing. A trust not sufficiently declared
on the face of the will could not have been set up by extrinsic
evidence to defeat the rights of plaintiffs.

Where a trust not declared in the will is established by a court of
chancery against the devisee, it is by reason of the obligation
resting upon the conscience of the devisee, and not as a valid
testamentary disposition by the deceased. Where the bequest is
outright upon its face, the setting up of a trust, while it diminishes
the right of the devisee, does not impair any right of the heirs or
next of kin, in any aspect of the case; for if the trust were not set
up, the whole property would go to the devisee by force of the
devise; if the trust set up is a lawful one, it ensures to the benefit of
the cestuis que trust; and if the trust set up is unlawful, the heirs or
next of kin take by way of resulting trust.
C. Types of Private Express Trusts
i. Discretionary v. Mandatory Trusts, 533 (pg. 130)
–
Trusts can be divided into mandatory trusts and discretionary trusts.
–
In a mandatory trust, the trustee must distribute all the income.
–
In a discretionary trust, the trustee has discretion over payment of
either the income or the principal or both.
–
The trustee's discretion may be limited by an ascertainable support
standard (“such amounts as are necessary to support my children in the
style of living to which they are accustomed”). This may be called a
support trust.
–
The discretionary support trust combines an explicit statement of
discretion with a stated support standard (“such amounts as the
trustee shall, in his uncontrolled discretion, deem necessary to
support my children in the style of living to which they are
accustomed”)
–
In modern trust practice, the primary mechanism for safeguarding the
beneficiary against abuse of discretion by the trustee is the fiduciary
obligation.
a) Marsman v. Nasca, 534-43 (pg. 130-131)

The trustee had the power under a testamentary trust to pay
principal to a beneficiary for his support and maintenance. Aside
from one payment, the trustee never made any payments to the
beneficiary and, as a result, the beneficiary had to convey his
house. The court found that the trustee failed in his duty of inquiry
into the needs of the beneficiary. The court determined, however,
that the proper remedy was not to set aside the conveyance but to
determine the amounts which should have been paid to the
beneficiary to enable him to keep the house, and to pay that
amount from the trust to the beneficiary's estate.

Even where the only direction to the trustee is that he shall in his
discretion pay such portion of the principal as he shall deem
advisable, the discretion is not absolute. Prudence and
reasonableness, not caprice or careless good nature, much less a
desire on the part of the trustee to be relieved from trouble furnish
the standard of conduct.

That there is a duty of inquiry into the needs of the beneficiary
follows from the requirement that the trustee's power must be
exercised with that soundness of judgment which follows from a
due appreciation of trust responsibility.
ii. Spendthrift Trusts, 543-49 (pg. 133-134)
–
The creditor cannot, by judicial order, compel the trustee of a
discretionary trust to pay him. The theory is that, because the
beneficiary has no right to a payment, neither does the beneficiary's
creditors.
–
In some states, the creditor may be entitled to an order directing the
trustee to pay the creditor before paying the beneficiary.
–
Since the trustee is said to exercise discretion to pay the beneficiary at
a moment in time before the property is transferred to the beneficiary,
during which period the lien attaches, it is important to know what acts
constitute an exercise of discretion. Crediting the beneficiary's account
on the trustee's books or an oral or written declaration to the
beneficiary may be a sufficient act to indicate the power has been
exercised. After such exercise by the trustee, the creditor may seize the
property awarded to the beneficiary while it remains in the hands of
the trustee.
–
In a protective trust, the trustee is directed to pay income to A, but if
A's creditors attach A's interest, A's mandatory income interest ceases,
whereupon a discretionary trust automatically arises. The trustee then
has discretion to apply the income for A's benefit, and the creditors of
A cannot demand any part of it.
–
A beneficiary of a spendthrift trust cannot voluntarily alienate her
interest. Nor car her creditors reach her interest in the trust. This is true
even if the trust provides for mandatory payments to the beneficiary. A
spendthrift trust is created by imposing a disabling restraint upon the
beneficiaries and their creditors.
–
In New York, all trusts are spendthrift as to income unless the settlor
expressly makes the beneficiary's interest transferable.
a) Uniform Trust Code §504 – Discretionary Trusts: Effect of Standard
(pg. 134)
a) Scheffel v. Krueger, 549-50 (pg. 135-136)

Plaintiff mother sued defendant tortfeasor, alleging that the
tortfeasor had, inter alia, sexually assaulted the mother's minor
child. The tortfeasor was the beneficiary of a trust containing a
spendthrift provision. The appellate court held that N.H. Rev. Stat.
Ann. § 564:23(I) provided two exceptions to the enforceability of
spendthrift provisions, neither of which was applicable. Nothing in
the language of the statute suggested that the legislature intended
that a tort creditor should be exempted from a spendthrift
provision. New Hampshire did not recognize a public policy tort
creditor exception to the statute. Further, the statute did not place
any limitation on the rights a beneficiary was granted under the
trust instrument. Rather, by its plain language the statute applied
where a trust's governing instrument provided a beneficiary was
not able to transfer his or her right to future payments of income
and principal, and a creditor of a beneficiary was not be able to
subject the beneficiary's interest to the payment of its claim.

Beyond the exclusion of trusts settled by the beneficiary, N.H.
Rev. Stat. Ann. § 564:23(II), the statute does not place any
limitation on the rights a beneficiary is granted under the trust
instrument. Rather, by its plain language the statute applies where
a trust's governing instrument provides, a beneficiary shall not be
able to transfer his or her right to future payments of income and
principal, and a creditor of a beneficiary shall not be able to subject
the beneficiary's interest to the payment of its claim.
b) Shelley v. Shelley, 550-57 (pg. 136)

The ex-husband had disappeared and his location was not known at
the time of the suit. The trust placed no conditions upon the right
of the ex-husband to receive the trust income during his lifetime.
The court held that public policy required that the interest of the
beneficiary of a trust should be subject to the claims for support of
his children. The court also held that the duty of the husband to
support his former wife overrode the restriction called for by the
spendthrift provision. The court held that the beneficiary's interest
in the income of the trust was subject to the claims of the second
wife for alimony and to the claims for the support of the exhusband's children as provided for under both decrees for divorce.

Particular Classes of Claimants: Although a trust is a spendthrift
trust or trust for support, the interest of the beneficiary can be
reached in satisfaction of an enforceable claim against the
beneficiary, (a) by the wife or child of the beneficiary for support,
or by the wife for alimony.

It is within the court's power to impose upon the privilege of
disposing of property such restrictions as are consistent with its
view of sound public policy, unless, of course, the legislature has
expressed a contrary view.
c) Uniform Trust Code § 502 – Spendthrift Provision (pg. 136-137)
iii. Self-Settled Asset Protection Trusts, 557-60 (pg. 137)
–
A longstanding principle of trust law holds that you cannot shield your
assets from creditors by placing them in a trust for your own benefit.
Your creditors always have recourse against your entire interest in a
self-settled trust, even if the trust is discretionary, spendthrift, or both.
a) FTC v. Affordable Media, 560-69 (pg. 137-138)

Defendants-appellants formed a limited liability company to serve
as the primary telemarketer of media units. The group was unable
to sell enough products to return the promised yields to the mediaunit investors, but the group was able to take the later investors'
investments to pay the promised yields to earlier investors, which
was a classic Ponzi scheme. A preliminary injunction was entered
against appellants, which required appellants to repatriate any
assets held for their benefit outside of the United States. Appellants
refused to comply with the order and the lower court held them in
civil contempt of court. The court found that there was no clear
error in the lower court's finding that appellants remained in
control of their trust and could repatriate the trust assets and
therefore the only action the lower court could have taken was to
hold appellants in contempt.

Asset protection trusts typically are designed so that a defendant
can assert that compliance with a court's order to repatriate the
trust assets is impossible. Another common issue is whether the
client may someday be in the awkward position of either having to
repatriate assets or else be held in contempt of court. A welldrafted asset protection trust would, under such a circumstance,
make it impossible for the client to repatriate assets held by the
trust. Impossibility of performance is a complete defense to a civil
contempt charge.

In the asset protection trust context, moreover, the burden on the
party asserting an impossibility defense will be particularly high
because of the likelihood that any attempted compliance with the
court's orders will be merely a charade rather than a good faith
effort to comply. Foreign trusts are often designed to assist the
settlor in avoiding being held in contempt of a domestic court
while only feigning compliance with the court's orders.

A protector can be compelled to exercise control over a trust to
repatriate assets if the protector's powers are not drafted solely as
the negative powers to veto trustee decisions or if the protector's
powers are not subject to the anti-duress provisions of the trust.
D. Modification and Termination of Trusts, 572-74 (pg. 140)
–
If the settlor and all the beneficiaries consent, an irrevocable trust may be
modified or terminated. No one else has any beneficial interest in the trust.
The trustee has no beneficial interest and cannot object. Such a right exists
even if the trust contains a spendthrift clause.
–
In the U.S., the great weight of authority holds that a trust cannot be
terminated or modified prior to the time fixed for termination, even if all
the beneficiaries consent, if termination or modification would be contrary
to a material purpose of the settlor.
i. Modification
a) In re Trust of Stuchell, 574-80 & 569-72 (pg. 140-141)

One of two surviving life-income beneficiaries of a testamentary
trust sought modification of the trust. The trust will terminate on
the death of the last income beneficiary, to be distributed equally to
the beneficiary's children or their descendants. One of the
beneficiary's four children is a mentally retarded 25 year old who
is unable to live independently without assistance. He receives
Medicaid and Social Security benefits, both of which have income
and resource limitations for participants. The life-income
beneficiary requested the court to approve, on behalf of the
mentally retarded child, an agreement, the stated purpose of which
is to ensure the child's continued qualification for public
assistance. The court affirmed the trial court's dismissal of the
petition for modification, and held that there was no basis on which
the trial court could have granted the modification, solely to make
the trust more advantageous to the income beneficiaries.

It is a well-established rule that where the purposes for which a
trust has been created have been accomplished and all of the
beneficiaries are sui juris, a court will, on the application of all of
the beneficiaries or of one possessing the entire beneficial interest
declare a termination of the trust.

The court will not permit or direct the trustee to deviate from the
terms of the trust merely because such deviation would be more
advantageous to the beneficiaries than a compliance with such
direction.
a) Uniform Trust Code 412 – Modification or Termination Because of
Unanticipated Circumstances or Inability to Administer Trust
Effectively (pg. 141-142)
b) Troy v. Hart, 136-40 (pg. 143-144)

While decedent was a Medicaid patient in a hospice facility and
while he was being represented by the attorney-in-fact, the
representative of decedent's sister's estate, procured from the
decedent a renunciation and disclaimer of his inheritance. The
attorney-in-fact sought to have the renunciation rescinded. The
court found that the representative, who was another of decedent's
sisters, did not take advantage of a confidential relationship
because there was no suggestion of mental incompetence on the
part of the decedent. The court found that the decedent's
application for Medicaid did not bar operation of the disclaimer
under Md. Code Ann., Est. & Trusts § 9-205 because the
application was neither an assignment to the state of decedent's
rights to the inheritance nor an encumbrance with regard to the
inheritance. However, the court found that the decedent violated
his duty as a recipient of Medicaid to inform the state of any
change in his financial status and that the state had an equitable
claim against the deceased sister's estate for any money improperly
paid as a result of the violation of this duty.

A renunciation of an equitable interest in property shall relate back
to the time of the transfer and thereby will nullify any creditor's
levy that may have been made during the viability of, and against,
the renunicator's equitable interest, which levy could have been
enforced at the time legal title vested.

A constructive trust is a remedy employed by the courts to convert
the holder of legal title to property into a trustee for one who in
good conscience should reap the benefits of the possession of said
property. The remedy is applied by operation of law where the
circumstances render it inequitable for the party holding the title to
retain it. The purpose of imposing a constructive trust is to prevent
the unjust enrichment of the title holder.
–
Reformation is an equitable remedy that conforms the instrument to
what the settlor actually intended at the time of its execution.
–
Modification to achieve the settlor's probable intent in light of changed
circumstances is an application of equitable deviation. Not what the
settlor meant to say, but what the court believes the settlor would have
said had the settlor anticipated the changed circumstances.
ii. Termination (pg. 144)
–
Generally, a trust cannot be terminated if it is a spendthrift trust, if the
beneficiary is not to receive the principal into obtaining a specified
age, if it is a discretionary trust, or if it is a trust for support of the
beneficiary.
a) In re Estate of Brown, 580-85 (pg. 144-145)

The trustee complied with the terms of the trust and used the trust
proceeds to pay for the education of the beneficiaries. Once the
trustee determined that the beneficiaries' education was complete,
he began to distribute the trust income to the beneficiaries in their
capacity as lifetime beneficiaries. The beneficiaries petitioned the
probate court for termination of the trust, arguing that the sole
remaining purpose of the trust was to maintain their lifestyle and
that distribution of the remaining assets was necessary to
accomplish that purpose. The court held that the settlor's intention
to assure a life-long income for the beneficiaries would have been
defeated if termination of the trust were allowed.

An active trust may not be terminated, even with the consent of all
the beneficiaries, if a material purpose of the settlor remains to be
accomplished.

A support trust is created where the trustee is directed to use trust
income or principal for the benefit of an individual, but only to the
extent necessary to support the individual.

A trust in which by the terms of the trust or by statute a valid
restraint on the voluntary and involuntary transfer of the interest of
the beneficiary is imposed is a spendthrift trust.

In the interpretation of trusts, the intent of the settlor, as revealed
by the language of the instrument, is determinative.
iii. Trustee Removal, 585-87
a) UTC 706 Removal of Trustee (pg. 146)
b) Restatement (Second) of Trusts 258 Contribution or Indemnity from
Co-Trustee (pg. 155-156)
E. Charitable Trusts
i. Charitable Purpose, 729 (pg. 146)
–
Unlike a private trust, a charitable trust need not have an ascertainable
beneficiary to be valid. However, to qualify as a charitable trust, the trust
must have a valid charitable purpose.
a) Shenandoah Valley Nat’l Bank v. Taylor, 729-37 (pg. 146-149)

Appellant argued, inter alia, that the testator's gift qualified as a
charitable trust and that if the trust was found to violate the rule
against perpetuities, the court should apply the doctrine of cy pres
provided by Va. Code Ann. § 55-31 (1950) to prevent the trust
from failing. The court affirmed the lower court's judgment. The
court reasoned that the testator's dominant intent was expressed in
his unequivocal direction to the trustee to divide the income into as
many equal parts as there were children beneficiaries and pay one
share to each. The court found that this expressed purpose and
intent was inconsistent with the appended direction to each child as
to the use of his respective share for educational purposes and that
the latter phrase was ineffectual to create an educational trust. The
court determined that the testator's intent was to bestow upon the
children gifts that would bring them happiness; however, that fell
short of an educational trust. The court declined to apply § 55-31
because the trust's beneficiaries and purpose were not uncertain or
indefinite and no intent to apply the income to educational,
charitable, or eleemosynary purposes was disclosed.

A charitable trust is created only if the settlor properly manifests
an intention to create a charitable trust. Charitable purposes
include: (a) the relief of poverty; (b) the advancement of education;
(c) the advancement of religion; (d) the promotion of health; (e)
governmental or municipal purposes; and (f) other purposes the
accomplishment of which is beneficial to the community.

In the law of trusts there is a real and fundamental distinction
between a charitable trust and one that is devoted to mere
benevolence. The former is public in nature and valid; the latter is
private and if it offends the rule against perpetuities, it is void. It is
quite clear that trusts which are devoted to mere benevolence or
liberality, or generosity, cannot be upheld as charities. Benevolent
objects include acts dictated by mere kindness, good will, or a
disposition to do good. Charity in a legal sense must be
distinguished from acts of liberality or benevolence. To constitute
a charity the use must be public in its nature. Charitable trusts are
favored creatures of the law enjoying the especial solicitude of
courts of equity and a liberal interpretation is employed to uphold
them. Courts incline to a liberal construction in order to uphold
charitable donations against the charge that they violate the
perpetuity rule. Charitable gifts are viewed with peculiar favor by
the courts, and every presumption consistent with the language
contained in the instruments of gift will be employed in order to
sustain them. All doubts will be resolved in their favor.
b) Rosser v. Prem, handout (pg. 149-151)

The decedent's will bequeathed her residuary estate to the trustee
who was directed to use the income and corpus to publish and
disseminate her book, which concerned her only daughter who
died of cancer at the age of eight. The administrator brought an
action for a declaratory judgment to determine whether the will
created a valid trust. The court reversed and remanded, finding that
the trust was charitable and capable of being carried out by the
trustee. Although the book had little if any literary value, the court
held that the decedent's intent to help bereaved parents through the
story of her daughter was clear and was a permitted charitable
purpose.

A charitable trust is a fiduciary relationship with respect to
property arising as a result of a manifestation of an intention to
create it, and subjecting the person by whom the property is held to
equitable duties to deal with the property for a charitable purpose.
Permitted charitable purposes include: (a) the relief of poverty; (b)
the advancement of education; (c) the advancement of religion; (d)
the promotion of health; (e) governmental or municipal purposes;
(f) other purposes the accomplishment of which is beneficial to the
community.

The required elements of a charitable trust are: (a) fiduciary
relationship, (b) duties of trustees, (c) trust property, (d)
manifestation of intention, and (e) charitable purpose.

The intention to create a charitable trust may be ascertained: (a)
from the will itself; or (b) from an existing instrument properly
incorporated in the will by reference; or (c) from facts which have
significance apart from their effect upon the disposition of the
property devised or bequeathed by the will.

Where the purpose for which the trust was created constitutes a
valid charitable use, the educational value of the books or
pamphlets to be distributed is ordinarily of no concern to the court,
nor is the literary merit of the material a proper subject of judicial
inquiry. A charitable trust must provide some societal benefit. The
question is not whether the trust is in harmony with the prevailing
public views as to what purposes are of advantage to society. The
court sanctions the advancement of many minority causes, for
example, aid to religious sects which have few followers and trusts
to promote governmental changes which are not popular. The court
should not hold the trust to be noncharitable merely because it does
not approve of the objectives of the settlor and does not consider
that his trust will bring about social benefits. If, notwithstanding its
disapproval, the court finds that the settlor and rational men in
general might reasonably believe that public advantages would
accrue, it may hold the trust to be charitable, for example, in the
case of a trust to promote vegetarianism.

A charitable purpose may be found in almost anything that tends to
promote the well-doing and well-being of social man. Well-being
consists not only of physical health and surroundings but also of
mental happiness.
ii. Modification: Cy Pres, 737-38 (pg. 151, 156)
–
Under the cy pres doctrine, if the settlor's exact charitable purpose
cannot be carried out, the court may direct the application of the trust
property to another charitable purpose that approximates the settlor's
intention.
–
Test For When you Can Apply the doctrine of Cy Pres
–
First, it must be a valid charitable trust
–
Second, it must be a general trust (specific trusts must fail or
terminate if the terms cannot be met)
–
In re Nehrer (pg. 738)
–
Widow left trust to town to use property as a hospital.
Town accepted gift, but felt that the hospital wasn't
feasible, they wanted to build a town meeting center.
–
The lower court felt that this was a specific gift, the
appellate court held that it was a general gift.
–
The court felt that it was a general charitable trust for a
memorial and the hospital was optional.
–
The court felt that under the plain-meaning rule
extrinsic evidence was not allowed.
a) In re Neher, 739-42 (pg. 151-152)

The village was bequeathed property that was to be used as a
hospital for the benefit of the people of the village. The village
accepted the bequest but later filed a petition for a decree
construing and reforming the will provision so that the village
could use the property for the village's administrative building as
the village did not have the resources to establish a hospital and
there was a new hospital near the village. The court held that the
gift was not a gift to a particular institution, that there was no
singular object of the bounty because it was to a whole community,
and that there was no hint for any certain type of medical or
surgical care. The court concluded that, in reading the will
provision as a whole, the true construction was that the intention
was to give the property for a general charitable purpose rather
than a particular charitable purpose and that a grafted direction
could be ignored when compliance was impracticable.

A grafted direction may be ignored when compliance is altogether
impracticable and the gift may be executed cy pres through a
scheme to be framed by the court for carrying out the general
charitable purpose. N.Y. Real Prop. Law § 113(2).
iii. Discriminatory Trusts, 742-43 (pg. 152)
–
If the trustee of a racially restrictive trust is a governmental body (such
as a public school granting scholarships to whites), courts have held
that the administration of the trust in a racially discriminatory manner
is discriminatory state action forbidden by the Equal Protection Clause
of the Constitution.
–
Where the trustee is a private individual and not a public body,
enforcing the racial restriction is usually not unconstitutional as
discriminatory state action.
a) The Buck Trust, 743-46 (pg. 156)
–
Argued that the testator would not have been able to foresee how
large the trust would grow to. Trustees wanted to be able to help
more people than just in one county.
–
Trustees argue that settlor would have wanted to help more people.
b) The Barnes Foundation, 746-50 (pg. 156)
V. Fiduciary Administration of Trusts
A. Powers of Trustee, 777-78 (pg. 152)
–
In the absence of legislation, the administrative powers of a trustee are
derived exclusively from the instrument creating the trust.
–
The task of trustee is to carry out the settlor's intent, which varies from
trust to trust.
–
Having in mind the uncertainty of trustees' powers, legislatures in a large
majority of states enacted legislation to broaden trustees' powers. This
legislation has usually taken two different forms:
–
a) An act that permits the settlor to incorporate by express reference in
the trust instrument all or some enumerated statutory powers. This
permits a trust drafter to omit a long and detailed list of trustee powers,
incorporating the statutory powers instead.
–
b) A broad trustees' powers act that grants to trustees basic powers set
forth in the statute, as exemplified by the Uniform Trustees' Powers
Act 3(c). Express incorporation of statutory powers in the trust
instrument is unnecessary under this type of statute.
B. Duties of Trustee
i. Duty of Inquiry into Beneficiary Needs, 534-41 (review)
ii. Duty of Loyalty, 779 (pg. 152)
–
The trustee must administer the trust solely in the interest of the
beneficiaries.
a) Hartman v. Hartle, 779-82 (pg. 153)

Mrs. Dorothea Geick died testate on April 8th, 1921, leaving five
children, one of them being the complainant. She named her two
sons-in-law executors and they qualified. Among other matters the
will expressly directed her executors to sell her real estate and to
divide the proceeds equally among her children. On February 9th,
1922, the executors sold part of the real estate known as the farm,
at public auction, for $ 3,900, to one of the testatrix's sons, Lewis
Geick, who actually bought the property for his sister, Josephine
Dieker, who is the wife of one of the executors. On April 11th,
1922, Mrs. Dieker sold the property to the defendant Mike Contra
(and another who is not a party to the action) for $ 5,500, part cash
and part on mortgage.The executors settled their final accounts on
April 21st, 1922, and at or about that time complainant expressed
to the deputy surrogate her dissatisfaction with the price realized
from the sale of the farm.

A trustee cannot purchase from himself at his own sale, and his
wife is under the same disability unless leave to do so has been
previously obtained under an order of court.

Where property was purchased for the wife of a trustee at the
trustee's sale and afterwards resold by her at a profit, the trustee
must account to the heirs for the profit so realized.
b) In Re Rothko, 783-91 (pg. 154-155)

An abstract expressionist painter whose works through the years
gained him an international reputation died testate, and the
principal asset of his estate consisted of 798 paintings of
tremendous value. Within a period of only three weeks, the three
executors had dealt with all of the paintings by virtue of two
contracts with galleries in which two of the executors had an
interest. The artist's children instituted proceedings to remove the
executors, to enjoin the galleries from disposing of the paintings, to
rescind the sales agreements, and to recover damages. The court
held that, due to the conflict of interest of two of the executors
between the estate and the galleries, there was a breach of duty and
trust to the estate. The third executor breached the trust by failing
to exercise ordinary prudence in view of the others' divided
loyalties.

The duty of loyalty imposed on the fiduciary prevents him from
accepting employment from a third party who is entering into a
business transaction with the trust. While a trustee is administering
the trust he must refrain from placing himself in a position where
his personal interest or that of a third person does or may conflict
with the interest of the beneficiaries.

An executor who knows that his coexecutor is committing
breaches of trust and not only fails to exert efforts directed towards
prevention but accedes to them is legally accountable even though
he was acting on the advice of counsel. Alleged good faith on the
part of a fiduciary forgetful of his duty is not enough.

If a trustee in breach of trust transfers trust property to a person
who takes with notice of the breach of trust, and the transferee has
disposed of the property it seems proper to charge him with the
value at the time of the decree, since if it had not been for the
breach of trust the property would still have been a part of the trust
estate.
iii. Duty of Prudence, 791-98 & 805-06 (pg. 157)
–
After loyalty, the next great duty in trust fiduciary law is prudence.
This duty imposes on the trustee an objective standard of care.
Restatement (Second) of Trusts 174 gives the classic formulation: The
trustee is under a duty to the beneficiary in administering the trust to
exercise such care and skill as a man of ordinary prudence would
exercise in dealing with his property.
–
The primary (but not exclusive application of the duty of prudence in
modern trust practice is in the law of trust investment.
–
Modern Trust-Investment Law
–
In the 1990s, the constrained prudent man rule was finally replaced
with a modernized – and gender neutral – prudent investor
standard.
–
The prudent investor standard of the new Restatement and uniform
act implements three core reforms: (a) an increased sensitivity to
the tradeoff between risk and return; (b) a diversification
imperative; and (c.) a reversal of the non-delegation rule.
a) Uniform Prudent Investor Act (1994) - Section 2 – Standard of Care;
Portfolio Strategy; Risk and Return Objectives (pg. 157-158)
b) Uniform Prudent Investor Act (1994) - Section 3 Diversification (pg.
158)

A trustee shall diversify the investments of the trust unless the
trustee reasonably determines that, because of special
circumstances, the purposes of the trust are better served without
diversifying.
a) In re Estate of Janes, 806-17 (pg. 158-159)

Testator died leaving several trusts, including a marital deduction
trust for the benefit of testator's wife. Petitioner executor failed to
diversify the trust, which consisted of a large amount of one type
of stock. Testator's wife, who was found to be very inexperienced
when it came to financial decisions, sought to surcharge petitioner
for losses incurred by the estate, during which time the value of the
stock had dropped about one-third of its date-of-death value.
Objectant personal representatives subsequently took over the
cause of action against petitioner upon testator's wife's death. The
court affirmed the order of the appeals court which affirmed a
surcharge awarded against petitioner because maintaining a
concentration of one stock under the circumstances presented
violated certain critical obligations of a fiduciary in making
investment decisions under the prudent person rule. Petitioner
failed to consider the investment in one stock in relation to the
entire portfolio. The court affirmed the award established by the
appeals court because the correct determination of damages was
the amount of the capital lost and not lost profits or market index
measure of damages.

N.Y. Est. Powers & Trusts Law § 11-2.2(a)(1) (1970) provides that
(a) fiduciary holding funds for investment may invest the same in
such securities as would be acquired by prudent (persons) of
discretion and intelligence in such matters who are seeking a
reasonable income and the preservation of their capital.

The trustee must weigh all investment factors as they affect the
principal objects of the testator's or settlor's bounty, as between
income beneficiaries and remainder persons, including decisions
regarding whether to apportion the investments between high-yield
or high-growth securities.

Various factors affecting the prudence of any particular investment
must be considered in the light of the circumstances of the trust
itself rather than (merely) the integrity of the particular investment.

Determining whether a fiduciary has acted prudently, a court may
examine a fiduciary's conduct throughout the entire period during
which the investment at issue was held. The court may then
determine, within that period, the "reasonable time" within which
divestiture of the imprudently held investment should have
occurred.
iv. Duty of Impartiality, 821 (pg. 159-160)
–
Perhaps the most frequently litigated of the fiduciary subrules is the
duty of impartiality. The hallmark of the duty of impartiality is
balance: The trustee must strike a fair balance between the
beneficiaries, giving due regard to their respective interests.
a) Dennis v. Rhode Island Hosp. Trust Co., 821-27 (pg. 160-161)

A bank trustee challenged findings that it failed to take proper
corrective action in managing the trust assets when their value
began to decrease. The court held that: (1) the lower court's
conclusion that the bank trustee should have sold the assets if
necessary to prevent the trust corpus from being consumed by the
income beneficiaries was reasonable and therefore lawful.

Settled law requires the trustee to act impartially, with due regard
for the respective interests of both the life tenant and the
remainderman.

An impartial trustee must view the overall picture as it is presented
from all the facts, and not close its eyes to any relevant facts which
might result in excessive burden to the one class in preference to
the other.

The trustee is under a duty to the beneficiary who is ultimately
entitled to the principal not to retain property which is certain or
likely to depreciate in value, although the property yields a large
income, unless the trustee makes adequate provision for amortizing
the depreciation.
b) Principal & Income Problem, 827-30 (pg 161)

It is better to invest for total return, and then allocate that return to
the income and principal beneficiaries, than to allow the
characterization of investment proceeds as income or principal to
drive the trustee's investment decisions.

Modern portfolio theory puts pressure on lawyers to discuss with
clients the kind of income stream the client wants to income
beneficiary to have.
v. Duties Related to Trust Property, 830-32 (pg. 161)
a) Duty to Collect and Protect Trust Property

When a testamentary trust is established, the trustee should collect
the assets from the executor as promptly as circumstances permit.
b) Duty to Earmark Trust Property

To earmark property is to designate it as trust property rather than
the trustee's own.
c) Duty Not to Mingle Trust Funds with the Trustee's Own

A trustee is guilty of a breach of trust if the trustee commingles the
trust funds with his own, even if trustee does not use the trust funds
for his own purposes.

In recent years, the prohibition against commingling has been
partially abrogated in almost all jurisdictions to permit a corporate
fiduciary to hold and invest trust assets in a common trust fund.
vi. Duty to Inform and Account, 832
a) Fletcher v. Fletcher, 832-38 (pg. 161-162)

The trust agreement provided for the establishment of three
separate trusts upon the grantor's death. The beneficiary instituted
the present suit after the trustees refused to provide him with a
copy of the trust instruments in their possession. The trustees
argued that that the trust instrument established three separate
trusts and that the segregation of a trust into separate trusts for
different beneficiaries not only segregated the assets, but also
segregated the trustee's duties to the different beneficiaries. The
trustees stated that they had provided the beneficiary with all
information relevant to him. The court held the trial court had
properly ordered the trustees to provide to the beneficiary all trust
instruments in their possession. A trustee was under a duty to the
beneficiary to give him, upon his request, complete and accurate
information as to the nature and amount of the trust property. Here,
there was a single integrated trust agreement, not three distinct
trust documents, each entirely independent of the other. The
information not disclosed could have a material bearing on the
administration of the trust agreement insofar as the beneficiary was
concerned.

The beneficiary is the equitable owner of trust property, in whole
or in part. The trustee is a mere representative whose function is to
attend to the safety of the trust property and to obtain its avails for
the beneficiary in the manner provided by the trust instrument. The
fact that a grantor has created a trust and thus required the
beneficiary to enjoy the property interest indirectly does not imply
that the beneficiary is to be kept in ignorance of the trust, the
nature of the trust property and the details of its administration.

A beneficiary is entitled to review the trust documents in their
entirety in order to assure the trustees are discharging their duty to
deal impartially with all the beneficiaries within the restrictions
and conditions imposed by the trust agreement.
b) Uniform Trust Code Section 813 – Duty to Inform and Report (pg.
162-163)