Probate Process
Why do we need a probate process? Clear title, distribute assets, pay creditors or bar them from collecting later.
Statutes of Limitations: Creditors – 4 months or 60 days (CPC 9100) / To probate a will – 60 days or 120 days (CPC 8226).
How to avoid probate: JTWROS, POD bank accounts (and similar property), revocable trust (and other revocable
transfers), life insurance proceeds, lifetime gifts. Avoiding probate =/= avoiding taxes:
JTWROS = 100% FMV at death
Revocable transfers = FMV at death
Pay on death beneficiary designations = FMV at death
Life insurance = Death proceeds if owned by D
Taxable lifetime gifts (over $14k) = adjusted taxable gifts (go into base to determine cumulative gifting amount).
Tax Exemptions and Exclusions
Estate and gift tax exemption = $5.25 million ($10.5 million per couple).
Annual gift tax exclusion (per donee) = $14k of a present interest.
Estate and gift tax rate on amounts in excess of the $5.25 million exemption = 40 percent.
Note: state estate taxes could apply even when federal estate taxes do not apply.
Step-up in basis at death = IRC § 1014 vs. original cost basis if gift is carryover (§ 1015).
Statute of Limitations for Malpractice
Heyer v. Flaig: Marriage revoked the will. Issue: When does the S/L begin to run on the malpractice action? Holding: at
time of T’s death. Today: Cause of action accrues under the discovery rule which may be later than T’s death.
Choice of Law
Real property: where property is located / Personal property: where decedent is domiciled at death.
English per stirpes: vertical quality—each line of descent treated equally.
Modern per stirpes (CA): each line of descent treated equally beginning at first generation with a living taker.
UPC per capita: horizontal equality—each taker at each generation treated equally (“equally near, equally dear”).
Summary of UPC Intestacy Provisions (Text pp. 69-70)
(S)pouse; (D)escendent; (P)arents under 1990 UPC § § 2-101 to 2-106 (rev. 2008)
S; no D; no P – Spouse gets it all
S; D – Spouse gets it all only if all D are also S’s and S’s only kids
S; no D; P – Spouse gets $300k + ¾; the rest goes to P
UPC: Ancestors, Collaterals, and Others (Text p. 85)
UPC: No laughing heirs / CPC 6402 (French at p. 14) provides for laughing heirs.
Advancements and Hotchpot
Common law advancement and hotchpot (modern trend is gifts are presumed to be gifts.)
Summary of Community Property Intestacy Provisions
Community property includes all property acquired during marriage other than by gift, bequest, or devise. Quasicommunity property is acquired while married in a non-community property state, treated as community property for
purposes of distribution at death and divorce (i.e., quasi-community property has not vested until death or divorce).
CPC § 6401 Share of Spouse
(a) Community property—the intestate share of the surviving spouse is the one-half of the community property
that belongs to the decedent.
(b) Quasi-community property—the intestate share of the surviving spouse is the one-half of the quasicommunity property that belongs to the decedent
(c) Separate property—the intestate share of the surviving spouse is:
(1) 100% if no issue, parent, siblings, etc.
(2) 50% if one child or issue of one deceased child with no issue, but parents or issue of parents
(3) 33.3% more than one child
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Definition of a Spouse under State Law
Marriage is generally necessary (but subjective good faith belief in validity of marriage produces putative spouse in CA).
Taxation permitted for same-sex spouses but social security is still in the works.
In CA you may be a registered domestic partner AND a spouse (other states may limit or eradicate RDP).
Registered domestic partners and civil union partners (property acquired from 2001-2005 is community property).
Long term cohabitants are not spouses (exception: Washington state cohabitation contracts create CP rights).
Simultaneous Death
Uniform Simultaneous Death Act: If there is no sufficient evidence of survivorship, the beneficiary is deemed to have
predeceased. Claimant must establish survivorship by 120 hours (5 days) by clear and convincing evidence.
Janus v. Tarasewicz [Cyanide-laced Tylenol capsules]: The determination of legal death must be made in
accordance with the usual and customary standards of medical practice, i.e., Theresa’s brain death.
CPC: Simultaneous death rule applies to community and quasi-community property upon death of spouses. / Applies to
life insurance, JTWROS, CPWROS, etc. / For intestacy, heir must survive by 120 hours (5 days) rather than mere seconds.
Posthumously Conceived Children
UPC says posthumously conceived child is treated as in gestation if the child is in utero within 36 months after the
individual’s death, or born within 45 months after the individual’s death. Time limitations help close the estate.
CPC 249.5 conception after death; 9th circuit rule on SS (recognizing paternity before conception makes you a father.)
In re Martin B. [Unexpected grandchildren]: When a governing instrument is silent, post-conceived children
should be accorded the same rights as children who are conceived prior to their father’s death.
In re estate of Mahoney: A conviction of voluntary manslaughter disables the party from taking under the decedent’s
will or through intestate succession. (If no state statute, constructive trust approach divests any inequitable legal title.)
At common law, the commission of any felony deprived the wrongdoer of his right to inherit property. Today,
most states simply bar murderers from inheriting any interest in the victim’s estate.
California Slayer Statute [CPC § 250 (Supp at 39)]
For “A person who feloniously and intentionally kills the decedent…” property passes as though killer predeceased.
Applies to property passing by will or trust, property subject to power of appointment, insurance, JT and intestacy.
BoF § 254 – conviction is conclusive, but if acquitted (or not tried) then preponderance of the evidence is sufficient.
JTWROS § 251 – killer should not be better off by killing victim (but see Estate of Castiglioni community property).
§ 253 any case not described by statute where one person kills another, any acquisition as a result shall be treated in
accordance with the principles (so 251 should apply to community property).
Beneficiary cannot take and passes as though killer/beneficiary predeceased (goes to contingent beneficiary or estate).
Guardianship and Conservatorship for Minors
Trust: IRC §2503(c) satisfies the gift of a present interest as long as distributed to the minor once they reach 18.
(Note: “strong-armed trust” is a way to keep money in trust past 18.) Shellenbarger: Deadbeat parents cannot inherit.
Disclaiming an Interest
Disclaimer Statute: CPC § 282: Property passes as if disclaimant predeceased the creator of the interest.
Drye v. United States: Exception: IRS tax lien trumps disclaimers. (Some people also try to disclaim to keep Medicaid.)
“Valid where executed” Statutory Formalities
UPC § 2-502(a): Except as otherwise provided, a will must be (1) in writing; (2) signed by testator; (3) signed by at least
two individuals within a reasonable time after witnessing OR acknowledged by the testator before a notary public.
Functions of Formalities
Evidentiary function: Supply satisfactory evidence to the court.
Ritual/cautionary function: The performance of some ceremony for the purpose of impressing the significance.
Protective function: Prophylactic purpose of safeguarding the testator.
Channeling function: The standardization of form simplifies administration.
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Presence REQ in Will Execution
Line of sight: T does not actually have to see the witnesses sign, but must be able to see them were the testator to look.
Conscious Presence: T through sight, hearing, or general consciousness of events, comprehends that witness is signing.
Signature in Will Execution
What forms of signature evidence finality, distinguishing a will from a draft or mere notes?
Type of mark: name in full; a cross (In re Estate of McCabe); abbreviation; nickname; electronically printed name in full
(cursive font) (Taylor v. Holt); Initials and date sometimes; Mark made by someone else at the direction of the testator
Location o mark: At the end of the document generally; Subscription “at the foot or end thereof” (req. for few states)
Order of “signing”: Additions to will made after”signing” may be invalid.
Witnesses: At time of T’s signing or acknowledgement, as part of one continuous transaction, or within a
reasonable time, sometimes even after T’s death (modern trend to accept after death if reasonable)
CPC Section 6110: The will shall be witnessed by being signed, during the testator's lifetime, by at least two persons
each of whom (A) being present at the same time, witnessed either the signing of the will or the testator's
acknowledgment of the signature or of the will and (B) understand that the instrument they sign is the testator's will.
(2) If a will was not executed in compliance with paragraph (1), the will shall be treated as if it was executed in
compliance with that paragraph if the proponent of the will establishes by clear and convincing evidence that, at the time
the testator signed the will, the testator intended the will to constitute the testator's will.
Possible cures for switched wills
(1) Probate the will that the testator intended to sign—cure the defect in the execution (makes sense to fulfill will).
(2) Probate the will that the testator mistakenly signed—reform the terms of the will so that it makes sense, reforming
its terms to make sense (used because the writing requirement is so important).
Self-proving affidavit: where available can be used to prove the will, but the will must be properly executed.
In re Will of Ranney: Two step self proving affidavit; witnesses signed the affidavit, not the will; substantial compliance.
In re Will of Ferree: Will was not notarized but there was no second witness. The court did not think this was sufficient.
This would have constituted harmless error under the UPC 2-503.
Substantial Compliance
Harmless Error (UPC § 2-503)
The court may deem a defectively executed will as being in The court may excuse noncompliance if there is clear and
accord with statutory formalities if there is clear and
convincing evidence that the decedent intended the
convincing evidence that the purposes of those formalities document to be his will.
were served.
Will signing ceremony instructions to satisfy the formal requirements in all states (text pp. 168-169).
Note: The harmless error rule applies to a document that was misexecuted, not a document that doesn’t exist
Holographic Wills
CPC § 6111 Signature and the material provisions must be in the handwriting of the testator. No date necessary unless
inconsistent with another will. Any statement of testamentary intent may be a part of a commercially printed form will.
Jurisdictional Split: Only about half the states recognize holographic wills and requirements vary.
1st generation (Entirely written, signed, and dated): If the jurisdiction requires that the holographic will
be entirely in the testator’s handwriting, any printing or other marks on the document may invalidate
the whole will under a strict compliance approach to the requirements.
2nd generation (Surplusage theory): All of the material provisions that affect the disposition of
testator’s property must be handwritten, e.g., the “who gets what,” any administrative provisions (i.e.,
appointment of a personal representative or guardian), and under strict compliance even testamentary
intent (i.e., the intent that this document constitutes the person’s last will and testament.)
3rd generation (UPC approach): The UPC requires only that the material portions, not the entire
instrument, be in the testator’s handwriting. UPC § 2-502(b). Testamentary intent can be derived from
the handwritten material, the non-handwritten provisions, or other extrinsic evidence. UPC § 2-502(c).
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Testamentary Intent
Kimmel’s Estate (1924): Decedent handwrote a letter to three of his children. Words such as “Kepp this letter” supports
a finding of testamentary intent and “Father” qualifies as a signature since that is how he normally signed letters.
Material Provisions
Estate of Gonzales (2004): Decedent purchased a commercially printed form will, filled in the blanks, then signed the
form will. The decedent showed the document to his brother and sister-in-law, then told them he planned to write it
more neatly on a second form. The decedent fell ill and died before copying the testamentary provisions over to the
second form that his family members had signed. The court chose to apply a looser standard and find a valid will.
Conditional Wills
Conditional wills are those that contain an express clause conditioning their being given effect upon some event
occurring. Courts tend to construe such clauses, when possible, as mere explanations for why the decedent executed
the will as opposed to an express condition precedent to the will being given effect.
Eaton v. Brown (1904): “I am going on a journey and may not return. If I do not, I leave everything to my son.”
Estate of Harris (1948): “In case I die in this mess, I leave all to the wife.” Scratch with a knife, in extremis.
Revocation of Wills
UPC 2-507: May revoke a will or any part thereof by executing a subsequent will expressly or by inconsistency, or by
performing a revokatory act. / CPC 6120: Acts constituting revocation.
Majority: Testator does not intend to die intestate.
Minority: Once revoked, always revoked.
Harrison v. Bird: Speer executed duplicate wills naming Harrison as the main beneficiary. Speer instructed her attorney
by phone to revoke her will. The attorney tore the will into four pieces and sent the pieces along with a letter stating
that the will was revoked to Speer. Speer dies. The letter from the lawyer but not the pieces of the will are found.
Rebuttable Presumption
If the evidence establishes that Ms. Speer 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
duplicate 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. Burden of rebutting the presumption is on the proponent of the will.
Dependent Relative Revocation (DRR Doctrine)
Did T really intend to revoke Will #1 or was it conditional upon Will #2 being valid?
Fact Situation #1: If the court finds that the testator would not have destroyed his old will had he known that the new
will was ineffective, e.g., interested witness, the court will disregard the revocation and probate the destroyed prior will.
Did T intend to revoke Will #2 only if it revived Will #1?
Fact situation #2: T revoked will #1 by a subsequent will, and revoked will #2 by a physical act. Both wills have been
revoked, but maybe T intended to revive will #1 by destroying #3.
Note: Some states never recognize partial revocation by physical act (e.g., strikethroughs) to avoid DRR issues.
Issues usually arise when the beneficiary changes, or the amount given decreases, because intent to deprive.
However, partial revocation is recognized in California, by clear and convincing evidence for a holographic will.
Revival Statutes (CPC § 6123)
Majority Jx: Upon revocation of will 2, will 1 is revived if the testator so intends. Such intent may be shown from the
circumstances surrounding the revocation of will 2 or from the testator’s contemporaneous or subsequent oral
declarations that will 1 is to take effect. UPC § 2-509 is fairly representative of the majority of these state statutes.
Minority Jx: A revoked will cannot be revived unless re-executed with testamentary formalities or republished by
being referred to in a later duly executed will.
Revocation by Operation of Law
Marriage used to revoke an existing will. Birth of new children used to revoke a will. Divorce still revokes will for spouse.
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Integration
In re Estate of Rigsby: The second page could easily be interpreted as a work sheet listing Decedent’s assets as a
preliminary step before drafting the first page. Holding: The second page is missing proof of testamentary intent.
Hypo: T wants to revise a will. He goes to his attorney and the secretary re-prints out page 7. T didn’t re-sign. Invalid.
The lawyer can avoid litigation by ensuring that the will is fastened together before the testator signs and by having the
testator sign or initial each numbered page of the will for identification.
Republication by Codicil
A will is treated as if it were executed when its most recent codicil was executed.
Incorporation by Reference
UPC § 2-510: 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.
Requirement: Pre-existing document specifically referenced in the will.
“I give 100k to the first five people named in the Vassar Alumnae Directory of 2012.” Incorporated by reference.
“I give 100k to the first five people named in the Vassar Alumnae Directory of 2015.” Independent significance.
Clark v. Greenhalge: Codicil republished her will, and incorporated all the new entries in her notebook, i.e., farm picture.
Separate Writing Identifying Devise of Certain Types of Tangible Personal Property UPC § 2-513 (1990):
Whether or not the provisions relating to holographic wills apply, a will may refer to a written statement or list to
dispose of items of tangible personal property not otherwise disposed of by the will, other than money. To be admissible
under this section as evidence of the intended disposition, the writing must be signed y the testator and must describe
the items and the devisees with reasonable certainty. The writing may be referred to as one to be in existence at the
time of the testator's death; it may be prepared before or after the execution of the will; it may be altered by the
testator after its preparation; and it may be a writing that has no significance apart from its effect on the dispositions
made by the way.
CPC § 6132 (French at 81-82): (g) The total value of tangible personal property identified and disposed of in the writing
shall not exceed 25k. (And maximum value for any single item is 5k.) Additionally, writing must be dated and signed.
What happens if the writing purports to give the diamond ring to Brad and the ring is worth 10k? Residuary.
Acts of Independent Significance
Nontestamentary Amendment to a Will (I.e., Acts not prompted by a desire to change the beneficiaries or their gifts).
UPC § 2-512: 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. / CPC § 6131 adds: The execution or revocation of a will of another person is such an event.
Contracts Relating to Wills
A person may enter into a contract to make a will or a contract not to revoke a will.
UPC § 2-514 Contracts Concerning Succession: A contract to make a will or devise, or not to revoke a will or devise, or to
die intestate . . . may be established only by (i) provisions of a will stating material provisions of the contract, (ii) an
express reference in a will to a contract and extrinsic evidence proving the terms of the contract, or (iii) a writing signed
by the decedent evidencing the contract. The execution of a joint will or mutual wills does not create a presumption.
CPC § 21700 (French at 83): Contract must be in writing OR there must be clear and convincing evidence of contract.
CA CCP 366.3: (a) If a person has a claim that arises from a promise or agreement with a decedent to distribution
from an estate… an action to enforce the claim to distribution may be commenced within one year after the
date of death, and the limitations period that would have been applicable does not apply.
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Testamentary Capacity (Four Part Test)
Testator must be capable of knowing and understanding (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 also be capable
of (4) relating these elements t one another and forming an orderly desire regarding the disposition of the property.
Form of legal obligation
Marriage
Will
Competing policies
Protection of property v
individual autonomy
Protection of property v
testamentary freedom
Irrevocable lifetime gift;
contract; deed
Protection of property v
freedom of contract
Insane Delusion
A delusion is a false conception of reality. An insane delusion is a delusion to which the testator adheres despite all
evidence and reason. The insane delusion must cause the unnatural devise or gift in order to be stricken.
In re Strittmater’s Estate: Belief that men are awful caused devise to National Woman’s Party. Insane. Probate set aside.
Breeden v. Stone: Mr. Breeden died in his home from a self-inflicted gunshot wound 2 days after he was involved in a
highly publicized hit-and-run accident that killed the driver of the other vehicle. He left a suicide note/holographic will.
Held: Alcohol, drugs, and insane delusions regarding others did not affect or influence the disposition of his property.
Undue Influence
A donative transfer is procured by undue influence if the influence exerted over the donor overcame the donor’s free
will and caused the donor to make a donative transfer that the donor would not otherwise have made.
Presumptions and Burden Shifting (Common Law requires some of both)
Confidential relationship: Fiduciary, reliant, and/or dominant-subservient relationship
Suspicious circumstances: Unnatural disposition, lack of independent advice, will was produced in secrecy or haste,
sudden change in donor’s attitude.
California Law on Common Law Presumptions
California Supreme Court in Estate of Stephens held once a presumption is established, the burden of persuasion on the
proponent of the will to show an absence of undue influence by a preponderance of the evidence.
Disqualified transferees (statutory presumptions rebuttable by clear and convincing evidence):
Presumption of undue influence against: drafter (unless related), fiduciary who transcribes or causes
transcription, a care custodian, family member of above, cohabitant or employee of above.
Estate of Lakatosh: Roger had his second cousin draft Rose’s will. He subsequently converted 130k in assets from Rose’s
estate for his own benefit. Rose was living in squalor and filth and had fallen behind in the payment of her bills.
Confidential Relationship
A confidential relationship exists “whenever one person has reposed 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. E.g., the power of attorney over one’s entire life’s savings.
Suspicious Circumstances (Text pp. 290-291)
(1) How weak was donor?
(2) Did wrongdoer participate in the drafting or execution?
(3) Did donor receive independent advice?
(4) Was document prepared in secrecy or in haste?
(5) Had donor/testator’s relationship with others changed?
(6) How much of a discrepancy btwn old document and new one?
(7) Is there evidence of settled intent in prior documents?
(8) How unfair is the new disposition?
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Undue influence is generally accomplished by a gradual, progressive inculpation of a receptive mind. The fruits of the
undue influence may not appear until long after the weakened intellect has been played upon.
Undue Influence vs. Testamentary Capacity
Testamentary capacity concerns the mental ability of the testator, which is a question of status. Undue influence
concerns the actions of a third party, which is a question of conduct. Yet many cases involve allegations of both
incapacity and undue influence because the mental status of the testator is a relevant factor in assessing susceptibility
to undue influence—and a will may be held invalid on both grounds.
To overcome the presumption of undue influence, the proponents must show (a) good faith on the part of the
beneficiary, (b) the grantor’s full knowledge and deliberation of the consequences of her actions, and (c) the grantor’s
independent consent and action.
Adult Adoption
Heirs of a deceased person who adopted an adult have standing to attack the adoption for fraud.
In re Will of Moses: The court held invalid a will by a woman that favored her lover, a man 15 years her junior.
In re Kaufmann’s Will: The court held invalid a will by a man that favored his lover, a dirty homosexual.
No Contest Clauses
Some courts will not enforce a no-contest clause if there was probable cause for a good faith challenge.
CA will enforce no-contest clauses. But you can bring a case litigating whether an action constitutes a will contest.
Current CA rule: Consistent now with modern trend: no contest rule only enforced if claim is brought without probable
cause. CPC § 21311 (French p. 131). Also, strictly construe the clause because will challenges are against public policy.
Bequests to Lawyers and Fiduciary Appointments
Undue influence: Many courts hold that a presumption of undue influence arises when an attorney-drafter receives a
legacy, except when related to the testator. It is unethical for an unrelated lawyer to solicit gifts from their clients.
Fiduciary Appointments: In obtaining the client’s informed consent to the conflict, the lawyer should advice the client
concerning the nature and extent of the lawyer’s financial interest in the appointment, as well as the availability of
alternative candidates for that position.
Strategies if a Contest is Anticipated
Build a record, maintain secrecy, and sooth feelings: Client letters, competent witnesses about testator’s capacity,
signed affidavits, audio or visual recordings, professional examination, inter vivos trust/gifts, family meeting.
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 otherwise have made.
Fraud
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. Claims of fraud usually involve fraud in the execution or fraud in the inducement.
Tortious Interference with an Expected Inheritance
Under this theory, the plaintiff must prove that the inference involved tortious conduct, which under the cases includes
undue influence, duress, or fraud. The tort cannot be invoked if the challenge is based on the testator’s mental capacity.
Restatement (Second of Torts) § 774(B). Half the states recognize this tort.
Construction of Wills (Mistaken or Ambiguous Language in Wills)
Mahoney v. Grainger: The residuary clause left the residue of her estate to her “living heirs” when she meant to leave it
to her first cousins. The aunt was the closest, and therefore only, living heir under Massachusetts law. The fact she used
the plural instead of the singular “heir” was not enough to consider the wording ambiguous.
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Patent and Latent Ambiguity
Patent ambiguity: Evidence from the face of a will.
Latent ambiguity: when the terms are applied to the facts.
Equivocation: When two or more persons or things fit the description exactly.
Personal usage: If a testator habitually used a term in an idiosyncratic manner. (Mrs. Mosely.)
No exact fit: A description in a will does not exactly fit any person or thing
Arnheiter v. Arnheiter: Typo in decedent’s address. Mere erroneous description does not vitiate.
Collapsing the distinction between patent and latent ambiguities
To the University of Southern California, known as the UCLA… latent or patent? Interpreted as latent to admit extrinsic
evidence on remand. In re Estate of Black.
UPC Remedy § 2-805 Reformation to Correct Mistakes (Minority Reformation Rule)
The court may reform the terms of a governing instrument, even if unambiguous, to conform the terms to the
transferor’s intention if it is proved by clear and convincing evidence what the transferor’s intention was and that the
terms of the governing instrument were affected by a mistake of fact or law, whether in expression or inducement.
Scrivener’s Error/Expression Error: heirs (but not aunt); wrong Robert Krause; wrong address; failure to name
Inducement Error: T learns from Susie that J is dead so she names Susie beneficiary. J is alive. Worst evidence.
More Factual Mistakes: What level of proof is required to show that “but for” this mistake she would have been
named, to what share? This is why we need clear & convincing.
California does not allow reformation (yet). If plain meaning, then cannot change. If ambiguous, can look outside the will
to help construe the ambiguous language. Estate of Duke: pending before California Supreme Court (could change rule.)
Estate of Dye: Court says there’s no ambiguity (regarding “issue”) so no extrinsic evidence is allowed, preventing reform.
Under the UPC, mistake of law + clear of convincing evidence = reform to meet testator’s (conservative) intent.
Antilapse Statutes (Death of Beneficiary before Death of Testator)
Antilapse as Default Rule only when you don’t provide otherwise. Diagram on text p. 373.
Contrary Intent
CPC § 21110(b) Majority Rule: A requirement that the initial transferee survive the testator or survive for a specified
period of time after the death of the transferor constitutes a contrary intention.
UPC § 2-603(b)(3) Minority Rule: The term “if he survives me” is not a sufficient expression of contrary intent.
Lapse and Class Gifts
CPC § 21110: If a transferee is dead when the instrument is executed, or fails to survive the transferor, the issue of the
deceased transferee takes. A transferee under a class gift shall be a transferee for the purpose of this subdivision unless
the transferee’s death occurred before the execution of the instrument and that fact was known to the transferor when
the instrument was executed. Text page 372—Under UPC F takes; Under CPC F does not take.
Ademption
A leaves Blackacre to B but at death A does not own Blackacre because A sold it. B takes nothing because B revoked.
In re Estate of Anton: Second marriage for Herbert and Mary. Mary executes will. Subsequently executes durable power
of attorney authorizing Nancy to manage her financial affairs. Nancy believed she had no other choice but to sell the
property that Mary devised to Stepdaughter. Mary did not have the opportunity to change her will once she knew that
the duplex was no longer part of the estate so Gretchen is entitled to the proceeds which have not yet been expended.
Identity theory: If the object cannot be identified, then it’s been adeemed by extinction.
Intent theory: Ademption only exists if testator intended to revoke by independent fact.
Implied conditions of survival are created by “heirs” and “issue.”
“Heirs,” by definition, requires survival. “Issue,” by definition, is determined per stirpes at person’s death.
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Trust Characteristics and Creation
Inter Vivos: Created by declaration of trust or deed of trust. Transferred nonprobate. Revocable or irrevocable.
Testamentary: Created by will. Transferred by probate. Irrevocable.
Benefits of trust: centralized management for numerous beneficiaries, can split amount among many beneficiaries, can
split over time, no filing with the state to form, flexibility, management for those who need it-minors and incompetents.
Lux v. Lux (1972): A trust will not fail for want of a trustee. (The court will appoint a trustee, most likely the executor.)
How do you create a trust?
Intent to create trust (no magic words, but best to be clear, i.e., name a trustee to hold the property in trust)
A writing may be required (statute of frauds and wills act). Delivery (symbolic, constructive, physical) required.
How many parties do you need? settlor (trustor/grantor, trustee, beneficiary). Settlor may not be only beneficiary.
The trust property has to have property in it. Reece, race, rehz, res.
Clarek v. Campbell: The trustees shall select which friends will receive testator’s property. “Friends” must fail for want of
beneficiaries. (Which “friends” can enforce the trust?) Trustees must therefore dispose legal title as part of the residue.
Clark distinction: Needs power of appointment-to A, my executor, to distribute among such of my friends as A chooses.
Note: A charitable trust may be created for the benefit of the public, because the attorney general has standing to sue.
The Will of Marilyn Monroe granted Lee Strasberg all of her personal effects with precatory language to distribute it.
There is no creation of a trust or ascertainable beneficiary.
Legal questions raised by will substitutes: (1) Wills Acts Formalities; (2) Subsidiary Law of Wills
Revocable Trusts
Farkas v. Williams (1955): Farkas purchased stock of Investors Mutual, Inc. on four separate occasions and each time
executed a written application instructing them to issue the stock in his name as trustee for Williams, his employee. It is
conceded that the instruments were not executed in such a way as to satisfy the requirements of the statute on wills.
These trust declarations constituted valid inter vivos trusts and were not attempted testamentary dispositions. Why?
Tests: (1) Whether Williams acquired a present interest when the trust was created; (2) Whether Farkas retained
so much control over the trust property that he still owned it at death, rendering the trust testamentary.
Uniform Trust Code (UTC) § 602
Revocation or Amendment of Revocable Trust
A revocable trust can be amended or revoked in any manner that clearly manifests the settlor’s intent to do so, unless
the trust instrument specifies a particular method of amendment or revocation and expressly makes that method
exclusive. (This means a revocable trust may be used more like a will in which the beneficiary has no present interest.)
Application of Subsidiary or Substantive Law of Wills
Although a will substitute need not be executed in compliance with the statutory formalities required for a will, such an
arrangement is, to the extent appropriate, subject to substantive restrictions
State Street Bank and Trust Co. v. Resier (1979): Dunnebier creates an inter vivos trust, conveys capital stock to trust,
and executes a pour-over will, leaving residuary estate to trust. Impressed with “the general cut of Dunnebier’s jib,”
State Street Bank makes an unsecured loan to Wilfred for 75k. Wilfred dies in an accident. His estate has insufficient
assets to pay off the loan. Can the bank recover against the trust assets? Yes, over which settlor has control at death.
UPC 2-804: Divorce revokes any revocable disposition of property made by a divorced individual to his former spouse in
a governing instrument. Applies to revocable trusts and life insurance policies.
California Probate Code (CPC) § 5600 (French at 190): Applies to revocable trusts, does not apply to life insurance
(because this should be done by a contract).
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Pension and Retirement Plans
Defined benefit plan: Employee typically receives an annuity. If benefit is annuitized, no remainder to pass at death.
Uncommon today among private employers. Common today among public employers.
Defined contribution plan: Employee owns a specific account. Employee controls investment and distributions in
retirement. Remainder passes outside of probate to designated beneficiaries. Favored by private employers.
Individual retirement account: Similar to a defined contribution plan, but subject to contract between account holder
and custodial institution. Remainder passes outside of probate to designated beneficiaries. IRAs are common, may
include “roll over” from DC plan. Not subject to ERISA because individuals are creating their own accounts.
Nunnenman v. Estate of Grubs (2010): Donald transfers IRA to Raymond James, named Jeannie as beneficiary. Donald
executes will leaving estate to Shervena, no mention of IRA. Donald dies. Shervena claims to have found note in
Donald’s bible leaving IRA to her. AK law allows you to change the beneficiary by will. If valid will, revoked by last will.
Is “all IRA” sufficiently specific? Perhaps dependent relative revocation or harmless error to change beneficiary.
Egelhoff v. Egelhoff (2001): David failed to change beneficiary designation on his insurance plan relating to ERISA. It has
no presumption of revocation upon divorce, but as a federal statute, preempts state law regarding presumptions.
Multiple Party Bank Accounts
Varela v. Bernachea (2005): Bernachea adds Varela as joint tenant with right of survivorship to CMA account. Bernachea
suffers a heart attack. His daughters bar Varela access to hospital and apartment. Varela withdraws 280k from CMA
account. CPC § 5301 amended to bar excess withdrawals unless clear and convincing evidence of contrary agreement.
Lee v. Yang (2003): Who owns cash deposited in a joint account? Overridden by CPC § 5000 b/c banking =/= ownership.
CPC § 5302: Sums after death of joint account party belong to the survivor absent clear & convincing evid of dif intent.
Planning for Incapacity
Conservatorship: Court-appointed conservator has power over property similar to that of a trustee.
Revocable trust: Successor trustee can act with respect to trust property immediately and without judicial involvement.
Durable power of attorney: Agent authorized to act with respect to any of the principal’s property, but only while alive.
Health Care Advance Directives
Instructional directives: Specifies treatment in end-of-life situation or in the event of incompetence.
Proxy directives: Designates an agent to make health care decisions for the patient.
Hybrid or combined directives: Incorporates both of the first two approaches, that is, directs treatment preferences and
designates an agent to make substituted decisions.
§ 4605: Advanced directive means either an individual health care instruction or a power of attorney for health care.
§ 7100: Right to control disposition of remains; duty and liability for internment; devolution; decedent’s prior directions.
Power of attorney for health care allows you to name an agent to make lifetime care AND after-death-related decisions.
(Unless other directions have been given by the decedent under 7000.1, i.e., by writing his/her directions for burial.)
Marital Property Systems
Separate Property
-No automatic sharing of earnings; whatever spouse earns
or acquires is his or hers
-Protection against disinheritance provided through
elective share
Partnership Theory
-Elective share justified because surviving spouse
contributed to decedent’s wealth
-Surviving spouse should be entitled to one-half of
decedent’s property acquired during marriage
Community Property
-Property earned or acquired during marriage is
community property
-No elective share, because each spouse owns all earnings
during marriage in equal, undivided shares
Support Obligation
-Older view that marriage entails a support obligation
-Support theory implies: smaller percentage applied to all
of the decedent’s property, a minimum amount,
accounting for other resources available for support of
survivor
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Premarital or Postnuptial Agreement
CPC § 142: A waiver under this chapter shall be in writing and signed by surviving spouse.
§ 143: A waiver is enforceable unless the surviving spouse proves there was improper disclosure of property and
finances or that the surviving spouse was not represented by independent counsel at time of signing.
Miscellaneous Additional Rights
Social security: surviving spouse entitled to worker’s benefits.
Pension and retirement accounts: ERISA gives spouse of employee survivorship rights to pension plan.
Homestead: Right to occupy family home for lifetime (UPC = $22,500)
Personal property set-aside: Right to tangible personal property up to a certain value (UPC = $15,000)
Family allowance: For support of surviving spouse during probate (UPC = “reasonable allowance”)
Dower and curtesy: Life estate in one-third (Dower) or entirety (curtesy) of land
California Specifics
Social security: Surviving spouse entitled to worker’s benefits but not community property—federal law controls rights
Pension and retirement accounts: ERISA gives spouse of employee survivorship rights to pension plan & ERISA trumps
community property (Boggs Case)
Homestead: CPC § 6524 limited set aside but not beyond lifetime of spouse
Personal property set-aside: Certain personal property is exempt from creditors’ claims—vehicle, furnishings, etc.
Family allowance: Support of surviving spouse or others dependent on decedent during administration of estate
Dower and Curtesy: Not applicable in community property states
Community property: Partnership theory, currently vested rights, tax advantages (or disadvantages), clients who move
(conflict of laws), inception of title (Texas), pro rata ownership (California), when can creditors reach community funds?
What is community property in California?
All property acquired during marriage other than gifts, bequests, and devises. Property traceable to separate
property (e.g., acquired before marriage). Comingled property can turn separate property into presumptive
community property (e.g., joint bank account.) Rights of creditors to community assets for separate debts.
Fiduciary Administration
Except as otherwise provided in the terms of the trust, a trustee has a duty to administer the trust solely in the interest
of the beneficiaries, or solely in furtherance of its charitable purpose. (Charitable trusts are enforced by the attorney
general.) American trust law honors the settlor’s freedom of disposition over the wishes of the beneficiary.
The Duty of Loyalty
Hartman v. Hartle: Self-dealing is prohibited even if hypothetically conducted in good faith for the benefit of the trust.
Remedies: Cannot return property after bona fide purchase; when gains outweigh losses, gains turned over.
In re Gleeson’s Will: Gleeson leases farmland to Con Colbrook a year at a time. One month before the second lease term
ran, she died he became trustee of her estate. Colbrook renews the lease as trustee; guilty of inadvertent self-dealing.
Exceptions to the no further inquiry rule: Trustee compensation and circumstances caused by testator.
The Duty of Prudence
UTC § 804: Trustee shall administer the trust as the prudent person would, by considering the purposes, terms,
distributional requirements, and other circumstances of the trust.
Marsman v. Nasca: Dead wife’s trust provided Cappy one-third of residue, income payable quarterly, principal paid if
trustees “deem it necessary or desirable.” Standard: reasonable, maintenance, comfort, and support. Further guidance:
after having considered the various available source of support. Cappy sells house out of financial need. Trustee
breached his duty to inquire but an exculpatory clause bars personal liability so the remedy is a constructive trust. (Note:
Cappy’s widow cannot get the house back because buyers were bona fide purchasers).
Exculpatory clause: No trustee hereunder shall ever be liable except for his own willful neglect or default.
Was his action willful neglect or default? No, the trustee did not know he was doing anything wrong.
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Express Standards of Duty
Extended Discretion
-Trustee discretion is “sole,”
“absolute,” or “uncontrolled.”
Exculpatory Clause
-Trustee is excused from liability for
breach of trust.
Mandatory Arbitration
-Claims for breach of trust must be
resolved by arbitration.
-In spite of extended discretion,
trustee is still subject to judicial
review.
-If trustee is draftsman, trustee must
show disclosure of clause and its
meaning to settlor.
-Whether such a clause is enforceable
is unsettled; authority is scare and
contradictory.
-Trustee must not act arbitrarily or
capriciously, or abuse its discretion,
and must act in good faith.
-Cannot excuse liability for bad faith,
reckless indifference, or intentional or
willful neglect.
CPC § 16461: Exculpation of trustee; trust provisions; objections
A provision in the trust instrument is not effective if (1) intentional with gross negligence, band faith, or reckless
indifference; (2) any profit that trustee derives from breach.
Trustee’s tension between lifetime beneficiary and remainderman creates a conflict of interest. A trustee should request
a declaratory judgment (for large sums of money) if he cannot obtain consent from all the beneficiaries.
Estate of Giraldin: Who can sue the trustee? ANS: The beneficiaries. But what about beneficiaries in a revocable trust?
During life of Settlor, duty is to Settlor. What about after Settlor’s death? Split as to whether beneficiaries have standing.
Alienation of the Beneficial Interest (Spray & Sprinkle)
Mandatory payout of income
Payment for support
Right to income
Right to support
Creditor can reach
Creditor can reach support
Payout in trustee’s discretion
Right to something? Good faith REQ.
What can creditor get? Depends.
Discretionary Trusts
Pure discretionary trust: Trustee has absolute discretion over distributions to the beneficiary. Creditor of a beneficiary
has no recourse against beneficiary’s interest in trust.
Support trust: Trustee required to make distributions as necessary for the beneficiary’s needs. Insulates the trust
property from some but not all of the beneficiary’s creditors (e.g., child, spouses, and suppliers of necessities).
Discretionary support trust: It’s common for a trust to combine absolute discretion with a distribution standard.
Discretionary trusts: UTC § 504: cannot make trustee distribute when the trustee has discretion; however, distribution
may be ordered for support or maintenance of spouse/children.
Spendthrift Trusts
Nichols v. Eaton: Why a parent, or one who loves another, and wishes to use his own property in securing the object of
his affection, as far as property can do it, from the ills of life, the vicissitudes of fortune, and even his own improvidence,
or incapacity for self-protection, should not be permitted to do so, is not readily perceived.
Exceptions to Spendthrift provision: UTC § 503: A spendthrift provision is unenforceable against a beneficiary’s child,
spouse, former spouse, or a court order against the beneficiary for support or maintenance, or a judgment creditor who
has provided services for the protection of a beneficiary’s interest in the trust.
Scheffel v. Krueger: No principal or income payable shall be subject to assignment.
Diaz v. Bukey: Review granted but then transferred back to consider in light of another arbitration case. This case has
settled so we don’t know whether arbitration provisions in trusts will be enforced. The only case to consider it says no.
Arbitration: A trust or will is not a contract. / CPC § 1281: Arbitration agreements apply to contracts.
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California rules on creditor’s right to reach assets in a support or discretionary trust for a beneficiary—
CPC § 15303: A creditor cannot compel a trustee to exercise its discretion, regardless of whether the trust instrument
provides a standard for the exercise of the trustee’s discretion. However, judgment creditors are entitled to payment if
discretion is exercised. (This provision does apply if the interest is subject to a valid restraint on transfer.)
CPC § 15305 Claims for child and spousal support can be enforced against a trust.
Ventura County v. Brown: A trustee must exercise discretion and pay child support.
CPC § 15305.5 Assets may be reached for restitution for the victim when the beneficiary has committed a felony.
Young v. McCoy: But court cannot order trustee to exercise discretion if trustee makes no distributions to beneficiary
unless trustee is abusing discretion; not an abuse of discretion to accumulate income during time that B is in prison.
Modification and Termination (Illegal, impossible, or impracticable terms)
Settlor consent: Settlor plus all beneficiaries may modify or terminate.
Settlor does not consent (Claflin Doctrine): Consent of all beneficiaries; and not contrary to settlor’s material purpose.
Equitable Deviation Doctrine (Cy Pres): Consent of all beneficiaries not required; petitioner must show that
unanticipated change in circumstances that will defeat or substantially impair accomplishment of the purposes of the
trust (traditional law) or will further the purposes of the trust (UTC/Third Restatement).
Trustee Removal
CPC § 15642: Removal of trustee; grounds, costs, surrender of property or suspension of powers.
A trustee may be removed in accordance with the trust instrument, by the court on its own motion, or on petition of a
settlor, co-trustee, or beneficiary. DRAFTING: Be careful who you give the power; maybe a trust protector; if want a
corporate trustee limit the right to remove one corporate trustee and replace with another.
Benefits of Powers of Appointment
Changes in circumstances: Postpone and delegate decisions about who will receive future distributions of trust property
Tax avoidance: Can be structured to avoid estate or gift tax when exercised
Asset protection: Can be structured to avoid claims by creditors of the power holder (but not in California)
Terminology and Types of Powers of Appointment
Persons
Donor: Creates the power
Donee: Holds the power
Objects: Persons in whose favor the power may be exercised
Appointee: Person in whose favor the power is exercised
Takers in default of appointment: Persons who take if the
power is not exercised
Time and Manner of Exercise
Manner of Exercise
Deed (lifetime power)
Will (testamentary power)
Deed or Will
General and nongeneral
General power: A power that is exercisable in favor of
the donee, his estate, his creditors, or the creditors of his
estate
Nongeneral power: Any power that is not a general
power (i.e., a power not exercisable in favor of the
donee, his estate, his creditors, etc.)
Time of Exercise
During Life
At death
During Life or At Death
Donee of power can: Exercise it, release it, disclaim it, fail to exercise it, exercise it invalidly.
Tax Considerations
General power: Donee is treated as owner of appointive property and taxed accordingly (income, gift, and estate)
Nongeneral power: Donee is not treated as owner of appointive property for tax purposes (income, gift, and estate)
Exceptions: (1) A power subject to an ascertainable standard is treated as a nongeneral power for tax purposes (HEMS);
(2) A lapse of a power is not taxed as a general power to the extent of 5k or 5% (whichever’s greater) of the trust corpus.
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Creditor’s Rights
CPC § 682: Property subject to general power is reachable (even after death).
Irwin Union Bank & Trust Co. v. Long: “The right to withdraw from principal once in any calendar year… up to four
percent of the market value.” CL: Victoria cannot reach the appointive property to satisfy her divorce judgment.
Modern California rule: Creditor can reach assets if NEEDED (must seek satisfaction from other assets first.)
Exercise of a Power of Appointment
General requisites for exercise of a power: To exercise a power of appointment (1) the donee must manifest an intent to
exercise the power; (2) the manner of expression must satisfy any formal requirements imposed by the donor; and (3)
the appointment must be a permissible exercise of the power… whether or not the donee has manifested an intent to
exercise a power of appointment is a question of construction. Restatement (Third) of Property.
Residuary Clauses
Majority Rules
Residuary clause does not presumptively exercise a
general or nongeneral power of appointment.
Variation on whether contrary intent may be shown with
extrinsic evidence or only by reference to face of the will.
Minority Rules
Residuary clause exercises a general power of
appointment unless a contrary intent affirmatively
appears. / A few jurisdictions also apply presumption to
nongeneral power of appointment if the residuary
devisees are objects of the power.
Third Restatement: A residuary clause in the donee’s will or revocable trust does not manifest an intent to exercise any
of the donee’s powers of appointment, unless the power in question is a general power and the donor did not provide
for takers in default or the gift-in-default clause is ineffective.
UPC § 2-608 Exercise of Power: In the absence of a requirement that a power of appointment be exercised by a
reference to the power, a general residuary clause in a will, or a will making general disposition of all of the testator’s
property, expresses an intention to exercise a power of appointment held by the testator if (i) the power is general…
UPC § 2-704 Specific Reference Requirement: If a governing instrument creating a power of appointment expressly
requires that the power be exercised by a reference, an express reference, to a specific reference, to the power of its
source, it is presumed that the donor’s intention, in requiring that the donee exercise the power by making reference to
the particular power or to the creating instrument, was to prevent an inadvertent exercise of the power.
CPC § 641: Exercise by general residuary clause in wills does not exercise power of appointment.
Fraud on the Power
Example: T – to A for life then as A appoints among her kindred. A has no children and wants her spouse (not kindred) to
benefit. She agrees to appoint to cousin C if C will share with spouse. Fraud on the power—to benefit a non-object.
Failure to Exercise a Power of Appointment
Well-drafted instruments consider that the donee might not exercise the power. Example: T – to A for life and then as A
appoints, and in default of appointment to A’s then living issue. A dies, survived by a son and a granddaughter of a
deceased son. Who takes? A’s then living issue = son ad granddaughter.
Failure to Exercise a General Power
T – to A for life and then as A appoints by will. What if A doesn’t appoint? Reversion in T? Better to let it pass under A’s
will? Restatement: Residuary exercises in this case. CPC § 672(b): If donee of general power makes ineffective
appointment, may imply appointment to donee’s estate. (Failure to exercise is not an ineffective appointment.)
Failure to Exercise Special Power
T – To A for life and then as A appoints among A’s children. What if A doesn’t appoint? Implied gift in default to A’s kids.
In California, permissible implied gifts in default may pass to the deceased’s issue.
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