INTRODUCTION TO ESTATE PLANNING AND THE LAWYER’S ROLE
INTRODUCTION
[1-4]
Analysis when someone dies
 Was there a will substitute?
o Probate avoidance devices
o Main will substitutes (LIPJART):
 Life insurance (LI)
 Pensions (P)
 Joint accounts (JA)
 Revocable trusts (RT)
o Also, keep in mind that WS are private documents, whereas wills are public documents filed in court and
thus accessible by anyone
 Was there a will?
o Wills only come into play when all else fails
 Who are the beneficiary designations?
 What debts does she have? What assets does she have?
 Whether the state whose law applies is a community property or common law property state?
 What state’s law applicable?
 You will want to ask about family
o Children’s ages?
o Children with substance abuse?
o Relationship with husband and/or ex-husband?
 Is the marriage between same-sex spouses?
Primary policies driving TE law
 Create certainty
o The decedent is assured that her property will be distributed as she chooses
 Intent – freedom of testation
o Wealth preservation
o Market of efficiency
 The rule of perpetuities promotes efficient use of money
o However, public policy is becoming more restrictive when it comes to “dead hand control”
 Override assumptions/rules
o There is an assumption that you want to take care of family members
 Even if you operate against this assumption in writing your will, there are some override rules that
exist to protect family members and creditors
Unanswered policy questions re: TE law
 Should there be greater limitation on state’s ability to effectuate a will based in notions of discriminations?
o Analogous to Shelley, should a state court be able to enforce the administration of a will that is racially
discriminatory, or invidious in some other way?
 Should children and other descendants be protected in the way that spouses are?
 Should TE extend past the traditional family and into more modern notions of family?
TE law is a law of default
 Drafting v. default rules
o Intent is supreme in drafting
 May have to get to know client’s family dynamics
 You must draft in a manner that reduces the likelihood of a will contest
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Guiding principle
 Courts are supposed to be getting at what the intent of the donor is
o In doing so, they look at the document as a whole.
o Because donative intent is so important, court’s generally let in all evidence so as
to get the best sense possible of the donor’s intent.
Changes in TE over the years
 Less formalism
 There are more opportunities for will contests and disciplinary and malpractice actions against attorneys
 There has been a move toward uniformity across the states
 Emergence of will substitutes
 Public policy has expanded
o The Feinberg case probably would not have come out as it had if it was heard today
o “Dead hand control” has been limited by public policy
 However, the less formal nature of wills pushes against this because intent is more easily discerned
and “dead hand control” thus becomes more prevalent
 The broader use of trusts
 The definition of “family” has changed over time
The probate process
 R3. 1.1(a): the probate estate consists of (i) property owned by the D at death where the B is not already
determined by a WS and (ii) property acquired by the D’s estate at of after D’s death.
TESTAMENTARY FREEDOM AND LIMITATIONS ON “CONTROL FROM THE GRAVE” [4-6]
 Drives TE law
 The rights of testation and the rights to inherit are not constitutional rights, they are rights created by state statutes
o Nevertheless, these rights are substantial
 The restriction of these rights is not so substantial
 Indeed, the public policy restriction still does not have that much bite to it
Black letter law – Restatement
 Unless contrary to public policy of violative of some rule of law, a provision designed to prevent the acquisition
of property in the event of any failure on the part of the transferee to comply with a restraint on personal conduct is
valid.
o So, the question is what kind of restraint violates public policy?
 Its purpose is unlawful or its performance calls for the commission of a criminal or tortious act
 It violates rules relating to perpetuities
 It is contrary to some other public policy
 Family relationships
 A trust or a condition or other provision in the terms of a trust is ordinarily invalid if it tends
to encourage disruption of a family relationship or to discourage formation or
resumption of such a relationship
 A trust provision is ordinarily invalid if it tends seriously to interfere with or inhabit the exercise
of a beneficiary’s freedom to obtain a divorce or the exercise of freedom to marry by limiting
the beneficiary’s selection of spouse
o EX
 The trust contains a provision directing that, in the event “N should be so foolish as to marry before
age 20, all of his right and interests in the trust shall terminate”?
 VALID
o Age restriction is different from religious restriction because it is not absolute.
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Restrictions encouraging the postponement of marriage are valid so long as
they are not unduly (see below).
 The trust provision terminates all of N’s rights if, before termination of the trust, he “should marry a
person who is not of R Religion” (this is the Feinberg provision)?
 Invalid according to the Restatement
 A trust provision is ordinarily invalid if it interferes with the freedom to marry, either by
limiting the beneficiary’s selection of a spouse or by unduly postponing the time of marriage.
 A fundamental exception, however, permits termination of a beneficial interest of the
settlor’s spouse in the event of the spouse’s remarriage.
The provision in Feinberg would have been valid under the Restatement
o This follows the general sentiment that public policy is being used more often to disable the ability of
questionable restrictions
EX (p. 31)
 Most state courts find that you cannot encourage divorce
 If you are in IL, can you effectuate what Maxine wants?
o First prong
 Unlikely to be upheld because it encourages divorce
o Second prong
 Race is different from religion
 In virtually all states, restrictions related to race will be shot down
 Sexual preference is different from religion
 In many, but not all, states, restrictions related to sexual preference will be shot down
 As a lawyer, you must discuss the pragmatic consequences of this provision on intra-familial dynamics
 There are other options to effectuate her intent though
o She could still effectuate her discriminatory intent by specifically disinheriting Nathan and Susan, rather
then setting up a general, categorical provision
o She could set up a discretionary trust and provide someone with powers of appointment
PRE WITHIN THE TE CONTEXT
[6-9]
How might a dissatisfied beneficiary challenge inheritance? What actions against whom?
 Heir v. beneficiary
o Heir – someone who takes in intestacy
 You only know who someone’s heirs are when someone dies
o Beneficiary – someone entitled to take from a written document, i.e., a will, trust, etc.
 You can try and figure out who a beneficiary is from a will, etc.
 Different ways of challenging (you can pursue one, two, or all of the below actions in any given case)
o Against the estate
 Will contest
 Beneficiary v. executor
o Actions against attorney
 Malpractice
 Under contract or tort theories
 Disciplinary action
 Defensive lawyering
o If you represented testator in drafting, by the time a will contest or malpractice action is filed, there is no
testator around to testify
 Keep good documentation of client’s wishes/intent
 Keep good documentation of actions reflecting professional care
 Remember that clients are often elderly and may die if you procrastinate
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Counseling
 In the course of the estate planning process the lawyer should assist the client in making informed judgments
regarding the method by which the client’s objectives will be fulfilled.
o In the course of doing so, the lawyer should explain to the client possible alternatives and their costs and
benefits (including the present and future tax implications), legal and other costs, and even nonlegal
considerations (to which he could speak).
Duty of confidentiality
 The lawyer’s duty of confidentiality continues after the death of the client, unless consent has been expressly or
impliedly authorized by the client or the client’s personal representative.
o Joint and separate clients
 In the absence of any agreement to the contrary (usually in writing), a lawyer is presumed to
represent multiple clients with regard to related legal matters jointly with resulting full sharing of
information between the clients.
 A lawyer who receives information from one joint client hat the client does not wish to be
shared with the other join client should:
o (1) take no action with respect to communications regarding irrelevant (or trivial)
matters
o (2) encourage the communicating client to provide the information to the other client
or to allow the lawyer to do so
o (3) withdraw from the representation if the communication reflects serious adversity
between the parties
o Multiple separate clients
 Separate representation of multiple clients is an option
Conflict of interest
 Some conflicts of interest are so serious that the informed consent of the parties is insufficient to allow the lawyer
to undertake or continue the representation (a “non-waivable” conflict).
o However, keep in mind, that in other situations, a client who is adequately informed may waiver some
conflicts that might otherwise prevent the lawyer from representing another person in connection with the
same or a related matter.
Dual Roles
 If you are drafting attorney, you can be an executor, and thus play dual roles, so long as you attain written,
informed consent that enables the client to make an informed decision in selecting their fiduciary
o The ABA allows you to disclose your availability and essentially solicit business
 ACTEC suggests that the lawyer can only play dual roles in this situation only at the clients
suggestion, thus disabling the lawyer’s ability to solicit business
 If you are the drafting attorney, you can only leave money to yourself if you are a family member
MALPRACTICE
 Plaintiff sues attorney rather than, or in addition to, contesting the will.
 P must establish that the D-attorney owed a duty to the P and that there has been a breach of such a duty, typically
by showing that the D-attorney has acted without reasonable care
 There needs to be damages for someone to be able to file suit
Privity bar
 Based on whether there is a sufficiently direct relationship on which there is an adequate basis to impose duties
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o You need a legal relationship with an attorney to be able to sue her
The privity bar has been substantially relaxed
o Non-client may be able to sue a lawyer for negligence when it is reasonable for the lawyer to know that
her activity will benefit that third party
Why do some court’s hang on to the privity bar here?
o Self-interested aspect
 The court is being very protective of attorneys in that they do not want them to be subjected to all
kinds of claims from all kinds of beneficiaries who didn’t get what they wanted
 This is judges protecting other lawyers
o Protecting the client
 You want to make sure that a lawyer is protecting her client, rather than any potential third parties
that may sue her later
Why have so many states done away with the privity bar?
o If you put the standard so high, no one would be able to hold the attorney liable via suit
Schneider (N.Y. 2010)
o The court provides a very narrow exception to the privity rule
 The personal representative of the estate may sue the attorney who committed TE malpractice –
the executor of the estate is standing in the shoes of the decedent
 Privity remains in effect with regards to disappointed beneficiaries.
o It is the estate, not the beneficiaries, that bring this case.
Malpractice for not executing a will
 Sisson (N.H. 2002)
 Because the will had not been executed, the NH applies the privity bar
o What if the will had been signed?
 Brother would have been able to sue.
 Simpson allows a disappointed beneficiary to sue when an attorney negligently drafts a
will.
o We are dealing with the distinction between negligent drafting (Simpson) and failure to execute the
will promptly (Sisson)
 Until a will is executed it is not final, and the testator may have many changes of heart.
 The attorney has not committed malpractice until the will is executed and done so
negligently.
 The court might have been better holding that there was a duty owed to the brother, but that the attorney
exercised adequate care in not having Sisson sign the will at a time when he appeared incapacitated
 Practical take aways
o Keep good documentation of the changes made and your furtherance of the client’s intent
o Keep good documentation of your diligence in adhering to standards of professional responsibility
o If you procrastinate, you may do harm to your client
Restatement § 51
 A lawyer owes a duty to use care in each of the following circumstances:
o To a nonclient when and to the extent that:
 The lawyer knows that a client intends as one of the primary objectives of the representation that
the lawyer’s services benefit the nonclient;
 Such a duty would not significantly impair the lawyer’s performance of oblations to the client;
AND
 The absence of such duty would make enforcement of those obligations to the client unlikely.
INHERITANCE AND RELATIONSHIP
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INTRODUCTION
[9-10]
Inheritance and Status
 The American system of inheritance is a status-based system – you inherit because of your relationship to the
decent – rather than a behavior-based system
o Exceptions – homicide, abandonment and termination of parental rights
 Status is at the heart of both intestacy and testacy laws
 When status matters – Intestacy
o We are focusing on what “spouse” and “descendents” mean
 Note that the terms “descendents” and “issue” are synonymous
 When status matters – Testacy
o Interpreting governing instruments
 “Governing instruments” is an incredibly broad term of art
o Who is the decedent’s children, spouses, issue, descendants, brothers, sisters, parent, etc.? Especially re:
class gifts.
o Is it different for nonmarital or adopted children and descendants?
 The answer to this question will depend on who drafted the governing instrument.
 Both legal and factual issues are important in dealing with many of these issues
WHO IS A CHILD?
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[10-16]
The fundamental building-block of our status-based system is the parent-child relationship.
“Child” v. Descendant” (UPC 1-201)
o “Child” includes an individual entitled to take as a child under this Code by intestate succession from the
parent whose relationship is involved and excludes a person who is only a stepchild, a foster child, a
grandchild, or any more remote descendant
o “Descendant” of an individual means all of his descendants of all generation with the relationship of parent
and child at each generation being determined by the definition of child and parent contained in this Code.
 “Issue” is synonymous with “descendant”
Establishing Maternity (UPA 201)
 Giving birth to the child
 Adjudication of maternity
 Adoption
 Adjudication of maternity when another is the gestational parent due to ART arrangement (surrogacy)
Establishing Paternity (UPA 204)
 Man is presumed to be father, and such presumption is only rebuttable by adjudication, if:
o The man is married to the mother of the child are married and the child is born during the marriage
 Marital presumption
o The man is married to the mother of the child were married to each and the child is born within 300 days
after the marriage is terminated by death, annulment, declaration of invalidity, or divorce, or after a
decree of separation;
 Marital presumption extended to divorce situations
o Before the birth of the child, the man and the mother of the child married each other in apparent compliance
with law, even if the attempted marriage is or could be declared invalid, and the child is born during the
invalid marriage or within 300 days after its termination by death, annulment, declaration of
invalidity, or divorce, or after a decree of separation
 Marital presumption extended to invalid marriages
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o After the birth of the child, the man and the mother of the child married each in apparent compliance with
law, whether or not the marriage could be declared invalid, and he voluntarily asserted his paternity,
AND:
 The assertion is in a record filed with the state agency maintaining birth records; OR
 The man agreed to be and is named as the child’s father on the child’s birth certificate; OR
 The man promised in a record to support the child as his own;
o For the FIRST TWO years of the child’s life, he resided in the same household with the child and
openly held the child as his own
 Rationale (also applies to the instance above)
 Protection of a existing PC relationship when an estranged parent stumbles back into child’s
life down the road
 Lock someone into a PC relationship when that person has spent the first two years with a
child
Other ways to prove paternity
o Voluntary acknowledgement of paternity (UPA 201)
o Adjudication of the man’s paternity (UPA 601)
 Genetic testing?
o An adoption of the child by the man
o The man’s having consent to ATR
Even if paternity proven, a class gift to that “child” by a third person may not cover that “child”
Nonmarital children
 Under the UPC 2-217, there is no distinction between marital and nonmarital children (UPC 2-117)
o You can have a parent-child relationship regardless of the marital status of the parents
 However, if the parents are married, the presumption of paternity makes it easier for the father to
establish a parent-child relationship
o Still, you must look to state law (in addition to the model codes) for further guidance
 Supreme Court
o Classifications based on the marital status of a child should be subject to intermediate level of scrutiny
 It is much more difficult for a nonmarital children to inherit
Adopted children
 There is no distinction between an adopted children and any other kind of legally related child
o An adopted child is a legally related child
o For the purposes of intestacy, basic purposes, and for the purposes of inheriting from a parent (and also for
the purposes of a parent inheriting from a child), an adopted child is the legal child of the parents
 In all states, the new PC relationship (child/adoptive parents) is a complete substitute for the old PC relationship
(child/biological parents). “Step into shoes.” UPC 2-118; 2-119.
o Exception to default treatment of adopted children: stepparent adoption exception. (UPC 2-119).
 A PC relationship exists between an individual who is adopted by the spouse of either genetic parent
and:
 The genetic parent whose spouse adopted the individual; and
 The other genetic parent, but only for the purpose of the right of the adoptee or a descendant
of the adoptee to inherit from or through the other genetic parent.
 When does this occur?
 Most stepparent adoptions occur after the death of one of the genetic parents. If the two
genetic parents are divorced and one remarries, the new spouse of the remarrying genetic
parent cannot adopt the children because the other genetic parent retains parental rights. The
only scenario in which there is a divorce and a new spouse of a genetic parent can adopt
is when the other genetic parent’s right are terminated, typically based on abuse and
neglect.
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One-way street
 Under the stepparent adoption exception, the right to inherit belongs to the child, not the
other genetic parent or her relatives.
 Interesting caveat to the stepparent adoption exception
 If person who adopts the child is NOT MARRIED to the genetic parent, then the stepparent
adoption exception DOES NOT KICK IN and therefore, under the law generally guiding
adopted children, the child is disinherited by the other genetic parent.
o Implications for gay couples
 Is the law allowing for the stepparent adoption exception good policy?
 Why allow for this double-dipping? Keep in mind that not all states allow for this.
o The only justification would be to help develop the relationship between the child
and his stepparent.
Adult adoptions
o General rule = age of the adopted child irrelevant to the ability to adopt – though there are jurisdictions
that hold otherwise
o Reasons people have adopted adults
 Used by same-sex partners seeking a way ensure that each would inherit from other
 Used to alter who will inherit certain property
o Should it be relevant for inheritance purposes?
 Aside from class gifts by a nonparent, the age of the adopted individual is not relevant
Equitable adoption
o Clearly the exception
o UPC is neutral (2-122)
o Everything but a formal, legalized adoption proceeding
 There is no birth certification or court order indicating you have been adopted
o To succeed in states that allow EA, you must provide by clear and convincing evidence that the child
stood from an age of tender years in a position exactly equivalent to a formally adopted child (but for
the paperwork). Since equity is invoked, you also need to prove detrimental reliance.
 Tender years does not mean the first two years of the child’s life
o Factors considered in such proceedings (Singer):
 Circumstances that militate in favor of finding an equitable adoption:
 The benefits of love and affection accruing to the adopted party
 The surrender of ties by the natural parent
 The society, companionship, an filial obedience of the child
 And invalid or ineffectual adoption proceeding
 Reliance by the adopted person upon the existence of his adoptive status
 The representation to the world that the child is a natural or adopted child -- important
 The reading of the child from an age of tender years by the adopting parents
 Circumstances that militate against finding an equitable adoption:
 Failure of the child to perform the duties of an adopted child
 Misconduct of the child or abandonment of the adoptive parents
o However, mere mischievous behavior usually associated with being a child is not
sufficient to disprove an EA
ART (Assisted Reproductive Technology) Children
 Artificial Insemination (sperm from a donor is used to inseminate the birth mother). UPC 2-120.
o A child conceived by AI is the child of the birth mother. UPC 2-120(c).
o Married couples
 The donor may be the husband of the mother or may be a third-party donor.
 If the husband is the donor, then a PC relationship between the child and the husband of the birth
mother. UPC 2-120(d).
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If there is a third-party sperm donor other than the husband, there is still a presumption that the
husband of the birth mother is the father of the child for purposes of inheritance unless there is clear
and convincing evidence to the contrary. UPC 2-120(h)(1).
o Nonmarried couples
 A PC relationship exists between a person other than the birth mother who consented to the ART
with the intent to be the other parent of the child. UPC 2-120(f).
In-Vitro Fertilization (a woman’s eggs are fertilized by a man’s sperm outside of her body. The resulting embryo
is implanted in the woman and she gives birth to a child. All kinds of combinations of eggs and sperm are
possible.) UPC 2-120.
o If the wife’s eggs and the husband’s sperm are used, the child is clearly the marital child of both.
o Even if a third-party’s sperm is used to fertilized the wife’s eggs, the child would be a marital child of the
wife and husband.
o If both the eggs and sperm are donated by third-parties, you can see that the child might potentially have
two mothers and two fathers!
 Options for establishing PC: adopt; consent to ART; function as parent of child
o Consent
 Note that one can withdraw consent to be a parent under ART if he does so before placement of
the embryo.
 One’s consent is withdrawn automatically by divorce if the couple divorces before placement of
the embryo.
Surrogacy (a woman provides donor eggs that are fertilized by her husband’s sperm or by an anonymous donor
and the resulting embryo is not carried by the wife but by a surrogate or “gestational carrier.” In this case, the child
has a birth mother who is different from her genetic mother.) UPC 2-121.
o In essence, the gestational carrier is generally not deemed to be the mother for purposes of
inheritance.
 Rather, the woman who intends to be the mother of the child (the woman who entered into the
“gestational agreement” with the surrogate mother) is the mother for purposes of inheritance.
o If the gestational carrier changes her mind and wants to keep the child, there are very difficult questions for
courts to resolve in terms of who is the legal mother for purposes of raising the child.
Posthumous children
 Non-ART posthumous children
o The child must be born within 300 days of the deceased parent’s death and survive 120 hours (or whatever
period is in the governing instrument)
 ART posthumous children. UPC 2-120(k).
o The child must be in utero not later than 36 months after the individual’s death OR born not later than 45
months after the individual’s death
ART and same-sex couples
 A woman who is not the birth mother could adopt the child under UPC § 2-118; or
 She could consent to assisted reproduction under UPC § 2-120(f); or
 She could function as a parent of the child under UPC 2-120(f)(2) as a way of establishing a parent-child
relationship
 Gay male couples have similar options.
Foster and stepchildren
 Foster children and stepchildren are generally not included in the term “child” for purposes of intestacy or
construction of wills and trusts.
CLASS GIFTS IN WILLS AND TRUSTS
[16-17]
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We are now looking at situations involving governing instruments (documents), rather than situations involving
intestacy
PARENT is donor
 Unless specifically stated otherwise in the governing instrument, then the same definitions as those used in
intestacy will apply where decedent is PARENT and decedent leaves property to his/her children (or descendants).
UPC 2-705.
o This includes:
 Marital children
 Nonmarital children
 Adoptees
 ART children
THIRD PARTY is donor
 Transferor Not Genetic Parent (UPC 2-705(e))
o A child is not considered a “child” unless:
 The child’s parent, a relative or a surviving spouse of the parent functioned as a parent when
the child was a minor.
 Somebody who was related to the third party in some way needs to have functioned as a
parent to the child while she was a minor.
o “functioning like a parent” (UPC §2-115(4))
 “behaving toward a child in a manner consistent with being the child’s parent
and performing functions that a customarily performed by a parent, including
fulfilling parental responsibilities toward the child, recognizing or holding out
the child as the individual’s child, materially participating in the child’s
upbringing, and residing with the child in the same household as a regular
member of that household.”
 Transferor Not Adoptive Parent (UPC 2-705(f))
o UPC §2-705(f) – Transferor Not Adoptive Parent (p.101-102)
 In construing a dispositive provision of a transferor who is not the adoptive parent, an adoptee is not
considered the child of the adoptive parent unless:
 (1) the adoption took place before the adoptee reached 18 years of age;
 (2) the adoptive parent was the adoptee’s stepparent or foster parent; OR
 (3) the adoptive parent functioned as a parent of the adoptee before the adoptee reached 18
years of age.
 What the justifications for differently treating a third party’s class gifts to nonmarital and adopted children?
o For nonmarital children
 Promoting and celebrating the institution of marriage
 Historical distrust of nonmarital children
o For adopted children
 Third parties have been historically considered “strangers to the adoption”
 The bloodline generally controlled inheritance rights
WHO IS A PARENT/ANCESTOR?
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[17]
We now switch our focus from whether a child can inherit from a parent or grandparent (downstream) to whether a
parent or ancestor can inherit from a child (upstream)
General rule
o If there is a parent-child relationship, then the parent will inherit from the child. UPC 2-116.
 The critical issue is whether there is a legally established parent-child relationship
 I.e., it does not matter if the child is marital or nonmarital
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o Generally, you inherit based on your status
 However, there are exceptions:
 If the parents rights are terminated
 The UPC and some states bar parents from inheriting if right before the child’s death
the parent’s rights could have been terminated based on abuse and neglect
o This is the trend in UPC-adopting states
WHO IS A SPOUSE?
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[17-19]
State law definition of marriage is controlling with respect to state law issues
o Distribution of property by intestacy or testacy is a matter of state law
o DOMA is irrelevant in states that allow same sex couples to marry
Does it matter if the spouses are separated? In the process of getting a divorce?
o Until there is a formal decree of divorce, you remain married to the spouse and inherit accordingly
 This is where TE law looks more closely at status than behavior
 Your behavior as a spouse doesn’t really matter
If the deceased spouse has a Civil Protection Order?
o Unfortunately, because it is a status based system, a surviving spouse will still inherit so long as they
maintain their status as a spouse
However, keep in mind for later in the semester, there are some exceptions to this status-based inheritance
regime
o Some states disallow inheritance for “slayers,” or individuals who have murdered their spouse (or someone
else) from whom they were to inherit
Ways in which the spousal relationship may arise
 Legally married spouses
o The husband or wife of a decedent who was legally married in a sanctioned ceremony to the decedent in the
absence of a divorce as of the date of death meets the definition of a surviving spouse for purposes of
inheritance in all states.
 Remember that once you are married, you need a formal legal decree to effectuate your divorce.
o Same-sex marriage
 A handful of states recognize same-sex marriage, and others recognize valid same-sex marriages
entered into in other jurisdictions.
 As a result of DOMA, states who do not acknowledge same-sex marriages do not have to give Full
Faith and Credit to same-sex marriage validated in another state.
 Couples use wills/WS and also adult adoption to get around this problem.
 Common law spouses
o In a small number of states, cohabitants who have not participated in a formal marriage ceremony may
be deemed “spouses” if they meet the criteria for CLM.
 (1) living together;
 (2) holding themselves out as married; and
 (3) the mutual intention to be married
o Once formed, a CLM was fully valid for all legal purposes, and could be dissolved only through formal
divorce.
 Even if the marriage was formulated through CLM rather than legal mechanisms, you have to obtain
a formal legal decree to effectuate your divorce.
o If the couple later moves to another state, that state will consider them “spouses” as well for purposes of
inheritance, even if the second state does not recognize CLMs, due to the full faith and credit clause.
 Putative spouses
11
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o Spouses who think that they were legally married in good faith but who turn out to be wrong – because
of some defect in the marriage ceremony or because of bigamy, for example – may be deemed “spouses”
and entitled to equitable relief as “putative spouses.”
 If there is a legal spouse or other putative spouses, rights acquired by a putative spouse do not
supersede the rights of the legal spouse or those acquired by other putative spouses, but the court
shall apportion property among the claimants as appropriate in the circumstances.
o If your state recognizes CLM, you may become a putative spouse under the CLM doctrine as well.
Civil Unions and Domestic Partnerships (some states)
o A handful of states recognize civil unions and domestic partnerships that confer inheritance rights in
intestacy. Some civil union or domestic partnership statutes state explicitly that couples are granted the
same rights as if they were married, including inheritance rights.
Cohabitants
o Absent an explicit (or in some states an implied) contract, couples who live together without marital status
(legal, putative, or CL) are unlikely to be granted inheritance rights in most states.
INTESTATE SUCCESSION
INTRODUCTION
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[19-20]
“Intestate Succession” = The process by which the PROBATE property of an “intestate” decedent (D) passes at
D’s death to D’s successors (call D’s “heirs”)
o Personal property = law of D’s domicile
o Real property = law of state where RE is located
Intestacy – When it applies
o No will
o Will is invalidated for lack for D’s capacity, etc.
o Will does not dispose of all the decedent’s property (partial intestacy)
o One or more WS fails
What property is disposed of in intestacy?
o Only the probate estate
 Successful nonprobate transfers (i.e., will substitutes) are disposed of according to the terms of the
governing instrument, e.g., beneficiary designation, JTWROS, terms of trust and thus are NOT
included in the probate estate.
o Probate asset(s) or probate estate
 Property that passes under a will or by intestacy, in contrast to property that passes automatically,
outside the probate process, likely jointly held property and contractual assets such as life insurance.
MOST OF TE LAW IS ABOUT HOW YOU OPT OF THIS DEFAULT SYSTEM
Assumptions built into intestacy system
o Driving presumptions – in intestacy, we want to design a system that would carry out the intent of
average decedent
 Considering that the average decedent does not plan for death (i.e., with a will or will substitutes)
o Accordingly, what are the central assumptions (reflecting the presumed intent of the average
decedent)?
 Preference for inheritance passing to spouse/descendants
 “spouse” generally means legally married spouse
o The definition of spouse is relatively narrow
 It does not allow your partner of however many years to inherit if you are not
legally married to that individual
 Descendants
o We are talking about “legal children” (children by blood or adoption)
 Parents are not treated as favorably as spouses/descendants
12
o Should having kids essentially cut off parents?
Social welfare policy
o The younger descendants will be able to do more with the inherited capital than the
older ancestors
Family protection – bloodline (downstream, rather than across or upstream)
 Assumption that surviving spouse will take after joint children (those in the bloodline; those
legally adopted that take the place of a bloodline descendant) after decedent’s death
o Correspondingly, it is assumed that children of the decedent, and not of the surviving
spouse, will be taken care of justly
There is some protection against having the “slayer” of decedent inherit



SHARE FOR SURVIVING SPOUSE (SS)
[20-22]
UPC 2-102
 (1) If D survived by SS or SS and joint descendants  SS gets 100% of D’s estate
 (2) If D survived by SS and parents, but not any descendants  SS gets $300k + ¾ of the balance
 (3) If D survived by SS, joint descendants, and spouse’s descendants  SS gets $225 + ½ of the balance
o There are both joint descendants and step-descendants
o The other ½ of the balance goes into the intestate pot for distribution to the descendants of D; nothing goes
to the step-descendants.
 Notice that D’s descendants are entitled to a share of the intestate estate even though they are joint
descendants.
 This is in contrast to Situation #1.
 (4) If D survived by SS and descendants who are not joint descendants  SS gets $150 + ½ of the balance
o D is survived by her surviving spouse and at least one descendant who is not a joint descendant.
o This section applies in all cases where the D is survived by a descendant who is not a descendant of the
SS, regardless of whether or not there are also joint descendants or descendants of only the SS.
o Rationale
 The UPC recognizes that the SS’s conflicting loyalties are more intense when the D has
children by a prior marriage than when only the SS has children by a prior marriage.
SHARE OF OTHER RELATIVES (PRIORITY)

[22-24]
Any property that doesn’t go to the surviving spouse, goes to other heirs of the decedent
Order of distribution to heirs
 Surviving spouse
 (1) lineal descendants
o D’s children, grandchildren, great-grandchildren, etc.
 NO step-children or foster children
o Descendants will take to the exclusion of all other heirs
 (2) parents
 (3) brothers and sister/their descendants
 (4) grandparents/their descendants
 (5) step-children/step-grandchildren
 otherwise, escheats: UPC 2-105
o If there is no taker under the provisions of this Article, the intestate estate passes to the state
 UPC’s attempt to protect against “laughing heirs,” while protecting relatives who had an actual
relationship with the descendant
o This comes into play very, very rarely
13
THREE SYSTEMS OF REPRESENTATION (look to handouts as well)
Universal Rules
 If there is a SS, descendants and other heirs are entitled to a share of the intestate estate only from what is not
reserved for the SS
 If the D is survived by a descendant, the D’s ancestors and more remote collateral heirs do not take
 If all D’s children survive D, the representation rules are not necessary. The children will share the portion of the
estate to which they are entitled equally per capita. Thus, if D is survived by all of her children (1st generation
descendants), the entire portion of D’s intestate estate not going to the SS is divided equally among them.
 If D is survived by only some of her children (1st generation descendants), and if the child(ren) who predeceased
the D did not leave any descendants of their own, the share of D’s intestate estate available to descendants is
divided equally among the surviving children.
 An heir who predeceased the D cannot be represented by his spouse; or stepchildren. Only an heir’s children and
grandchildren can stand in his shoes as representatives. The representation rules require relationships by blood
(consanguity) or adoption, not marriage (affinity).
 Only the highest surviving generation member of a family may take.
Systems of representation
 Equality
o Strict Per Stripes – purely bloodline
 Equity based on the highest level possible
o Modern Per Stripes (Per Capita By Representation) – hybrid bloodline/generation
 Equity based on the survivors of each bloodline
o Current Per Stripes (Per Capita By Each Generation) – purely generational
 Equity based on the survivors of each generation
(1) Strict Per Stirpes
 Step one
o Determine the number of shares by dividing the estate into as many equal shares as there are:
 (1) living children of D, if any, and
 (2) deceased children with descendants then living who will represent them
 This system is unique in that the division occurs at the first generation even if everyone in that
generation is dead
 Step two
o Distribute one share to each living member of the highest generation
 Step three
o For the children who were not alive but whose bloodlines were entitled to a share because they were
represented by theirs descendants, determine the portion allocated to that bloodline in the same manner as
Step One above and distribute the probate property in the same manner as in Step two. Repeat this
generation by generation, putting each descendant who is represented at the top of the chart.
(2) Modern Per Stirpes
 Step one
o Find the first generation where there are living descendants.
o Determine the number of shares by dividing the estate into as many equal shares as there are:
 (1) living children of D, if any, and
 (2) deceased children with descendants then living who will represent them
 Do not determine the number of share at a generation where there are no living descendants
and everyone is merely represented. There must be a living descendant at a generation to
justify the share determination. In other words, perform Step One at the highest generation
where someone is alive.
14
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
Step two
o Distribute one share to each living member of the highest generation.
Step three
o For the children who were not alive but whose bloodlines were entitled to a share because they were
represented by their descendants, determine the portion allocated to that bloodline in the same manner as
Step One above (remember that there must be a survivor) and distribute the probate property in the same
manner as in Step Two. Repeat this for each next generation.
(3) Current Per Stirpes
 Step one
o Find the first generation where there are living descendants.
o Determine the number of shares by dividing the estate into as many equal shares as there are:
 (1) living children of D, if any, and
 (2) deceased children with descendants then living who will represent them
 Step One is identical to the Modern Per Stripes method. In other words, perform Step one at
the highest generation where someone is alive.
 Step two
o Distribute one share per capita to each living member of the first generation where there are living members.
 Step three
o Combine the remaining shares, if any, into a pot for sharing by lower generations. It is at Step three that the
Current Per Stirpes method breaks from the modern per stirpes method.
 Step four
o Move down to the next generation and basically repeat Steps one to three until the entire estate is
distributed.
ADVANCEMENTS
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Advancement
o Inter vivos transfer of something of value (usually cash or property) to a putative heir (either a spouse or
descendant) that is intended as an advance to the inheritance that the putative spouse would otherwise
receive
 It is a prepayment against inheritance
CL Rule
o Any transfer to a putative heir was considered to be an advancement
 You want to make sure that all of the heirs are being treated equitably
Modern Rule (UPC’s reversal of the CL Rule)
o Any transfer to a putative heir is considered to be a gift
 Protects the recipient
o Evidence required to establish an advancement (2-109) – very specific documentary evidence
 (1) A contemporaneous writing from the decedent that acknowledges the transfer to be an
advancement; OR
 We don’t want the decedent to be able to condition a transfer as a advancement under any
certain circumstances
 (2) A writing, which does not have to be contemporaneous, from the recipient that acknowledges
the transfer to be an advancement
 Time requirement is removed here because the recipient generally will not go against his own
interest
 A contemporaneous writing of D can cut off the rights of not just the recipient, but also the rights
of the recipient’s decedents (see below)
Advancements are not loans
o Advancements will only reduce inheritance
15
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 And advancements do not have to be repaid if advance was greater than inheritance
If the recipient of the advancement fails to survive the decedent, the advancement is NOT taken into account
in determining the share to which the recipient’s descendants are entitled UNLESS the D’s contemporaneous
writing (see above) so requires.
The “Hotchpot”
 Calculation template for advancements
o (1) Start with probate estate
o (2) List advancements made to all beneficiaries
o (3) Add Steps 1 and 2. The result is the total preliminary hotchpot estate.
o (4) Determine the intestate shares to which each B is entitled.
o (5) Schedule the advancement made to each B.
o (6) Subtract Step 5 from Step 4 on a B-by-B basis.
o Decision point: If no B received an advance that was larger than the amount to which he is entitled, this is
the end of the calculation; each person gets the amount determined in Step 6. On the other hand, if any B
received more in advances than his intestate share, it is necessary to do further calculations.
 If more than one B received more in advances than his intestate share, you do one round of
calculations per each excessive advancement, starting with the largest excessive advancement.
o (7 – if necessary): Any B who received advances greater than his intestate share is not required to pay the
excess. Repeat Steps 1-6 disregarding these beneficiaries, i.e., without grossing up the amount for advances
to that B or calculating an inheritance for that person.
o (8 – if necessary): Repeat Step 7 until there are no excess advancements.
Advancements and disclaimer
 The effect of a disclaimer is to treat the disclaimant as having predeceased the D.
o However, a disclaimant is NOT treated as dead for intestacy and advancement purposes.
 A B cannot use a disclaimer to increase the share passing to her lineal descendants either by taking
advantage of the predeceasing advancee rule or the per capita model of representation.
NONPROBATE TRANSFERS – WILL SUBSTITUTES AND GIFTS, AND TAX
PASSING PROPERTY BY WILL SUBSTITUTES AND GIFTS
[24-28]
Will v. will substitutes
 Will
o A highly formalized document, requiring the testator’s signature and witnesses that transfers
property and may give other instructions at time of death – a Testamentary Act with transfer via
probate
o Effective upon your death
o During your life, a will has no effect on the property that you own
 Will substitutes
o Contracts and forms of property ownership that do not require witnesses )and sometimes not even the
person’s signature) that transfer property at death (and other specified times) and may give other
instructions at time of death – a Non-testamentary Act with transfer outside probate
o Transfers property at your death
o During your life, you have file ownership rights of the property
o Property passes outside of probate, but it doesn’t mean that it isn’t subject to estate and/or gift
taxation
 Taxes aside, the property is not considered to be part of the probate estate
 WSs help the decedent avoid the probate system
 How are they the same? Different?
o Function is the same
16
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What does this mean?
 Could have life insurance policy payable to estate – or directly to beneficiary
 Focus on intent
o Execution is entirely different
 Thus, courts for years had trouble accepting the informality of WSs and the transfer of property
outside of the probate process
Wills Act Requirements v. WS Requirements
o Writing v. usually written but can be oral
o Signed by testator v. usually signed by person but sometimes done over phone or internet
o Must be attested to by witnesses or be in the hand of the testator (holographic) v. normally no witnesses
required
o Often notarized v. rarely notarized
o Often drafted by an attorney and signed at attorney’s office v. often business forms (except trusts). Can
often be handled by phone, fax, or Internet
o Subject to probate v. not subject to probate
Wills -- Formalities (Wills Act)
o 4 Functions
 (1) an evidentiary function by showing how the testator wanted to distribute the property;
 shows the intent of the testator
 (2) a ritual (or cautionary) function to ensure that the testator was serious about the document
serving as a will;
 (3) a protective function to prevent against undue influences on the testator; and
 (4) a channeling function to ensure that the document looks like other wills
 this gives the testator great comfort that once he executes his will, it was be treated as a will
by the courts
o By contrast, will substitutes have fewer requirements and are controlled either by contract or by trust
law
 The casualness by which you enter into will substitutes has posed a challenge for the law
o These formalities show the ritualistic nature of the probate process and goes to show why such process is so
time consuming
Most people did not enter into will substitutes just for the sake of avoiding probate
o However, one may change the nature of will substitutes much more easily than one could change a will
Reasons to choose or not choose WS
o Reasons to avoid wills and probate
 The will might be invalidated due to an infraction of one of the formalistic rules that apply to the
drafting, amending and revoking of wills
 The formalities required to amend a will may be greater than those required for a WS.
 If one owns real property in another state, ancillary probate proceedings will be required there,
adding time and cost to the process.
 For high profile individuals, a will is a public document, so the media might report on matters the
individual would prefer to keep private.
 Some statutory protections and restrictions apply to wills only.
o Illusory reasons to use WS
 Trusts are less expensive than wills.
 Probating a will is expensive.
 Estate taxes can be avoided if probate is avoided.
o Advantages to going through probate
 The claims of creditors are addressed and resolved during probate.
 There is an “inheritance defense” associated with acquiring “superfund” property.
 The proceedings are controlled by a judge.
 In most cases, the personal representative is required to prepare an accounting and report of her
activities.
17
o Other matters to consider
 It may be better to have the entire estate plan in one document.
 Generally, WSs are much more piecemeal (aside from revocable trusts).
 The documents used to avoid probate may be confusing to an unsophisticated person.
 Some planning devices are forever.
 Irrevocable transfers are forever.
o Wills can be changed up until the minute that you die.
 Even if one carefully plans to avoid probate, it is difficult to avoid it completely.
Determining which property is probate and which is not
 Driving consideration: Did the Decedent Own the Property in Whole or in Part at death?
o Ownership for probate purposes means an actual, beneficial, ownership interest in property at the time of
death
 A will can only dispose of property that you die with
o Probate property does not include property over which the decedent merely has control
 E.g., property you are responsible for as a trustee is not probate property
o Property ownership may consist of a present or future interest so long as the decedent’s death does not cause
the interest to terminate
 (1) Trusts (beneficiary designation)
o Property in an inter vivos trust, whether revocable or irrevocable  NOT probate property
o Property in a testamentary trust (can only be irrevocable)  probate property
 (2) Joint Tenancies with Rights of Survivorship (operation of law)  NOT probate property
o In essence, the CL joint tenancy required that the several tenants have one and the same interests accruing
by one and the same conveyance, commencing at the same time and held by one and the same undivided
possession. However, most states have relaxed the CL requirements for a JTWROS.
 The most important aspect of a JT is that, assuming no previous severance (such as by one joint
owner selling her interest to a third party) on the death of on of the joint tenants title passes
exclusively to the surviving joint tenant or tenants.
 (3) Life insurance (beneficiary designation)
o So long as the beneficiary is not the D’s estate  proceeds of a life insurance policy are NOT probated
 (4) Annuities and retirement accounts (beneficiary designation)
o So long as the beneficiary is not the D’s estate  the annuity or retirement proceeds are NOT probated
 (5) Contracts deposited with financial institutions (beneficiary designation)
o Single-party accounts, with NO payable-on-death (POD) beneficiary designation  probate property
o Multiple-party accounts
 Tenancy in common  probate
 JTWROS (used in multiple-party context)  NOT probate property
 “A or B”
 A and B, JTs”
 Butta: court held that the presumption for a JTWROS has not been overcome and that the
bank account must be held to be a JTWROS, rather than a convenience account
 POD beneficiary designation (general used in single-party context)  NOT probate property
 “A, P.O.D. to B”
 Convenience account  probate property
 The convenience depositor has neither an ownership interest in the account nor rights to the
balance in the account upon the death of the depositor, which distinguishes it from a
JTWROS or a POD account.
 “A” [but B is authorized to act as A’s agent]
 (6) Security accounts (beneficiary designation)
o Account includes a transfer-on-death (TOD…like POD) beneficiary designation  NOT probated
 (7) Transfer on death deeds for real estate (beneficiary designation)  NOT probate property
18
o A TOD deed is a better option if the owner simply wants to transfer the property at death. Unlike a JT deed,
the TOD deed creates no immediate interest in the B and can be revoked at any time before death.
GIFTING – NOT EXACTLY A WILL SUBSTITUTE
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[28-30]
Gift – a voluntary lifetime transfer of property from one person (the “donor”) to another (the “donee”), made
without consideration.
o A gratuitous transfer of a property interest
o Inter vivos
o Normally irrevocable
3 elements of a valid gift:
o (1) Donative intent
 Donor must have the mental capacity to be able to make the gift
o (2) Delivery
 Some present property interest must be transfered
 Personal property – physical, constructive, symbolic
 Real property – a deed
 What is it that needs to be delivered?
 Restatement/Genecin
o The transfer of personal property, necessary to perfect a gift, may be made (1)
by delivering the property to the donee, or (2) by inter vivos donative document.
o (3) Acceptance
 Generally presumed
Methods of gifting
o Fee simple
 Immediate transfer of some kind of property
 Donee acquires all the ownership rights and the donor no longer has any
o Gifts into trusts
 Rather than making gifts directly to the donee in fee simple, donors sometimes make inter vivos
transfers using a trust.
 Keep in mind that once a trust is set up, it is a WS.
 If the settlor wishes to make a completed gift so that there will not be an estate tax owed at death or
if the goal is to deny subsequent creditors access to the property, the settlor must retain no interest.
If the principle purpose is probate avoidance, then the settlor can retain significant interest in the
trust.
When a gift is successfully made, the property gifted is no longer probate or nonprobate because the
property no longer belongs to the donor
o While the effect of gifting is that the property avoids probate, gifting is not normally done for that reason
o Also, keep in mind that if a gift fails, then it remains the owners and is subject to probate
How do a will, a WS, and gift differ?
o Wills and WS allow you to hold onto the property until your death, while a gift is a lifetime transfer.
o A gift is an immediate transfer of some kind of interest, a will and WS are not.
3 bodies of law that influence gift giving
o Laws of property and contract (tell us when something is a gift and not an exchange for consideration)
and
o Tax laws influence when, what, and how gifts are made.
DEVELOPING A COMPREHENSIVE ESTATE PLAN
Selecting the Beneficiary
 Individual beneficiaries
19
[30-32]
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o May be the simplest method
Custodians
o Good for a client with minor children who wants a simple estate plan
Client’s estate
o Easiest, if not best method, of ensuring that the client’s estate plan is fully coordinated is to designate the
client’s estate (or executor or personal representative) as the B of each asset requiring a B designation.
o All the assets will then be paid to the client’s executor to be distributed in accordance with the client’s will.
o This approach, however, may have significant adverse consequences -- among them being subjecting the
nonprobate property to the claims of creditors when they would otherwise be exempt and concerting
nonprobate property into probate property.
Revocable trust
o The trustee of a client’s revocable trust is the preferred B in almost every situation.
o With the trustee as B, the trust agreement can coordinate all the asset disposition, including those to
charities, the SS, or others that would have adverse income tax consequences if done incorrectly.
o The most important advantage is that, if substantially all of the client’s assets pass through the revocable
trust, implementation of the client’s plan will be simplified.
o Because assets passing directly to the trustee of the revocable trust do not pass through the estate, their
protection from claims of the client’s creditors may be preserved. The trust instrument should explicitly
prohibit the use of exempt assets for payment of the deceased settlor’s obligations.
o Having the B designation assets paid to the trust makes it much easier to allocate and charge estate taxes
appropriately among the Bs because the trustee controls all assets.
What if the B predeceases the D?
 With probate property, in order to inherit the heir or devisee must survive the D. If she does not, her right to
inherit lapses or terminates.
o A devise to a devisee who predeceases the T fails (lapses); the devised property does not pass to the
devisee’s estate, to be distributed according to the devisee’s will or pass by intestate succession.
 In most states, the lapse rule and antilapse statutes apply strictly to wills; they do not apply to WS.
 WS, such as life insurance or retirement beneficiary designation forms, typically request the name of a secondary
beneficiary. In such cases, since the contract states specifically what happens on death of the primary B, the
secondary B is entitled to the property and statutory or CL default rules are not required.
o However, if neither the primary not secondary B survives the D and if the form does not say that
survival is a condition to taking, then the law is unsettled with regard to what happens to the
property.
Failed will substitutes
 5 common situations where WSs fail:
o (1) the naming of one’s estate as the beneficiary designation in a designation form
 probate property embraces property acquired by the estate of after D’s death
 So, if an estate is designated as a primary or secondary B, what would have been a
nonprobate transfer is converted into a probate transfer.
o Might be a good way to coordinate disposition of property, but in turn that property
loses its status as probate.
o (ii) the severance of a joint tenancy by the inter vivos actions of one of the tenants
 if a severance occurs, the joint tenancy is transformed into a tenancy in common with no
survivorship rights, which interest is a probate asset.
o (iii) the murder of the owner or joint tenant by the B or other joint tenant
o (iv) a divorce between the B and the owner or one join tenant by the other joint tenant
o (v) the simultaneous death of the owner and designated B or of joint tenants
Can a will or other document or provision of law override a WS’s designation of a B?
20
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Statute  yes
o The UPC and many jurisdictions have an automatic revocation-upon-divorce statute -- after entering into
a divorce, a former spouse who is still the B of a contract is not legally entitled to the proceeds
Subsequent will  it depends
o General rule for most WS (Lincoln Life): the method prescribed by the WS must be followed in order to
effect a change of beneficiary
 Unless the WS permits the B to be designated or changed by will, even a specific testamentary
bequest of the policy proceeds generally will not override a prior B designation made in
accordance with the terms of the WS
o Substantial compliance: while mere intent is not enough, some courts allow substantial compliance with
the WS to effectuate a change in designation
 However, most courts require strict compliance. Generally, it is not enough to have merely tried.
 Nonetheless, substantial compliance is a very close standard to strict compliance.
o General rule (UTC): a trust may be amended or revoked by a later will or codicil that expressly refers to
the trust or specifically devises property that would have otherwise passed according to the terms of the
trust – a “superwill” that can control all WS
ESTATE AND GIFT TAX PLANNING
[32-36]
Introduction
 Tax law has a tremendous impact on how people dispose of their money
o However, most married couples do not need to engage in sophisticated tax planning, as most married
couples have not amassed wealth over $10 million
 Types of transfer taxes (at federal level – there is a whole level of state taxes that we will not deal with)
o Estate tax
o Gift tax
 All transfers for which there is no adequate consideration may be subject to the gift tax when the donor is living
and may subject to the estate tax when the donor is deceased
 Estate and gift taxes only kick in when individuals have at least $5 million or when a couple has at least $10
million
o You are assessed taxes, then you are given a credit against them.
 Gifting as an individual
o You can gift up to $13,000 per year to any number of individuals without suffering tax liability; also, you
can gift $5 million total to anyone within your lifetime (yearly 13k per person is not included in
calculating the 5m credit)
 You are assessed taxes, then you are given a credit against them.
Transfer taxes & income taxes
 Basic principle: all transfers are taxed
 Transfer taxes  on donor or D’s estate
 Income taxes  on recipient of gift or bequest
o Receipts of income due to gifts or bequests, no matter how large, are income tax-free
 Receipt of cash is straightforward
 Receipt of property is more complicated because the basis, holding period and character of the
property must be determined for the recipient
 Gift  basis is that which the donor had
 Devise  basis is the FMV at the time of D’s death
21


Thus, it is good planning to delay until death the transfer or property that is already
appreciated.
 However, it may be wise to presently gift property that is projected to significantly
increase in value in the future rather than hold onto it until death.
o Because of the difference in tax rates incurred by the donee for capital gains
(generally 15%) and by the decedent for estate taxes (up to 35%), gifting property
before it appreciates can save the family as much as 20% of future appreciation.
A transfer must still be reported, even though there will be no tax consequences for the donor or recipient
TAXATION OF ESTATES
Determining the estate tax, if any, due:
o (1) Determine the federal gross estate, which is the sum of the following property interests:
 While property that is subject to WS is typically excluded from the probate estate, it is usually
included in the gross estate.
 Standard for determining whether a D has interests or powers over trust property sufficient to treat
the corpus as if it were owned by the decedent, and thus, includible in D’s gross estate:
o (i) whether D had functional equivalent of ownership during life
o (ii) whether D’s death resulted in the transfer of property to another
 Property interests:
 Probate estate – property in which D has an interest
o Fee simple
o Joint ownership, other the JTWROS, held by D and not given away until his death
 QTIP property -- Qualified terminable interest property between spouses
o Requirements:
 (1) the trust must provide the SS with an exclusive income interest for life; and,
 (2) the estate of the D spouse must make a special QTIP election
o While this makes the inter-spousal transfer estate-tax free, the gross estate of the second
spouse includes the FMV (as of the date of the second spouse’s death) of any property
remaining in the trust (see below).
 GPOA as of Date of Death
o Unless, GPOA is limited by ascertainable standards
 JTWROS – 100% less other JT % combination
o The full value of the entire asset owned in JTWROS is included in the gross estate, except to
the extent that the D’s estate can establish the percentage of the cost of the JT asset
contributed by others.
o Spouses: if the JT is between spouses, half of the value or property held by spouses as
JTWROS is included in the estate of the first spouse to die, regardless of which spouse
contributed the funds needed to purchase the property.
o Gifted: if the D was gifted an interest in property as a JT, the FMV of the property in
proportion of the interest the D was gifted in includible in D’s estate.
 Annuities with a Survivor Feature
o The amount included in the gross estate is the actuarial value of the amount receivable by the
surviving Bs.
 Life Insurance Owned or Where Incidents of Ownership Retained
o The proceeds of a life insurance policy are included in a D’s estate if the D owned the policy
at the time of death, if at any time in the 3 year period prior to death the decedent had
“incidents of ownership” in the policy or if the estate is named as the beneficiary of the
policy.
o If interest that would have caused inclusion in the gross estate is transferred, released, lapsed,
etc. within 3 years of death, the gross estate includes the value of that interest as if it was
not transferred, etc.
22

o
o
o
o
Transfers with Interests Retained for Life – very broad
o E.g., a trust in which the settlor kept only the right to the income (even if he did not retain
control over the principal) or the right to designate the persons who should possess or enjoy
the property or income therefrom
 However, this goes beyond just trust assets – e.g., vacation home transfer, but right to
use for life without paying rent was retained
o If interest that would have caused inclusion in the gross estate is transferred, released, lapsed,
etc. within 3 years of death, the gross estate includes the value of that interest as if it was
not transferred, etc.
 Transfers Subject to D’s Right to Revoke, Amend, etc. as of Date of Death
o E.g., revocable trusts
o If interest that would have caused inclusion in the gross estate is transferred, released, lapsed,
etc. within 3 years of death, the gross estate includes the value of that interest as if it was
not transferred, etc.
 Gifts made less than three years before death come back into one’s estate
(2) Determine allowable deductions
 Administrative expenses
 Executor, accountants, lawyers, funeral costs, etc.
 D’s debts and other claims against the estate
 The value of the property contributed to charities
 Charities can be given partial interests, such as for a term of years or during one’s life or remainder
 The value of the property transferred to D’s SS
 Unlimited deduction
o Basically results in tax deferral from 1st spouse to survivor (and even better I Congress
eliminates or reduces taxes before survivor dies)
 Fee simple transfers
o Deduction is for the full value of the property transferred
 Transfers in trust for benefit of SS
o Deduction allowed in estate of 1st spouse only if trust property will be included in estate of
2nd spouse.
o Two principle types of marital trusts for which a transfer is deductible:
 GPOA
 QTIP
(3) Calculate taxable estate (subtract #2 - #1)
(4) Calculate the preliminary estate tax by multiplying the taxable estate (the amount determined in #3) by the tax
rates in the IRC.
 A tax of 35% is imposed upon all transfers above the unified credit amount
(5) Determine the net estate tax due, which is the preliminary estate tax (#4) reduced by various credits
 Unified tax credit (total for lifetime and death-time transfers)
 Credit amount: $5 million
 Portability
o A SS may take advantage of the D’s unused amount so long as the personal representative of
the deceased spouse makes an irrevocable election on a timely filed estate tax return.
TAXATION OF GIFTS
Determining the amount of the gift tax requires the following steps:
 (1) Determine taxable gifts, which equals the FMV of all gifts made, less during a taxable year, less any interests
the donor retained, the following items:
o The annual exclusion
23
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

The donor can annually give up to $13,000 in present interest (not future interest) gifts to any
number of people. Importantly, gifts within the annual exclusion do not count against the
lifetime unified tax credit of $5 million.
 Gift-splitting
 If the property-owning spouse is the only donor but the husband and wife wish to utilize both
of their annual exclusions, they may do so by completing the consent line on the gift-tax
return form.
o This helps when married couples have the bulk of their property in the name of only
one spouse.
o Gifts made for certain tuition and medical expenses  unlimited
 These types of gifts must be paid directly to the service provider
 Only tuition is excludable from taxable gifts – not gifts for room, board, and books
 529 plans
 An individual can use the 13k annual exclusion by contributing to a 529 plan (26k for
married couples). If the limits are not exceeded, the transfers are not subject to gift tax
and the plan assets are excluded from the transferor’s estate.
 Even though the donor maintains control of the money, the contributions are still considered
gifts.
o Gifts subject to the charitable deduction
 Charities can be given partial interests, such as for a term of years or during one’s life or remainder
o Gifts subject to the marital deduction
 Unlimited deduction
 Basically results in tax deferral from 1st spouse to survivor (and even better I Congress
eliminates or reduces taxes before survivor dies)
 Fee simple transfers
 Deduction is for the full value of the property transferred
 Transfers in trust for benefit of SS
 Deduction allowed in estate of 1st spouse only if trust property will be included in estate of
2nd spouse.
 Two principle types of marital trusts for which a transfer is deductible:
o GPOA
o QTIP
(2) The preliminary gift tax is calculated by multiplying the taxable gifts (the amount determined in #1) by the tax
rates in the IRC.
(3) The net gift tax equals the preliminary gift tax (under #2) reduced by various credits.
o Unified tax credit (total for lifetime and death-time transfers)
 Credit amount: $5 million
 Portability
 A SS may take advantage of the D’s unused amount so long as the personal representative of
the deceased spouse makes an irrevocable election on a timely filed estate tax return.
CREATION OF TRUSTS
INTRODUCTION
[36-38]
UTC is a default statute
 The terms in the trust are most important
o The terms in the trust control the UTC, except for a few default rules, for example:
 The requirements for creating a trust;
 The trustee’s duty to act in good father and in the interests of the beneficiaries
 If a trust doesn’t speak to something, the UTC should be able to fill the gap
24
Setting up a trust – as a settlor
 Choosing a trustee
o The trustee has a legal responsibility, a fiduciary duty, to the beneficiaries of the trust to manage the
property placed in the trust
 The trustee owns legal title to the property
o The trustee can be a beneficiary so long as the trustee is not the only beneficiary
 The trustee can be the only lifetime beneficiary, but there must be somebody else who is able to
enforce the obligations of the trustee
 Choosing your beneficiaries
o May include the settlor
o Beneficiaries hold no legal title whatsoever, they own only equitable (beneficial) title in the trust property
o However, beneficiaries have the right to enforce the obligations of a trustee
o Depending on how the trust is structured, beneficiaries may get income and they also may be able to
invade the trust corpus as well
 Property (corpus) that goes into the trust
o You have to re-title everything in the name of the trust
 A trust is not actually an entity, but in some ways you can compare it to a corporation
o i.e., fiduciary duty, etc.
The Settlor, Trustee, and Beneficiaries
 Settlor
o Person creating the trust
o Conveys trust property to the trustee
 Trustee
o Promises to manage the property in the best interest of the beneficiaries
 Fiduciary obligations
o Makes distributions to the beneficiaries
 Beneficiary
o Retain the right to sue the trustee to act in accordance with fiduciary duties required of the trustee by the
trust’s terms
o Qualified beneficiary
 UPC 103
 “Qualified beneficiary” means a B who, on the date the B’s qualification is determined
o (A) is a distributee or permissible distributee of trust income or principal;
o (B) would be a distributee or permissible distributee of trust income or principal if the
interests of the distributees described in subparagraph (A) terminated on that date
without causing the trust to terminate;
o (C) would be a distributee or permissible distributee of trust income or principal if the
trust terminated on that date.
 Classification used to limit the class of Bs to whom certain notices must be given or consents
received
 Limits the trustee’s duties in some circumstances
Corpus
 Corpus/res: property held and managed by the trustee
Classifying trusts
 Inter vivos (living) or testamentary?
o Inter vivos trusts
 Set up during one’s lifetime
 Can be either revocable or irrevocable
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
 Revocable – settlor retains power to modify or revoke the trust
o Testamentary
 Set up in one’s will
 Can be only irrevocable
o Self-trusteed or 3rd party trustee?
Private or charitable?
o Private trusts have rule of perpetuities problems, charitable trusts do not
Express or implied (constructive or resulting)?
o Constructive and resulting trusts are not truly “trusts” so to speak
 They are not addressed by the UTC
 Constructive trust
 Transferee holds property in constructive trust for intended B if:
o Transferee used fraud to get property
o Transferee was in confidential relationship
 This is a softer way to force someone who has committed fraud to transfer the property to the
intended beneficiaries
 Equitable remedy imposed by a court
o Legal fiction
 Resulting trust
 When trust fails because it no longer has a valid purpose
o Funds go back to the estate of the person who attempted to create the trust – to the
residuary takers and to the decedent’s heirs
 Implied by law
Merger
 When the only trustee and the trust’s ONLY beneficiary are the same person, the legal and equitable interests
merge and the trust terminates.
o So long as there is someone outside of the trustee who can enforce obligations, then merger will not apply
and the trust will not dissolve.
 You only need one other B, and his interest may even be future or contingent
ELEMENTS OF A TRUST
[38-49]
(1) Competent settlor
 Different standards
o Testamentary trusts (only irrevocable) AND revocable inter vivos trust (per UTC 601) – same as for will
drafting
 Settlor must:
 P – know the nature and extent of property
 O – understand the natural objects of her bounty
 P – must develop a plan, and
 I – understand how these all interrelate
o Irrevocable inter vivos trust:
 Competent to enter into K, and
 Effect that creating trust will have on future financial security (higher standard)
 The law imposes this higher standard because a decision to part with property during
life affects the settlor’s ability to care for herself and any dependents.
 Remember that all trusts are subject to challenge on grounds of undue influence, fraud, duress.
(2) Valid, legal purpose
 The purpose of a trust must be legal
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The purpose also cannot be contrary to public policy
If you can find a valid purpose for a trust, the trust will continue
o However, if a trust fails for a lack of a valid purpose, then the trust money will go back into S’s estate
Keep in mind that parts of the trust can be upheld and parts of the trust can fail
(3) Trustee
 Trust is still valid without a trustee, nevertheless…
 Choosing a trustee
o The settlor himself, or
o Third party
 Family members and friends
 Family dynamics and impartiality are important things to consider here
 Corporate trustee
 Important to consider potentially expensive fees here
 Professional fiduciary
 Acceptance – UTC 701
o Methods of acceptance – formality not required
 Substantially complying with a method of acceptance provided by the trust
 Signature on trust agreement will do
 Titling property in one’s name as trustee
 Accepting delivery of trust property, exercising powers or performing duties as trustee, or otherwise
indicating acceptance
o Rejection
 Must reject either fail to accept trusteeship within a reasonable time after knowing of the
designation.
 This person may still act to preserve the trust property of, within a reasonable time after
acting, the person sends a rejection of trusteeship to the settlor or, if the settlor is dead or
lacks capacity, to a qualified beneficiary.
 Also, this person may inspect or investigate trust property to determine potential liability
under environmental or other law or for any other purpose.
 Titling trust property
o Titling corpus of the trust is important for showing that trust has a corpus, and it is also important for
protecting the property of the trust
 Resignation of trustee – UTC 704
o Vacancy
 A vacancy occurs when:
 A person designated as trustee rejects the trusteeship
 A person designated as trustee cannot be identified or doesn’t exist
 A trustee resigns
 A trustee is disqualified or removed
 A guardian or conservator is appointed for an individual serving as trustee
 If one or more co-trustees remain in office, a vacancy in a trusteeship need not be filled. A vacancy
in a trusteeship must be filled if the trust has no remaining trustee.
 A vacancy in a trusteeship of a noncharitable trust that is required to be filled must be filled in the
following order of priority:
 By a person designated in the terms of the trust to act as successor trustee
 By a person appointed by unanimous agreement of the qualified beneficiaries, or
 By a person appointed by the court.
o Resignation
 A trustee may resign
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Upon at least 30 days notice to the qualified beneficiaries, settlor, if living, and all cotrustees; or
 With the approval of the court
o Court may issue orders and impose conditions reasonably necessary for the
protection of the trust property
Any liability of a resigning trustee or of any sureties on the trustee’s bond for acts or omissions of
the trustee is not discharged or affected by the trustee’s resignation
(4) Intent to create a trust
 Written evidence on intent not required
 There is NO requirement for a public declaration of the trust.
o No one other than the settlor must be necessarily aware that a trust has been created.
 However, if others know, it may help your case in establishing the settlor’s intent
 Possible alternatives to the creation of a trust – a determination of what the property owner intended will
establish whether a trust exists, which in turn will affect the ultimate ownership of the property:
o (1) Testamentary transfer (or inter vivos gift in trust).
 Look to the language of the document (trust) is important to discerning settlor intent
 There are no magic words though
o “my last verbal act”  will language (Palozie)
 Were duties associated with a trust established
 Settlor can always impose trustee duties on himself
o (2) Outright gift with explanatory or precatory language (or gift in trust)
 Words of settlor are important to discerning settlor intent
 Examples of precatory words:
o “it’s my wish/desire”
o “it’s my hope”
o “it’s my recommendation”
o “please use this for”
 Don’t need to say I want to create a trust with you as a trustee in order for valid trust to be
created, but those words help.
 Level of discretion afforded (Bollinger)
 Was complete discretion afforded to the purported trustee? Was there no direction or
restrictions?
o (3) A promise to make a gift in the future (or transfer into a trust)
 Nye
 Constructive delivery  gift
o Here, delivery of memorandum + acts = constructive delivery.
 If no constructive delivery  imperfect gift; maybe constructive trust
o Constructive trust due to reliance by the university
o Constructive trust due for reasons of equity
 Do not want to frustrate settlor’s intent
o In this case, lots of statements on her part that she intended to give the books to the
university, and she knew that the university was relying on this gift.
o (4) Creation of a power of appointment over the property
(5) The trust must be funded (i.e., must have some corpus (property/res))
 Corpus can be very minor or substantial.
o Statutory exception to the rule that a trust cannot be created without corpus: in some states, UTATA
now permits a trust funded at death to be considered created during the settlor’s life.
 Can be money, tangibles, intangibles, personal or real, securities, art house, everything so long as it constitutes a
property right (an expectancy cannot be the basis for the property in a trust)
28


Retitling
o Best practice – retitling everything
 At least, it would be wise to retitle assets with formal title documents
o Actual practice – scheduling
 This works quite well when the settlor is the trustee
 However, this does not work as well when the trustee is a third party because some property
must be transferred
o If the trustee is someone other than the settlor, there needs to be an actual
transfer or re-titling of property
 Keep in mind that scheduling is often not effective for assets with formal title documents
 UTC 401: declaration is permitted, but re-registration is best practice
The date of the trust is often used as an identifier for the trust.
(6) Ascertainable beneficiary
 B plays a key role in the trust because he has standing to enforce the trust
o B doesn’t have to know that he is a B
o Settlor can be the beneficiary
o Trustee can be the beneficiary, but when trustee becomes sole beneficiary then merger occurs and trust
dissolves
 A trust will fail if the S has not named a B, unless the trust is:
o charitable trust
o honorary trust
o animal trust
o trust for a purpose
 Person or class
o Identifiable person or class of persons who can be identified
 Class membership may change over time and class members may not yet be born
 People can represent minor and unborn Bs and can enforce the trust on their behalf
o Clark: a class like “friends” does not work under the CL, because a court cannot determine for certain who
the S’s friends were and therefore who has rights in the trust.
 Honorary trusts
o Trust has no definite B, but the “trustee” is allowed to “honor” the trust terms, if the trustee is willing.
 Must be created by a court
 Cannot violate the RAP
o Examples (all explicitly addressed by the UTC now)
 Trusts for pets
 Trusts for building/maintaining graves or monuments
 Trust for a purpose – UPC 409
o A trust may be created for a noncharitable purpose without a definite of definitely ascertainable B or
for a noncharitable but otherwise valid purpose to be selected by the trustee.
 Cannot violate RAP
 May be enforced by person appointed in terms of the trust or by a court
 Property may only be used for its intended use, with all excess (as determined by a court) provided
to whomever the settlor intended, the settlor, or the settler’s successors in interest.
 Animal trust – UTC 408
o A trust may be created to provide for the care of an animal during the settlor’s lifetime.
 Trust terminates upon the death of the animal or, if the trust was created to provide for the are of
more than one animal alive during the settlor’s lifetime, upon the death of the last surviving animal.
 Enforceable by appointed or interested persons.
 Property may only be used for its intended use, with all excess (as determined by a court) provided
to whomever the settlor intended, the settlor, or the settler’s successors in interest.
29
(7) Formalities – Written Trusts v. Oral Trusts and Secret Trusts
 The elements of a trust generally do not include a requirement of a writing, a signature by the settlor or
signatures by witnesses; however, all of these things may be helpful in proving that something is a trust
o Oral trusts of personalty
 UTC 407: except when otherwise required by statute, a trust need not be evidenced by a trust
instrument, but the creation of an oral trust and its terms may be established only by clear and
convincing evidence.
 High standard of proof
o Oral trusts of real property
 In most states, trust of land must be stated in a writing that is signed by either the settlor or the
trustee
 If not done, the trust is not void, but it is unenforceable against the transferee (the trustee).
o Secret v. Semi-secret trusts
 Majority rule
 Secret  enforced
o Devise appears absolute on the face of the will
o Extrinsic evidence necessary to prevent unjust enrichment
o Courts will impose a constructive trust  the person named to take the property will
acquire only legal title to the property and will hold it for the Bs of the trust.
 Rationale: if a trust is a secret trust, the person named to take the property
will acquire both legal and beneficial title unless the court enforces the trust,
in which case the named person will acquire only legal title
 Enforcing secret trusts prevents merger of legal and equitable title in
wrong person
o EX: “I give my house to X.” Secret instructions have been talked about.
 Semi-secret  unenforceable
o Desire to create trust appears on the face of the will
 Terms are undisclosed
o Extrinsic evidence not needed to prevent unjust enrichment
o Devise is unenforceable. The trustee will hold the property as a resulting trust, and
the property will be distributed through the estate of the person who attempted to
create the trust – to the residuary takers under the will or to the D’s heirs.
 Rationale: a trustee of a semi-secret trust is identified as a trustee and thus
has only legal title. The trust fails and the person named in the will is not
unjustly enriched.
o EX: “I give my house to X. I have given him instructions, and he has agreed to
transfer the house as I have instructed him.”
 Minority rule (Restatement)
 A court should impose a constructive trust on behalf of the intended beneficiaries
whether the truth was secret or semi-secret.
 Resulting trust v. Constructive trust
o Resulting Trust
 (1) Attempted private express trust fails
 Example = trust was valid at outset but now all Bs have died
 (2) Trust exceeds maximum $ that could ever be needed for trust purposes
 Remedy
 Funds go back to the estate of the person who attempted to create the trust – to the residuary
takers and to the decedent’s heirs
o Constructive trust
30

(1) the transferee used fraud, undue influence or duress to cause the property owner to transfer the
property; or
 For fraudulent behavior to result in the imposition of a constructive trust, the transferee must
have intended not to act as trustee at the time of the transfer.
 (2) at the time of the transfer, the transferee was in a “confidential relation” to the property owner
 Bowlsby: court refuses to find heightened fiduciary obligations for a father dealing with his
adult children
 Some courts say that bad faith is a required element for imposition of a constructive trust
 By contrast, in some cases, courts have used the constructive trust remedy to fix an equitable
problem, even if no bad faith
 Remedy
 Property goes to equitable beneficiaries (rightful owners)
o Both of these are court ordered legal fictions that are designed to take legal rights away from the
alleged owner of the property
o Who benefits from each type of fictive trust?
 Heirs from resulting trust
 Alleged beneficiaries from constructive trust
(8) Exculpatory (Exoneration) Clauses
 Enforceable to excuse the trustee from liability for ordinary negligence although generally not from bad faith or
willful neglect.
 UTC 1008
o A term of trust relieving a trustee of liability for breach is unenforceable to the extent that it:
 Relieves the trustee of liability for breach of trust committed in bad faith or with reckless
indifference to the purposes of the trust or the interests of the beneficiaries; OR
 Was inserted as the result of an abuse by the trustee of a fiduciary or confidential relationship
to the settlor.
o An exculpatory term drafted or caused to be drafted by the trustee is invalid as an abuse of a fiduciary or
confidential relationship unless the trustee proves that the exculpatory term is fair under the
circumstances and that its existence and contents were adequately communicated to the settlor.
 Factors to consider when determining whether a lawyer/trustee/agent has adequately communicated
with the settlor:
 The extent of the prior relationship between the settlor and trustee
 Whether the settlor received independent advice
 The sophistication of the settlor with respect to business and fiduciary matters
 The trustee’s reasons for inserting the clause
 The scope of the particular provision inserted
(9) Mandatory rules – UTC 105
 S cannot create a trust with a purpose that is unlawful
 trustee must act in good faith and in the interests of the Bs
 requirements for creating a trust
 the courts have power to take actions with respect to the trust that are necessary in the interests of justice
 limitations on the S’s ability to exculpate the trust
 the trustee’s general obligation to keep Bs informed about the trust
 specific requirements about notice to beneficiaries
REVOCABLE TRUSTS

[49]
RLTs provide management of trust property for the settlor during the settlor’s life and then acts as a WS on the
settlor’s death.
31

o RLT sets up a trust where the settlor is trustee and life time beneficiary
Settlor retains the power to revoke the trust at any time.
Structure
 A settlor creates a revocable trust during life, and the settlor retains control over the property, often serving as
trustee.
 At death, the trust becomes irrevocable.
 Pour-over will
o Usually the settlor will have drafted a pour-over will, which will transfer any probate assets (assets not
already in the revocable trust) to the trustee of the revocable trust.
o Other nonprobate assets, may name the trustee of the trust as the B for that asset so that those assets will be
distributed to the trust outside of probate.
o The revocable trust will then serve as the dispositive document when the settlor dies, and the settlor’s
assets will pass under the terms of the trust to the desired Bs.
 Two parts of RLTs:
o (1) the terms for management and disposition of the trust during the lifetime of the settlor
 distributions to settlor under broad standard
 settlor will usually be able to withdraw assets
o (2) the terms for the management and disposition of the trust after the settlor’s death
 directs the payment of claims and taxes
 should be coordinated with the will if the settlor also has probate property
 distribution of the assets or the creation of further trusts to be held for Bs
 Funding the trust
o Settlor should fund the trust with something
 Even if it is something small, so that it may exist at least as a “standby trust”
o Pour over wills will often fill up RLTs
o Settlor’s mistake -- what if left unfunded at S’s death?
 UTATA (UPC 2-511) – huge exception to the need for corpus in a trust…cure-all
 A will may validly devise property to the trustee of a trust established or to be established
during the T’s lifetime or at the T’s death, if the trust is identified in the T’s will and its
terms are set forth in a written instrument, other than a will, executed before,
concurrently with, or after the execution of the T’s will or in another individual’s will if
that individual has predeceased the T.
o The devise is not invalid because the trust is amendable or revocable, or because the
trust was amended after the execution of the will or the T’s death.
o Also, keep in mind that the trust into which the will pours over does not have to be
the trust of the deceased individual, and that the will that pours over into T’s trust
does not have to be that of the deceased.
 Events of independent significance (not as good as UTATA)
 If the trust exists at the time of execution, any property transferred to the trust through a
pour-over will can be distributed through the trust because the trust is then an event of
independent significance.
 Incorporation (not as good as UTATA)
 If the trust does not exist at the settlor’s death, then the doctrine of incorporation by
reference can be used to incorporate the written trust instrument into the will.
o Only the document in existence at the time the will is executed can be incorporated
by reference, so if the will was executed before the trust document was prepared or if
the trust document was amended after the will was executed, anything written later
cannot be given effect.
Purposes and advantages of RLTs
32
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Lifetime purpose – planning for incapacity
After-death purposes – avoiding probate
o Costs
 You have to balance costs
o Privacy
o Challenges
 Trust is more difficult to invalidate
 To challenge a will, P must show that the cause for challenge exists at one point in time – the
time the D executed the will.
 The P challenging a trust must show that the undue influence, for example, continued during
the trust: the trust is an ongoing relationship, and the transactions involved in a trust
continue from the time the S establishes the trust until the S dies.
o Avoiding delays
o Avoiding ancillary probate
 Property held in a RLT will not be subject to probate, so any real property located in another state
will not be subject to ancillary probate if held in a revocable trust.
Disadvantage -- Statute of Limitations for Creditors
 RLTs may provide creditors with longer SOLs than the probate process would
Misconception – Taxes
 No income or transfer tax benefits
Rules for RLTs that differ from those applicable to other trusts
 Capacity
o Capacity is the same that is required to execute a will.
 Irrevocable inter vivos trusts are subject to the higher contract standard.
 Duty to beneficiaries
o UTC 603:
 While the settlor is alive, the trustee owes fiduciary duties only to the settlor/beneficiary.
 Some states limit this provision: if the settlor is still alive but lacks capacity, then the trustee
must provide notice to other Bs and will owe all the applicable fiduciary duties to them as
well.
 Rules that apply to wills
o Some states apply certain rules that apply to wills to revocable trusts.
 E.g., effect of divorce, annulment, and decree of separation; effect of homicide of the settlor by a B
Joint Revocable Trusts
 The use of JRTs has grown in recent years, particularly in states with community property systems or in states to
which couples with community property have moved.
 A JRT is one in which two settlors contribute property to a single trust.
 The trust remains completely revocable as long as both settlors are alive, but when the firs settlor dies, half the trust
usually becomes irrevocable.
 The settlors of JRTs are typically spouses or domestic partners.
FIDUCIARY DUTIES
INTRODUCTION
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[50]
Although a trust will not fail for the lack of a trustee, there must be a trustee
Fiduciary duties
33
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o Whenever a person manages property for the benefit of somebody else, that person could be treated as a
fiduciary
Although the settlor can modify most parts of the laws applicable to trusts, a settlor cannot completely abrogate
the laws associated with a trustee’s fiduciary duties
o If this was allowed, the beneficiaries would have no duties to enforce.
Extent of the trustee’s powers and fiduciary duties depends on the trust instrument, the statutory law, and the
common law.
FIDUCIARY DUTIES OF A TRUSTEE
[50-56]
(1) DUTY OF OBEDIENCE
 Trustee must follow directions of the settlor
 Trustee is supposed to be loyal to the terms of the trust
 Often mentioned in passing because it seems so obvious
(2) DUTY OF LOYALTY
 Trustee must act on behalf of the beneficiaries and not upon self-interest
o UTC 802: trust must be managed solely in the interests of the Bs
 Trustee cannot:
o (1) engage in self-dealing with the trust assets
 When a trustee uses trust assets for his own behalf
 Innocence doesn’t matter when we are talking about self-dealing
o (2) enter into transactions in which the trustee has a conflict of interest
 When a trustee uses the trust property to benefit others with whom the trustee is close
 Who might be involved?
o Family members of trustee
o Corporation if trustee owns it
o Corporation if trustee is a director (e.g., bank)
 Difference from self-dealing
o The transaction does not deal with the trustee directly
 Transactions violating the duty of loyalty are voidable by beneficiary, not void
o Any transaction not entered into solely on behalf of the beneficiaries is voidable by the beneficiaries, even
if it is fair
 Regardless of whether there is any harm to the trust whatsoever
o In order for a transaction to be voided, keep in mind the statute of limitations
Exceptions to the duty of loyalty – deals with both self-dealing and conflicts of interest (UTC 802)
 The transaction was authorized by the terms of the trust
 The transaction was approved by the court
 The beneficiary did not commence a judicial proceeding within the applicable time
o Statute of limitations has run
 The beneficiary consented to the trustee’s conduct, ratified the transaction, or released the trustee in compliance
with the UTC
 The transaction involves a contract entered into or claim acquired by the trustee before the person became
or contemplated becoming trustee
(3) DUTY TO INFORM AND REPORT – PROVIDING INFORMATION TO BENEFICIARIES
 Trustees have an affirmative duty to provide notice and reports, in addition to the duty to respond to request for
information
UPC 813
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A trustee shall keep qualified beneficiaries informed about the administration of the trust and related material facts
o Unless unreasonable, a trustee shall promptly respond to all Bs request for information about the
administration of the trust
A trustee:
o Upon request of a B, a trustee shall promptly furnish a copy of the trust instrument
o Within 60 days after accepting trusteeship, trustee shall notify the QBs of the acceptance and the trustee’s
name, address, and telephone number
o Within 60 days after the date the trust acquires knowledge of the creation of an irrevocable trust, or the
date the trustee acquires knowledge that a formerly revocable trust has become irrevocable, whether by
the death of the S or otherwise, shall notify the QBs of the trust’s existence, of the identity of the S or
settlors, of the right to request a copy of the trust instrument, and of the right to a trustee’s report
o Shall notify the QBs in advance of any change in the method of rate of the trustee’s compensation
A trustee shall send to the distributees or permissible distributees of trust income or principal, and to other
qualified or nonqualified beneficiaries who request it, at least annually and at the termination of the trust, a
report of the trust property, liabilities, receipts, and disbursements, including the source and amount of the
trustee’s compensation, a listing of the trust assets and, if feasible, their respective market values
A B may waive the right to a trustee’s report or other information otherwise required to be furnished under this
section. A B, with respect to future reports and other information, may withdraw a waiver previously given.
Representation
 The UTC allows for representation for beneficiaries who lack legal capacity or are not yet born.
o The UTC provides for representation by:
 Fiduciaries (UTC 303)
 A conservator may represent and bind the estate that the conservator controls
 A guardian may represent and bind the ward if a conservator of the ward’s estate has not
been appointed
 An agent having authority to act with respect to the particular question or dispute may
represent and bind the principal
 A trustee may represent and bind the beneficiaries of the trust
 A personal representative of a decedent’s estate may represent and bind persons interests
in the estate
 Parents (for minor and unborn children) (UTC 303)
 A parent may represent and bind the parent’s minor or unborn child if a conservator or
guardian for the child has not been appointed
 Those with a “substantially identical interest” (UTC 304)
 The representation provisions apply only if the person representing another B does not have a conflict of
interest that would affect representation
(4) DUTY OF PRUDENCE (DUTY OF CARE)
 The rules for how a trustee must manage a trust
Duties to protect the property
 A trustee shall take reasonable steps to:
o Take control of and protect trust property (UTC 809)
o Enforce claims of the trust and claims against the trust (UTC 811)
o Compel a former trustee or other person to deliver trust property to the trustee, and to redress a
breach of trust known to the trustee to have been committed by a former trustee (UTC 812)
Duties to keep proper records and to keep the property separate
 UTC 810
o A trustee shall keep adequate records of the administration
35
o A trustee shall keep trust property separate from the trustee’s own property
 Duty not to commingle
o Except as otherwise provided below, a trustee shall cause the trust property to be designated so that the
interest of the trust, to the extend feasible, appears in records maintained by a party other than a
trustee or beneficiary
 Duty to earmark – duty to label trust property as belonging to the trustee in her fiduciary capacity
 Trustee may be held liable if his failure to earmark caused injury because the trustee’s
creditors could reach the property
o If the trustee maintains records clearly indicating the respective interests, a trustee may invest as a
whole the property of two or more separate trusts.
 Common trust funds are okay
Duty to invest prudently
 A trustee shall invest and manage trust assets as a prudent investor would, by considering the purposes, terms,
distribution requirements, and other circumstances of the trust. In satisfying this standard, the trustee shall exercise
reasonable care, skill, and caution.
o The standard of prudence is an objective standard.
o Also, keep in mind that the prudent investor rule is a default rule and may be expanded, restricted,
eliminated, or otherwise altered by the provisions of a trust. A trustee is not liable to a B to the extend that
the trustee acted in reasonable reliance on the provisions of the trust.
 Two goals:
o (1) produce income
o (2) maintain value
 Recently, there has been an incredible expansion upon the formerly constrictive duty to invest prudently
o Portfolio investing – not asset by asset
 The focus is on total return, not on which investments produce “income” and which produce
“principal”
o Risk and return suited to trust and need of beneficiaries
o List of factors to consider – economic conditions and needs of trust and beneficiaries
o No restrictions on particular investments
o Duty to diversify, unless there are special circumstances
 Failing to diversity presents an unnecessary risk to the trust
o Duty to minimize costs
o Permission to delegate investment and management functions
 Consulting a range of different advisors may help you insulate yourself from accusations that you
did not act as a prudent investor.
(5) DUTY OF IMPARTIALITY
 Trusts generally have more than one beneficiary – multiple beneficiaries
o Often times these interests differ over time – both current and future beneficiaries
 Keep the interests of all beneficiaries in mind – look to settlor’s intent
o Settlor’s intent is absolutely key
 Settlor’s intent is supposed to be established clearly by the terms of the trust
o Settlor’s may very well intend for the fiduciary to favor one or more of the beneficiaries
 Allocation of income and principal
o Modern uniform laws allow a trustee to adjust between income and principal – power to adjust (which is
limited by the duty of impartiality)
 Income: interest; dividends; rent
 Principal: capital gains; any property contribution to the trust
RIGHTS OF BENEFICIARIES AND CREDITORS IN TRUST PROPERTY; MODIFICATION AND
TERMINATION OF TRUSTS
36
INTRODUCTION

[56]
Recurring tensions – flashpoints
o Rights of the beneficiaries v. the rights of the settlor
o Rights of the present interests beneficiaries v. the rights of the future interests beneficiaries
 We saw this in the last section as well
o The trustee’s discretion v. the trust language
o The claims of creditors v. the settlor’s intent to protect the beneficiaries
o Overarching flashpoint – the need for flexibility in administering trusts, established by the language of a
trust instrument
DISTRIBUTION PROVISIONS
[56-66]
RIGHTS OF BENEFICIARIES
Trust Distributions
 What is the standard?
o Guiding principle will be the settlor’s intent
 Language of trust and all other evidence of intent at time of execution
o Distinction between mandatory and discretionary distributions
 Mandatory  no discretion
 Discretionary  some discretion; guidance provided
o An important distinction is that between income and corpus/principal
Different Discretionary Standards
 Which would you consider ascertainable, i.e., capable of determining with some level of specificity?
o Health (H)
o Education (E)
o Maintenance (M)
o Support (S)…HEMS (common abbreviation)
o Emergency
o Comfort
o Happiness
o Welfare
o Best interests
o In trustee’s absolute/sole/unfettered discretion
 One of the frustrating thins is that none of these have a clear black letter definition
o Courts all over the map when it comes to interpreting them
What steps do you take as a beneficiary if you are displeased with the trustee’s distributions?
 Make sure the beneficiary has looked at the trust instrument and annual reports so that he is informed with regards
to what is available
 Next, you go and talk to the trustee to see what is available for
 Then what…petitioning the court and bringing legal action
o If it is a mandatory distribution, you will have a better chance of having a court rule in your favor (as a
distributee)
INTERPRETING DISCRETIONARY STANDARDS OF DISTRIBUTIONS
Important questions in these cases
37
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Who are the beneficiaries receiving income?
Who are the beneficiaries receiving principal (from the corpus)?
What is the trustee’s standard of distribution?
Factors used by courts in interpreting guidelines
 Words used
 Relationships between the settlor and the beneficiaries
 Terms of the trust
Judicial review of trustee’s exercise of discretion – reasonableness and good faith
 Courts intervene only to prevent misinterpretation and abuse of discretion; it will not impose its own view of
how a trustee should exercise discretion
 Judicial determinations
o Fact-specific determination
o Touchstone is the settlor’s intent
o “Abuse of discretion”  trustee’s exercise of power was unreasonable or in bad faith
 Even when the court finds unreasonableness, the court will not direct the trustee to distribute a
specific amount, but instead will direct the trustee to exercise discretion reasonably
o UTC guidance (UTC 814, cmt)
 Factors to consider in determining whether trustee has a duty to distribute in a given situation:
 Exact language used
 Whether the standard grants discretion and its breadth
 Whether this discretion is coupled with a standard
 Whether the beneficiary has other available resources
 More broadly, the overriding purposes of the trust
 Courts will not interfere with the trustee’s exercise of discretion if the trustee “acts in good faith
and does not act capriciously,” but courts will interfere if the trustee “acts dishonestly or in bad
faith, or where he acts from an improper motive”
o Even when the settlor gives the trustee “absolute,” “unlimited” or “sole and uncontrolled” discretion, a
court will still require the trustee to act reasonably and in good faith.
o Factors that may give rise to an inference of an abuse of discretion (Mesler):
 Failure to provide any accounts or reports
 Invasions beyond reasonable limits
 Trustee-beneficiary situation makes discretion of trustee-beneficiary particularly vulnerable to
challenge
 When there is a trust that involves a trustee-beneficiary, the remainder people have a
heightened duty to enforce
SPECIFIC STANDARDS
(1) Support and maintenance
 Ascertainable standard -- a court can make a determination under state law about what the standard means in the
context of a particular trust, even though the trustee still has discretion to interpret the standard
 Factors to consider in order of priority:
o Settlor’s intent
 Also, the amount of property the S put in the trust
o Information about the relationship between the S and the B
o “Support” – B’s accustomed standard of living
 Goes beyond food and housing
o Other resources of B (depending on the terms of the trust, or the law in the applicable state.
38
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After making reasonable inquires about the financial situation of the Bs, the trustee should consider the needs of
future Bs and the amount of property in the trust relative to the current beneficiary’s needs as well as the needs of
future Bs.
(2) Education
 Clearly covers tuition
o May also include room and board, books, fees, and other costs
o Generally encompasses technical training as well as college or graduate education, depending on the
evidence of the S’s intent in the document
 Absent clear statements in the trust to, related costs for education, such as for private primary school, study
abroad programs and music lessons or sports instruction, are less likely to be viewed within the term
“education”
 Trustee must consider not only the standard for distribution but also the resources of the beneficiary and other
purposes of the trust. The trustee cannot make a determination with respect to one distribution in isolation from
the interests of other Bs.
 A settlor may choose to include a statement of his expectation in the trust instrument. If the settlor intends to limit
distributions for education in some way or wishes the term to be interpreted broadly, that information should be
clearly stated to avoid possible disagreements between the trustee and the B.
o Remember that the more specific the instructions to a trustee are, the less flexibility the trustee will have.
(3) Emergency
 “Emergency” is considered a restrictive standard, and a distribution can be made under the standard only if the
sort of emergency the S envisioned has occurred
o As is generally true with respect to a trustee’s exercise of discretionary powers, courts tend to defer to
the trustee’s determination of whether an emergency has occurred and will define emergency
narrowly when deciding whether a the trustee acted unreasonably in not making a distribution.
 Remember: If the trustee’s discretion is “in the ballpark” of what appears to be contemplated by
the trust, then the trustee’s discretion will be upheld (and the court will not get involved)
(4) Welfare; Best Interests; Happiness
 Very broad discretion
o Limits on the trustee’s powers…can’t act in bad faith or in a arbitrary and capricious manner with an
improper motive.
 Nonascertainable standards
 Difficult standards to challenges
What happens when a B wins?
 If you are successful in suing as a disappointed beneficiary and the funds of the trust are depleted, then a trustee
could be held personally liable
o This is why trustees generally distribute conservatively
Summary
 Black letter law (or at least the closest thing to it)
o Look to settlor’s intent and all of the circumstances surrounding the trust (the trust’s assets, who the
beneficiaries are and what kinds of beneficiaries they are, the needs of the beneficiaries, etc.)
 It is a very much a fact-based inquiry as to whether a trustee has abused her discretion
 It is very, very hard to get a court to force a trustee to make a distribution
RIGHTS OF CREDITORS
Introduction
39
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Settlor CANNOT protect property from PRESENT, existing creditors
o Uniform Fraudulent Conveyances Act
o Fact that trust is irrevocable, distributions are discretionary or has spendthrift clause does not protect
o Creditors can follow property into trust and get court orders
Present creditors
o Creditors of settlor
 Creditors can attach income and principal of trust
o Creditors of non-settlor beneficiaries
 ???  see below
Future creditors
o Creditors of settlor
 If settlor is not a beneficiary and has not retained any control, creditors cannot reach
o Creditors of non-settlor beneficiaries
 ???  see below
Parameters of Issue – Variables
o Present v. future creditors (with a judgment)
o Irrevocable v. revocable trust
o Mandatory v. discretionary distributions
o Voluntary v. involuntary alienation
o Spendthrift clause
o Is creditor a “super creditor?”
Brief snapshot of creditor/debtor issues in trusts
o In order to attach trust assets or potential distributions from a trust, a creditor needs a court order
 Before getting a court order, a creditor must get a judgment establishing the debt
 After establish the debt, a creditor will seek to discover a debtor’s assets
 In the case of a trust, a writ will then be served on a trustee
 Most trustees will refuse to comply, so a creditor must go back to court an receive an order
seeking compliance…charging order
o In general, the creditor can only reach what the beneficiary would have been entitled to reach
 As you know, in discretionary distributions, the beneficiary is not really entitled to reach anything
o Creditors will go after any other asset before attacking a debtor’s trust
 It is not easy for a creditor to reach into a trust
Creditors of a beneficiary who is NOT the settlor
 The creditors of a B who have a judgment, whether obtained before or after the B’s interest is created, can reach
assets in the trust only to the extent the B has right to demand assets or distributions.
o Thus, like the B, creditors of a B may be restricted in accessing the B’s interest in distributions of income
or property of the trust by
 (i) Spendthrift provisions
 Protects against both voluntary and involuntary alienation
 Provide protection within the context of both mandatory and discretionary distributions
 Standard provisions in trusts
o Standard provision  lend to B of trust at your peril (creditors will see your assets
when deciding whether to provide loans)
 Settlor-beneficiaries cannot put enforceable spendthrift clauses into their trusts
o Spendthrift clauses only protect non-settlor Bs
 Why are spendthrift clauses enforced?
o Settlor’s intent is paramount
 We are so protective of settlor’s intent and dead hand control
o We also have this idea that a trust is a conditional gift and the condition is that the
settlor’s intent be complied with
40
 And if the intent is not complied with, then no gift should be made
Exception to the spendthrift rule  Super creditors
o UPC 503: children owed child support; ex-spouses owed spousal support (alimony);
But NOT a tort judgment creditor.
 Keep in mind that “super” creditors cannot have a court require a trustee to
distribute to them directly if the distribution is discretionary, but rather they
have the ability to have a court ordering the payment of any future
distributions to them.
 (ii) The discretion of the trustee
 Mandatory distribution (and no spendthrift clause)  creditor can get a charging order
(within a reasonable time after the designated distribution date) that requires the trustee to
distribute the property directly to the creditor
 Discretionary distributions 
o UPC 504:
 A creditor cannot compel a distribution that is subject to the trustee’s
discretion, even if:
 The discretion is expressed in the form of a standard distribution
 The trustee has abused the discretion
o Note that a beneficiary can bring an action where there has
been an abuse of discretion
 Here, the creditor does not step into the shoes of the
beneficiary
 To the extent a trustee has not complied with a standard of distribution
or has abused a discretion:
 A distribution may be ordered by the court to satisfy a judgment or
court order against the B for support or maintenance of the B’s child,
spouse, or former spouse; and
 The court shall direct the trustee to pay the child, spouse, or former
spouse such amount as is equitable under the circumstances but not
more than the amount the trustee would have been required to
distribute to or for the benefit of the B had the trustee complied
with the standard or not abused the discretion.
 (iii) The standards for distribution imposed by the trust
o Like an onion, each of these restrictions adds a layer or protection for the B, warding off actions by the
creditors to collect.
 Mandatory distributions
 NO spendthrift
o Creditors of the beneficiaries will be able to compel (UTC 501)
 Spendthrift
o Only super creditors of the beneficiary will be able to compel (UTC 503)
 Super creditors: state or federal authorities (e.g., taxing authorities); children
owed child support; ex-spouses owed spousal support (alimony); creditors
who provided necessary good and services to the beneficiary.
 Discretionary distributions
 NO spendthrift
o Only super creditors of the beneficiary will be able to compel (UTC 504) to the extent
that a trustee has abused its discretion.
 Super creditors: children owed child support; ex-spouses owed spousal
support (alimony)…may include other super creditors
 Shelley: Are the children also potential beneficiaries?
o Easier to compel as a B, rather than as a creditor

41
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Spendthrift
o Only super creditors of the beneficiary will be able to compel (UTC 503, 504) to the
extent that a trustee has abused its discretion…may include other super creditors
 Super creditors: Super creditors: children owed child support; ex-spouses
owed spousal support (alimony).
When a creditor cannot compel a distribution, it can still go after the distributions after they have been dispersed,
but this process is much more difficult.
o Once property is distributed to a B, it is fair game for creditors.
Creditor of a beneficiary who IS also a settlor
 A creditor cannot defraud existing creditors through the creation of a trust
o See Uniform Fraudulent Conveyance Act
 Revocable trusts
o Assets of a revocable trust (and not merely the settlor’s interest in the trust) remain reachable by the
settlor’s creditors, both during lifetime and at death.
 Attempt to prevent a settlor from circumventing creditors’ claims.
 Irrevocable trusts
o A creditor or assignee of the settlor may reach the maximum amount that can be distributed to or for the
settlor’s benefit
 Exception: asset protection trusts (some “tax haven” countries/states permit non-residents to establish irrevocable
trusts that benefit the settlor while denying the settlor’s creditors the right to reach the assets in those trusts)
o Requirements:
 Shelter is not available for existing debts; only those liabilities that arise after the trust is
established and funded are protected
 The trust must be irrevocable
 The settlor may not be a mandatory beneficiary, only a discretionary beneficiary
 The settlor may not be a trustee
 Some assets of the trust and the trustee must be located in the state where the trust is
established and administered
o In AK, for example, no RAP, so dynasty/perpetual trusts permitted
o Other states that have also changed their trust laws to make self-settled trusts more safe from the claims of
creditors (though not necessarily as safe as AK)
 CO, DE, HI, MO, NV, NH, OK, RI, SD, TN, UT, WY
MODIFICATION AND TERMINATION OF TRUSTS
[66-69]
INTRODUCTION
Issue
 When can those associated with a trust revoke, amend, or modify a trust?
 First question: to what extent do the terms or the trust speak to these issues?
o If the settlor sets out modification procedures, the beneficiaries must be sure to follow them
 Second question, with respect to questions not addressed by the trust itself what do the default rules of the UTC
say?
o UTC presumption…trusts are presumed to be revocable
 If you are the settlor and want the trust to be irrevocable, you must establish that explicitly
 The UTC is quite liberal with respect to how a settlor can revoke a trust
o However, keep in mind that the flexibility allowed in structuring trusts, should limit the need for the
modification and termination of trusts.
Revocable trusts
42
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Power retained by the settlor to modify or revoke
o UTC 602: trusts are PRESUMED to be revocable, unless the settlor states otherwise
 Some other states still presume irrevocability
o The S may revoke OR amend a revocable trust:
 By substantial compliance with a method provided in the terms of the trust; or
 If the terms of the trust do not provide a method or the method provide is not expressly made
exclusive, by:
 A later will or codicil that expressly refers to the trust or specifically devises property
that would otherwise have passed according to the terms of the trust; OR
 Any method manifesting clear and convincing evidence of the S’s intent
o A settlor normally revokes a trust by giving written notice to the trustee (often both positions are held by
the same person) and taking back title to the property.
 If settlor is trustee, delivery is automatic.
 If someone else is trustee, settlor must send the revocation to the trustee.
Revocation by someone acting for the settlor
o A revocable trust does not necessarily become irrevocable if the settlor loses capacity. The settlor may
regain capacity and be able to modify or revoke the trust herself, or someone may be able to modify or
revoke the trust on the settlor’s behalf.
Irrevocable trusts  not as easily terminated as revocable trusts
 Planning measures that make modification unnecessary (trusts are incredibly flexible):
o Standards of discretion that give the trustee a broad range of discretion
o A definition of spouse that would include only the person to whom the S or a B is currently married so that
divorce will terminate any beneficial interest for the person
o A provision giving the beneficiaries the power to replace the trustee with a different, independent trustee
o A provision giving the trustee the power to make loans to Bs
o A provisions giving the trustee the power to change nondispostive provisions of the trust
o Powers of appointment exercisable by a spouse of other B
 Modification or termination with settlor’s consent
o A noncharitable irrevocable trust may be modified or terminated upon consent of the settlor and all
beneficiaries, EVEN IF the modification or termination is INCONSISTENT with a material purpose
of the trust
 Modification or termination without settlor’s consent (usually after settlor’s death)  The law makes
modification after the S’s death difficult, however, especially when the desired modification may conflict with a
material purpose that the S had in establishing the trust. If the settlor is still alive, modification will be even more
difficult because the S can argue against the modification.
o Material purpose doctrine
 Modifications by Bs will be permitted only if the modification is not contrary to a material
purpose of the settlor.
 What are the purposes? Which are material? What modifications would be inconsistent?
Hard questions. Fact-based analysis required.
o Modification by consent of the beneficiaries
 UPC 411: If NO material purpose of the trust would be frustrated by its
termination/modification, the beneficiaries can agree to a termination/modification, if ALL of
the Bs consent.
 UPC 411: Even if ALL Bs DO NOT agree, a court may authorize
termination/modification if:
o All Bs had consented, the trust could have been modified/terminated under this
section, AND
o The interests of a B who does not consent will be adequately protected.
 UPC 411: a spendthrift provision is not presumed to constitute a material purpose of the trust.
43
o Representation
 If a living, competent, adult B has exactly the same interest as Bs who are not legally able to give
consent, then the consent of the living, competent, adult B will bind unborn or unascertained Bs.
 UPC 305: a court may also appoint a representative
o A representative may consider general benefit accruing to the living members of the
individual’s family in addition the individual
o Changed circumstances – equitable deviation -- UPC 412
 The court may modify the administrative or dispositive terms of a trust or terminate the trust if,
because of circumstances not anticipated by the settlor, modification or termination will
further the purposes of the trust. To the extent practicable, the modification must be made in
accordance with the settlor’s probable intention.
 The court may modify the administrative terms of a trust if continuation of the trust on its existing
terms would impracticable or wasteful or impair the trust’s administration.
 Upon termination of a trust, under this section, the trustee shall distribute the trust property in
a manner consistent with the purposes of the trust.
o Modification to fix a mistake – UTC 415
 The court may reform the terms of a trust, even if unambiguous, to conform the terms to the
settlor’s intention if it is proved by clear and convincing evidence that both the settlor’s intent and
the terms of the trust were affected by a mistake of fact or law, whether in expression of
inducement.
o Small trust termination -- UTC 414
 After notice to the QBs, the trustee of a trust consisting of trust property having a total value less
than $50,000 may terminate the trust if the trustee conclude that the value of the trust
property is insufficient to justify the cost of administration.
 The court may modify or terminate a trust or remove the trustee and appoint a different trustee
if it determines that the value of the trust property is insufficient to justify the cost of
administration.
 Upon termination of a trust, under this section, the trustee shall distribute the trust property in
a manner consistent with the purposes of the trust.
o Modification to achieve tax objectives – UTC 416
 To achieve the settlor’s tax objectives, the court may modify the terms of a trust in a manner
that is not contrary to the settlor’s probable intention. The court may provide that the
modification has retroactive effect.
o Combination and division of trusts – UTC 417
 After notice to the QBs, a trustee may combine two or more trusts into a single trust or divide
the trust into two or more separate trusts, if the result does not impair rights of any B or
adversely affect achievement of the purposes of the trust.
TERMINATION
 According to the terms of the trust (UPC 410): a trust terminates to the extent the trust is revoked or expires
pursuant to its terms, no purpose of the trust remains to be achieved, or the purposes of the trust have
become unlawful, contrary to public policy, or impossible to achieve.
 By agreement (UTC 411): if the settlor and all the Bs agree, they can terminate the trust.
 Without settlor consent or after the settlor’s death (UTC 411): all the provisions discussed in connection with
modification also apply to termination.
POWERS OF APPOINTMENT
POA, INTENT TO CREATE POA, EXERCISE OF POA
INTRODUCTION
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[69-74]

Now, we are moving away from out study of trusts and into our study of wills
What is a POA?
 An incredibly flexible estate planning technique that allows someone trusted to make property decisions in the
future.
What are the issues re: POAs?
 Who the characters are with respect to POAs?
 The different types of POAs.
 Power of donee of POA v. Power of trustee of trust?
 Intent to create a POA?
 The manner in which a donee exercises a POA and the extent to which the donor’s instructions influence that.
 What if a donee appoints to an impermissible appointee?
 What happens if the donee never exercises a POA?
Power of Appointment v. Fiduciary duty
 POA: nonmandatory
o Donee can choose to exercise the power or not and can choose to exercise it arbitrarily, as long as the
property subject to the power is given to a permissible appointee
 FD: mandatory
o Trustee must exercise discretion, even if the trustee decides not to make a distribution, and a trustee cannot
act arbitrarily.
Terminology
 Donor: person who creates a POA
 Donee of power: person who holds the power and makes decisions using the power. The donee does not hold title
to the property and does not have beneficial interest in the property. The donee only holds a power to appoint the
property.
 Appointive property: the property subject to the power
 Permissible appointees or objects of power: the persons in whose favor the power can be exercised
 Taker in default: the persons who will take the property if the donee fails to exercise the power and the donee’s
power terminates (often at donee’s death)
 Powers of appointment
o Testamentary v. presently exercisable
 Testamentary power of appointment: a power that can be exercised only by will
 Presently exercisable power of appointment: a power the donee can exercise during life, through
an inter vivos instrument. A presently exercisable power is exercisable when it is granted.
o General v. Nongeneral
 General power of appointment: a power to appoint in favor of the donee, the donee’s estate, the
donee’s creditors or the creditors of the donee’s estate. A GPOA can be broad – to anyone – or
can be limited to one or more of the four categories listed – for example, to the donee. The
distinction between GPOA and NGPOA comes from tax law, and different tax consequences
follow depending on whether a power is G or NG.
 Power of withdrawal: the right to withdraw property, or a specified amount of property,
from a trust. A power of withdrawal is a GPOA, because the donee can withdraw
property for her own benefit.
 Nongeneral power of appointment: a that cannot be exercised in favor of the donee, the donee’s
estate, the donee’s creditors or creditor’s of the donee’s estate. A NG power can be broad – to
anyone in the world other than the donee, the donee’s estate, the donee’s creditors or creditor’s of
the donee’s estate – to the settlor’s descendants or to Harry and Georgette. A nongeneral power may
also be called a special power or a limited power.
45
o Exclusive v. Nonexclusive
 Exclusive POA: a power that can be exercised in favor of one group of permissible appointees, to
the exclusion of the other appointees. Most powers are exclusive powers.
 Nonexclusive POA: a power that must be exercised in favor of all permissible appointees, so that
each member of the group receives something. There is no requirement of equal distribution, and
the amount each appointee must receive can be the subject of controversy among the group of
permissible appointees. The default rule is that nongeneral powers are exclusive. Careful drafting
should clarify the donor’s intent.
INTENT TO CREATE A POA
 No special words are necessary, so disagreements arise:
o Outright gift with precatory words?
o POA?
o Trust?
EXERCISE OF A POA
 Donee must intend to exercise POA
o There is an incredible concern that there is not an accidental exercise of POA
 Effective exercise
o Donee must follow any directions provided by the donor of the power
 Presently exercisable  likely will have to give a written document to the trustee
 Testamentary  will have to exercise by valid will
 Specific reference
o To avoid inadvertent exercise of a POA, many donors (or their estate planners) provide that a document
exercising a power must include a special reference to the power.
o Restatement – Substantial compliance
 An attempted exercise should be effective if evidence shows that the donee intended to exercise the
power and that the way in which the donee exercised the power did not impair the donor’s
reason for imposing a requirement, including a requirement of specific exercise, or the manner
of exercise.
 If the reason for the requirement is to prevent inadvertent exercise, then substantial
compliance should be sufficient.
o Some courts, on the other hand, require strict compliance
 Policy reasons for strict compliance (below are themes that pervasive throughout the whole
course)?
 Channeling function
o This helps courts decide whether there has been an effective exercise of appointment
 Ambiguity is eliminated
 Protective
o Makes sure the donee knows what she is doing when she is exercising the POA
 Ritual
o Again, the process impresses upon the donee the seriousness with which the exercise
must be taken
 Evidentiary function
o This serves as evidence that the power has been exercised
 Donor’s intent
o Remember that we always want to protect the donor’s intent
 This cuts back to notions of protection and ritual listed above
 Exercise by a general residuary clause
o Specific reference NOT required
46

Sometimes the donor simply requires a donee to exercise a power “by will.” If the donor did not
require a specific reference and the donee did not provide a clear expression of the intent to exercise
a power, a will or other document may be ambiguous as to whether a power has been exercised.
 Majority
 A general residuary clause, without more, WILL NOT exercise a power of appointment held
by the testator.
 Minority
 A general residuary clause WILL exercise a general POA, if the residuary beneficiaries are
permissible appointees, unless there is contrary evidence (“the intention that the will is not to
operate as an execution of the power appears expressly or by necessary implication”)
 UPC 2-608
 A general residuary clause effectuates a POA only if:
o (1) The power is general AND there is no stated taker in default (no “gift in
default” clause), OR
o (2) The T’s will manifests an intention to include the property subject to the power
(whether the power is general or nongeneral)
 When there is a blending clause (“All the rest, residue, and remainder or my
estate, including any property over which I have a power of appointment, I
devise to…), an effective power will be deemed exercised, so long as NO
specific reference is required
 Blending clause, NO specific reference required Exercise
o Specific reference REQUIRED
 UPC 2-704
 Donor’s intentions for including a specific reference requirement were to avoid inadvertent
exercise of a POA.
 Mere use by the donee of a blending clause would be ineffective to exercise the power
because such a clause would not make sufficient reference to the particular power.
o If, however, it could be shown that the donee had knowledge of and intended to
exercise the power, the blending clause would be sufficient to exercise the power.
 Blending clause, specific reference REQUIRED  NO exercise, unless it
could be shown that the donee had knowledge of and intended to exercise
the power
o Best practices for exercising POA
 Look to grant of POA  is their a particular method required to exercise POA?
 Then, look to exercise  if there was a particular method required to exercise POA, was it
employed?
 In writing, donee should:
 Unambiguously express intent to exercise power,
 Identify the trust and the specific provision that granted the power,
 Clearly state to whom the appointment is made (making sure they are permissible
appointees),
 Provide what happens if appointee predeceases exercise, and
o If the appointee predeceases the donee, then, under the general rule, the exercise is
ineffective and the property will go to the takers in default or the donor’s or donee’s
estate, depending on the situation
 Whether any conditions apply
o Exercise in further trust
 A general power may be exercised to appoint the property in feel simple as well as subject to
further trust or to a new POA. Since the done of a general power could appoint to herself and then
use the property to establish a trust or give the property to a donee subject to a further power, the
47
law permits the original donee to accomplish this result without the intermediate step of
appointing the property to herself.
o Impermissible exercise
 A POA can only be exercised in favor of the permissible appointees. If a donee attempts to
exercise the power in favor of someone who is not a permissible appointee, the attempted
exercise is invalid, and the property will go to the takers in default.
RELEASE, FAILURE TO EXERCISE AND AN EXPRESS STATEMENT OF NONEXERCISE [74-75]
Release, Nonexercise, Expressly refraining from exercise  lapse
 Release
o Donee has given up control of the power and no longer has the ability to decide who will take it
o Donee will notify the trustee, and the takers in default, if there are any, will have certainty about the
ultimate distribution of the property.
 Nonexercise
o Donee decides not to exercise the power because he thinks the TID should take the property
 Or donee may forget to exercise power or not even known he has the power
 Expressly refraining from exercise
o If a donee wants to make sure TID take, an express statement is appropriate
 This is because general residuary clause may serve to exercise a power (inadvertently)
 Who takes?
o Takers in default  they get the property
 Partially invalid exercise (some of the exercise affords property to impermissible appointees)
 Court could decide that the exercise is wholly invalid
o Then, TID take
 Court could reapportion the exercise and give an equal share to the permissible appointees
 Court could decide that the exercise to the permissible appointees is valid, and then they
would divide the exercise to the impermissible appointees among the takers in default
o NO takers in default 
 Non-general POA
 If defined and limited class exists  permissible appointee
 If class is too broad  donor’s estate as a reversionary interest
o E.g., “to charities,” “my friends”
 General POA
 Nonexercise  Donee’s estate, unless the terms of the grant of the power provide otherwise
 Release or express release  donor or donor’s estate, as a reversionary interest
 Why the difference here?
 A general power gives the donee the power to appoint to himself, his descendants, etc.
 In part, this is a also for tax reasons. All property subject to a general POA is subject to
taxes.
Contract to exercise power
 Donee’s power is currently exercisable
o Contracting is allowed
 GPOA
 Donee CAN exercise the power in a way that benefits himself because he is a permissible
appointee
 NGPOA
 Donee CANNOT exercise the power in a way that benefits himself because he is NOT a
permissible appointee
o Failure to exercise power as required by contract
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
 Specific performance, among the other various contract remedies, is available
Donee’s power is testamentary
o Contracting is disallowed until the donee dies
 GPOA
 Donee CAN exercise the power in a way that benefits himself because he is a permissible
appointee
 NGPOA
 Donee CANNOT exercise the power in a way that benefits himself because he is NOT a
permissible appointee
o Failure to exercise power as required by contract
 If NOT a taker in default, only a claim for restitution is available
 Specific enforcement is not available
Creditors of donee of a GPOA
 Common law
o Creditors could not reach property, even that subject to a GPOA
 UTC, UPC, Restatement
o Creditors can reach as much of the property as the donee of POA can
 This is clear with respect to general power
 With regards to limited powers, the creditors have no ability to reach into the trust property
TAX ISSUES
[75-76]
NGPOA v. GPOA
 NGPOA  NOT taxed
o NGPOA helps avoid the IRS and creditors
 GPOA  MAYBE taxed
o GPOA is equated with ownership/control
o Ascertainable standard  NOT taxed
 Safe harbor: “health, education, maintenance, support”
o Non-ascertainable standard  taxed
 If exercise is currently exercisable, property is taxed like a gift
 If exercise is testamentary, property is taxed as if included in donee’s estate
 Safe harbor: “welfare and best interests”
WILLS – VALIDITY AND EXECUTION
INTRODUCTION
[77-78]
Functions of wills
 Why do people make wills?
 What property can be disposed of in wills?
o Probate estate, which is everything that is not passed outside of probate
 Anything the testator owns in fee simple
 Tenancy in common/community property interest
 Property subject to a testamentary power of appointment
 Photos, jewelry, heirlooms, etc.
 This highlights why wills should not be understood as simply an instrument of the wealthy
 Property that can NOT be disposed in wills…nonprobate property
 Other functions of wills
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o Revoking and/or setting up trusts
Validity of wills
 Only a validly executed wills are capable of passing along property
 You can execute wills until the day that you die
o The most recently executed will is generally the one that is valid
Framing questions
 (1) What requirements should (and do) statutes impose for execution of wills?
 (2) Why? What purposes do these requirements serves?
 (3) How should courts treat documents (“wills”) not executed with these formalities?
o What happens to the decedent’s estate?
Will execution ceremony – best practices for the process under the UPC (also see D. Johns on page 468)
 Review the will with the client
 Making sure that you have two witnesses that can confirm that she has capacity to enter into the will and could
provide persuasive testimony to that effect if need be
o Paralegals are good
 They are familiar with the will execution ceremony and would provide particularly persuasive
testimony
o It could be someone that she knows
 Under the UPC, it could be someone that is interested in the execution of the will
 However, doing so may not actually be prudent
o Witnesses don’t need to know what’s in the will
 Witnesses need to know that the document is in fact a will
 Witnesses need to see the will
 Will has to be in the presence of the witnesses (Kirkeby)
 Witnesses need to see the testator sign the will or acknowledge his signature or the will
 OR, you can get a notary instead of witnesses (under the UPC)
o Keep in mind that the UPC has not been adopted in the majority of states
o Most state statute will not waive the witnesses requirement if one’s will is notarized
 Ask the client to acknowledge the will as her own
o However, there is no requirement of publication in most states
 Nonetheless, these kinds of ceremonial aspects serve to impress upon everyone the seriousness, the
solemnity, and the ritual nature of the ceremony
 Have testator initial, date, and number each page of the will
 You may want to witness to declare that the document is a will
o And you may want to have this videotaped
o This helps the witnesses understand the ritual nature of the proceeding
 Now, the testator may sign the will
o You want the testator to sign her will at the bottom of the last page
 Then, you have the witnesses sign
 If you are doing a “self proved” will, you have to get a notary (not to replace the witnesses though)
 Do you want her to fully execute a second copy?
o No.
 You do not want any discrepancies or any problems misplacing one of the wills.
o You want one original will, and copies of that original will.
 Only when validly executed, does this will supersede other previous wills
o However, you can go back to your attorneys and revive a previously revoked will so long as you exercise
the required formalities (e.g., exercising a codicil)
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David Johns material
 Even though this was written 20 years ago, the information included is still relevant
o This shows the encrusted nature of the law associated with wills
 Anything that surprised you?
o The elimination of jokes, humor, sarcasm, etc.
o The probate process is controlled by the state where the decedent died
 This may very well be different from the state where the will was executed
 This is another reason why attorneys really try to cover their bases in proceeding with
formalities in will rituals
o E.g., having three witnesses when not that many are even required
 Best practices v. statutory requirements
REQUIREMENTS FOR A VALID WILL
[78-84]
Extrinsic evidence
 UPC 2-502: intent that a document constitute the T’s will can be established by extrinsic evidence, including, for
holographic wills, portions of the document that are not in the T’s handwriting.
LEGAL REQUIREMENTS
(1) Age and testamentary capacity
 Age – usually 18
 Testamentary capacity
o Three-prong test (POPI):
 (1) must understand she is making a will
 (2) must know the extent and character of her property; and
 (3) must know the natural objects of her bounty, who are generally recognized as the T’s close
relatives
 Must be of sound mind
o You may want to ask some basic questions to establish this
 Free of undue influence, duress, or fraud
o You probably do not want to have disfavored heirs or even family members in general there
(2) Testamentary intent
 D intended the document to be a will and to become operative on her death
o A strong, but rebuttable, presumption of testamentary intent exists if the will contains language to that
effect, such as “This is my last will and testament.”
FORMALISTIC REQUIREMENTS – UPC 2-502
Formalistic requirements
 Applies to wills and codicils or any attempts to dispose of probate property at death
 Compare to will substitutes
Functions served by having formalities
 The evidentiary function: they assure that permanent reliable evidence of T’s intent exists
 The channeling function: they assure that the T’s intent is expressed in a way that understood by those who
need to interpret it. Formalism also assures that the document enters the legal system in a manner that courts (and
personal representatives) can process routinely and without litigation.
 The ritual (cautionary) function: they assure that the T’s intent to dispose of property is serious and that the T
understands this is a will. The formal requirements assure that the document is final and not a draft.
51

The protective function: they assure that the T is protected from her own lack of capacity. They assure that T’s
intent is not the product of undue influence, fraud, delusion, or coercion. The formal requirements also assure
that the document and signatures are not the productions of forgery or perjury.
(3) The writing requirement
 Most states do not recognize oral wills.
o However, oral wills are generally limited to situations involving imminent death on the battlefield
 Some states may allow oral wills in the face of imminent death, even outside of the battlefield
 Courts prefer paper writing, but the writing requirement has been broadly construed to include a “medium that
allows he markings to be detected” (Restatement)
 Dated? – not normally required but helps establish order of wills if more than one
 What about electronic wills? See NV statute on p.448-49…NC would enact NV statute along with a witness
requirement or requirement that a camera record the drafting process, so that it to prevents fraud
o Unlike NV, the UPC does not allow for a digital writing`
(4) The signature requirement
 Required by all states and the UPC
 Where to sign
o A T’s handwritten name in freestanding form at the end of the document unquestionably satisfies the
signature requirement.
 UPC does not require the signature to be at the bottom.
 UPC/Restatement: courts should not deem a name in an exordium alone to meet the signature
requirement unless there is additional evidence that the person “adopted the document as his or her
will.”
 How to sign
o Best evidence would be for T to signs her full name on the signature line.
 However, other means have been allowed to indicate that the T had the intent to make the document
her will.
 Some states allow an individual to guide the T’s hand so long as there is other evidence of
intent.
 Who can sign
o Some other individual in the testator’s conscious presence and by the testator’s direction
 Conscious presence
 Person must be within the range of the T’s senses such as hearing: the signing need not have
occurred within the T’s line of sight.
o What about telephonic presence? The law is unchartered here, so engaging in this
should come only as a last resort.
(5) Publication
 Historically, the T was required to “publish” the will by signifying to the attesting witnesses that the document she
was asking the witnesses to sign was her will.
o Strict publication consistent of the testator explicitly saying to the witnesses, “This is my last will.”
 Even thought the UPC and most states DO NOT require “magic words,” doing so may be wise because it provides
good evidence of testamentary intent.
(6) The witness requirement
 Must be “witnessed,” i.e., signed by two or three people other than the T, in order to be valid.
o A witnessed will is also called an “attested” will
 Only PA does not require witnesses
 Witnesses will provide good testimony of the T’s capacity and circumstances surrounding the will
 UPC 2-502 – 2 witnesses or notary (notarization not the norm in most states)
52




o (1) A will must be signed by two competent individuals, each of whom signed within a reasonable time
after the individual witnessed either:
 The signing of the will
 The T’s acknowledgement of that signature, or
 The T’s acknowledgment of that will.
o (2) A will must be acknowledged by the T before a notary public or other individual authorized by law
to take acknowledgments
Who may be a witness
o Must the T sign or acknowledge in the witness’s presence?
 The entire will needs to be presence of the witnesses and the witnesses must be able to see the
entire when the T signs/acknowledges it as his will. (Kirkeby).
 Also, the T must be in the conscious presence of the witness’s when signing or acknowledging
(Kirkeby)
 Conscious presence
o Person must be within the range of the T’s senses such as hearing: the signing need
not have occurred within the T’s line of sight.
o Must the witnesses sign in the T’s presence?  in some states, but not under the UPC
When the witnesses must sign
o A witnesses must sign within a reasonable time after the individual witnessed either the signing or
acknowledgement of the signing or acknowledgment of the will by the T.
 Witnesses can sign after the T’s death so long as they sign within a reasonable amount of time
Interested witnesses
o UPC
 Interested witnesses DO NOT invalidate any portion of the will
o Purging statutes
 Interested witnesses do not invalidate the will, but the shares of each interested witness are purged
and those interested witnesses are left with the shares they would have taken under intestacy.
Proving the will – UPC 3-406
o The self-proved will
 A will may be simultaneously executed, attested, and made self-proved, by acknowledgment
thereof by the T and affidavits of the witnesses, each made before an officer authorized to
administer oaths under the laws of the state in which execution occurs and evidenced by the
officer’s certificate, under official seal, in substantially the following form…see p.466
 If a will is self-proved, it satisfies the requirements for execution without the testimony of
any attesting witnesses, upon filing the will and the acknowledgment and affidavits annexed
or attached to it, unless there is evidence of fraud or forgery affecting the acknowledgment
or affidavit. UPC 2-504.
o Conclusive, rather than rebuttable, presumption established without the testimony
of witnesses.
 When a witness signs a SPA, she is affirming that she has already performed
the function of a witness to a will
 So, the SPA serves as an affidavit and serves as a substitute for witness
testimony at a hearing or other legal proceeding
 What if someone wanted to challenge a self-proved will?
 Even though there is a conclusive presumption that all of the will
formalities have been complied with, this has nothing to do with
whether or not the testator was mentally competent.
o In short, would have to testify to circumstances surrounding
the execution that indicate fraud, forgery, or the testator’s
mental incapacity.
o The notarized will
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
A notarized, but not self-proved will creates a rebuttable presumption that the will satisfies the
requirements for execution upon filing.
o Not self-proved or notarized – attestation clause
 A witnessed, but not notarized or self-proved, will requires the testimony of at least ONE of the
attesting witnesses to establish proper execution if the witness is within the state, competent, and
able to testify. Proper execution may be established by other evidence including an affidavit of an
attesting witness.
 An attestation clause that is signed by the attesting witness raises a rebuttable presumption that
the events recited in the clause occurred.
 A will with an attestation clause can be probated even if witnesses do not have a memory of
signing as long as they can identify their signatures and the testator’s signature is correct.
 Can also use an attestation clause to impeach a hostile witness
 When a witness signs an attestation clause she is expressing a present intent to be a witness
to a will
HOW A DOCUMENT CAN BE ESTABLISHED AS A WILL W/O REQUISITE FORMALITIES
[84-91]
HOLOGRAPHIC WILLS





What is holographic will?
How is it different from other wills?
o It is handwritten in the testator’s handwriting
 How much of the will must be handwritten is subject to enormous dispute
What formalities are required with respect to holographic wills?
o There are no formalities that go along with actually having a holographic will
 You don’t need the will execution ceremony if the will is written in the testator’s handwriting and
signed by the testator
How many witnesses?
o None usually
Only about half of the states allow holographic wills
o Why DON’T the rest of the states allow holographic wills?
 They undermine the formalities and protections that regular wills have
 No witnesses – no protective function
 You can just impetuously send out a letter, etc. -- no ritual function
 Letters, etc. don’t look like wills and this can cause problems for the courts -- no channeling
function
 Harder to discern T’s intent -- no evidentiary function
o Why DO the rest of the states allow holographic wills?
 Holographic wills arguably show a true expression of the testator’s intent
 No using a lawyer as a conduit
 The handwriting of the testator establishes the authenticity of the document, so there is no
need for anything else to establish the authenticity of the document
Must be handwritten (holographic wills)
 A typical first-generation statute provides that:
o “A holographic will is one that is entirely written, dated, and signed by the hand of the testator. It is subject
to no other form, and need not be witnessed.” (10 states mostly in S. Central and Mid-Atlantic).
 A typical second-generation statute provides that:
o “A will which does not comply with the requirements for an attested will is valid as a holographic will,
whether or not witnessed, if the signature and the material provisions are in the handwriting of the
testator.” (7 states).
54

 “I give, bequeath, and devise” needs to be in testator’s handwriting
A typical third-generation statute provides that:
o “A will which does not comply with the requirements for an attested will is valid as a holographic will,
whether or not, witnesses, if the signature and the material portions of the document are in the handwriting
of the testator.” (7 states & UPC 2-502 (b)).
 The words identifying the property and the devisee must be handwritten; also, the T must add
his signature
 “I give, bequeath, and devise” needs NOT be in testator’s handwriting
Different “generations” re: pre-printed will forms
 1st – you cannot use a pre-printed will form
 2nd – you can use a pre-printed will form only if you can discern the testator’s intent after eliminating all preprinted language (Muder – court did a 3rd analysis under a 2nd statute because they could discern T’s intent and did
not want to be nonsensically constrictive).
o Material provisions: generally defined as the words of gifting, not just to whom the gifts go
o Surplusage theory
 Courts will looked a the will as a whole and strike out any provision which are not in the T’s
handwriting. If what’s left evidences sufficient intent to make a will and identifies who is to get
what, the court will validate the instrument.
 3rd – you can use a pre-printed will form so long as the words identifying the property and the devisee, along
with the signature, are all handwritten
o Material portions: words identifying the property and the devisee, along with the signature, are all
handwritten
o The goal of a third-generation statute is to give effect to testamentary intent
 A court looking at a will under a third-generation statute is likely to validate a will so long as a the
intent is easily discerned.
o Under a 3rd generation regime, if the testator types up her will, at least the words identifying the property
and the devisee must be handwritten for the will to be valid
o Also, note that a failure to sign could be fatal for the validity of the will, but the failure to date will not
be fatal for the validity of the will
Testator’s intent
 A document written entirely by the D need not be witnessed to be a will, but not ever handwritten document is
intended to serve as a will.
 Another issue that arises in connection with holographs is whether the D intended the writing to constitute a
will.
 Kuralt
o Consider: “I’ll have the lawyer visit the hospital to be sure you inherit the rest of the place in MT.”
 Does this indicate testamentary intent?
 Is this dispositive, or does it merely suggest that T will meet with a lawyer for the purpose of
creating a testamentary instrument in the future?
(2 + 3) SUBSTANTIAL COMPLIANCE + HARMLESS ERROR
Concepts
 Now that you know the formalities – what are their drawbacks?
o They can be intent-defeating
 You may not know where to start with the will process
 You may know where to start, but you may hit a speed bump in fulfilling all of the formalities
o The whole process may be difficult and intimidating – making sure that a will is actually going to be valid
55
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
To assure that your will is properly executed, you will probably have to go to the attorney and go
through all of the old, formalistic, ritualistic proceeds
 This process can also be costly
o No benefits
 Especially when compared to the ease of entering into will substitutes
The evolution of substantial compliance and harmless error
o The goals of this movement has been to reduce the number of otherwise valid wills that would have been
invalidated under strict formalistic analyses
o Also, this movement seeks to close the gap between wills and will substitutes by ushering wills into the
modern era
Substantial Compliance
 The vast majority of states still require a two-step process:
o (1) are the formalities met, and
 This step is not considered under harmless error regimes, instead harmless error regimes look just
to whether the document was intended to be the testator’s will
 But this proves somewhat circular because compliance with formalities is often used in
establishing T intent under the harmless error doctrine
o (2) what was the testator’s intent?
 If step (1) is not meet in those states, then the court may not proceed to step (2)
 Example
o Snide
 Textbook example of substantial compliance: “crossed wills” case
 The court says that they know the formalities serve their purposes, but the testator’s intent was
very clear in this case
 The court declined the formalistic view that testamentary intent attached irrevocably to
the document prepared, rather than the testamentary scheme it reflects
o Strong language
 Another way to read this case is to keep in mind that the mistake in this case is the attorney’s
 The attorney should be penalized, not the dead testator
Harmless Error -- UPC 2-503:
 Although a document or writing added upon a document was not executed in compliance with Section 2-502, the
document or writing is treated as if it has been executed in compliance with that section if the proponent of the
document or writing establish by clear and convincing evidence that the decedent intended the document or
writing to constitute
o (i) the decedent’s will,
o (ii) a partial or complete revocation of the will
o (iii) an addition to or an alteration of the will, or
o (iv) a partial or complete revival of his or her formerly revoked will or a of formerly revoked portion
of the will
 The harmless-error rule effectively reduces the presumption of invalidity applicable to a defectively executed will
from a conclusive on to one that is rebuttable by clear and convincing evidence
 NOTE: keep in mind that for the exam, Cahn usually informs us whether UPC 2-503 has been enacted in the
jurisdiction -- this is because 2-503 has not been enacted in that many states
 It doesn’t matter if any formalities have been complied with so long as the document was intended to be the
testator’s will -- will is to be treated as if it complied with all requirements
o This is an intent-promoting doctrine
 What errors may be deemed harmless?
o Wilfong
 “Technical drafting mistakes should not be allowed to frustrate decedent’s testamentary intent”
56

“The greater the deviation from the requirements due execution, the heavier the burden on the
document’s proponent to prove, by clear and convincing evidence, that the instrument establishes the
decedent’s intent.”
o Missing one witness may be a harmless enough error
 Missing T’s signature probably will not be a harmless enough error
Substantial compliance v. dispensing power/harmless error
 SC allows for probate when the T substantially complies with the will formalities in a way that serves the purposes
of the will’s formalities
 HE excuses non-compliance with the statutory formalities if there is clear and convincing evidence that the
decedent intended the document to be his will
 Example
o Theodore Dw…
o Theodore Dwight didn’t quite sign his full name to his because he died before he could finish
o …probably want to use substantial compliance here
CHOICE OF LAW


UPC 2-506:
o States recognize the validity of wills executed by its own law or elsewhere if the will meets the
requirements of the state in which it was executed.
T’s may specify which state’s law control the various provisions in their wills
o Intestacy statutes of another state may be chosen, but not another state’s probate laws cannot be chosen to
administer the estate
 Remember that under conflict of laws doctrine, wills will generally be probated in the place of
your last residence – usually where you die
 However, keep in mind that ancillary probate of real property left through the will is done
in the state where real property is located
ETHICAL ISSUES IN WILL DRAFTING
[91]
Ethical issues
 Lawyer may not seek appointment executor, but may accept if asked
 Lawyer may include clauses limiting liability, but must receive the informed consent of a client to do so
 Lawyer should not name himself as a B in a client’s will, unless he is a relative
o “relative” is defined quite broadly
 Lawyer may represent husband and wife, but must receive the informed, written consent of each client
 Lawyer may prepare a will of a T when recommended to do so by a B, but he must receive T’s informed consent
 Duty to produce and keep the will
o UPC 2-515
 A will may be deposited by the T or T’s agent with any court for safekeeping, under rules of the
court. The will must be sealed and kept confidential. During the T’s lifetime, a deposited will must
be delivered only to the T or to a person authorized in writing signed by the T to receive his will.
o UPC 2-516
 After the death of a T and on request of an interested person, a person having custody of a will of
the T shall deliver it with reasonable promptness to a person able to secure its probate and if
non is known, to an appropriate court. A person who willfully fails to deliver a will is liable to
any person aggrieved for any damages that may be sustained by the failure. A person who
willfully refuses or fails to deliver a will after being ordered by the court in a proceeding brought
fro the purpose of compelling delivery is subject to penalty for contempt of court.
57

Drafting software
o Mistakes and the unauthorized practice of law
INTERPRETING THE WILL
INTRODUCTION

[91]
Turning to the section figuring out what documents are part of a will, when you have already established that
you have a will
o This section provides doctrines that tell you what constitutes the valid will, how to interpret the valid will,
and what to do if the circumstances change
Donor Intent Controls
 Words of the document are the best indication of donor intent if they are clear, unambiguous and address the
situation
o Keep in mind that it is very hard to divine the T’s individual intent from the language of a will
 Otherwise look to the rules of construction in statute
WHAT CONSTITUTES THE WILL?
[92-95]
Integration
 T’s will includes those pages/provisions that were “integrated” into the will
o “Integrated”
 Were physically present when T executed the will, and
 T intended these documents to be part of the will
 One way to handle this issue is to have the T initial each page of her will
Incorporation by Reference
 Not quite as broad as harmless error, but there is a tendency to incorporate whatever you can by reference
 UPC 2-510
o A 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.
 Requirements
o (1) A writing
o (2) Other writing must actually be in existence when will is executed
 The writing will be hold out as what it was on the date of the will’s execution
o (3) Will must show T’s intent to incorporate the other instrument
 In order to show intent there is no magical words, but the more specific the T is about what is being
incorporated, the more likely it is that the document will be deemed to be incorporated into the will
o (4) Will must identify the other instrument with reasonable certainty
 Incredibly important to know the date of the will executed and the date of all other documents
Republication by codicil
 Codicil- term for a will that amends or supplements a prior will
 Updates date relevant for incorporation by reference
58
o Anything that has been done in between will and codicil can be incorporated by reference
Evens of Independent Significance
 The will must be self-contained but we can incorporate documents that already exist (backwards looking)
 The will can give a roadmap on who gets what based on future acts or events so long as they will happen or not
happen regardless of the T’s testamentary plan (forward looking)
 UPC 2-512. A will may dispose of property by reference to acts and events that have significance apart from
their effect upon the disposition 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.
o Be sure to refer to an event that is “clearly independent”
o Typical events: birth, death, and adoption of a child as well as the act of acquiring or disposing of property.
o Example: My principle residence in Bethesda at the time of my death to A, if she survives me. If she does
not, then to B.
 Any change in testamentary plan of giving must be accompanied by formalities
 Main issue to consider
o Determine whether the event was merely an attempt by the testator or some other person to effectuate
a change in the testator’s plan without having engaged in the requisite formalities.
Memorandum at Death
 UPC 2-513
o A will may refer to a written statement or list to dispose of items of TANGIBLE personal property
NOT otherwise specifically disposed of by the will, other than money.
o To be admissible under this section as evidence of the intended disposition:
 The writing must be signed by the T
 The writing must describe the items and the devisees with reasonable certainty
o The writing may be one
 To be in existence at the time’s of the T’s death
 Prepared before or after the execution of the will
 Altered by the T after its preparation
 That has no significance apart from its effect on the dispositions made.
 Note that this is completely separate from incorporation by reference.
o Under 2-513, the document does not have to be in existence when the will is created.
 A blatant exception to the rule that any change to one’s testamentary plan must be accompanied by
formalities – however, there are certain requirements
 Unless the T specifies otherwise, the will itself takes precedence over an external memorandum if the two
conflict.
Pourover Wills
 A provision in a will that transfers (“pours over”) some of the estate (usually the residue) into a trust
o Trust may be a previously funded and operating trust or a standby trust that is either already minimally
funded or not previously funded at all.
 However, if the revocable trust is unfunded (and UTATA is not effect) or the document is
unsigned, the doctrine of incorporation by reference may be used to give effect to the terms of the
trust, if the will adequately identifies the document and the intent to incorporate it. If
incorporation by reference must be used, the trust will be considered a testamentary trust and the
court will have jurisdiction over the terms of the trust, which will be considered a part of the
will. More importantly, any changes to the trust document after execution of the will cannot be
given effect under incorporation by reference.
 Trust becomes the dispositive document and since changes to a trust do not require the formalities that
changes to a will do, it allows changes more easily
59
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Let’s entire estate plan be accomplished with one document – the trust
INTERPRETING THE MEANING OF A WILL USING EXTRINSIC EVIDENCE
[95-96]
Resolving Ambiguities with Extrinsic Evidence
 Historically view
o Use of extrinsic evidence to resolve an ambiguity depended on whether the ambiguity was latent or
patent
 Patent (ambiguity apparent on face of document)  extrinsic evidence NOT allowed
 Historically, and sometimes still today, if the court found was patent ambiguity, the
clause fails and the property falls into the residuary clauses. If there is no residuary clause or
residuary heirs, then it would go to the testator’s heirs.
 Latent (ambiguity apparent only AFTER court allows EE in)  extrinsic evidence NOT allowed
 Historically, and sometime still today, if the court found a latent ambiguity, extrinsic
evidence was allowed in, and doing so would hopefully solve the problem.
o What explains reluctance to use EE?
 Reluctance to change the written words of a will without having gone through the requisite
formalities.
o Some jurisdictions still abide by patent/latent distinction, but most want to fulfill T’s intent.
 Drafting errors -- these situations are generally created by drafting errors
o Using language that is ambiguous
o Making a flat-out mistake
o Failing to ask the “What if…” questions
 Nevertheless, even still today, you still need an ambiguity to be able to bring in extrinsic evidence…
 Modern view of ambiguities
o The modern view is that extrinsic evidence will be allowed for any ambiguities (you don’t have to go
through distinguishing whether an ambiguity is patent or latent)
 Though not for mistake
 In the reformation of mistake context, the modern trend is to allow the use of extrinsic
evidence if the party could establish under the clear and convincing standard that there
was a drafter’s error.
o Restatement – what kind of EE may be considered:
 Evidence of the circumstances surrounding the execution of the donative document
 Whether the drafter of the document was a layperson (usually the donor) or ac person experienced in
the use of legal or other specialized terminology (usually the donor’s lawyer)
 Direct as well as circumstantial evidence relevant to the donor’s intention may be considered
 Although the primary focus is on the donor’s intention at the time of execution of the donative
document, post-execution events can sometimes be relevant in determining the donor’s intention.
Extrinsic evidence and mistake – reformation of wills
 The modern trend is to allow the use of extrinsic evidence if the party could establish under the clear and
convincing standard that there was a drafter’s error.
o Even if the will is unambiguous
RULES OF CONSTRUCTION
[96-100]
Interpretation analysis
 If intent is clear  apply T’s intent
 If intent is unclear  apply rules of construction
o Rules of construction are either statutes or judicial doctrines which assist the court in giving meaning
where the T’s intent is unclear.
60

If there is no rule of construction on point or if the rule supplies a rebuttable presumption as to what the T
meant  consider extrinsic evidence to determine T’s intent under the circumstances described above.
Constructional preferences
 Family members favored over non-family members
 Close family members favored over distant family members
 Do not disinherit a line of descent
RULES OF CONSTRUCTION RE: WILLS
Classification of devises
 Specific devise: a testamentary disposition of a specifically identifiable asset
 General devise: a testamentary disposition, usually of a specified amount of money or quantity of property, that
is primarily payable from a designated source, but is secondarily payable from the general assets of the estate.
 Demonstrative devise: a testamentary disposition, usually of a specified amount of money or quantity of
property, that is primarily payable from a designated source, but is secondarily payable from the general assets
of the estate to the extent that the primary source is insufficient.
 Residuary devise: a testamentary disposition of property of the T’s net probate estate not disposed by a specific,
general, or demonstrative devise.
Rules of construction applicable ONLY to wills
 What is included in a bequest of “all my property”?
o UPC 2-602: a will may provide for the passage of all property the T owns at death and all property
acquired by the estate after the T’s death.
 Highlights the law’s preference for testate, rather than intestate, distribution.
 Lapse and Antilapse (AL) – What happens to a bequest when the B predeceases the T?
o Inheritances can only be given to the living
 The traditional rule is that if the beneficiary is dead, his/her gift lapses or terminates or, in the
words of 2-604, fails.
o Traditional (lapse) rule – UPC 2-604
 Devise fails  Alternate beneficiary
 No alternate beneficiary 
 Devise, other than a residuary devise fails  bequest becomes part of the residue
 Residuary devise fails 
o Two or more residuary Bs  divided among surviving residuary Bs
o Only residuary B  distributed through intestacy
o The traditional rule still applies if the AL rules do not or if the will specifically says that a gift lapses if
the B predeceases the T.
o Antilapse rule – UPC 2-603
 Four elements required to apply AL:
 (1) intended B must predecease T or be deemed to have predeceased T
 (2) intended B must leave living descendants
 (3) intended B must be a protected devisee (very inclusive…covers almost all relatives who
would receive property if T died intestate)
o Protected:
 A family member by blood (in the grandparents line)
 A family member by legal adoption
 A family member by marriage (stepchild)
 …focus on bloodlines (stepchildren are an exception)
o Spouse is left out of this protected group…lapse rules apply to him/her
61
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(4) The will must neither provide for an alternative gift (to a “taker in default”) nor state
specifically that the AL rules are not to apply, because such a statement of intent would
superseded application of the default rules.
Class gifts – substitute gifts (SG)
 Not a class gift  SG is created in the devisee’s surviving descendants
o They take by representation the property to which the devisee would have been
entitled to had the devisee survived the T.
o Sometimes a determination of whether a gift is a class gift or not will dictate the
ultimate recipient of the property.
 A gift is more likely to be determined to be a class gift it is not individualized.
 Class gift 
o Member of class NOT protected by AL statute  AL statute will not apply; the
rest of the class will generally share in the gift
o Member of class protected by AL statute 
 Multi-generational gift  AL statute will not apply; surviving descendants
of a deceased devisee will be automatically substituted (through
representation) to receive to the deceased devisee’s share
 e.g., issue, descendants, heirs of the body, heirs, next to kin, relatives,
or family, or a class described by language of similar import.
o AL does not apply because the class gift itself is phrased in
such a way as to automatically substitute a member of the
younger generation if an ancestor predeceases.
 NOT a Multi-generational gift  AL statute will apply; surviving
descendants of a protected, deceased devisee will receive the protected,
deceased devisee’s share
 E.g., my siblings, my children
 If the deceased class member has NO descendant, the remaining class members would
benefit from his share
Contrary intent
 A T can trump the application of AL rules by clearly expressing a preference in a will for
who should receive the property in the event that the intended B dies first.
o The alternate B is generally referred to as a “taker-in-default.”
 To establish contrary intent, the T can :
 Establish takers-in-default
 E.g., “if X predeceased me, then it shall go to Y”
 Express the intention that he does not want the AL rules to apply
 E.g., “but if she predeceases me, the devise shall lapse and pass under
the residuary clause”
Words of survivorship
 Do mere words of survivorship automatically defeat the AL statute?
o Some courts have held that if the T explicitly requires the B to survive, then that
expresses an intent not to have AL rules apply to save the bequest by giving the
devise the B’s descendants.
o However, there is a trend to deem the mere inclusion of survivorship words
insufficient to override the application of the AL statute – mere words of
survivorship, absent additional evidence, do not directly contradict the statutory
substitute gift to the D’s of a deceased devisee (strong policy in favor of applying
AL rules)
 Drafting
62

To be safe, you would rather include “to my surviving children and not
to the descendants of a deceased child,” rather than “to my surviving
children”

AlternatE devise
 Creation of an alternative devise supersedes the substitute gift only if an expressly designated
devise of the alternative devise is entitled to take under the will.
o Analysis re: AL rules
 T’s intent
 Expressed intent not to have AL rules apply
 Words of survivorship (with additional evidence of intent not to HAVE AL rules apply)
 Alternate devise
 AL rules in default
 Traditional rules when AL rules do not apply
RULES OF CONSTRUCTION RE: WILLS AND WILL SUBSTITUTES
Survival
 Inheritances are meant to the benefit the intended B. But if he/she doesn’t survive for a long enough period,
this provision precludes B from receiving property and passing it along to his/her beneficiaries. Instead,
decedent’s property goes to alternate beneficiaries under the terms of the WS or will/antilapse statute (in the
case of WS, the alternate beneficiaries designated in the instrument itself will take the property).
 Wills v. WS
o A B under a will must survive the T in order to take a bequest. For WS, survival is not required unless the
document says so, but most WS required that a B survive.
o The document, whether a will or WS, can define what “survive” means.
 The below rules are default rules
 Issues
o Determining death – UPC 1-107
 Death occurs when an individual has sustained either:
 (i) irreversible cessation of circulatory and respiratory function, or
 (ii) irreversible cessation of all functions of the entire brain, including the brain stem
 A certified or authenticated copy of a death certificate purporting to be issued by an official or
agency of the place where the death purportedly occurred is prima facie evidence of the face, place,
date, and time of death and identity of he decedent
 An individual whose death is not established and is absent for a continuous period of 5 years,
during which he has not been heard from, and whose absence is not satisfactorily explained
after diligent search or inquiry, is presumed to be dead. His or death is presumed to have
occurred at the end of the period, unless there is sufficient evidence for determining that death
occurred earlier.
o Requirement of survival – UPC 2-702
 An individual who is not established by clear and convincing evidence of to have survived an
event, including the death of another individual, by 120 hours (5 days) is deemed to have
predeceased the event.
 Exceptions
 If the governing instrument contains language dealing explicitly with the simultaneous
death or death in a common disaster and that language is operable under the facts of the
case
 If the governing instrument provided a contrary definition of “survive”
 Policy
63
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

This type of survival rule prevents the bequest or devise from being probate in the T’s estate
and then again immediately in the B’s estate, incurring additional probate fees and perhaps
taxes.
The rule also ensures that the T’s property passes to her Bs rather than those of the named B.
Lastly, the rule may avoid difficult evidentiary questions that arise in connection with
simultaneous death.
Disclaimers
 A disclaimant is deemed to have predeceased the D, and the interest to which the disclaimant would otherwise
have been entitled (the “disclaimed interest”) passes as if the D died before the T (even though he did not actually
die). – UPC 2-1106
o Benefits of disclaimers
 Minimize taxation
 Avoidance of creditors
 Who may take the disclaimed interest?
o (1) a taker in default
o (2) a descendant of the disclaimant per the substitute gifts rules of 2-603 if a taker in default is not named
and the AL rules apply
o (3) others consistent with 2-604 if the gift lapses (a pre-residuary gift passes to the residuary Bs, a residuary
gift passes the to remaining residuary Bs, if any, or via intestacy, if there are no other residuary Bs)
 Requirements for a valid disclaimer – UPC 2-1105
o A person may disclaim, in whole or part, any interest in or power over property, including a POA.
 A person may disclaim an interest even if its creator imposed a spendthrift provision or similar
restriction on transfer or a restriction or limitation on the right to disclaim
o A disclaimer must be in writing or other record, declare the disclaimer, describe the interest or power
disclaimed, be signed by the person making the disclaimer, and be deliver and filed in the manner
provided by 2-1112
 When a disclaimer is barred or limited
o A disclaimer of an interest in property is barred if any of the following events occur before the disclaimer
becomes effective:
 (1) the disclaimant accepts the interest sought to be disclaimed
 (2) the disclaimant voluntarily assigns, conveys, encumbers, pledges, or transfers the interest sought
to be disclaimed or contracts to do so.
 Disclaimers serve as another way to rewrite the T’s testamentary plan without all of the requisite formalities
REVOKING THE WILL AND WILL CONTESTS
REVOKING THE WILL


[100-105]
Once the T has created a valid will, it will become effective upon her death, unless she revokes it or unless it is
successfully challenged.
o The requirements to revoke a will are far less onerous than the formalities required to create a will.
Requirements for a valid revocation
o (1) T had capacity to revoke
o (2) T had intent to revoke
o (3) T revoked in the proper way
Ways in which a will can be revoked
 By the testator
o Through subsequent instrument (SI) – UPC 2-507
 SI can revoke previous will expressly or impliedly, partially or wholly
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


Express revocation: a T may include an express revocation clause in a subsequent will
Implied revocation
 SI can wholly revoke previous will by inconsistency if the T intended the subsequent will to
replace rather than supplement the previous will
 If SI makes complete disposition of T’s ESTATE, then it is a presumed (and can only be
rebutted by clear and convincing evidence) that the previous will is revoked and the
subsequent will is operative on T’s death
 If SI does not make a complete disposition of T’s ESTATE, then it is a presumed (and can
only be rebutted by clear and convincing evidence) that the T intended the subsequent will
to supplement rather than replace the previous will, and thus have the subsequent will
revoke the previous will to the extent the subsequent will is inconsistent with the
previous will; each will is fully operative on the T’s death to the extent they are not
inconsistent.
 Cash devises
 Under CL, bequests are presumed to be cumulative.
o B would get the bequest in the subsequent instrument on top of whatever she was
originally set to receive.
 Under UPC, there is no presumption.
 Codicils
 Generally presumed to supplement.
o Through physical act – UPC 2-507
 Must be done with the requisite intent
 Can be done by testator or another individual within the conscious presence of the T
 Such physical acts may include burning, tearing, canceling, obliterating, or destroying the will or
any part of it.
 These acts are effective whether they touched any of the words of the will.
 Partial revocation may be achieved by canceling
 T may simply cross out the provisions he would like to cancel
o T should sign, date, and initial at each cancellation
 However, keep in mind that a bequest designated to replace the provision cancelled will
not be valid unless we can establish it by other means
o E.g., Holographic codicil
 Presumptions
 Mutilated will
o If the will is found with revocatory marks, the law creates a rebuttable
presumption that the T intended to revoke the will.
 The presumption can be rebutted by evidence that establish that the T did not
mutilate the will with the intent to revoke it.
 Lost will
o If the will is missing, the CL creates a presumption that the T destroyed the will
with the intent to revoke.
o Presumption applies when will is in T’s custody or he has ready access to it.
(Beauregard).
o Preponderance of the evidence is the standard that must be met to rebut the
presumption that a will seen, last in T’s possession and later not found, is no longer in
existence because T intended to revoke/destroy it (Beauregard).
 Extrinsic evidence can be used to overcome the presumption.
By law (dealing with both probate and nonprobate transfers)
o Through marriage
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
Most states now provide that marriage only revokes the will to the extent necessary to give the
spouse an intestate share. If you don’t want to have this happen, you will have to write a new
post-divorce will.
 The UPC expands this rule to limited the spouse’s share to amounts no devised to the T’s
children born before marriage who are not children or the spouse and to the
descendants of those children.
 Some states still revoke the will in its entirety if the T marries, but marriage will generally not
revoke the will if evidence shows the T did not intend that the marriage revoke the will or that the T
executed the will in contemplation of marriage.
o Through divorce
 Most states revoke bequests to a former spouse, any provisions of a power of a appointment to
the former spouse, and any nomination of the former spouse as a fiduciary.
 Other states and the UPC 2-804 extend this rule to the family members of the former
spouse.
o The former spouse and her family members are deemed to disclaim the property or
predecease the D and are precluded from taking or serving as a fiduciary.
 Keep in mind that any JTWROS will be severed and transformed into
tenancies in common.
 D’s half will not go to his wife, but rather his descendants.
 Also, some states and the UPC 2-804 apply this rules to wills and WS alike.
o Through murder – UPC 2-803
 A killer does not receive any bequests, any provisions of a power of a appointment, and any
nomination as a fiduciary.
 A “killer”
o Must determine that the killing was felonious and intentional under the
preponderance of the evidence standard
 The killer is deemed to disclaim the property or predecease the D and is precluded from
taking or serving as a fiduciary
o Keep in mind that any JTWROS will be severed and transformed into tenancies in
common.
 Many states and the UPC 2-804 still allows the killer’s descendants to take
 Also, some states and the UPC 2-804 apply this rules to wills and WS alike.
o Through abuse
 Still in a minority of jurisdictions
 Not in the UPC
 Serve to deal with elder abuse
 Also concerns dependent adults
 In short, it deals with caretaker abuse quite innovatively
 Designed to cut more broadly than if the caretaker kills the decedent
IMPACT OF REVOCATION
[105-108]
What occurs upon revocation
 Total revocation
o A will that is validly revoked cannot be probated.
o If the T does not have an earlier will, the T is treated as having died intestate.
 If the T had executed an earlier will or wills, then the most recent, unrevoked will may be
probated if one of the doctrines discussed below applies.
 Revival
 DRR
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
o If T has a later will, but that will does not apply because it has not been properly executed, we could
attempt to validate a new will thorough harmless error (2-503).
Partial revocation (fails)
o If taker-in-default exists  property goes to taker-in-default
o If NO taker-in-default  default rules kick in
 AL rules apply (for wills)
 AL rules do not apply
 Specific bequest  property goes into residuary
 Residuary bequest 
o Two or more residuary Bs  divided among surviving residuary Bs
o Only residuary B  distributed through intestacy
REVIVAL

Revival applies when the T has intentionally revoked a later will with the intent to revive all or part of an earlier
will that has been previously revoked. If revival applies, then revocation is effective and the earlier will or a
portion of it is revived and becomes the operative document.
UPC 2-509
 Revocatory acts (a + b)
o (a) Revocatory act that wholly revokes  previous will remains revoked (no revival), unless there is an
intent to revive
o (b) Revocatory act that partially revokes  revoked part of previous will is presumed to be revived,
unless intent shows otherwise
 Revocation by codicil will serve to revive the earlier will
o Example
 If Will #2 was revoked by a revocatory act (rather than a later will), the presumption is that the
previous will, Will #1, remains revoked and is not revived, unless Will #2 only revoked a portion of
previous Will #1, in which case it is presumed the portion previously revoked is revived.
 Later will (c)
o (c) Subsequent will that wholly OR partially revokes  previous will remains revoked unless there is an
intent to revive.
 Example
 Whether Will #1 that was revoked by a later will, Will #2, should be revived when the later
will is itself effectively revoked, either by another will, Will #3 or by a revocatory act. The
presumption is that the previous will, Will #1, remains revoked regardless of the revocation
of the later will, Will #2, by a third will, Will #3.
 Presumptions are rebuttable and extrinsic evidence may prove critical
 Why are there difference consequences when dealing with revocatory acts v. subsequent wills?
o When you have a subsequent will, there is presumption that a lawyer has been a part of the execution
process
 Even if no lawyer has been involved, you still have to go through at least some formalities (that
force you to consider the process in which you are engaging)
DEPENDENT RELATIVE REVOCATION (doctrine of ineffective revocation)


DDR applies where there is revocation of one document with the intent that another document take effect.
o EX: revival may not accomplish what the T has in mind if the T revoked a will as part of a plan to leave
property pursuant to a new will but the new will turns out to be invalid for one reason or another.
Restatement 4.3(a)(1) – Ineffective Revocation
o We pretend that a valid revocation is invalid so as to further T’s intent
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

 It is the doctrine of second best because we can’t give effect to the T’s true preference
o We engage in this legal fiction because the revocation of one will was conditional on the application of
another will, which later turned out to be ineffective
Analysis
o Look to 2-503 (harmless error) first
 2-503 should be considered in conjunction with the fact that the UPC allows for a broad variety of
non-traditional will validation techniques (e.g., holographic wills)
o If 2-503 will not apply, then apply DRR
 (1) Revocation based on mistake of law or fact; AND
 (2) T would not have revoked if T had known truth (goes to intent – intent to revoke is missing
because of mistake)
 From here, we have to decide whether it would be better for the first will to be probated or
whether the T should die intestate.
 Evidence considered under DRR to divine T’s intent:
 (1) the nexus between the revocation of the old will (or a part of it) and the attempted
execution of a new will or provision in terms of how close in time the two events were; and
 (2) how similar the terms of the two wills (or provisions) are
 The closer in time revocation and execution are and the more similar the terms of the two
documents, the more likely it is that a court will find that DRR is appropriate to apply.
Revival and DRR are litigation doctrines
o These doctrines will not be at the forefront of drafting attorneys during the will drafting process
WILL CONTESTS
[108-
Procedure for bringing contest
 Requires a formal testacy proceeding, even if will is being probated informally. Contestant must bring proceeding
within three years of death under UPC 3-401. Must be brought by interested party: spouses, heirs, devisees,
creditors, beneficiaries, etc.
o “interested party” -- someone who has some stake in this and who will benefit
 Burden of proof
o While the burden is on these presenting the will for probate, “the proponents,” to establish proper
execution, the burden then shift to those challenging the will, “the contestants,” to establish that the will is
valid.
Most common grounds for will contests
(1) Improper execution
 Proponent has the burden of presenting a properly executed document?
 If properly executed, contestant has the burden of establishing that the requisite legal requirements and formalites
were not complied with.
(2) Lack of testamentary capacity – general capacity and insane delusion
 Sound mind – two factors (Breeden):
o General capacity
 What T has to be aware of at time of execution (POPI) – T can fail to be of capacity before/after
the execution of the will (the theory of lucid intervals)
 (1) who the natural objects of his bounty are
 (2) that he is making a will
 (3) the extent of his property
 (4) how these three elements interrelate
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
o If you lack general capacity, the entire will is invalidated
 However, under the theory of undue influence, insane delusion, or mistake, just a particular
provision may be invalidated
o Ethics
 Lawyer has a duty to make sure that T has testamentary capacity
Insane delusion
o Contestant must show that the delusion had no basis in reality and that there was a (material)
CONNECTION between the delusion and the T’s bequest in the will.
o Question to ask: would the T have done something different but for the insane delusion?
(3) Lack of testamentary intent
 It must be evident that the T intended that the very document at issue to be the instrument that actually makes the
disposition of the T’s estate.
o A document that merely evidences an intention to dispose of the property is not a will.
 In some instances, a T’s conditional testamentary intent may very well NOT satisfy the requirement of
testamentary intent.
(4) Undue influence (often linked to a lack of testamentary capacity)
 Elements
o The existence and exertion of an influence
o The effective operation of that influence so as to subvert or overpower the T’s mind at the time of the
execution of the will
o The execution of a testament which the maker would not have executed but for such influence
 In essence, if the wrongdoer asserted such influence over the T that is infringed upon the T’s free will and
caused the T to make a transfer
 Red flags that put you on notice that there could be an undue influence issue
o A confidential relationship with a beneficiary capable of exercising undue influence over the testator
(Simmons)
 Restatement
 Three kinds of confidential relationships:
o Fiduciary
o Reliant
o Dominant
 In GA, a state requires that in addition to a confidential relationship with a beneficiary, the
beneficiary engaged in that confidential relationship is not a natural object of her bounty
o A possible fraudulent motive of the B (Graham)
o Was the T cut off from her friends? (Simmons)
o Was the will prepared in secrecy or in haste?
o Is there great discrepancy in the former will and the present will?
o Was there independent advice, outside of the attorney employed to draft the will?
o What the testator in a weakened state from illness or mental state?
o Just how involved was the beneficiary in the will execution process?
(5) Fraud and duress – less likely
 Fraud: will can be invalidated if the contestant can establish that they are the result of fraud
o Restatement: a donative transfer that 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 donative transfer that the donor would not otherwise have made.
o There are some similarities between undue influence and fraud.
 Duress:
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o Restatement: a donative transfer like a bequest has been procured by duress if someone threatens to or
actually does something that coerces the T into making the bequest.
 Such an act must be wrongful
 It must be something that the wrongdoer has no right to do.
 Again note the connection to undue influence
 While an act may not constitute coercion or duress because the person does have a right to do
it, it may rise to the level of undue influence.
(6) Mistake -- less likely
Preventing challenges – in terrorem or “no contest” clauses
 UPC 2-517
o A provision in a will purporting to penalize an interested person for contesting the will or instituting other
proceedings relating to the estate is unenforceable if probable cause exist for instituting proceedings.
 In essence, a beneficiary will forfeit her bequest if she brings challenge to the will, unless there is
probable cause for challenging the will.
 B must receive something of value for this type of clause to have practical effect.
 Many states construe these types of clauses narrowly because they have the effect of “closing the courthouse door”
to potential beneficiaries.
o A number of courts have narrowed the applicability of no-contest clauses by finding that the challenge does
not come within the gambit of a “contest.”
PROTECTING THE FAMILY (a.k.a. Limitations on Freedom of Testation)
Themes
 At what point are we going to limit freedom of testation?
o Elective share statutes serve to override the freedom of testation
 Elective share statutes protect spouses
o Only LA allows for children to have any claim to protected elective shares
COMMON LAW PROPERTY V. COMMUNITY PROPERTY

[111-
CP is the rule in a minority of the states; however, they are some of the bigger states, so community property law
applies to a good deal of the US population
CL v. CP
 CL
o Marriage
 Income earned during marriage is separately owned and thus controlled by the person whose
name it is titled in.
 Unless the property is titled in both spouses’ names
o Death (married couples)
 Title controls who gets to dispose of the property, even if the property was earned during
marriage.
 CP
o Marriage
 Income earned during marriage is jointly owned.
 However, gifts, inheritances, and pre-marital earnings are considered separate property
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
o Death (married couples)
 Each spouse gets one-half of the jointly owned property.
 Decedent spouse can do whatever he wants to do with his share of the property
Migrating couples
o Most CP states will hold that the laws of the marital domicile when personal property was acquired or
the law of the place of the real property will control.
 However, most of these states have set up laws to make sure that the surviving spouse is not left with
nothing -- quasi-community property statutes
 QCP is generally defined as marital property acquired while domiciled in CL state that would
have been characterized as CP if the married couple had been domiciled in a CP state.
o In effect, the property becomes community property to which the SS has rights.
 Keep in mind that CP doesn’t become separate when the move is from a CP state to a CL
state.
THE ELECTIVE SHARE


CL regime creates the need for the elective share
o Elective share applies regardless of T’s intent, or whether the parties are separated or divorce is
pending.
The SS has the option of electing against the will
o Rather than taking her testate or intestate share
The traditional approach – Karsenty
 Surviving spouse can elect to take one-third (if there is a surviving issue) or one-half (if there is no surviving
issue) of the net estate rather than whatever share is left to her (minus some expenses)
o Net estate  D’s property passing by testate succession
 Here, the problem is that most of D’s wealth is in mostly through nonprobate planning
mechanisms – much of the planning of which occurred in the 3 to 4 months prior to his death.
 Sham transactions?
o Did the decedent intend to depart with ownership of the property in form only?
 If there is some substance to the departing of ownership of the property, then that property
will not be subject to the elective share.
 The fact that the decedent controlled the property is an important, but not dispositive,
consideration.
 If the transaction is a sham transaction designed to deprive the SS’s right to an elective share,
the court will invalidate the transaction under the rules of equity.
 Three factors in deciding whether a transaction is a sham:
o Did the decedent retain control?
o Was the estate planning scheme legitimate? If so, don’t second-guess.
o Other factors in case law?
UPC approach – 2-203 through 2-207
(1) Determine the augmented estate – very broad (includes property acquired BOTH during and before marriage)
 It includes (net probate estate + any property in which the decedent spouse had the functional equivalent of
ownership):
o (a) D’s net probate estate
 D’s probate estate reduced by funeral and administration expenses, homestead allowance,
family allowances, exempt property, and enforceable claims.
o (b) D’s nonprobate transfers to persons other than the SS; (d) D’s nonprobate transfers to SS
 Nonprobate transfers (applies to the spousal equivalent subsection as well)
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
Property owned in fact or in substance by the D immediately before death transferred
to other and to the SS
o Property over which D had a presently exercisable POA.
 Real property held by the D in joint tenancy with the right of survivorship.
o D must include his fractional interest – a fraction with one as the numerator and the
number of joint tenants as the denominator (remember: dealing with real estate here)
 Personal property or account held in POD, TOD, or JTWROS
o D must include his ownership interest – the percentage toward the cost of the joint
tenancy contributed by the D (remember: dealing with personalty here).
 Certain transfers during marriage with interests retained by the D
 Property the D irrevocably transferred away during the marriage normally does not get
included in the augmented estate.
o Exceptions
 (1) a transfer in the two-year period prior to D’s death
 (2) a transfer where the D retained sufficient right over the property so
that the underlying property is treated as if it were still owned by the D
 EX: a transfer of “marital property” into a irrevocable trust in which
the D retained for himself the right to income with the remainder going
somewhere other than his estate.
 What’s included?
o The value of the underlying corpus from which income is
being drawn and over which the power may be exercised.
 Transfers to persons other than SS during marriage AND within two years of D’s death
 Transfers in the contemplation of death
 An exercise, release, or lapse of a GPOA during the proscribed two-year period
requires inclusion in the augmented estate
o (d) SS’s probate and nonprobate transfers to others, at D’s death – spousal equivalent rule
 Any property that would have constituted the “augmented estate” of the SS if the SS had been the
spouse to die first
 The idea behind this provision is to avoid the unjust enrichment of the SS
(2) Identify the percentage of the augmented estate to which the spouse is vested pursuant to 2-203 (p.673)
 Sliding scale based on the number of years of marriage
(3) Multiply the augmented estate in step one by the percentage in step to calculate the “marital-property
portion.”
(4) Multiply the marital-property portion by 50% to determine the amount to which the SS is entitled.
Waiver by SS – UPC 2-213
 May waived wholly or partially by agreement signed by the SS
o Not enforceable if:
 (1) SS proves that she did not execute the waiver voluntarily, OR
 (2) Waiver was unconscionable when it was executed and, before execution of the waiver, the SS
 was not provided a fair and reasonable disclosure of the property or financial obligations
of the D;
 did not voluntarily and expressly waiver, in writing, any right to disclosure of property
of financial obligation of the D beyond the disclosure provided; AND
 did not, or reasonably could not have had, an adequate knowledge of the property or
financial obligations of the D.
 Policy
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
o Sets a high bar to challenge waiver
o Very much pro-contractual freedom
 We respect freedom of testation and we respect freedom of contract
o Unconscionability plus standard
 Unconscionability is hard enough to prove
o This is tilting in favor of protecting earlier families
 We recognize that marriage is a partnership, but we also understand the you have a commitment
to a previous family
Best practices re: waivers
o Make sure there is full and fair disclosure in order to present the agreement as being upset due to
unconscionability
o Probably want to make sure there is separate representation when there is disparity between parties’
negotiation powers
o You want to document
o You will need to establish clarity with regards to what exactly is being waived
 What is the scope of the waiver
o Make sure you cover all aspects of the applicable black letter law when drafting a pre-nup
Omitted spouse statutes
 Pretermitted spouse: a person who was left out of spouse’s will that was written prior to the marriage.
 Presumption: Decedent wants to provide for surviving spouse
o UPC: SS is given the intestacy share (not the more expansive “augmented estate”)
 Limited Pool: Limited in scope only to the property that has NOT been given to a earlier, nonshared child
o Remember, SS, in this situation, also has access to the elective share
 So, the SS has to decide whether she will take her intestate share or her elective share.
 Remember the elective share extends beyond just probate property
 Rebutting the presumption – ONE of three events occurs:
o (1) the parties entered into a premarital or marital agreement to waive inheritance rights
o (2) after the marriage, D uses other means, such as trusts or insurance policy benefits to provide
substantially for the SS; OR
o (3) the spouse was given something in the will even though the will was written prior to marriage and the
will expressly states that it excludes any persons the T might marry in the future
73