Professional Documents
Culture Documents
Legal Lines - Wills and Trusts
Legal Lines - Wills and Trusts
Legal Lines - Wills and Trusts
Page
I. A FOTJNDATION
FOR ESTATEPLANNING: SOCIETY,S
CONTROL OF INHERITANCE I
A. PROLOGUE 1
l. T. Jefferson I
2. 2 W Blackstone,Commentaries I
3. SupremeCowt I
4. TakingPropertyWithout JustCompensation I
5. on Mafiase Permissible
PartialRestraints 3
C. TIIE PROBATEPROCESS
l. lntroductionahdTerminology
a. Execulor,administralor ... 4
b. Oth e te
r rmi n o l o g.........
y 4
2. ls Probale
Necessary?. . .. .. 6
3. A Summaryof ProbateProcedure
a. Openingprobare 6
b. Supervising therepresentative's
actions 6
c. C l o si n g
th ee sta te....... 6
4. of Wills
Contest
a. Gro u n dfo
s rco n te st.....
l. Will Beneficiaries
OwedDuty of Care ,7
2. Fiduciary
Duly 8
A. INTESTATE SUCCESSORS!
SPOUSEAND DESCENDANTS .. . . . . .. . . . 10
l. Spouse l0
a. S i mu l ta n e oduesa th....... l0
Wills - v
l) Evidenceof survival 10
2. Descendants ll
a. Taking by representation:
per stirpesdist ibution 1l
B. INTESTATTSUCCFSSORS:
ANCESTORSAND COLLATERAT,S . . . . . . . t6
l. HalfBloods l6
2. Escheat 16
C. BARSTO SUCCESSION l6
1. Misconduct 16
a. Killing decedent l6
b. Adultery t1
c. Deseftion ).'l
vi - Wills
a. delusions
-lnsane aboutmen .. 19
b. Insanedelusionresultinefrom irrationalbeliefin nonexistent
facts . . . . 20
B, TJNDUEIMLUENCE 2l
l. Subjeclive
Test ......... 2l
2. Requirement
ot erootsnowrng
suusti*,ion
oinpiurroi
T e sl a me n l a ryD i sp o si.....
tion 2l
3. UndueInfluenceArisingout of Attomey-Client
Relationship 22
4. UndueInfluencea Questionof FactwhereTestatorIs EasilySwayed. . . . . . 23
)_ No-contest Clauses
C. FRAUD 24
l. Definition u
a, Fruudin the execution A
b. Fraudin the inducement 24
Constuctive Trust ImDosedWhercTestatorPreventedFrcm
ExecutingWill 24
A. EXECUTION 26
I. wills
Attested
a. of dueexecution
Requirements 26
b. thatbothwitnesses
Requirement be present
2. of Witnesses
Competency 27
a. Interested
witnesses 27
b. Requirement of disinterestedness 27
a. Self-provedwills 30
b. Testamentaryprovisionsnot in handwritingof testator
c. Infomal will
Wills - vii
B. REVOCATIONOF WILLS 33
l. MethodsofRevocation 33
2. ProbateofLost or Destroyed
Wills 33
3. Revocationby Writingor PhysicalAct 34
a. Presumption will destroyed.. .. .. 34
b. Attemptedrevocationby writing on paperuponwhichwill is wdtten 35
c. Partialrevocationby physicalact 35
4. Dependent
RelativeRevocation
andRevival
a. Prcsumptionagainstintestacy ...... 36
b. Doctrineapplicable
wherelaterwill revokedundermistakenbelief
thatdoingsoreinstates
prior will
c. Revival 38
1) Commonlaw 38
2) Modemlaw 38
5. Revocation
by Operationof Law:Changein FamilyCircumstances 39
a. Marriage 39
l) Stateswithoutstatutes 39
2) Stateswith statutes 39
b. Divorce 39
c. COMPONENTSOFA WILL 39
l. Integrationof Wills 39
2. Republication by Codicil 39
3. Incorpontionby Reference 40
a. Notebookincorporatedby reference 40
b. Validationof inoperative
will by holographic
codicil 4l
4. ActsoflndependentSignificance 42
D, CONTRACTSRELATING TO wlLLS 42
I. Contractsto Make a Will 43
2. ConrractsNot to Revokea Will 43
3. JointWills 43
a. Electivesharein conflictwith will conracr 43
viii - Wills
V, WILL SUBSTITUTES 4S
A. CONTRACTSWITHPAYABLE.ON-DEATH
PROVISIONS 15
l. Life Insurance 45
2. NonleslamenlaryTransfersat Deatt
3. Successor
Beneficiarynot Pemittedin Life Insurance
Contact
4. Investment
ClubProceeds 46
5. ChangeofBeneficiaryof Life Insurance
Policyby Will
l. TypesofAccounts. . . . . . . . 48
2. JointBankAccount:LackofDonativelntent ... 48
3. StockCertificates
Heldin JointTenancy. . . . . . . 49
D. R EV O C A B L E T R U S T ............-
S . 50
1. Intoduction 50
2. Retentionof Controlby Settlor 50
3. "Pour-Over"
Testamentary intoanInterVivosTrust .......... 54
4. UseofRevocable
Trustsin Estate
Planning ....... 56
a. Co n se q u e n d
ceu sri n gl i feof settlor ......... )o
b. Co n se q u e n a
cetdse a tho f settlor ........... 56
a. A g e n t's
a cti o nu p h e l d. . . . ............... 5' l
Wills - ix
vr. WILLS: CONSTRUCTIONPROBLEMS
59
A. ADMISSION OF EXTRTNSTCEVIDENCE: AMBIGUTTI
MJSTAKE,
AN'DOMtssroN..
59
l. LatenlAmbigur!ies
2. PatentAmbiguities 59
3. No ExtrinsicEvidenceto Corect Drafter,sMistake 59
Failurero ComplywjrhSlalutory 59
RequiremenLs 60
5. E_xtrinsicEvidenceAdrnissibleto Ascertarn
Circumstances
U n d e rWh i ch WiWasMade
ll ........
6. Correcting MistaLes 60
62
a. Extrinsicevidenceofscrivener'serroraclmlssible
to ascertalntestator'strue intent
B. DEATH OF BENEFICIARYBEFORE
DEATH OF
TESTATOR:LAPSE
64
1 . LIPCSection2-601
2. ttP CS e cti o2n-6 0 5.. .. .. .. .. .. .. .. 64
3 . An li- lAh ca s' "h ,,- . 64
64
a. Anti-lapsestatutedoesnot apply
64
4. RuleofConstructionthat..And,,BeReadas.,Or,,to
Effectuate
5 RuleofConsrucrionHeldInapplicable 65
66
7. cift ro ClassandNamedIndividualWhopreaeceases
thetestaior
C. CIIAiIGES IN PROPERTYAFTEREXECUTION
OF WILL:
SPECIFICVS. GENERALDE\'ISES
68
r. Aoempuon
68
a. Ademption
by extinction.. , .. ..
69
2. Abatement
69
a. IJP Cse cl i o 2
n -6 0 8 ............
69
3. Exoneration
ofLiens
69
a. IJPCsection2-609:nonexoneration
69
x - Wills
4. Satisfaction 70
5. StockSplits 10
a. propertysystem
Separate 11.
l) Prctection
aeainst
disinheritance ...... 7l
b. Communitypropenysystem '11
2. Rightsof SunivingSpouse
to suppon 'tl
a. Socialsecurity '11
b. P ri va tep e n si opnl a n s ..... 7l
c. Homestead '11
d. Personal propenyset-aside. '72
e. F a mi l ya l l o w a n ce....... 12
f. Do w e ra n dcu rte sy...... '12
a. Electiveshareandits rationale 72
b. Election requiredfor public assistance 73
c. No forced sharein homosexualrelationship . . . . . . 14
d. Survivingspouse's statutoryshareof assets
of intervivos
trustcreatedby deceased spouse .
UPCrighttoelective share.... .. 16
f. Sourceof elecliveshare '76
a. Otherstatures '76
h. Waiver. . . 18
l) Wa i ve ru p h e l d .......... 78
Wills - xi
4. Rightsof SuryivingSpousein Communityproperry . . . . . . . . . .tg
a. Introduction 79
b. Classification
of assets ascommunityor separate
property 79
c. Pullinglhe sur\ivor lo anelection 79
5. MigratingCouplesandMultistatepropertyHoldings . . . . . . . . . .7g
Migntion ftom separatepropety stateto cornmunitypropefiy state . . . .lg
b. Migration from communityprcpertystateto separatepropertystate . . . g0
c. Uniform Dispositionof Co.nmunitypropefy Rights at Oeathlct . . . . . S0
6. SpouseOmiuedfrom premariralWill
80
a. Stateswithoutstatutes
80
b. Statutorysolurions
80
c. Spouseomitted from premaritalwill
80
B. RIGHTS OF ISSUEOMITTED FROM THE WILL
81
l. ChildBom After Will but Befo.eCodicil
8l
2. No MalpracriceSuitWithourprioriry . .
82
3. GreatgrandchildrenNot p."r"r-itt"dt"j;; . .. . .. . . 82
VUI. TRUSTS:CREATION,TypES,AND CHARACTERISTTCS
u
A. INTRODUCTION
84
l. Background
84
2. The Settlor
84
3. The Trustee
84
TheBeneficiaries
84
5. Use of Trustsin Estateplanning . .
84
6. A TrustComparcdwith a LegalLife Estare
84
B. CREATIONOFA TRUST
84
1. Intentto Create
a Trust 84
a. Neednot expressly
directthatsubjectmatterbe heldin trust 84
b. CustodianshipUnderUniform Tmnsfelsto Minom Act
85
c. Precatorylanguageand equitablecharges
86
d. No intentJonto imposerrusreeduries L .
86
e. Constnrctive
delivery 87
2. Necessityof Tnistproperty
8'I
a. Promisero makegrftsin thefuture
87
xii - Wills
b. Resultingandconstructivetrusts 88
l) Resultingtust 88
2) Constructivefust ... ... 88
a. Identificationofbeneficiaries 9l
b. Honorarytusts . . . . . 92
c, D I SC R D T I ON A R Y T R U S T.,....,..
S 95
1 . T r u s t e €D'su ty ...... 95
l. lmmunityfromAlimonyandChildSupport. . . . . . ........ 97
2. Creditorc'Rights in SupportTrustsandDiscretionaryTrusts 99
a. Supporttusts 99
b. Discretionaryfusts . . . . . . . . . 99
..l .. .. ..
1 ) IR Su n su cce ssfu ........ " 99
b. n sts . . . . . . . . . .
T h ird -p e n ofu ...... .. . .l0O
c. C a re fudl ra fti n g ........ 100
Wills - xiii
l. Modificationof Distributiveprovisions
101
a. Trustmodification
denied....... 101
2. Terminationof Trusts
101
a, Remainingmaterialpwpose.. ..
102
b. Trustsremaining
indestructible
beyondtheperpetuities
period........ 103
xiv - Wills
a. ........
A l l o ca ti oonf a sse ts ...,.,.. ...110
b. C a p tu re .... . 110
l. i n th eT ra n sfer or
F u t ueIn te re sts ............... ll2
2. F u t ure i n T ra n sfe re es
In te re sts .............. .ll2
a. R e ma i n d e rs ................ ll2
b. E xe cu to ry .......
i n te rcsts ......,.,,... ll2
3. Remainders
of Contingent
Destructibility ....... ........... il3
1 cer V e steIn
Pr e fe re nfo d te re s ts ............... 113
a. T mn sfe ra b i lai ty
n dta xa tion... ............113
b. i nntop o sse ssion
A cce l e ra ti o ........... 113
l) R e n u n ci a tiva
o nl i d ....... .....' .....113
c. g rvi vato
R e q u i d nsu l ti meofpossession
....... ..,,,,., 114
1) t steidn te rest....
P re se nve .......... ll4
2) Heirsdetermined asof thedateof deathof thetestator.......... ll5
3) Cornmonlaw rule whercbequestis to be paid at certainage . . . . . . 116
4) Controve$ialchangein UPCsection2-101 . , . . . . . . . . . . . . . . . . . I 16
Wills - xv
l) Constuingclassgift to testator'sgrandchildren_. 117
xvi - Wills
not invalidated. .
to othersubclasses
a. Remainders 127
L Exercisable
GeneralPowersPresently "" 129
2. PowersandSpecialPowers
GeneralTestamentary """"" 129
a. o f p o w e r . ... .
V a l i d i ty ...."" " 129
b. va l i d i tyo f e xe rci se..... ......."" ' ' 129
taxtrap" . .
l) The"Delaware ."""" 129
docrine ....
2) Thesecond-look 130
c. powerofrcvocation
Ruleappliedto unconditional " 130
1. The "Wait-and-See
Doctrine" "" 132
2. (1986,asamended
The UniformStatutoryRuleAgainstPerpetuities
in 1990).. . . 133
3. Reformation
Cy Prcsor Equitable ...... . . .134
l. Rule .. .
ofthe Suspension
A Brief Explanation 134
2. Trusts . . . . . .
Ruleto StatutorySpendthrift
Applicationof theSuspension 134
xII . E R U S T S.........
C H AR T T A B L T . . . . . . . . . . . . . . . . . . . . . 135
Wills - xvii
l Creationof a ChadtableTrust 135
l. GenemlCharitablePurpose . . 136
2. GreatIncreasein AvailableFunds t3'1
1 GeneralManagerialPowers . . . 148
2. Powersof Investment.... 148
r\iii - Wills
C. ERISA 149
A . IN TR ODU C TIO N
............. 150
1 . A B r i e fH i sto ryo f th eF e d e raEstate
l Tax ....... .......... 150
2 . Es t ate a n dIn h e d ta n ce
T a xeD s i stinguished
...... .......... 150
1 . N a t ure
o f a T a xa b lGi
e ft .... ............... 151
a. D i scre ti o n apry
o w eirn tru stee ...,....... l5l
b. I n co meta xb a si s ............ 152
3. GiftsBetween
Spouses
andfromOneSpouse
to a ThirdPerson.......... 153
C. T I M F E D E R A L E S T A T E
TAX ...........,.....,. 154
1. Introduction .. .. .. . 154
2. The GrossEstate:PropedyPassingby Will or Intestacy ..... 154
a. Section2040:Jointtenancy 154
1) Joint tenancybetweenpersonsotherthan
h u sb a n d a n d w i fe ..... 154
2) Joint tenancyandtenancyby the entirety
between husband and wife 154
Wills - xix
b. Section2039:Employe€deathbenefits 155
c. Section2042:Life insurance 155
4. TheGrossEstate:LifetimeTransfe6with RishtsRetained 155
Section2036:Transfeftwith life estateor powerof contol retained 155
1) No bona fide sale 155
2) Requirement
of anascertainable
standard 156
b. Section2038:Revocabletransfers t5'7
c. Section2037:Transfe6with rcvercionary
interestretained 157
5. WithinThreeyearsofDeath
The GrcssEstate:Tmnsferu 157
6. TheGrossEstate:PowersofAppointmentGivenDecedentby Another 157
a. Cohfort limitedby ascertainable
standard 157
b. S€quentialtusts 158
7. TheMaritalDeduction
.... 159
Inlroduclion 159
b. Interests
thatqualifyfor thededuction 159
l) Failureto qualifyfor thededucrion 160
2) Refomationallowed 161
t62
8 . T h eC h a .i ta bD
l ee d u ction
....... 162
9. Executor'sElections:post-Death Taxplanning . . . 162
a. Valuationof estateassets 162
b. Sections2053and2054deductions 162
D. THE GENERATION.SKIPPING TAX 163
E. STATE WEALTH TRANSFER TAXES 163
TABLE OF CASES
165
xx - Wills
I. A FOLINDATIONI'OR ESTATEPLANMNG: SOCIETY'S
CONTROLOF INHERITANCE
A. PROLOGUE
a Suprcme Court. In lrying Trust Co. u Day, 314 U.S. 556 (\942), the
SuFemeCowt heldthatsuccession dghtsto a deceased person'sprcp-
erty arecreatedby statute.The Constitutiondoesnot forbid statelegisla-
twes from limiting or abolishingtestamentarydispositionover property.
The Distdct Court foundthat the heirs (Ps)did not haveany vested
propertyinterestwhichwouldbeentitledto constitutional protec-
W ills- l
tlon,andaccordingly deniedreliel TheEighthCircuitrevened,holdingthat:
(i) Pshadstandingto assedthedecedents' right to contrclthedispositionof
theirpropefty,and(ii) therakingof thatright withoutcompensation violated
theFifth Amendment.
Held. Yes.Judgmentaffirmed.
2) Theoriginalversionofsection207oftheIndianLandConsolidation Act
of 1983effectsa takingof picpertywirhoutjustcompensation in viola-
tion of theFifth Amendment. It entirclyabolishes
bothtle descentand
deviseof thesepropertyintercstsevenwhenthe passingof the prcperty
to an heir might result in the consolidationof property.
2 - Wills
5. Partial Restraintson Marriage Permissible-Shapirav, Union Na- Shapira
tional Bank, 39 ohio Misc.28,315N.E.2d825(1974). v. Union
NationalBank
Facts.Thewill of thedecedent, DavidShapira, M.D., bequeathed a
portionof theresidueofhis estateto his son,DanielJacobShapira
(P), plovided that he is mardedto a Jewishgirl, both of whosepar-
ents arc Jewish,at the time of the testator'sdeath.If after seven
yearsfrom the testatot'sdeath,P is unmardedor maried to a non-
Jewishgirl, thenhis sharcshouldgo to the Stateof Israel.P,who is
2l yea$ old andunmarried,brings a petition in the Court of Com-
mon Pleasfor a declaratoryjudgment, arguingthat the condition
uponhis inheritance contraryto publicpolicy,
is unconstitutional,
andunenforceable because of its unrcasonableness.
b. Issues,
Wills - 3
l e c li n g l h e d e ce d e n r'sa ssets.{ iii) payingan} fam ilyallowanceandsetti ngas i de
homes'tead andexempt personat propefly. andlaxblll('
tiv I pa)ingcreditors'clajms
a oe€ree
and(v) distributingthe assetsof theestateuponthe probatecourt enteflng
ofdistribution.
4 - Wills
6) Heir.Apersonentitledby statuteto thelandofthe intestateis calledtheheir
or heirat law.
a) Expectantheir.An expectant
heiris onewhoexpectsto takeby inheri!-
ance,
b) Prospectiveheir.A prospective
heiris onewho mayinheritbut maybe
€xcluded.
This categoryincludesheirspresumptive
andheirsapparent.
13) Escheat.Propefiyescheats
to thestateif no relativesofthe intestare
areen-
titledto inheritance.
Wills- 5
17) Bequest.A bequest is a clausein a will dircctingthedispositionof
personalpropertyotherthanmoney.
4, Contest of Wills,
6 - Wills
theissuesof testamentary capacityor undueinfluence,a will con-
testmay alsobe basedon defectiveexecution,revocationof thewill
by the testator,lack of testamentaryintent, ftaud, andmistake.
D, PROFFSSIONAL RFSPONSIBILITY
b. Issues.
Wills - 7
identified thoseto whom he wisheshis estateto pass,the identified
beneficiariesmay enforcethe contact asthird-partybeneficiaries'
8 - Wills
carc for him andDl would temporarilyrun the Ande$on dealership.Under
D 1's direction,theAndersondeale$hipboughtanotherdealership,which was
operatingat a loss;Dl alsoformeda holding company,which assumedown-
ershipof thefather's real estateleasedto theAndersondealershipandgreatly
incrcased the rent.WhenP tried to retum.Dl refusedto relincuishcontrol
andeventuallyfiredher
Wills - 9
II. INTESTACY: AN ESTATE PLAN BY DEMULT
A. INTESTATESUCCESSORS:
SPOUSEAND DESCENDANTS
All stateshavestatutesofdescentanddistribution
thatgovemthedistribution
of thepropertyof a personwho diesintestate,
or who doesnot makea com-
pletedistributionof theestate.
l0 - Wills
istratorof Stanley'sestateappealed, contendingthat thereis
not sufficientevidenceto DrovethatbothYictimsdid not suffer
brain deathprior to their affival at the hospital.
c) Held. Yes.Judgmentaffirmed
) Descendants.
Wills - I I
the decedentwill takethe remainderof a decedent,spmperty.If the decedent
is survivedby childrenandgmndchildrcn,the grandchildrenwill takea share
of the estateonly if they are childrenof a deceased
child of the decedent.
Grandchildrentakeonly by reprcsentation.
c) Held.Yes.Judgment
affirmed.
12- Wills
inheritanceandto prescdbewho canreceivethatproperty.The state
maydenytheprivilegealtogether or mayimposewhateverrestic-
tions upon the grantit deemsappropriate.
2) Equitableadoption.Thedoctrineof"equitableadoption,"basedon estoppel
pdnciples,allowsa child to inheritftom a stepparent or fosterparentjustas
thoughthechild hadbeen adopted. The basisof the estoppelis thestepparent's
or foster parent'sconductin failing to perfom the agreementto adopt.The
docrine only works againstthe stepparentor fosterparent.Thus,if thereis an
unperformedagreementto adoptandthechild diesintestate,the stepparentor
fosterparcntdoesnot inherit from the child.
P andhis con-
(a) AlthoughP's fatherhadneveracknowledged
Wills- 13
P's auntwasnot
sentto the adoptionwasnot necessary,
P s "legalguatdian."
d. Children born out of wedlock. In all statestoday,a child bom out of wed-
lock(i.e.,a nonmarital
child)inheritsfromhisnaturalmotherandthemother's
kin, andtheycaninheritfrom andthroughthechild.While therulesrespect-
ing inheritancefrom the father vary, most stateshaveadoptedthe provisions
in UPC section2-109,whichpermitpatemityto be established by evidence
of the parents'subsequent marriage,by the father'sacknowledgment by an
adjudicationduringthe father'slifetime,or by clear andconvincingproof
after his death.
2) Issues.
14- Wills
b) Doesthe public policy of Califomia prohibit the artificial insemi-
nationof P becausesheis anunmarriedwomanor becauseKaneis
deceased?
Wills- l5
B, INTESTATESUCCESSORS: AND COLLATERALS
ANCESTORS
If the intestateis suNivedby descendants, parentsandcollateralsdo not take
in anyjurisdiction. If thereareno descendants, theintestate's propeftyis usu-
ally distributedto theparentsafterdeductingthe spouse's share.In nearlyall
states, ifthe intestate is not survivedby a spouse, descendants, or parents,
the
estatepassesto thedescendants of theintestate'sparents,i.e.,to thedecedent's
brothersandsisters(andthedescendants of deceasedbrcthercandsiste6, per
surpes).
C. BARS TO SUCCESSION
1. Misconducl
3) Held.Yes.Judgmentrcvened.
16- Wills
estatedirectly to the parents.We reve$e. The trial court was
bound to follow the statutesof descentand distribution and
decreethe estateto the widow.
Wills - 17
his sisterdiedintestate.
Oneof l_ettich'stwo survivingsisters,Hart (D), was
appointed penonalrepresentative of herdeceasedsister'sestate.
andalthoush
D wasawareLeltichwasrepresenled byTroy(p). D visiledLeuichandhelD;d
hime\eculea disclaimer to hisSt 00.000shareof rhedeceased sister.sest;te.
D did not adviseLettichof theeffectof thedisclaimeron his Medicaidstatus
andshedividedthe $100,000with their orhersisrer.p was notifiedof the
renunciation thefollowingmonth.Counselfor I_ettichfiled a Detitionto re_
scindthedisclaimerandremoveD aspersonal representative oi thedeceased
sister'sestate.One day beforethe deadlineto.espondto the petition,D,s
attomeyvisitedLettichandaskedhim to executea motionto striketheDeti_
tion.A socialworkerintervened andsuggesred p beconsulted. t ertichdied
shortlythereafterThe courtdeniedp's petition.p appealed. D,s motionfor
Judgmentwith rcspectto p,s requestto haveher tEmovedwasglanted:p,s
pelitionro rescind wasdjsmissed. p appeals.
b) Issue.May a Medicaidrecipientdisclaimaninheritance?
c) Held.Yes.Judgment
affirmed.
( 1) Marylandlaw requiresthatonceanindividualis elisiblefor and
receiv_
ingMedicaidbenefits.
hemustnorifytheDepartmeit ofSocialServices
("DSS")within l0 workingdaysof changesaffectingeligibility.
l8 - Wills
III. CAPACITYAND WILL CONTESTS
A. MENTALCAPACITY
', Test of Mental Capacity. The decedentmust know: (i) the natue and
extentof her propedy;(ii) thepersonswho arethe naturalobjectsof her
bounty;(iii) thedispositionsheis making;and(iv) how theseelements
relatein planningfor the dispositionof her propefiy.
Wills - 19
c) condition,especiallyher insanedelu-
I think it washer paranoiac
sionsaboutthe male,that led her to leaveher estateto the pady'
Probateshouldbe setaside.
20 - Wills
fulness;his belief of P's misbehavingby hiding male
callersunderherbedandby haulingmenfrom thestreet
up to her bedroomby the useof sheets;andso forth.
c) Theproponentsarguethatevenifthe decedentwaslabor-
ing undera delusion,otherreasonssupportthe validity of
A will is invalidif its dispository
the will. We disagree.
provisions mighthavebeencausedor affectedby thede-
lusion.
B. LNDUE INFLUENCE
Wills - 2l
hadakey to herhome.After signingthewill, T toldonewitnessthatshe
wasleavingher estateto her sonanddaughterandthather otherson,
JulianA.Weslow,andhischildrenwouldbeexcludedbecause theynever
showedanyattentionto her.Thewill provideda lengthyexplanation as
to why Julianwasexcludedfrom thewill largelydueto the"unfriendly
and distant attitude" T felt had been accordedto her. The children of
JulianWeslow(Ps)contestthe will, chargingFrankLipper andIrene
LipperDover(Ds) with undueinfluence.At tial, ajury foundthatT's
will wasprocuredby undueinfluence.Ds appeal,contending thatthere
is no evidenceto suppofithisfinding.
22 - Wills
c. Held, Yes.Judgmentaffirmed.
Wills - 23
will. A challengebasedon an actionbroughtto construethe will, on
jurisdictional gounds, or on the appointmentof an executor,or to the
accounting madeby thatperson,is not considercd a contestto the will
that would result in a forfeifure undera no-contestclause.
c. FRATJD
24 - Wills
beeninterfered
fraudedparty would have receivedhad not the deceased
with?
Wills- 25
IV. EXECUTION: FORMS AND FORMALITIF^S
A. EXECUTION
3) Held.Yes.Probatedenied.
26 Wills
theprcsenceof two or morewimessesprcsentat the sametim€,
and thosewitnessesmust attestand subscribethe will in the
presenceof thetestator,but no form of attestationis necessary
2) Issues.
Wills - 27
a) ProbateCodesection5l providesthata gift to a subscribing
witnessis void unlessthereare two otherdisinterested wit-
nesses to the will. Ps contendthata subsequent disclaimeris
ineffective to transforman intercstedwitnessinto a disinter-
estedone.Theyassertthatbecause therewasonly onedisin-
te.estedwitnessat the time of attestation,the deviseto D is
void by operatiorof law.D, however,pointsto language in
PrcbateCodesection190.6thatstates"in everycase,thedis-
claimershallrelatebackfor all purposesto thedateofcreation
ofthe intercst."
c) The essential
functionof a subscribing witnessis performed
whenthe will is executed.We believesection5l looksin its
operationsolelyto thattime.It opemtesto insue thatat least
two ofthe subscribingwitnesses aredisinterested.
28 - Wills
the will, executein ftont of a notarypublic an affidavit reciting that all of the
requisites for dueexecutron havebeencompliedwith.This allowsthewillto
be probatedif the witnessesare dead,cannotbe located,or have movedfa!
away.
Wills - 29
7. Conditional Wills. A conditionalwill is onethatbecomesoDerativeif a stated
eventocculs.
3) Held, Yes.Judgmentaffirmed.
a) Wedo not agreewith the appellatedivision thata will contain-
ing witnesses'signaturesonly on a self-provingaffidavit liter-
ally complieswith attestationrequirements.The court,s
rationalewasthatan affidavit andanattestationclausearcsuf-
ficiently similar to justify the conclusionthat signatrreson an
affidavit,like signatures on theattestationclause,satisfythe
30 - Wills
requircment that the signaturesbe on the will. This conclusionfails to con-
siderthe basicdifferencesbetweena subsequently-executed, self-provingaf-
fidavit andan attestationclause.
o) Here,affiants,intendingto actaswitnesses,signedtheaffidavitimmediately
aflerwitnessing T s e\eculionof thewil,.
f) In limitedcircumstances, complies"with
however,a will that"substantially
statutoryrequirementsmay beadmittedto probate.Otherstates,scholars,and
teatiseshavedetermined that"substantial
compliance betterservesthegoals
of statutoryformalitiesby permittingprobateof formally-defective
wills that
nevertheless representtheintentof thetestator"
Wills- 31
clause,clearandconvincingevidenceof thef intentshouldbe ad-
ducedto establish
substantial
compliancewith thestatute.
14 /e Estate b. Testamentaryprovisionsnot in handwriting of testator-h /€ Estateof
of Johnson Johnson,129Ariz. 307,630P2d 1039(1981).
32 - Wills
2) Issues.
B. REVOCATION OF WILLS
language
By a laterwill or codicil.In theseinstances, thatexprcssly
revokestheprior will shouldbeincluded.Altematively,a laterwill
may revokea prior will if thereareinconsistent provisionsin the
laterwill thatimpliedlyrevoketheearlierwill.
Wills- 33
thata will is lost,or is destroyed
withouttheconsentof thetestator,doesnot
preventits prcbate,providedits contentsareproved.Moststatesrequireproof
of contents by testimonyof persons whohadknowledgeof thecontents of the
will, asby havingreadthe will or havingheardit read.Statesthathavestat-
utesrestrictingtheprobateof lostor destoyedwills havenarrowlyconstrued
themin orderto permit probate.
34 - Wills
b, Attempted revocationby writing on paper upon which will is written" Thompson
Thompsonv. Royall 163V^. 492,175S.E.748(1934). { Royall
'
1) Facts.On September 4, 1932,the decedent, Mrs. Knoll (T), sigfleda
will consistingof five sheetsof legal paperOn September 19, 1932,at
T's request,her attomeyandher executortook thewill andcodicil to her
home,where shetold the attomey,in the presenceof her executorand
another,to deshoyboth.But insteadof destroyingthem' shedecidedto
retatnthem asmemoranda.On the back of the manuscriptcover,in the
handwritingof her attomey,signedby T, therewaswdtten:"This will
null andvoid andto be heldonly by (theexecutor)insteadofbeing de-
stroyedasa memorandumfor anotherwill if I desireto makesame." The
samenotationwasmadeon thebackof thecodicil,exceptthatthename
of the attomeywas substitutedfor that of the executor.The jury found
that the instrumentswerethe last will andtestamentof T. From an order
sustaining this verdictandprcbatingthewill, this appealwastaken.
3) Held. Yes.Judgmentaffirmed.
b) Here, the notationsmadeon the back of the will are not wholly in
T's handwriting, by subscdbing
nor areher signatuesattested wit-
nesses. Hence,underthestatutetheyareineffectualas"somewrit_
ing declaringanintentionto rcvoke."
Wills- 35
wherethetestatorattemptsto revokea portion of the will, theactis given
no effect. Thus, if the testatorcrossesout a bequestto Tom, Tom takes
the bequestdespitetheattempted cancellation. podon
If the destroyed
cannotbe recreated by extinsic evidence,only the destroyedportion
fails; the remainderof the will is given effect.
3) Held. Yes.Judgmentaffirmed.
36 - Wills
b) The doctrineof dependentrelativerevocation,oneof presumedin-
tention,hasasits purposeto effectthe testator'sintent.The mere
fact that a testatorintendedto makea new will, or madeonethat
failed,will not alone,in everycase,preventa cancellation or oblit-
erationof a will from operatingasa revocation. If it is clearthatthe
cancellationand the makingof the new will were partsof one
scheme,andthe revocationof the old will was so relatedto the
makingof thenewwill asto bedependent on it, thenif thenewwill
is not made,or is invalid,the old will, thoughcanceled, shouldbe
siveneffect.
c) Thestipulationthatthe1963willandthe1978document werefound
togethershifted the burdento Carter to prove that T would have
prefered intestacy.The presumptiol againstintestacystands
unrebutted.
b. Doctrine applicable wherc later will revoked und€r mistaken belief that Estateof
doing so reinstatesprior will.-EstateofAlburn, 18Wis.2d 340,ll8 N.W. Album
2d919 .L963)'.
3) Held. Yes.Judgmentaffirmed.
Wills - 37
makinga latertestamentarydispositionthatfor somereasonptoves
ineffective.
c. Revival.
1) Commonlaw.Thecommonlawrule,still adhered is
to in severalstates,
that no part of a will is effectiveuntil the deathof the Thereibre,
testator.
if Will #2 (whichexpressly revokesWill #l) is itselfrevokedbeforethe
testator'sdeath,Will#1aloneremainsin effectandisoperative uponthe
testator'sdeath.Destructionof Will #2 opentes to "revive" Will #l '
38 - Wills
5. Revocationby Operationoflaw: Changein Family Circumstances.
mayrevokeawill by operation
Achangein familycircumstances oflaw
presumes
Thelawin theseinstances anintentto revokeon thepartof the
testator
C. COMPONENTS
OFA WILL
Wills- 39
Incorporation by Refercnce.Pagesthat cannotbe integratedbecausethey
werc not presentat the will's executionneverthelessmay be given effect un-
der the doctrineof incorporationby reference.This doctdnerecognizesthat a
duly executedwill may by appropriatereferenceincorporateinto itself any
extrinsicdocumentor writing eventhoughthe otherdocumentwasnot prop-
erly executed. Thefollowingrcquirements mustbe met:
40 - Wills
3) Ileld. Yes.Judgmentaffirmed
Wills - 4l
entitledto probate,but if testamentaryin characterit is a
will nonetheless.
42 - WiUs
law of contractsapplies.A will in violationof a validcontractmadeby thetesta-
tor,whileit maybe probated, will be subjectto contactualremedies(e.9.,impo-
trust).
sitionof constructive
a. Elective share in conflict with will contract-'Via v. Putnam' 626 So. \4a v.
2d 460Gla. 1995). Putnam
Wills - 43
thethirddistrict'stuli ngin Johnsottu Girtman,542So2d 1033(Fla 3dDCA
1989).Ds appeal.
44 - Wills
V. WIL ST]BSTITUTES
A. CONTRACTSWITHPAYABLE-ON-DEATHPROVISIONS
Wills- 45
mentbetweenthepartieswastheresultof a sepanteandindepen-
dentagrcement,
unrelated
to thetermsofthe policy.
c. Held.Yes.Orderreversed.
2) Thisis a third-partybeneficiary
contract,performableat death,and
it neednot confom to therequirements of thestatuteof wills.
46 ' Wills
5. Changeof B€neffciary of Life Insurance Policy by Will--Cook v. Equita. Cookv.
ble Life AssuranceSociety,428N.E.2d110(Ind.App. 1981). EquitableLife
Assurance
a, Facts.The decedent, DouglasCook(T), hadpurchased a wholelife in-
surance policy in 1953 naminghis wife at thattime,Doris, asthebenefi
ciary In 1965,T andDorisweiedivorced.The divorcedecrcemadeno
prcvisionregarding theinsurancepolicy.AfterthedivorceT ceased pay-
ing the premiumson his life insurance policy,andthe inswancecom-
panynotifiedhim in 1965thathis wholelife policy wasautomatically
convenedto a paid-upterm policy.The policy containeda provision
allowingtheownerto changethebeneficiary by writtennoticeprovided
thatthe changeis endoNedon thepolicyby theinsurance company.ln
1965, T married Maryarct,anda son,Daniel, was bom to them.In 1976,
T madea holographicwill in whichhebequeathed his insurancepolicy
to his wife andson.
Wills - 47
from Doris to MargaretandDaniel.If T hadwantedto change
the beneficiary he hadampletime andoppofiunity to comply
with thepolicyrequirements.
4) Publicpolicy requiresthattheinsurer,insured,andbeneficiary
shouldbe ableto rely on the certaintythatpolicy provisions
pertainingto the namingand changingof beneficiaries will
control exceptin extremesituations.
48 - Wills
b. Issue,Doesevidenceof lackofdonativeintentat thetime of creationol
severlhejoinl tenancy?
ajointlenancy
Wills - 49
parties'divorce.Marie broughta petition in connectionwith the divorce
to detemine her interestin the stock.The petition wasrcfered to a mas-
ter,who heldthatRobertneverat anytime indicatedthathe intendedto
transferanyprcsentinterestin the stockto his wife. The masterfound
that the words"joint tenants"werc usedbecausethis wasthe only form
of issuanceauthorizedby thecompanythat would approximateRobert's
desireto makehis wife his beneficiaryif he died. On appeal,the court
deteminedthatcertificates ofstockheldinjoint tenancybetweena hus-
band and wife may be paid to the wife upon the deathof the husband
without the arrangementbeingdeclaredtestamentaryandvoid.
D. REVOCABLE TRUSTS
50 - Wills
occasions duringhis life thestockoflnvestorsMutual,Inc.,insftuctingit, by
meansof a wdttenapplication, to issuethe stockin his name.,astnisteefor
RichardJ. Williams." Farkasalso signedseparatedeclarationsof trust, all of
which wereidenticalexceptasto dates.In eachof thesedeclarations,Farkas
reservedto himselfas settlorthe followingpowels:(i) the dght to receive
during his lifetime all cashdividends;(ii) the right at any time to changethe
beneficiaryor revokethe trust; and (iii) upon saleor redemptionof any por-
tion of the trustproperty,theright to retainthe proceedstherefromfor his own
use.The co-administratorsof the estate(Ps)bring this actionto havedeclared
theirlegalrightsin thefour stockcertificates. Thecircuitcourtfoundthatthc
declarationswerc testamentaryin characterand, not having beenexecuted
with the formalities of a will, were invalid, and directed that the stock be
awardedto Ps as assetsof the estaleof Albert Farkas.The aDDellatecoun
affirmed.WilliamsandlnvestorsMutualI Dsl appeal.
2) Issues.
W ills- :
b) Farkasdid not retain such contol over the subjectmattgr of the
trust as to rcnderthe trustinsfumentstestamentary in character.
The retentionby the s€ttlorof the powe. to revoke,evenwhen
coupledwith a rcservationof a life interestin the trust property,
doesnotrenderthetrustinoperative for wantofexecutionof a will.
In re Estate b. Inter vivos trust revoked-/r, /e Estate and Trust of pilafas. 172Ariz. 207.
andTrust 836P.2d420 (1992).
of Pilafas
1) Facts.Thedecedent, StevenPilafas(T),executeda trustappoinring him-
selftrustee.Theagreement directedthatuponT's death,a poitionofthe
ftustestatewouldbe distributedto eightnonprofitorganizations (ps).
Theremainingportionwasto be heldin vtuioustrusts.Two of T's chil_
drenwereexplicitlyomitted.Thetrustincludeda revocation/amendment
provisionthatT exercised twice.On theoccasionof thesecondamend_
mentin 1987,afterT's divorce,T simultaneously executeda will that
gavetheresidueofhis estateto thetrust.Subsequently, T,s relationships
wrlh his childrenfDst rmproved. Duringthe lastmonthof hls life,T
indicatedto his attomeyhis intentionto revisehis estateplanto include
all hischildren. T s arrome)hadgivenf theoriginals;fthelrust.the
amendments, andthe will immediatelyaftertheywereexecuted. Upon
T s dealh. T s sonunsuccesslully searched T s houselor rhedocumenrs.
Ds testifiedthatT fastidiouslysavedimportantdocumentsandthatT
wasa manofdirectactionwhohadbeenknownto tearor discardDaDers
thirroffended him.T s sonfrleda petitionfor appoinrmenr of a ipecial
administatoranda specialtrustee,a petitionfor adjudication of intes_
tacyanddetermination ofrevocationof fust, andaskedthecoultto au_
thorizehim to transferall trustassets ps objected,seeknga
to T's estate.
determination thatT hadrevokedneitherhis will nor thetrust.Thetdal
coufi grantedDs' motion for summaryjudgment.ps appeal.
52 - Wills
2) Issues.
Cr€ditors may rcach trust assetsover which the settlor had control at the StateStreet
time of his death--State Strtet Bank & Trust Co. v. Reiser' 7 Mass App Bank & Trust
ct. 633.389N.E.2d768(1979). Co. v. Reiser
Wills- 53
3) Held,Yes.Soordered.
54 - Wills
T's tust insffumentnamedherselfandJohnHill asaustees.As thedonor,'l
retainedthe right to amendor revokethe tust at any time by written instru-
mentdelivercdto the tustees. In the eventthat D survivedT, the tust estate
wasto be divided into two parts.TrustA wasthe madtal deductiontrust' The
balanceof T's estate,or theentireestateif D did not surviveher,composed
Trust B. Trust B provided for five specific bequests.After those gifts were
satisfied,the remainingtmst assetswere to be held for the benefit of D for
life. UponD's death,theassets in TrustB wercto beheldfor thebenefitof T's
nephews andnieces living at thetimeof herdeath.Whenall of thesenephews
andniecesreach€dthe ageof 30, the trust wasto terminateandits remaining
assetswercto be dividedequallybetweenClarkUniversityandBostonUni-
versity.
2) Issues.
a) Did T createa valid trust despitethe fact that it wasnot fundeduntil her
death?
Wills- 55
estatetax purposes,andsuchobjectivebecameimpossibleaf-
ter the parties'divorce.Thereforethe trust waseffectively ter-
minated.
56 - Wills
cult to setasidea revocabletrustthana will on groundsof lack of mental
capacityandundueinfluence.Finally,a revocabletrust that becomes
irrevocable uponthedeathoione spouse cantherebycontrolthesurviv-
ingspouse's of ptopen).
disposilion
1I affirmed.
Held.Yes.Judgment
Wills - 57
death,Mrs. Franzencouldexercisethesepow-
Mr. Franzen's
erswith to theentirctrustestate.
respect
o) TheinstantpowerauthodzesO'Brien to revoketrusts,andwhile
not specific,we concludethatlanguageauthorizesO'Bdento
revokethe Franzen fust.
8. DispositionofDecedent'sBody.All stateshaveenactedUniformAnatomi-
cal GiftActs,whichallowa pe$onto donatehis bodyto anyhospital,physi-
cian,or medicalschoolfor research
or hansplantation.
58 - Wills
VI. W[LS: CONSTRUCTIONPROBLEMS
to changetheplainmeaning
In general,exffinsicevidenceis not admissible
do notapplythisrulerigjdlybutinvokea pre-
of i will. Somejurisdictions
sumptionlhatcanbeovercomewith srong evidenceol a conttarymeanlng'
Parolevidencemaybe admissible in a will'
to resolveambiguities
wills - 59
d. Comment.This holdingwasreaffirmedin 19'17in Gustafsonv.Svenson,
373Mass.273,366N.E.2d,'l6l(197'7).
c. Held.No. Decreereversed;
instrument
disallowed.
2) It is competent
to contradictby parolethe solemnstatements con-
tainedin aninstrumentthatis a will, thatit hasbeensignedassuch
by thepersonnamedastestator,andattestedandsubscribedby per-
sonssigningaswitnesses.
60 - Wills
gift of halfof
entitledto takeby will andthatdogsarenot included,thatthe
,t" ,o Roiy is void, and that P, as the testator'ssoleheir at law' is
"*u,"to half oi the re$idue.At the headng,P infoduced without objec-
entitled
his
tion extrinsicevidencethatRoxy wasthetestator'sdog Quinn'through
a omey.inlroduced evidence of hrsrelalionshipw'lh thelestator'anddocu-
mentaryeuidenceconsistingof the testator'saddressbook and a cefiain
quiLclaim deed.all of whichwasadmilledoverobjectionThe lrial coun
q
tieldLharit wastheintentionof theleslalorlhal Quinn as to receiveher
entireestateexceptingthe goldcoin anddiamondsbequeathedto P andthat
testator'sdeathThe coult
Quinnwasto carefoithe dogin theeventof the
h-eldthatthe lang,rage in the will indicatedthatQuinnwasto usewhatever
portionofthe esiateasmightbe necessary to carefot andmaintainthe dog'
P appeals.
c. Held. Yes.Judgmentreversed
Wills - 61
6. CorrectingMistakes.Iftheallegedmistake involvesthereasons thatledthe
testatorto makethewill (or thereasons for makingornot makng a particular
gift), andthemistakewasnotftaudulentlyinduced,noreliefis granted. Some
courtshaverecognized anexceptionifthe mistakeappears on thefaceof the
will, andthedisposition thetestatorwouldhavemadebut for themistakecan
at leastbeinfelredftom theinsfument.Casesin whichsuchreliefis granted
arerarcbecause it is unlikelyfor themistakeandthe altematedispositionto
appearon the faceof the inshument.If a provisionwasmistakenlvomitted
from rheq ill. or a provision conrained in thewill is nor whatrherestator
intended, paroltestimonyis generallynotadmissible to showtheexistence of
the mistakeandwhatthetestatorintendedto providehadthe mistakenot been
made.Thus,mistakesof omissiongenerallycannotbe corected,nor cana
mistakein describing a beneficiary or item of property.
J) Held.Yes.Judgment
reversed
andremanded.
62 - Wills
case
though the will itself did not do so and' under existlng
law' would havebeenrcvokedby a subsequent mamage
enorhasmisledthelestator intoexecuting a
c) [f a scrivener's
the
will on the belief that it wiU be valid notwithstanding
marriage'exLrinsic evidenceof lhaterror
lestalor'ssubsequent
is admissiblelo eslablish theintentof the lhathrswlll
teslator
be validnotwithslanding thesubsequent marriage
and
d) Ifthe error andthetestator'sintent areestablishedbyclear
' that
convincing evidence,they will be sufncient to establish
the will hasprovidedfor suchcontingency
Wills - 63
B , DEATH OF BENEFICIARY BEFORE DEATH OF TESTATOR: LAPSE
64 - Wills
statuteapplies.Both partiesfiled motionsfor summaryjudgment;
thetrial courtgrantedI-era'smotion.Lewisappeals.
Held. Yes.Judgment
affirmed.
4) Comments.
Wills - 65
b. Issue.will thewords"and" or "or" be substitutedfor eachotherin arriv-
ing at a properconstructionof a will for the purposeof carrying out an
obvioustestamentarypupose of a testator?
2) It hasalsobeenheld,howevetthatthewords"or" and"and"may
be substitutedfor eachotherin arriving at a properconstuuctionof
a will, "and" havingbeenreadas"or" for thepuposeof carlying
out an obvioustestamentarypurpose.
66 - Wills
gift andat the sametime designatethe assignsof the namedtakersto takeby
way of substitution.
c. Held.No. Decreeaffirmed.
3) i.e.,"nephews"'"cousins,""descen-
T usedno classgift language,
dants,"etc.andthewill contained a survivorshipgift ofthe residue
gift
ofherestateino survivorship was createdin theclausedevising
the farmland.
the Testator-I' l'e
Gift to Classand Named Individual lYho Predecease's In rc'
Moss,[1899]2 Ch.314,aff'd, llg}ll A C.l87 (H L.) Moss
Wills 67
lifetimeandbecamepartof T's andElizabethMoss'sresiduaryes-
tates.Ds claimthatthebequest to ElizabethJaneFowlerandthem
wasa gift to a class,ofwhich theyarethesurvivingmembe$.The
trial courtheldfor P Ds appeal.
c. Held.Yes.Judsment
reversed.
1. Ademption.If specifically
devisedpropenyis notin thetestator's
estate
68 - wills
the gift is
at thetime of death(e.8.,it wassoldby the testatoror desffoyed)'
doctrile only ap-
adeerned.This is tnown as ademptionby extinction The
piies to specificdevisesandbequests;generallegaciesare not affected
70 - Wills
VII. RESTRICTIONS ON TIIE POWER OF DISPOSITION:
PROTECTION OF THE FAMILY
b. Communitypropertysystem'Underthisapproachanyeamings'
ln
andpropertyacquiredfrom eamlngs'aftermarriagels owneo
prop-
eqoA,onAiulaea.nat"sIn general'noneof the community
power
erty siateshasan electivesharcstatute Eachspousehasthe
one-half com-
of iestamentarydispositionover only that spouse's
munityinteresiThi survivingspouseautomatically ownsone-half
of the communityestateuponthe other spouse'sdeath'
Wills- 7l
d. Personalproperty set-aside.Somestatutesexemptcertainitemsof
tangiblepersonatpropertyftom executionor levy ifl satisfactionof
creditors'claims.
2) Testamentaryeffect.Dowerandcurtesyrightscouldbe asserted
regardlessof the decedent'swill. Thus, a wife's dowerinterest
in her husband'sland wasnot affectedby the fact that the hus-
bandhaddevised lhelandto another'To thisextenteachspouse s
powerof testamentary dispositionoverpropertywaslimited by
the other'sdoweror curtesyilght
72 - Wills
75 Ohio st' In re Estate
b. Election rtquired for public assistance-It /e Estateof Cross'
of Cross
3d 530.664N.E.2d905(1996).
for
2) Issue.Did the probatecourtjudge abusehis discretionjnelecting
her support' to
Beulah, who dependedsolely on Medicaid benefitsfor
takeagainstherdeceased husband'swill?
3) reversed
Held.No Judgment reinstaled'
counjudgment
Probate
a
a) The prcbatecoult has statutoryauthority to elect on behalf of
disabledspouseafter ascertainingthe spouse'sadequatesupp9l
n""Jt una thevalueof thespouse's shareunderthewill
"o-p-lng The
with her rights under the statuteof descentand distribution
court must-first considerother rcsourcesand the age' life expect-
needs
ancy,physical and mentalcondition, and anticipatedfuture
necessary to provide
of tit" spous"unaa"termineif the electionis
for her adequatesupport.
Wills - 73
1r?re Estate c. No forced sharc in homosexualrelationship-I, /e Estate of Cooper,592
of Cooper N.YS.2d797,187A.D.2d128(1993).
c) Thetraditionaldefinitioncontemplates
thesurvivorof a unionbe-
lweenmembers of theoppositesex.andwe \eeno reason to reject
that.
74 - Wills
d. Surviving spouse'sstatutory shareof assetsof inter vivos trust created Sullivan
by deceasedspouse.-Sullivanv. Burkin, 390Mass.864,460 N.E.2d571 v Burkin
(1984).
Wills - 75
survlvtngspouse's statutorysharc,shallincludethevalueof assets
held in an inter vivos trustcreatedby the deceased spouseas to
wiich he aloneretainedpowerduringhis life to directdisposition
of thosetrustassets for his benefit,as,for example,by theexercise
ot a powerof appointment or by revocationofthe trust.
4) The_\ alue.ofthesurvi\ingspouses.s
propenyandnonprobaretransfers
lo otherstharwoLrld
havebeenin heraugmeniedestat;uponherdeath;
arnd
5) Life insurance
proceeds
payableto anypersonotherthanthe surviving
spouse.
Sourceofelectiveshare.Statutes in somestatesprovidethatvaluesincluded
Lhalpassor havepassed lo the surviving,pour.
:i:1,. ligln".","d
appleo :tj"le
lrrstto salistytheeleclivesharecndlo reduce an) conrriluijons -.
from otherrecipients '----- due
---
of transfe$includedin tt e uug_"ni"a ertute.
76 - Wills
erty includiblein the grossestatefor federalestatetax purposes,
regardless
of
whetherthe decedent files an estatetax retum.
c) Held.Yes.Appellatedivision'sordermodified.
Wills - 7?
(4) The fact that the power teminated one day prior to T's death
effectedno realisticlimitationon its exercise.
78 - Wills
4. Rights of Surviving Spousein Community Property.
Wills - 79
"il*",**tilrg,*t*r
" ,*i:ii;#
i*il';'T*fi,*{,rqf#
#l{::
6. SpouseOmitted from premarital
Will.
a. Sates without statutes.The
run;":#*i.l "Jffi:T
#H;:"+ri"l$i
:'i'!i
st
sr::*:,l:
;:m;nffi .,;:n'#i;:
::,#"iiT
"*iji,:":t"i$*,,,x#fi
{f"n*qi:L,h
gg4,5p*n: .l$iiil.
;1p;5,*** ;.1'.t*im
ft ftTf $:,,:'l*i'l
il?r,liJiir,*ll,i''ri''lr,***tl#;"
Estateof
Shannon -'..1i:p*'ffi
" iil::: lill"r',i":T'iil:: Esrare
l"l,;;i; orShan
non.
2z-+
car
",1r$;;;1;qiff*j..
iffirr"l,*#l
2)
#il,jii:;]fi
t#iTtffiiHflilf:q*f
Issue.Wasp a pretermitted
spouse?
3) Hetd. yes. Orderreversed
andremanded.
,;T:jil?:il:H:i,."",":i::$iil,T"#:
l:fi,::?i::
80 - Wills
the executionof the testator'swill, the omittedspouse
shallreceivea share.
82 - Wills
anduponT's death,the 1984will wasofferedandaccepted for probate.Rich-
ard alld T's great-grandchildren(Ps) challengethe will and claim they are
pretermittedheirs. The probatecoult adoptedthe master'sfindings that Ps
werenot pretemitted heirs.Ps appeal.
Wills - 83
VIII. TRUSTSTCREATION,TYPES'AND CHARACTERISTICS
A. INTRODUCTION
B. CREATION OF A TRUST
1) Facts.In1945,thepatemalgrandmother of BetsyLeeJimenez
(P) purchased a $1,000U.S. SavingsBond registered in the
nameof P and/orJasonLee (D), the fatherof B and/orDor-
othyLee,themotherof P,to beusedfor P'seducational needs.
In 1956,Mrs.AdolphDiercksgave$500to P andmadeiden-
tical gifts to D's othertwo children.Mrs. Diercksdeposited
the$1,500in a savingsaccountin thenamesofD andhisthree
children.Thereafter, D cashedthe savingsbondandinvested
the proceedsin commonstockof the CommercialBank of
Sdem,Oregon,withtheshares registered as"JasonLee, Custo-
dian. . . for BetsyLee [P]."At thesametime,D closedthe
84 - Wills
joint savingsaccountandinvest€d$1,000of theproceeds in Cornmer-
cial Bank stock,takng this stockascustodianfor his children P con-
tendsthatthegifts for hereducationalneedscreatedfusts in eachinstance
andthatthetrustssurvivedD's investment of thetrustassets in theCom-
mercial Bank stock. P brought an action for an accounting The trial
court held for D. P appeals
2) Issues.
3) andfemanded.
Held. a) No. b) Yes.Casereversed
Wills - 85
not expended for theminor'sbenefit,thecustodian is requiredto transferthe
propertyto theminoron his attainingtheageof 21 or,ifthe minordiesbeforc
arlainingrheageof 2l , ro lheesrare
of theminor
86 - Wills
b) The factsindicatethatEthel intended'andpossbil orqcc
rrmr
to give an executed,prcsent,legal inter vivos gift o P
deliverY'
c) Becausea gift fails for lack of delivery' the intent to glre catr-
not be canLd into effect throughthe presumptionthat the do-
nor intendedto havemadeheNelftrusteeto makethenecessaq
delivery
propeflyand
d1 One may constituteherselftrusteeof personal
cleatea tust erforceablein equity'eveflwithout consideration
to
or delivery.However,while theterm "ttustee"doesnot have
be used,the donormust showanintent to imposeupon herself
enforceabledutiesof a trustee'
a) P claimsconstructivedeliveryby meansof.Ethel'smemo-
randum.Consfuctivedelivery requiresdelivery as nearly
perfectandcompleteasthetypeof propertyandthe-circum-
deliveryhasbeenfoundin
stanceswill permit Constructive
deliveryofkeys,pointingout hidingplaces'andaninforrnal
memorandum.
Wills - 87
payh€r
r) Facts.C.P Craftwrotea letterto Iva Rippstein(P),promisingto
that long ln the
$200 a monthfor the next five yearsprovidedhe lived
I
marginofthe letter,hewrote:"l havestdckenoutthewords'provided
iiulifruifong' u.a ft"t"by andherewithbindmy estateto makethe$200
monthlypay-ments." Ctaft diedthreedaysafterwriting theletter'Pbrcught
of his eslale(Ds) for declaralory judgment
suiragainsitheexeculors
aal,ral"car;ng rtreirtiauililyto paylulureInstallments astheymatureThe
tri'al court iranted th" motion for summaryjudgment The
"i""uiotr' the
court of apfeds reversedandrenderedjudgment for P' holding^that
*.iting inlu"ttion a voluntalytrustunder which Craftbound
"ttablished
his pr;pertyto theextentof thepromisedpaymentsDs appeal'
a
Issue.Is a writing promisingto makegifts in the futurebindingas
voluntarvtrust?
(i) al relationshiP;
A confidenti
prcmise,expressot implied;
(ii) A transferee's
88 - Wills
(iii) A transferof propertyin relianceon thepromise;and
of thelranslerce
(iv) Unjustenrichment
Wills - 89
stocktradingbecause therewerenonein existenceat thetime.His
declantionamountedto nothingmorethana ptomiseto crcatea
trust. We thereforcmust determinewhetherit complied with the
law of contracts.
(2) It is elementary
thatan executorycontact,in orderto be enforce-
able,mustbebasedupon valuableconsidention.Here,thedeclan-
tion wasgmtuitous.Evenif we assumethat it wasbasedon love
andaffection,thiswouldnotbesufficientconsiderationfor a Drom-
ise.
90 - Wills
trial cout heldfor
promiseto paytheshareof theprofits The
i. ut . put"ui(o)' puscal'swidow'appeals'
gifl bemadeofproperty thatis nol
b) lssue'Ma) a \alid present
in existenceat the time the gift is made?
2) Issues.
personalpropertyto a
a) Doesa bequestto a ttusteeto distribute
Lstator'sfiiendsconstitutea privatetiust?
a classof beneficia-
b) Must a privaterust havea beneficiaryor
i".l"ati"Ji",rt" *rll capableof cominginto courtandclaim-
ing thebenefitof thebequest?
Wills - 9l
3) Held. a) Yes.b) Yes.Casedischarged.
b) However,we hold that the will doesnot provide for definite and
ascertainable beneficiaries.Thus,it cannotbesustainedasa private
trust.Theword"ftiends,"unlike"relations,"hasno accepted statu-
tory or othercontrollinglimitationsandin facthasno precisesense
at all. No sufficientcritedonis fumishedto govemtheselection of
theindividualsfrom theclass.
2) Issues.
92 - Wills
beneficiarycapableof enforcingthefust. The modemauthori-
tiesupholdthe validity of suchgifts wherctheperconto whorn
thepowerisgivenis willing to carryoutthetestator'swishes
Weholdthatthebequestfor thecarcof thedog'Trixie,is noL
in andof itselfunlawful.
b) Nor doesthebequestviolatetheRuleAgainstPerpetuitieslt
is to be noted that unlessa trust establishedfor specific ani-
mals limits the durationof the trust-that is, the time dunng
which thepoweris to be exercised-tohumanlives,we will
havehonorarytusts establishedfor animalsof g1€atlongevity
thatpossiblycouldcontinuelongerthanthemaximumperiod
allowedby theRuleAgainstPerpetuitiesHerc,however,the
rule is not violatedsincethe moneygivenfor the purposeof
caringfor the animalis limitedto $ 1,000at 75t per day This
sumof moneywill b€ fully exhausted in threeyearsand238 l/3
days.It is thus apparentthat the testatorprovided a time limit
fot the exerciseof the power given to the €xecutorand that
suchtime limit is lessthanthemaximumperiodallowedun
dertheRuleAgainstPerpetuities.
4. Oral Inter Vivos Ttusts of Land. An oral inter vivos trust of personalprop-
but ifthe subjectmatterof theoralaustis land,a wntten
ertyis enforceable,
insfumentis requiredto makethetrlrsteffective.However,somecourtswill
imposea conskuctivetrustuponpropertyif the transferee stoodin a confi-
dentialrelationshipto thetransferor'
3) H€ld. Yes.Judgmentaffirmed.
Wills - 93
a) D hasnot attackedthecowt'sfindingthattheagreement was
in factmade,nor doeshecontestthereceiptof parolevidence
ashavingviolatedthe Statuteof Frauds.Sincethe findingof
factsis not challenged. the conclusionof the court that rhe
partiesstoodin a confidential relationship
muststandunless it
is uffeasonably drawn.Wegrantthatthebondbetweenparent
andchild is not per sea fiduciaryone;it doesgenerate, how_
evel a natulalinclinationto reposegreatconfidenceandftust.
J' Held.Yes.Judgment
for Ps.
94 - Wills
thewill, he hascommunicated to thembeforethe will's
execution,thetrusts,if for lawful purposes,maybeproved
by theadmission of theexecutors or by oralevidenceand
enlorcedagainstthem.It hasalsobeenheldthattheffusts
maybeenforcedagainsttheheirsor nextof kin.
C. DISCRETIONARYTRUSTS
Wills - 95
band.Thedaughtertookoverthemortgagepayments,taxes,insurance, and
majorrepairs.Hretaineda life estate.FarrhadneveradvisedHhecoulduse
thetrustprincipalfor theexpensesof thehome.The daughterdiedbeforeH.
Upon H's deaththe daughter'shusband askedP to vacate.P broughtthis
actionin probatecourt.The court foundT in breachof his duty to H and
orderedthehusbandto conveythehometo P andalsoorderedFan to reim-
burceTestator'sdaughter's husbandfrom theremainingportionof H's hust
for the expenseshe andTestator'sdaughterhadpaid for the upkeepof the
property.Ifthetrustwasinsufficient,thecourtfoundFarrpersonallyliable.
P appealsthe denialof attomeys'fees.Testator'sdaughter'shusbandand
FarI appealfrom thedenialoftheir motionsto amendthefindingsandfor a
new trial.
b. Issues.
2) If so,wasthecourt'sremedyfor suchfailurecolrect?
96 - Wills
D. SPENDTHRIFTTRUSTS
In a spendthrift
trust,thebeneficiaries
cannotvolunta.ilyalienatetheirinter-
estsandtheirinterestsareprotected
ftom creditors.
Wills- 97
2) Publicpolicyrequiresthattheinterestofthe beneficiaryofa trustshould
be subjectto claimsfor child suppon.It is clearthatparentshavethe
obligationto supporttheirchildren.Werewe to bar claimsfor support,
we wouldhavethe spectacle of a parentenjoyingthebenefitsol a trust
whilethecommunitypaysfor thesupportofthe children.With regardto
alimonyfor thespouse, thesameconsiderations apply;in manycases, if
thebeneficiary'sinterestcannotbereached, thestatemaybecalledupon
to supportthespouse.
Whetherthechildrencanreachthecorpusinvolvesstill a differentprob-
lem.Theftuststatesthatdisbursements to GrantShelley'schildrenwere
to be made"in caseof anyemergency wherebyunusualandextraordi-
naryexpenses arenecessary. . . ." D claimsthattheexpenses claimedin
this casearenot unusualor extraordinaryWe disagree.We conshre the
clauseto includethe circumstances involvedhere-where thechildren
aredesertedby their father andarein needof support.
6) The decrceof the lower court, permitting the corpusof the trust to be
invaded,wastoo broad.Firct,it improperlyincludedP's claimfor ali-
mony;andsecond,it permittedencrcachment uponthecor?uswithout
relerenceto whetherthe ffusteehasexercisedhis discretionor whether
therehasbeenanemergencyascontemplatedby the testator.The decree
thereforeshouldhavepermittedaninvasionof thecorpusonly ifit was
necessary first to reachthe incomeunderthe circumstances mentioned
andsuchincomewastheninsufficient.Further,thedecreeshouldhave
madesuchcorpusavailableonly in theeventofthe fiustee'sexerciseof
discretionundertheemergency circumstances providedfor in thetust.
98 - Wills
Cr€ditors' Rights in Support Thustsand Discrttionary Trusts'
1) 517N w2d
Statesv. O'Shaughnessy'
IRS unsuccessful..United United Statesv.
574(Minn. 1994). O'Shaughnessy
Wills- 99
c) in thenegative
Held.No. Cefiifiedquestionanswered
100- Wills
E. MODIFICATION AND TERMINATION OF TRUSTS
Issue.ShouldP'sproposedmodificationbe approved?
Wills - l0l
thoughall thebeneficiaries if teminationwouldbecontraryto a material
consent,
purposeof the settlor.
In 1983,Pspetitionedtheprobatecourtfor terminationoftrust,arguing
thatthesoleremainingpurposeof thetust wasto maintaintheirlifestyle
andthat distdbutionof the remainingassetswasnecessary to acconr-
plishthispurpose.
Therernaindermen (Ps'children)filedconsentsto the
proposedtermination.The probatecourtdeniedthe petitionto termi-
nate,andPs appealed to the WashingtonSuperiorCourt.The superior
courtreversed,concludingthatcontinuation of the trustwasno longer
necessary becausetheonly materialpurpose,theeducationof thechil-
dren,hadbeenaccomplished. An appealby thetusteefollowed.
3) Held.No. Judgment
reve$ed.
102- Wills
palfor thebenefitofan individual,but onlyto theextentnecessary
to supporttheindividual.Because thefusteemust,attheveryleast,
payall of thetrustincometo Ps,thetrustcannotbecharacterized
as
a suppofimlst.
wills - 103
IX. POWERSOF APPOINTMENT: BIILDING FLEXIBILITY INTO
TIIE ESTATE PLAN
A. INTRODUCTION
c. Held.No. Judgment
of trial couitreversedandcasercmanded.
104- Wills
not more than 4% of the fust corpus under certain circum_
stances, the powergivento the beneficiarywas a "powerol
appointment," andthe beneficiary's formerwife wasnot en-
titled as a creditor under a divorce decreeto reachproperty
coveredby a powerof appointment thatwasunexercised.
a. in will--Sternery, Nelson'210Neb.358,314
Inconsist€ntclau.$es Stemer
N.W2d263 (1982). v. Nelson
Wills- 105
3) Held. Yes.Judgment
affirmed.
106- Wilts
b. Issue.May the doneeof a power of appointmentthat is not prcs-
ently exercisablecontractto makean appointment?
Wills- 107
Bealsv. State Partia.lrcleaseof generalpow€r of appoinlment-Beals v. Stlte Str€etBank
Stre€tBank & Tfust Co.,367Mass.318,326N.E.2d896(1975).
& TrustCo.
1) Facts.The will of thedecedent, Arthur Hunnewell(T), placedtheresi-
dueof his propertyin a trust,theincomeof which wasto be paidto his
wife during her life. The will dircctedthar ar the deathof the wife the
trustwasto be dividedinto pofiions,onefor eachsurviving daughterand
for thethen-surviviflg issueof anydeceased daughterThe will directed
that the incomeof eachpofiion shouldbe,on a daughter'sdeath,paid
anddisposed ofas shemaydirectandappointby herlastwill. Following
the deathof her mother,one daughter,Isabella Hunnewell Dexter, re-
questedthe trusteesto makethe principal paymentsby transfer.ingvir-
tually all of her trust sharcto the Dexter family office in Boston.
Thereafter,Isabellaexecutedan instrumentpartially rcleasingher gen-
eral powerof appointment underher father'swill. Isabella,who died
withoutissue,did not expressly exerciseherpowerof appointment un-
derherfather'swill but did leavea will thatleft theresidueof heresrare
to theissueof hersisterMargaretBlake,who hadpredeceased Isabella.
In defaultof appointment, theBlakeissuewouldtakeone-halfof Isab€lla,s
trustshare.If Isabella'swill shouldbe teated aseffectivelyexercising
her power of appointment,the Blake issuewould take the entire trust
sharcandthe executorsof the will of Isabella'ssisterJanewouldnot
receivethat one-halfof thetrust sharethat would otherwiseeo to Janein
defaultof appointmenl. The lrusrees(Ps)of T's wjll filed a peririonfor
instrucdons,seekinga determinationof the distdbution to be made.The
trial court reserveddecisionand reportedthe caseto the appealscourt.
The casewasthentransfered to the suprcmecourt.
108- Wills
closeapproximationof a propertyinterestwhile a specialpower
lackedthis quality.
Wills - 109
4. Ineffective Exerciseof the Power.If an attemptedexerciseof a power
of appointmentis ineffective,the donee'sintent may still be effectuated
by allocationandcapture.
110- Wills
T's will gaveCabotJackson Morse,thesu ivingnephew,a specialpowerlo
appointthetrust principalto his "wife andissue"with thelimitationthatorly
incomecouldbeappointed to a widowwhowasliving atT's death.Cabotwas
suryivedby his wife Anna, whowasliving atT's deatb,andby his only child,
CabotJr, whodiedin 1948,two yearsafterhisfatherCabotleft a will, which
providedthatthepowerof appointment hehadunderT'swill wasto beexer-
cisedby appointingto his wife the right to the incomeduringher lifetime.
Consequently, the trustincomefollowingCabot'sdeathwas paid to Anna
until herdeathin 1983,whentheprincipalbecamedistributable. Thetrustees
thereupon sought inskuctions as to who is entitledto the remainder of the
Marian Hovey Trust now that the trr.lstis distributable.Among the claimants
areseveralcharitieswho wereto rcceivethewholetrustfund ifneither nephew
left appointees.
Held. Yes.Judgmentsoordercd.
Wills- 111
X. FUTUR.EINTERESTS:DISPOSITIVEPROVISIONSOF TIIE TRUST
INSTRIJMENT
A. INTRODUCTION
B. CLASSIFICATION OF FT]TUREINTERESTS
112- Wills
cut shortsomeintercstin anothertransferce (a shiftingexecutory
interest)or divestthetransferorfollowinga certainperiodof time
duringwhich no tmnsferceis entitledto possession (a springing
executoryinterest).
b. Accelerationinto possession.
b) Issues.
Wills- 113
(2) The contolling statutesproviderhata beneficiaryof a dispo_
sitionmayrenounce all or panof his inrerestjn a rransfei
of
propertyby a personduing his lifetimeor by will. properryis
"anythingrhatmaybethesubjectofown€nhip.,,
b) Issue.WasJohn'sremainderinteresta prcsent,vestedintercstat
thetimeofthe creationof theintervivostuust?
c) Held.Yes.Judgment
vacated.
(l) Becausea will is not operativeuntil the testator'sdeath,an
lnrcrestln a testamentary
trustcannotvestprior to thedeath.
An intervivostrustis operativefrom thedateof creation.
114- Wilis
Doseof thet sharcs'andno conditionof survivalof anychildren
ihis plan effectively eliminatedany futher idterestof T unlesshe
choseto inteffene.
b) Issues.
c) soordered'
Held. (1) Yes.(2) No. Judgment
Wills- ll5
futwe date.The fact that a life tenantis a memberof a classdoes
not preventthelife tenantfrom participatingin theremainderof th€
testator'sestateas part of the class.Here, the life tenantsshould
participatein the remainderdevisedby the testatorto his brothers
andsisters.
(2) The weight of authority in other sratesis to the effect that in the
eventof the deathof the devisees leavingno issue,the interestof
thosedeviseesi snot divestedby their death.The interestsof Martha
and Mary Wilson and MargaretIrvine were not divestedby their
deathswithoutissueandthattheirinterestsin T's estateshouldso
to their respectiveestates.
c) Held.Yes.
116- Wills
effecr.lhelrustpropenypasses
lo rhesettlor'sresiduarydevi-
seesor thesettlor'sheirs.
2 Gifts to Classes.
a. Gifts of income.
Wills- 117
c) Held. Yes.Judgmentsoordered.
(4) T provided that the trust should terminate2l yeals after the
deathof his lasrgrandchild. It is unlikelythatT inrendedthat
trustincomeshouldbeaccumulated for21 yeals.He musthave
expected thatsomeone wouldreceivetheincomedurinsthose
years.Theonly logicalrecipientswouldbe rheissue{by right
of representation)of deceased grandchildren, thesamegrcup
ofpeoplewhowouldtakethetn6t assets onteminationof the
trust(assuming no violationofthe RuleAgainstperpetuities).
118- Wills
a) Adopted adult not consideredan "heir"--Minary v. Citizens Minary v.
FidelityBank & Trust Co.,419S.W2d340(Ky. 1967). Citizens
FidelityBank
(1) Facts.The will ofthe decedent, Amelia S. Minary (T), de- & TrustCo.
visedherresiduaryestatein trustto paythe incometo her hus-
bandandthreesonsfor their respectivelives. The trust wasto
terminateupon the deathof the last surviving beneficiary at
whichtimethetrustwasto bedistributed to T's survivinghei$
andif no heirs,thento theFirstChristianChurch.Two of the
threesonsleftno survivingissues, buta thirdson,Alfred,mar-
ried andthereafteradoptedhis wife. Myra Minary (P),the wife
ofAlfred, broughtsuitagainsttheCitizensFidelityBank(D),
contendingthat the trust shouldbe awardedto her sinceshe,
havingbeenadoptedby her husband, becomesan "heir" for
purposes of thewill. The ftial courtheldfor P D appeals.
c. Gifts to heirs.
Wills- I l9
life tenantand to terminateuponW's death.The rcmainingtust estate
wasto go to T's daughter@) if shesurvivedandifnot, thento D's heiN
at law.UponD's deathin 1980,shewassurvivedby herhusband(H), a
niece,anda nephew.H died testatein 1988,leavingtheresidueof his
estateto the Regentsof the University of Califomia (Rs) for the
unive$ity'sBerkeleycampus.W diedin 1991.The rrusreebank(P)pe-
titionedtheprobatecourtto detemineD's heirsat law Thecowt deter-
minedthenieceandnephewto beD's heiG.Rs appeal.
c) Held.Yes.Judgment
rcversed.
120- Wills
in his heirs.The docrine is a rule of consfuction,not a rule of law It
raisesa presumptionthat no remainderin the settlor's heirs has been
created,but this presumptioncanbe rebuttedby evidenceof a contrary
intent of the gFntor. The doctrinemay still exist in somestates.
b) Issue.Whenall existentmembersofaclasshaveattainedthestated
age,shouldtheclass be closed
andthedistributionbe made?
c) Held. Yes.Judgmentsoordercd.
Wills- 121
the classhaveattainedthe statedage,considerationsof conveniencerequire
thatdistributionshallthenbe madeandtharthe propenyshallnot beiepl
ftom furtherutilization to awaitthe uncertainconceptionof further members
of the group.
122- Wills
XI. DURATION OF TRUSTS: THE RULE AGAINST PERPETIJ'ITIES
A. INTRODUCTION
Wills - 123
fetility, prescribingthatanypersonwho hasattainedthe ageof 65 shallbe
deemed incapable
of havinga chrld.
Example.O devises"to A for life, thento A's wife for life, thento As
childrenwho surviveA's widow."It is possiblethatA maymarrysome-
onenot in being(not yet bom) at O's death(whichis the time of the
fansfer).Shecouldlive beyondlivesin being(O'slife andA s life) plus
2l yean.Thereforc,thedeviseto thechildrenis void.This is thecaseof
the"unbomwidow."
124- Wills
Issue.Is a tust createdby a will void undertheRuleAgainstPerpetu-
ities becauseit is possiblethatthe interestof the variousbeneficiaries
mightnot vest within theperiodallowedby thatrule?
3) Held.Yes.Chancerycourtjudgmentreversedandcaseremanded.
A barepossibilitythata beneficiary's
interestwill not vestwithin
the pedod allowedby the RuleAgainst Perpetuities is enoughto
renderthatinterestvoid.
Wills - 125
C. APPLICATION OF THE RULE TO CLASS GIFTS
3) Held.Yes.Judgment
affirmed.
126- Wills
b) Howevetthecodicildoesnot operateto revokethegift to the
childrenof brothersandsisterscontainedin the will. The revo-
cationin thecodicilisconfinedtothepowerof appointment to
thewife. The prcvision in the will stands
undisturbed The time
whendistribr-rtionof the estateoccurs-herc, whenthe widow
remaried-is whentheclassofchildrenwho will takewill be
ascertained. Phillip Bumyeatis excludedsincehe wasbom
after the widow rcmarried
Wills - 127
andagaina suit washought. While this actionwaspending,Horace
diedanda supplemental bill for instuctionswasfiled.AlthoughMaryis
stillliving,thiscourtwill passon thevalidityof theremainderregarding
all partiesconcemed.
2) Issues.
a) A gift will fail unlessthe membersof the class are finally determined
within a life or livesin beingplus2l yealsandactualperiodsof gesta-
tion; stateddiffercntly, the classmust closewithin the period provided
by theRule,if theclassis to be heldvalid.Here,the remainde$to the
heirs of Hugh and Mary Duffey are valid-both Hugh and Mary were
livesin beingat T's death,andtheremainders limitedto theirhei$ had
to vest,if at all, withintheperiodprovidedby theRule.Thercmainders
to the heirsof HoraceandDepueareinvalid-they both werebom after
T died. andhencethe remaindersto their heirs could vestlater thanthe
periodpfovidedby theRule.It doesnot helpto showthat the Rulemight
becompliedwith,or that,thewaythingstumedout,it actuallywascom-
pliedwith.
b) Theinvalidityoftheseremaindem doesnottaintthevalidremainders to
the heirs of Mary andHugh.If the ultimatetaken arenot describedasa
singleclass-i.e.,As childrenthatreachage25-but nther asa group
of subclasses-i.?., theheilsof eachof A s children-and if theshareto
whicheachseparate subclassis entitledwill finallybedeteminedwithin
the period of the Rule, the gifts to the differcnt subclasses
are separabie
for the purposeof the Rule. We read the languagehere as a deviseof
rcmainders to subclasses andnot asa singleclass:"uponthe deathof
'each'theshareof the 'one' sodyingshallgo [to] . . . heror his heirsat
law" Accordingly,the invalidity of onedoesnot invalidatethemall.
128- Wills
3. Specilic Sum to Each ClassMember. Another exceptionto the all or
nothing class gift rule is wherethere is a gift of a statedsum to every
memberof the class.The policy underlyingthis exceptionis that the
amountintendedby the conveyorto be given to eachclassmembercan
be deduced withoutestimating how manypersonsarein theclass
Wills - 129
avoidingfederaltax liability (sincepropertysubjectto a specialpower
of appointment is not taxableat the donee'sdeath). Howevet section
2041(a)(3) of theIntemalRevenueCodetaxesthe assetsin thedonee's
estateif he exerciseshis specialpowerof appointment by establishing
another power thatcanbe exercised of thefi$t power'sdate
regardless
ofcrcation.
2) Issue.Ifa settlorreseflesanunconditional
powerof revocation,
for pur-
posesofthe RuleAgainstPerpetuities,
doestheperiodofthe Rulebegin
from whena powerof appointmentis first created?
Held.No. Judgment
enteredaccordingly.
130- Wills
b) However,thercis anexceptionto thisgeneralrulewherc
anunconditional powerofrevocation is reserved.In those
instances,theperiodof perpetuitiesis calculatedfrom the
time the powerof revocationceased,usually at the death
of the grantor.
e) If Marydiesbeforethe30-yearpedod expires,thepdnci-
pal goesto her estate;it doesnot passto her surviving
children underthe termsof Margaret'strust. That trust's
contingentrcmainderto Mary's childrenviolatestheRule
AgainstPeryetuities because it might vestmorethan21
years after Margaret'sdeath.The result in caseswherc
futureinterestsare voidedby the Ruleis that the p.ior
interests b€comewhattheywouldhavebeenhadthelimi-
tation of the future interestb€€nomitted from the instu-
ment.If a divestinginterestis void, theinterestthatwould
otherwisehavebeendivestedbecomes absolute.
E. SA\INGCLAUSE
Wills- 131
F. PERPETTIITIESREFORM
2) Issues.
132- Wills
-!
l
b) DoestheNew JerseyUniform RuleAgainstPerpetuities,* hrcf-
providesthatan actthatwouldhavebeeninvalid at common
validif it vestswithin 90 yearsof its cre-
law is nevertheless
ationandbecomes invalidonlyifit continues in existence and
doesnot vestwithin that time period,apply to a nonvested
intercstcreatedpursuantto theexercise ofa powerof appoint-
ment vestedin P by a 1944 tust and measwed from the cre-
ationof the 1944trust?
3) fot P
Held. a) Yes.b) Yes.Judgment
d) WhiletheNewJeNeystatutegenerallymaynot applyretroac-
tively,wheretheapplicabilityof a new statutoryperiodis be-
ing determined, thelaw statesthatanintercstcrcatedpurcuant
to a power of appointrnent is deemedcreatedupontheexercise
of thatpower.Thus,if thepowercreatedby P wereexercised
after July 3, l99l (the effective dateof the statute),the Rule
would apply to an interestcreatedunderthat power,
Wills- 133
atedprior to 1986unlesstheexerciseof a specialpowerof appointment
delaysthe vestingof an interestbeyondthe commonlaw perpetuities
period. Under USRAP,a grandfatheredtrr.rstis not exemptif a special
powerof appointment in violationof thecornrnonlaw per-
is exercised
petuitiesperiod,thusgivingrisetothe90-yearwait-and-see rule.In1990,
sectionl(e) wasaddedto USRABprovidingthatif thevestingof a gift
is basedon two altemativecontingencies, oneof whichcomplieswith
the commonlaw period
perpetuities and the othercomplieswith the
USRAPperiod,effectis givenonly to thecommonlaw perpetuities pe-
riod.
134- Wills
XII. CIIARITABLE TRUSTS
A. INTRODUCTION
A charitabletrust is one for the benefit of a classof pe6ons, and not for the
benefitof the communityat large,andmustbe for relief of poverty or lbr the
advancement of education,rcligion, health,or othercharitablepurpose.It must
benefitthe generalpublic or someparticularclassof the public that is indefi-
nite in number.
Held. Yes.Decreesaffirmed.
Wills- 135
tion of the mandateof the trustaccomplishes no educational
purpose. It merelyplacestheincomeforeverbeyondtherange
of the ftust. The wordsof the trust import an intent to havethe
ffusteepay eachchild an allotted share.The testator'sintent
wasto bestowuponeachchild gifts that wouldbring happi-
nesson the two holidays,which purposefalls far short of an
educationaltrust.
Held.Yes.Orderre\elsedandremanded.
136- Wills
par-
2) The direction that a hospitalbe erectedshowsan absenceof
tlculantyaslo type.managemenl' or control'exceptthatP s trust-
eeswereto be thegovemingboardThis absence of par(lct antyrs
a strongshowingagainstlhe \iew thattheinstructionwasthesub
stanceof the gift
Wills - 137
thetestatormanifested a generalcharitableintention.In prac-
tice,cy preshasmostoftenbeenappliedin Califomiain such
caseswherethecharitable trustpurposeis literallyimpossible
to fulfill or in caseswhercit hasbecomercasonably impos-
sibleof performance. Ineffectivephilanthropy,inefficiency,and
relativeinefficiency(i.e.,inefficiencyof trustexpenditures in
onelocationgivengreaterrelativeneedsor benefitselsewhere)
do not constitute impracticability.
138- Wills
attomeygeneralcouldbringanaction.Theappellatecourtreversed,
conclud-
ing the ConnecticutUniform Managementof Institutional Funds Act
("CUMIFA")providesdono6with standingeventhoughno such.ightispro-
vided for in the trust instrument.D appeals.
Held.No. Judgment
reversed.
Wills 139
ers clearly statedthey wishedto protect the donor's federalcharitable
contribution deduction,andthey anticipatedno federaltax problemby
allowing the donorto releasea restriction.
140- Wills
XIII. TRUST ADMINISTRATION: THE FIDUCIARY OBLIGATION
3) Held.Yes.Decreewill be advised
Wills- 141
for in interest-freeinstallmentsover a 12-yearperiod after aninitial payment
of $200,000. Theyalsoconsigned to MarlboroughGallery,Inc., a domestic
corporation,some700 other paintings listed in a scheduleto be prepared.It
later came to light that Reis was a director,secrctary,and treasurerof
MarlboroughGalleryin additionto beingco-executorof theestate;thatStamos
wasa not-too-successful artistfinanciallyandthatit wasto his advantage to
curry favor with Marlborough Gallery; and that Levine failed to exerciseordi-
naryprudencebecausehewasawareof Reis'sconflict of interest.KateRothko,
T's daughterlaterjoined by her brother,ChristopherRothko,andthe attomey
generalof the state(Ps),bmughtsuitto removeDs, to enjointhe saleof the
paintings,to rescindtheagreements enteredinto,to haveretumedthepaint-
ingsstill in possession of the corporations, andfor damages. The tdal coun
held for Ps.The app€llate court affirmed. This appealfollowed, Ds contend-
ing thattheyactedin goodfaith andthattheplanwasfair
3) Held.Yes.Orderaffirmed.
b) Levinearguesthat,havingactedprudently andupontheadviceofcoun-
sel, a completedefenseis established. We disagree.
An executorwho
knowsthathis co-executor of tmst andwhonot
is committingbreaches
only fails to exerteffortsdircctedtowardpreventionbut accedes
to the
breaches is legallyaccountable eventhoughhewasactingon theadvice
of couNel.
142- Wills
tbr too low a price, appreciationdamagesmay be appropriate.
A trusteemay beheld liable for appreciationdamagesif it was
his duty to retain the property.The sane rule should apply
herewherethereis a seriousconflictof interest.
Wills - 143
Mary Janefor the full amount.The trial coufi deniedthe petr-
tion:a dividedcourtof appealsreversed. Mary Janeappeals.
b) Issues,
144- Wills
dermenof a trustestablished and as such,aJe
by their great-grandmother,
entitledto incomeuntil 1991whenthe tlust ceases andPs receivetheprin-
cipal.Psclaimedin the districtcowt thatthebanktrustee(D) hadbreached
variousfiduciaryobligations.The courtfoundthatD hadfailed to actim-
partiallyasbetweenthe trust'sincomebeneficiadesandremaindermenD
;old the trust'sreal estateat the lowestpoint of value.Both sidesappeal
differentaspectsof thejudgment.
3) Held. Yes.Judgmentaffirmedasmodified.
c) D couldhavesoldthepropertyin 1950andreinvestedtheproceedsso
as not to createa "partiality" problem.The Restatement (Second)of
Trustssaysa fustee is undera duty to the beneficiaryultimatelyen-
titled to principalnot to retainpropertycertainor likely to deprcciate'
eventhoughthe propertyyields a high income,unlessD makesad-
equateprovisionfor amortizingthe income.
Wills' 145
Fletcherv. 4. Full DisclosureRequir€d-Fletcher%Fletch€r,253Va.30,480S.E.2d488
Fletcher ( t991).
b. Issue.Did the trial coufi err in finding that P had an absoluteright to the
completecopies of the trust agreementand ordering Ds to Fovide p
with same?
146- Wills
keptftom him
ty andits administration
Wills - 147
b. Issue. Doesthe failure to make any reasonableeffort to ascertain
thetruesetof factsconstitutea sufficientbasison whichto hold a
trusteeresponsible
for a constructiveflaud on beneficiariesof atrust?
Held. Yes.Judementaffimed.
148- Wills
rcmaining for Ds to invest. They loanedthe money to two real estate
developers, DowningandWard,who assured Ds thatthey werenot in
default on any of their loans.Thereafter,Downing andWard Constuc-
tion Companywent bankrupt,resulting in a loss to the trust fund of
$60,000.Ds filed a petition for approvalandfor setrlingof the first and
final accountand for their discharge.The beneficiariesunder the trust
(Ps)objectedon thebasisthatDs hadimproperlyinvestedthe$50,000.
Thetrial courtheldforDs. Psappeal.
3) Held. Yes.Judgmentrcvelsed.
a) Atrusteeis undera dutyto distributethedsk ofloss by reasonable
diversification.Here,Ds investedtwo-thirdsof thetrustDrinciDalin
a singleinvestment.
Wills - 149
XIV. WEALTH TRANSFER TAXATION: TAx PLANNING
A. INTRODUCTION
1. A Brief History of the Federal Estate Tax. Under the Tax Refom Act
of 1976,Congress uritedthegift andestatetaxes.The sameratesched-
ulewasappliedtobothgiftsandestates, thusremovingthetaxincentive
to make gifts before death. A single "unified credit" wasenactedwhich,
in effect,operatescumulativelyto both lifetime and deathtransfers
Moreover,thenewunified tax computationrequirestheestatetax to take
into accountlifetimegmtuitoustransfers, sothatall gratuitoustransfers
arcnow taxedcumulatively. Federal wealth transfer taxation
consistsof
threetaxes:(i) gift tax,(ii) estatetax,and(iii) generation-skippingtrans-
fer tax.
3. The Unified Federal Estate and Gift Tax. Under the unified system,
unified taxesareimposedon theestatesof decedentsdying afterDecem'
ber31, 1976,andfor giftsmadeafterthatdate.Theratesareprogrcssive
basedon cumulativelifetimeanddeathtransfels.
150- Wills
B. THE FEDERAL GIFT TAX
3) Held. Yes.Decisionfor P.
Wills- 151
desirablefor thewelfarc,comiort, andneedsof the settlor It is
reasonable to assume thatthetrusteewould.andcouldbe re-
quiredto, invadethecorpusif this wasdesirablefor thewel-
fare,comfort,andneeds of thesettlorIt wasthuspossiblethat
theentirecorpusmightbe distdbutedduringthesettlor'slife-
time.Hence,the settlorhadnot abandoned sufficientdomin-
ion andcontol over the propedytransfered to makethe gift
consummate.
152- Wills
section2503(b)for 1984and 1985with respectto Cs andGs' Gs
did not exercisetheir rights to withdnw underthetrust duringthose
years.The IRS (D) allowedT's estate(P) to claim the exclusions
with rcspectto Csbut disallowedit for Gsfor 1984and1985,deter-
mining that Gs' claimed exclusionswere not transfersof present
interests.P apPeals.
3) Held. Yes.Decisionenteredfor P
Wills - 153
C, TIIE FEDERALESTATETAX
l. Introduction. The federalestateta,r taxesthe value of propertyowned
or passingat deathandthevalueof propertygivenawayduringlife.
,,
The Gross Estrte: Property Passingby Will or Intestacy.
a. Section2040:Joint tenancy,
154- Wills
b. Section2039:Employeedeath benefits.Under section2039,the value
of amountsreceivableby a beneficiaryunder an agrcementwhefe the
decedent, duringlife, wasreceivingor hada rightto rcceivepayments ls
includedin the decedent'sestate.Deathbenefitsarenot includableirr the
decedent's estateif he is preventedfrom selectingthe beneficiarybe-
cause,for example,a statuterequircsthe benefitsto be payableto his
spouseor children.If benefitsarepayableto a beneficiaryat a scheduled
time or uponthe happeningof anevent,irresp€ctiveof whetherthe de{e-
dent is living or dead,they are not taxable under section 2039, even
thoughthe decedentmay be deadat the time scheduledfor payment'
Wills - 155
b) Issues.
c) Held. Yes.Judgmentaffirmed.
156- Wills
(l) If there is an ascertainablestandard,the trusteecan be
compelledtofollow it. If thercis not,eventhoughheis a
hduciary,it is not unreasonableto say that his retention
of an unmeaswablefrcedom of choice is equivalentto
retainingsomeof the incidentsof ownership.Hence,if
thereis an ascertainable standard,the settlor-tustee'ses-
tateis not taxed,but if thereis not,it is taxed
5. The Gross Estater Tfansfers Within Thr€e Yearsof Death. Under section
2035,certainint€r vivos transfersmadewithin threeyearsprior to deathare
bfoughtwithin thedecedent's grossestate.
W ills' 157
T receivedall the incomefrom the trust after his mother's deathandon
T's deaththe assetswereto be dividedin equalpartsfor T's two chil-
dren.T developed Alzheimer'sdiseaseandentereda nulsinshomein
1984butneverresigned asrustee.Ar T s death.hepossessed ; po\aerof
appointmentthat permittedhim to benefit himself, his estate.his credi-
tols or theestate'screditorcfor his 'tontinuedcomfort."The tax couft
heldthatT heldat his deatha generalpowerdefinedby I.R.C.section
2041,requiringthe trustassetsto be includedin T,s glossestate.T's
estateappeals.
3) Held.No. Judgment
reversedandremanded.
158- Wills
$3.4million. The estatetax rcturnincludedthe full valueof the
marital trust but noneof the valueof the family trust The IRS as-
sessed additionalestatetaxes.Theestate(P)challenged theassess-
ment. The tax court held that Kurz held a general power of
appointmentover570of thefamily trustandanother$170,000should
be includedin herestateunder26 U S.C.section2041(aX2). P ap-
peals.
b. Interests that qualify for th€ d€duction. For an interestto qualify asa
marital deduction,the following requirementsmust be met:
Wills 159
(iii) Thevalueof theinterestdeducted
is includablein thedecedent's
grossestate;
(iv) Theintercstpasses
to thesurvivingspouse;
and
b) Issues.
160- Wills
(1) Doesthe trustcreatedby T's will constitutea QTIP trust,which
qualifiesfor themaritaltax deduction?
Wills - 161
b) Issue.Shouldthe trustbercformedto give effect to T's intent?
c) Held.Yes.Soordered.
(1) Clearanddecisiveprcof of mistakeis requiredto refom
a aust instrument
to embodya settlor'sintent.
(2) Both the will and h.trstwere executedon the sameday;
the trust was clearly intendedto prcvide for the marital
deduction.It wasessentialto the estateplan.All of T's
assetswere fansl-erredto it. The income and orincioal
wereavailable lo T andhiswifeduringlheirliue".Clearly.
T intendedthe sameto continueafterhis death.Only a
scrivener'selrorcouldhavecausedthe requisiteclauseto
be omitted.Thereis no indicationthatT intendedto de-
pdvehis wife of theaust assetsduringher lifetime.
162- Wills
D. THE GENERATION.SKIPPING TAX
The Tax ReformAct of 1986prcventswealthyperuonsfrom creatinginter
vivos or testamentarytrustsfor the purposeof avoiding estateor gift taxes.
Theunderlyingprincipleof thegeneration-skipping transfeftax is thata transfer
taxshouldbeimposedoncea generation andcannotbeavoidedbygivingthe
next generation only a life estateor nothing at all. If a trust createsa genera-
tion-skippingtransfer,the tax is due when the transferoccus. The tansfers
arctaxedat a flat rate,whichis thehighestrateapplicable. Thetypeof trans-
fer determines theamounttaxed andwhois liableforpayment.Undersection
2631(a),an exemptionof up to $l million may be takenby eachindividual
makinggefleration-skippingtransfers.A marriedcouplemay give awayup to
$2 million in generation-skipping transfeNwithouthavingto paya tax.
Wills- 161
TABLEOF CASES
(Page
numbers
of briefedcases
in bold)
Wills- 165
Johnson,lnre Estateof - 32 SecondNationalBankofNew Havenv Har-
Johnsonv. Gifiman - 44 ns Trust & SavingsBank - 130
Johnsonv. Johnson- 4l SecurityTrustCo. v Irvine - 115
Seidelv. Wemer- 106
Kaufmann'sWill, 1r /e - 23 Shannon,Estateof 80
Kimmel'sEstate- 32 Shapirav. UnionNationalBank- 3
Kurz,Estateof v. Commissioner
- 158 Shelleyv Shelley- 97, l2l, 128
Shenandoah ValleyNationalBankv.Taylor-
Lathamv. FatherDiYine- 24 135
Laura,1'' re Estateof - 82 Shrimp v Huff - 44
Lipp€rv. Weslow- 21 ShrinersHospitalsfor CrippledChildrcnv.
Ioring v. Marshall- 110 cardiner - 143
Lux v Lux - 121 Simpsonv. Calivas, T
Sp'eelmanv. Pascal- 90
Mahoney,/n re Estateof - 16 StateStreetBank & Trust Co. v Reiser, 53
Mahoneyv. Grainger- 59 Sremerv Nelson- 105
Marsmanv. Nasca- 95 Strittmater,h rc - 19
Maxwell,Estateof v. Commissioner - 155 Stuchell,lnre Trustof- 101
Minary v. CitizensFidelity Bank & Trust Co. Sullivan v. Burkin - 75
- 119
Moses,Ir /e Will of - 22 Thompsonv. Royall - 35
Moss,In re - CI Troy v. Hart - 17
Ranney,In re Will of - 30
Rapp,Estateof v. Commissioner- 160
Reyn'olds,In re - 17
Rothko,1z re - 141
Russell,Estateof - 60
Scottv BankOneTrustCo. - 98
Searight'sEstate,1r,re - 92
166- Wills