Secured Transactions

❖ Article 9: applies if parties intended to make a security interest in personal property or

fixtures NOT mortgages or real estate
➢ Security Interest: means of securing interest
➢ Collateral: (A) accounts (right to payment); (B) deposit accounts (bank account); (C)
inventory (leased goods; goods for sale; raw materials); (D) equipment (goods other
than inventory, farm products, or consumer goods); (D) farm products; (E) consumer
goods (personal, family, household purposes)
❖ Attachment: attaches the security interest onto the collateral to allow recovery in the event
of default and requires (1) a valid security agreement, (2) the debtor to have rights in the
collateral, and (3) the debtor to provide consideration
➢ Valid Security Agreement: requires (1) a description of the collateral; (2) a signature
and written agreement, and (3) the intent to form a security interest
❖ Perfection: provides a debtor priority after attachment over other creditors with an interest
in the collateral
➢ General Rule: perfected by either (A) filing a financing statement—containing the name
and mailing address of the debtor and creditor as well as an indication of the
collateral—with the state or (B) taking possession of the collateral
▪ Exception—Consumer Goods: automatically perfected
• Exception does not apply to non-consumer goods (e.g., no automatic perfection if
purchasing goods for resale)
▪ Exception—Deposit Accounts and Money are Perfected by Control: automatic for
bank where non-consumer deposit account maintained; otherwise established by
putting deposit account in secured party’s name or coming to agreement with bank
▪ Exception—State Statute: state statute may modify condition of perfection such
that filing a financial statement will not satisfy
❖ Priority: perfected PMSI (automatic for consumer goods) > lien creditor or perfected party
(lien creditor beats perfected party if lien attached before perfection; perfected creditor
beats lien if lien attached after perfection) > unperfected PMSI or unperfected party (first in
time) > no valid attachment or no attachment at all
➢ PMSI: purchase money security interest (i.e., interest of creditor who provides the
money/credit for the purchasing of the collateral in exchange for a security interest)
➢ Accessions (goods physically united with others goods such that identity is not lost):
perfected security interest in whole prevails over perfected security interest in accession
❖ Default: creditor may seize the collateral so long as they do not breach the peace
➢ Sale of Collateral: creditor must (1) notify the debtor and (2) give 10 days to redeem
▪ Must sell for a commercially reasonable price: if sale > FMV, excess goes to debtor;
if sale < FMV, debtor remains liable for difference
 Conflict of laws
❖ Con Law (Full Faith and Credit): a final judgement (1) by a court with jurisdiction and (2)
decided on the merits must be respected by all states
➢ Doctrine of Comity: a court may, but is not required, to give full faith and credit to
judgments from foreign countries
❖ Civ Pro (Klaxton/Erie): federal court with diversity jurisdiction must apply (1) state
substantive law of the state in which it sits (prevent forum shopping) and (2) federal
procedural law
➢ Procedural Laws: civil procedures rules, statute of limitations***, burden of proof,
rebuttable presumptions
➢ Substantive Laws: choice of law rules, statute of frauds, irrebuttable presumptions,
statute of limitations that condition a substantive right or have a borrowing statute,
damages
❖ Torts: apply law of either (A) state where the wrong/injury occurred or (B) state with most
significant relationship to occurrence/parties or the greater interest (consider where injury,
conduct, domicile/residence of parties)
❖ Contracts
➢ Choice of Law Provision: upheld unless (1) the state has no connection with the parties,
(2) another state has a materially greater interest, or (3) the provision was obtained
under fraud or duress
➢ No Choice of Law Provision: either (A) law of state where contract formed/performed;
(B) law of state with the most significant relationship/greatest interest (consider place of
contracting/negotiating/performing, where parties domiciled/subject matter located)
❖ Family Law
➢ Prenup: apply law of either (A) where agreement executed or (B) state with the most
significant relationship to the transaction and parties (consider where married, lived
while married, currently living, assets are located, and children born)
➢ Marriage: (1) validity determined by law of state with most significant relationship to
spouses; and (2) marriage valid where formed (incl. common law marriages) valid
everywhere UNLESS violates strong public policy
➢ Divorce: personal jurisdiction only required over plaintiff, not required over spouse
➢ Distribution of Marital Property: personal jurisdiction required over both spouses
(Limited exception for state where property located)
➢ Child/Spousal Support: personal jurisdiction required over both spouses
▪ Modification of Child Support: modifiable only by state where issued so long as at
least one party remains domiciled there; enforceable anywhere
➢ Child Custody: either (A) home state where child lived 6 consecutive months prior to
proceeding (applies for 6 months after too); (B) state with significant connections to and
substantial evidence of the child and custody; or (C) any state in an emergency
❖ Property/Wills
➢ Personal Property: state law of where the decedent was domiciled
➢ Real Property: state law of where the property is located (“situs state”)
 Wills
❖ Requirements for a Valid Will: (1) writing, (2) signed—any mark counts—by a Testator over
the age of 18, and either (3A) witnessed by 2 witnesses*** or (3B) notarized
➢ Witnesses:
▪ Witnessing: either within the testator’s (A) line of sight (literally see testator) or (B)
range of senses
▪ Interested Witnesses: either (A) majority rule—will considered valid but interested
witnesses loses their gift unless two other disinterested witnesses; (B) CL
approach—will considered invalid; (C) UPC—will valid and witnesses keeps their gift
▪ Exception—Holographic Wills: in some states, witnesses not required if (1) signed
and (2) material portion are in testator’s handwriting
➢ Incorporation: external writing can be incorporated by reference if (1) writing exists
when will executed, (2) will manifests intent to incorporate, and (3) writing identified
with reasonable certainty
❖ Invalid Will
➢ Mental Capacity: presumed, so contester bears burden of proof; testator considered
capable if (1) knows what he owns, (2) knows who he is giving it to, (3) knows that he is
signing a will, and (4) knows how the will is being distributed
➢ Undue Influence (SODA): contester bears burden of showing (1) testator suspectable to
undue influence, (2) accused had opportunity to exert undue influence, (3) accused had
disposition to exert undue influence, and (4) will is product or result of undue influence
▪ Only the tainted part of the will is stricken unless the entire thing is affected
❖ Revocation of Will : either (1) execution of a new will or codicil, (2) cancelling or some other
writing on the will, or (3) burning, tearing, obliterating, or destroying the will the intent to
revoke
➢ Codicil: document amending and/or changing the effective date (i.e., permits
incorporation of document not existing when will signed) of a valid will that is executed
with the same formalities of a will
▪ Exception: cannot cure defects but cannot cure an invalid will
➢ Exception—Dependent Relevant Revocation: cancels previous revocation (including
later will/bequest) made under a mistaken belief of law or fact (testator’s intent)
❖ Revival: either (A) automatic under the common law if subsequent will revoked or either,
under modern view, (B1) testator intends to revive a will revoked by physical act or (B2) will
replenished by subsequent will or codicil if revoked by subsequent instrument
❖ Extraneous Events/Actions Affecting Gifts:
➢ Simultaneous Death: either (A) treated as having predeceased the other under the
majority rule or (B)
➢ Predeceased Testator: gift lapses and passes to either (A) residuary under modern view
or (B) intestacy under CL view UNLESS anti-lapse statute applies (statute where the
interest of a beneficiary who is related to testator by blood passes through to the
beneficiary’s issue—i.e., lineal descendants)
➢ Divorce: causes gifts/bequests/appointments to former spouse to lapse and be treated
as if former spouse predeceased testator (minority jurisdictions also apply as to former
spouse’s relatives)
 ➢ Ademption (specifically devised property no longer exists): either (A) gift fails under
common law or (B) beneficiary receives either (i) property for which the gift was
exchanged or (ii) unpaid insurance proceeds upon death under most state statutes
➢ Disclaimer (rejection of gift/power): allows beneficiary to cause gift/power to lapse as
if they predeceased testator or according to applicable terms if (1) declared in writing,
(2) describing interest or power disclaimed, (3) signed by person making disclaimer, and
(4) delivered or filed
➢ Abatement (insufficient assets): beneficiary’s gifts reduced in the following order: (1)
intestate property, (2) residuary gifts, (3) general gifts, and (4) specific gifts
➢ Slayer Rule: person who feloniously and intentionally kills (not accidental; i.e., voluntary
manslaughter and up) the decedent (not someone else) or is convicted of abuse,
neglect, or exploitation of the descendent can’t take under will or by intestacy
❖ Intestacy
➢ Distribution between Spouse & Children
▪ Spouse and NO Children: everything goes to spouse
▪ Spouse AND Children: either (A) spouse receives ½ or 1/3 and children get the rest
under most state statutes; or (B) spouse receives all if decedent’s children are also
hers under the UPC
▪ NO Spouse and Children: everything goes to children
➢ Distribution Between Children: available for adopted children, those born out of
wedlock, and half-blood children BUT NOT step-children
▪ Per-Capita with Representation (majority): divide evenly at first generation with
survivors; shares of predeceased individuals at that generation go to their issues
▪ Per-Capital by Generation (UPC): divide evenly at first generation with survivors;
shares of predeceased individuals at that generation pooled together and divided
equally amongst their collective issues (i.e., orphan cousins treated alike)
▪ Per-Stirpes: divide evenly amongst Testator’s living children
➢ Advancements (gift during lifetime): either (A) gift subtracted from recipient’s intestate
share under the common law; or (B) gift is ignored and recipient receives full intestate
share unless evidence of an intent to the contrary under the UPC
 Agency
❖ Agency/Principal Relationship: (1) assent of the parties; (2) benefit of the principal; (3)
control by the principal (actual characterization of relationship irrelevant)
➢ Termination: several ways including principal manifesting desire to discontinue
❖ Contract Liability: the partnership is liable for contracts entered into by an agent acting
with authority
➢ Actual Authority: authority agent reasonably believes according to express or implied
authority by the principal (even if actually mistaken)
▪ Express: permission explicitly granted by principal
▪ Implied: permission implied by either (A) agent’s expressly authorized duties; (B)
prior dealings—including silence/acquiescence; or (C) custom
➢ Apparent Authority: authority (1) a 3rd party reasonably believes agent possesses that is
(2) traceable to a manifestation by the principle (e.g., position or title; previously held
out; cloaked agent with appearance of authority)
▪ Can exist where principal unidentified/partially disclosed BUT NOT undisclosed
▪ Inapplicable if 3rd party had knowledge agent lacked actual authority
➢ Ratification: principal assumes liability for contract entered into without authority by (1)
knowing all material facts or contract terms and (2) assent through words/conduct
(whether undisclosed principal can ratify depends on jurisdiction)
➢ Liability of the Agent: agent generally has no liability unless they either (A) act outside
their authority or (B) fail to disclose or partially disclose (no name given) to the 3rd party
▪ Indemnification: agent may seek indemnification if (1) agent is liable but (2) their
conduct was authorized
❖ Tort Liability: if agent acted outside authority, principal entitled to indemnification
➢ Acts within Scope of Employment (Respondeat Superior): a principle is vicariously
liable for torts committed by agents in the scope of employment
▪ Employee vs. Independent Contractor: determined by principal’s right to control
the manner and method in which the job was performed (consider type of work; pay
rate; who supplied equipment/tools; degree of supervision; degree of skill required; if
work was to benefit employer’s business; principal’s control over work details;
whether agent/contractor is engage in distinct business)
• No Tort Liability for Independent Contractors UNLESS: (A) inherently dangerous
activity; (B) non-delegable duty owed by principal; or (C) estoppel
▪ Scope of Employment (time, place, purpose test): agent either (A) performing work
assigned by employer or (B) engaging in course of conduct subject to employer’s
control
• Detour = within scope of employment: e.g., stopping by gas station, bank, dry-
cleaner on the way to worksite
• Frolic = not within scope of employment: e.g., excessive action like driving 30
miles off work-route to go to favorite diner
➢ Acts outside Scope of Employment—generally no liability UNLESS: (A) employer
intended the conduct; (B) employer negligent or reckless in selecting, training,
supervising, or controlling the employee; (C) is a non-delegable duty; or (D) agent has
apparent authority and 3rd party reasonably relied
 ➢ Intentional Torts—generally no liability UNLESS: (A) expressly authorized; (B) a natural
product of agent’s duties; or (C) motivated by desire to serve the principal
➢ Liability of the Agent: an agent is liable for their own torts
❖ Fiduciary Duties
➢ Duty of Care: use reasonable care when performing duties
➢ Duty of Loyalty: act solely and loyally for principal’s benefits
➢ Duty of Obedience: obey all reasonable directions
 Partnership
❖ Formation
➢ General Partnership (default): (1) two or more persons, (2) as co-owners, (3) carrying
on a business for profit (intent to form partnership not required; sharing in gross profits
does not automatically create partnership)
▪ Creditor or Partner: person receiving share of profits presumed partner unless the
profits received in payment (A) of a debt, (B) for wages, (C) of rent, (D) of an annuity
or retirement benefit; (E) of interest/loan charges, or (F) sale of business
➢ Limited Partnership: requires (1) at least one general and one limited partner, (2) filing
a certificate with the secretary of state including (A) name and address of partnership
and each partner and (B) signed by a general partner
➢ Limited Liability Partnership: requires (1) vote which satisfies an amendment of
partnership agreement and (2) filing a statement of qualification with the secretary of
state including (A) name and address of partnership, (B) statement electing to become
an LLP, and (C) a deferred effective date if any
▪ Remains liable for any obligations incurred before becoming LLP
❖ Liability of the Partnership: partnership is liable for breach of contracts entered into by
agents (i.e., other partners) acting either (A) with actual authority by a majority approval of
partners for actions in the ordinary course of business or unanimous approval for un-
ordinary actions; (B) with implied authority; or (C) with apparent authority and the 3rd party
did not know the agent was acting without authority
❖ Liability of Individual Partners: all partners individually liable for their own misconduct
➢ General Partnership: ALL partners are agents and joint and severally liable for all
partnership obligations (new partners only liable for obligations incurred after)
▪ Contribution: if one partner pays entirety of partnership obligations, can require
other partner to contribute pro-rata share of payment
➢ Limited Partnership: only GENERAL partners are joint and severally liable for
partnership obligations; LIMITED partners are only liable for their individual conduct
➢ Limited Liability Partnership: partners are only INDIVIDUALLY liable for their own
obligations(i.e., LLP limits liability to the individual, never the partnership)
❖ Duty of Care & Duty of Loyalty: breaching partner will be personally liable to the
partnership for any losses
➢ Duty of Care: partner owes fiduciary duty to partnership and partners not to engage in
(1) grossly negligent conduct, (2) intentional misconduct, and (3) a knowing violation of
the law
➢ Duty of Loyalty: partner owes fiduciary duty to partnership and partners (even during
winding up) to act in the best interest of the partnership by (1) accounting for profits,
property, or benefits derived from partnership; (2) not having an adverse interest or
conflict of interest; and (3) not competing with the partnership or usurping business
opportunities
▪ Safe Harbor: no breach if (1) partner fully discloses information and (2) either (A)
amends the partnership agreement or (B) all other partners consent
▪ May be eliminated/altered in partnership agreement
❖ Rights Amongst Partner: unless otherwise agreed, (1) profits are shared equally and losses
are shared in the same ratio; (2) each partner has equal rights in management and control;
(3) partners are not entitled for payment for their services to the partnership unless
reasonable for services rendered during winding up
➢ Personal use of partnership property requires consent of other partners, and judgement
solely against partner cannot be satisfied with partnership property (but can be satisfied
with partner’s financial interest in the property)
❖ Assignment of Partnership Interests: only allowed to transfer (1) interest in share of
profits/losses and (2) right to receive distributions unless partnership agreement provides
otherwise (i.e., all partners must consent for an assignee of a partnership interest to become
a partner)
❖ Dissolution
➢ Dissociation (withdraw of a partner): partner may dissociate from the partnership at
any time upon notice (e.g., notices of express will to withdraw; occurrence of agreed
upon event; expulsion; incapacity/death; etc.)
▪ Wrongful Dissociation: if not in an at will partnership and dissociation is either (A)
inconsistent with terms of partnership agreement or (B) before the completion of
the agreed upon term or undertaking, wrongfully dissociated partner may be liable
to partnership/partners and cannot participate in winding up
➢ Dissociation → Dissolution: whether dissociation triggers dissolution
▪ UPA: partnership automatically enters dissolution if rightful dissection; partners may
waive wind-up and buy out partner if wrongful dissociation
▪ RUPA: partners may waive wind-up and buy out partner regardless rightful/wrongful
➢ Dissolution: unless otherwise agreed, occurs upon (A) notice of partner’s express will to
withdraw; (B) occurrence of agreed upon event; (C) business becoming unlawful, or (D)
judicial dissolution
▪ Post-dissolution Act: partnership will be bound by partner’s post-dissolution act if
either (A) appropriate for winding up of business or (B) 3rd party did not have notice
of dissolution and partner would have had the authority to perform it
➢ Winding Up: period between dissolution and termination; assets liquidated for creditors
in the following order (1) outside creditors; (2) inside creditors—partners who loaned
money to partnership; (3) partner’s capital contributions; (4) equal distribution of
surplus unless agreed otherwise
▪ Any deficiencies in assets to satisfy creditors split equally between partners
➢ Termination: real end of partnership; partnership ceases to exist
 Corporations and LLCs
❖ Formation: exists on date Articles of Incorporation properly filed with Secretary of State
➢ Articles of Incorporation: must include (1) name, (2) number of shares, (3) address and
name of initial registered agent, and (4) name/address of each incorporator
▪ Amendment: majority vote of directors and shareholders BUT directors may make
general minor amendments without shareholder approval
▪ De jure Corporation: complied with statutory requirements for filing with SoS
▪ De Facto Corporation (i.e., prevents person who deals with entity as a corporation
from denying it’s existence when error in incorporation): failed to comply with
statutory requirements but avoid personal liability if (1) a statute allows the entity to
validly incorporate; (2) good faith effort and colorable compliance with statue; (3)
conducted business in corporation’s name and exercise of corporate privilege
➢ Bylaws: rules and regulations adopted by the directors which govern the corporation’s
general conduct
▪ Amendment/Repeal: either (A) by shareholders; or (B) by directors unless either (i)
articles reserve to shareholders or (ii) shareholders expressly removed ability when
passing the specific bylaw
➢ Bylaws v. Articles of Incorporation: articles of incorporation control in a conflict
❖ Shareholder Voting: shareholders on the record date (cannot be more than 70 days prior to
meeting) are entitled to notice and to vote; majority vote prevails
➢ Quorum: majority required; shareholders DON’T break quorum by leaving
➢ Vote by Proxy: grants a proxy holder ability to vote shares as they like (valid up to 11
months) through a proxy agreement signed on either an (A) appointment form or (B)
electronic form
▪ Revocation of Proxy: freely revocable by shareholder by any action inconsistent
with proxy, even if proxy states irrevocable, UNLESS coupled with interest/legal right
➢ Only Outstanding Shares may be Voted: reacquired Shares (i.e., owned by Corp, not
Shareholder) cannot be voted
❖ Director Voting: acts as a body by voting to exercise all corporate powers not limited by
articles of incorporation or shareholders’ agreement; notice only required for special
meetings; majority vote prevails
➢ Quorum: majority of shareholders required; directors break quorum by leaving
➢ Cannot Vote by Proxy or Agreement: notice only required for spe
❖ Fiduciary Duties (directors and officers)
➢ Duty of Care: directors must make decisions with reasonable care and be reasonably
informed (otherwise personally liable to corporation for losses which result)
▪ Business Judgement Rule: no breach if director acted (1) in good faith; (2) with
reasonable care; and (3) in the best interests of the corporation
➢ Duty of Loyalty: directors must act in best interest of corp. and not (A) enter into
conflicting interest transactions; (B) usurp corporate opportunities; (C) trade on inside
information; or (D) compete with the corporation
▪ Safe Harbor: no breach if conflicted interest transaction (A) approved by
disinterested directors with knowledge; (B) approved by majority of disinterested
shareholders; or (C) transaction fair to the corp. at the time entered into
 ➢ Duty of Loyalty (but NOT duty of care) may be limited/waived in Articles of Incorp.
❖ Shareholder Lawsuits
➢ Direct Suit: shareholder brings suit in individual capacity for breach of duty owed
personally (i.e., denied dividend or preemptive right; oppression) and recovers personally
➢ Derivative Suit: shareholder brings suit on behalf of corporation for injury to
corporation (e.g., director breaches fiduciary duty) and recovery goes to corporation
▪ Requires: (1) standing—own shares at time of event; (2) adequacy—shareholder
represents corporation’s interest; and (3) demand—must make demand on board to
address issue 90 days before filing in court
❖ Shareholder Liability (Piercing Corporate Veil): corporation typically separate entity from
shareholders BUT court may disregard (close corporation or LLC) and hold shareholder
personally liable if (1) shareholders abused privilege of incorporating and (2) fairness
requires (i.e., show undercapitalization, failing to follow formalities, commingle of assets,
confusion of business affairs, deception of creditors)
❖ Shareholder Right of Inspection: shareholder right to inspect corporate books and records
if demand made (1) in good faith and (2) for a proper purpose (i.e., one reasonably related
to person’s interest as shareholder such as economic risks to corp.)
➢ Requires: demand stating (1) purpose, (2) records desired, and (3) how records desired
are directly connected to the purpose
❖ Pre-Incorporation Liability: corporation generally not liable on contract entered into by a
promotor unless either expressly (i.e., official action) or impliedly (i.e., someone with
authority accepts benefits) adopts the contract
➢ Promoter (procures contracts on behalf of to-be-formed corporation): generally liable
on such contracts (incl. both after corp. formed or contract adopted) UNLESS the
agreement expressly indicates otherwise (i.e., considered an offer not a contract)

❖ LLC Shenanigans
➢ Formation: requires filing of articles of organization with Secretary of State
➢ Rights and Duties: members (A) treated as agents of LLC (i.e., actual and apparent
authority to bind in ordinary affairs) and (B) owe fiduciary duties (i.e., loyalty and care)
➢ Dissociation: occurs upon membership leaving BUT does not lead to winding
up/dissolution unless other members unanimously agree to dissolve LLC
➢ Liability: individual members generally not liable for losses unless either (A) court
pierces LLC veil or (B) proper procedures for dissolution and winding up not followed
(i.e., creditors may enforce individual claims against LLC but total liability cannot exceed
total value of assets distributed to individual member during dissolution)
 Family Law
❖ Marriage
➢ Common Law Marriage (i.e., cohabitation agreement): (1) capacity; (2) agreement; (3)
cohabitation; (4) holding out marital relationship (e.g., common last name, joint bank
account, telling others married)
➢ Recognition: marriage valid in the state where entered (incl. CL marriages) valid
elsewhere unless violate public policy (e.g., bigamy will invalidate marriage, but most
recent marriage is prioritized and considered valid if the other marriages are ended)
➢ Divorce: most states are no-fault states and simply must show (1) irretrievably broken
and (2) living separate & apart for some time (i.e., consent of both parties not required)
▪ Jurisdiction: personal jurisdiction only required over plaintiff, not spouse
❖ Prenup: enforceable (e.g., regarding how to distribute property) so long as (1) voluntary, (2)
substantively fair, and (3) made with full disclosure of assets and obligations (BUT
unenforceable as to child custody/support if not in the best interest of child)
▪ Jurisdiction: apply law of either (A) where agreement executed or (B) state with the
most significant relationship to the transaction and parties (consider where married,
lived while married, currently living, assets are located, and children born)
❖ Distribution of Property: equitable distribution of marital property no matter how title held
(not separate property) according to (1) income, property, and liabilities of parties; (2)
duration of marriage; (3) obligations from previous marriage; (4) marital lifestyle, and (5)
contribution to marriage by each spouse including home-making
➢ Marital Property: property acquired during marriage, including property (e.g.,
stocks/interest in a company) acquired during marriage
➢ Separate Property: property acquired either (A) before marriage, (B) as inheritance, or
(C) as a gift to one party
▪ Comingled Assets: can transfer separate assets into marital assets if mixed with
marital property (e.g., marital funds used to improve, maintain, contribute, or pay
off separate property asset)
▪ Professional Degree/License: typically considered separate property but
consideration may be provided for spousal support while obtaining degree
➢ Partial Property: property acquired before marriage but paid for after marriage with
marital funds split between marital & separate property in proportion to contribution
➢ Jurisdiction: personal jurisdiction required over both spouses (limited exception for
state where property located)
❖ Spousal Support (alimony): court has substantial discretion in determining whether to
award/deny alimony by assessing the parties’ (1) financial resources and needs; (2) marital
contributions; and (3) marital duration (some states look to spousal misconduct)
➢ Permanent v. Temporary v. Lump Sum Alimony: determined according to spouse’s (1)
separate assets, (2) ability to support themselves/obtain gainful employment; (3) child-
rearing responsibilities
➢ Jurisdiction: personal jurisdiction required over both spouses
➢ Modification: upon substantial change in circumstances making prior award
unreasonable (i.e., change unforeseen at time of initial awarding)
 ▪ Jurisdiction: modifiable only by state where issued so long as at least one party
remains domiciled there BUT enforceable anywhere
➢ Termination: either spouse (A) dies or (B) remarries (or cohabitation in some states)
❖ Child Support: determined according to state-based guidelines that establish a presumption
that the guideline-calculated reward is correct; guidelines typically assess (1) income and
earnings of parents; (2) number of children and their ages, (3) special needs of children
➢ Jurisdiction: personal jurisdiction required over both spouses
➢ Modification: no retroactive modification unless fraud BUT future modification possible
upon showing a substantial change in circumstances making prior order unreasonable
(e.g., good faith reduction in income but not a bad faith voluntary reduction)
▪ Jurisdiction: modifiable only by state where issued so long as at least one party
remains domiciled there BUT enforceable anywhere
❖ Child Custody: determined based on best interests of child via (1) wishes of parents, (2)
primary caregiver, (3) mental/physical health of all involved; (4) interrelationship between
child and parents; (5) stability; (6) domestic violence
➢ Third-Party: parental custody presumed in best interest of child, but 3rd party may rebut
by proving either (A) parent unfit or (B) parental custody highly detrimental to child
➢ Jurisdiction: either (A) home state where child lived 6 consecutive months prior to
proceeding (applies for 6 months after too); (B) state with significant connections to and
substantial evidence of the child and custody; or (C) any state in an emergency
➢ Modification: required a substantial change in circumstances (i.e., change unforeseen at
time of initial judgement)
❖ Child Relocation: generally approved if (1) sought in good faith and (2) serves child’s best
interest but courts vary in whether relocating or objecting party bears burden of proof
▪ Balancing Test: impact on visitation by noncustodial parent v. benefits of move to
children and custodial parent
❖ Child Adoption: typically requires consent of both parents; terminates rights of biological
parents and establishes rights of adoptive parents (most states remove biological parent’s
visitation rights but others retain if in the child’s best interest)
➢ Ability of Parent (e.g., unwed father) to Prevent 3rd party Adoption: whether consent
required depends on whether demonstrates commitment to parenthood by
participating in childrearing via (1) visiting regularly, (2) admitting paternity, (3) paying
child support, and (4) bearing some responsibility for the supervision and care of child
❖ Parental Decision-Making: decisions (incl. those regarding medical care) by a fit parent are
given deference but can be limited if jeopardizes the health or safety of child
➢ Rights of Father: presumed for biological father but sometimes requires parent to
exercise rights within a specific time (e.g., 2 years)
 Trusts
❖ Trust: bifurcated transfer from settlor in which trustee owns legal interest while beneficiary
owns equitable interest (i.e., sole beneficiary can’t also be sole trustee)
❖ Formation: requires (1) definite beneficiary; (2) settlor with capacity; (3) intent to create
(may be a promise but NOT precatory language; i.e., “hope” or “request”); (4) named
trustee (court can appoint one instead of letting trust fail); (5) valid trust purpose; (6)
property (not created until property received but doesn’t have to be contemporaneous with
signing); and (7) state formalities (i.e., signed in front of notary)
➢ Definite Beneficiaries: must be ascertainable/identifiable at the time interest comes
into enjoyment (but not necessarily when trust is created)
▪ Class (e.g., my children): the class must be sufficiently definite; trustee may be given
discretion to select class members; (e.g., “to my top 5 friends at death” is too broad)
▪ Subject to the Rule Against Perpetuities: charitable trusts are an exception
❖ Trust Types
➢ Revocable/Irrevocable Trusts: whether trusts can be modified or revoked by settlor
depends on whether trust is revocable or irrevocable
▪ Majority View/UTC: presumed revocable absent explicit provision to contrary
▪ Minority View: irrevocable unless stated otherwise
➢ Testamentary Trusts: trust created through provision in settlor will that only takes
effect upon settlor’s death (i.e., revocation/termination prior to death causes gift to
lapse); property may be gifted to trust either during testators’ life or after death
▪ Distinguish with Pour-Over Provision: will gifts previously established trust (i.e.,
must be connected with previously created inter-vivos trust; pour-over does not
create trust)
➢ Charitable Trust: trust conferring a special benefit to society (i.e., a charitable purpose)
in which the beneficiaries may either be indefinite or a class of persons (i.e., large
number of not readily identifiable individuals)
▪ Cy Pres (only if testator had general charitable intent): failure to state specific trust
purpose/beneficiary will not cause trust to fail; court will select a trust
purpose/modify a frustrated trust to “as near as” settlor’s charitable intent
➢ Support Trust: trustee must pay what is necessary for beneficiary’s support
▪ Pure Support Trust: Trustee has no discretion
▪ Discretionary Support Trust: trustee has discretion BUT beneficiary may compel
trustee to make payments in accordance with an ascertainable standard (in trust)
➢ Honorary Trust: trust to take care of a thing for a non-charitable purpose (e.g.,
cemetery plot); violates RAP but courts typically allow enforcement for up to 21 years
➢ Remedial Trust
▪ Resulting Trust: vehicle for returning property to settlor/settlor’s estate when trust
fails (avoided by fit-over clause; “if X happens, remainder/residual to Y”)
▪ Constructive Trust: vehicle for preventing unjust enrichment (i.e., wrongful
conduct—fraud, undue influence, etc.—directed towards settlor to make trust)
❖ Modification
➢ Revocable Trust: settlor can unilaterally modify the trust (trust presumed revocable
under Majority/UTC unless trust explicitly states otherwise)
 ➢ All Trusts (including Irrevocable):
▪ By Settlor: beneficiary (all of them) consent (trustee irrelevant)
▪ By Beneficiaries: (1) beneficiary consent and (2) not inconsistent with trust purpose
▪ By Unforeseen Events: frustrate the purpose of trust
▪ By Court Action: continuing trust impractical/wasteful (equitable deviation doctrine)
❖ Termination:
➢ Revocable Trust: settlor can unilaterally modify the trust (trust presumed revocable
under Majority/UTC unless trust explicitly states otherwise)
➢ All Trusts (including irrevocable)
▪ By Settlor: beneficiaries (all of them) consent
▪ By Beneficiaries: all trusts, even irrevocable trusts, can be terminated if (1) income
beneficiaries and remainderman unanimously consent; and (2) no material purpose
of trust is yet to be performed (e.g., no spendthrift provision, no age limitation, not a
support trust)
▪ By Law: purpose of trust become either (A) unlawful, (B) against public policy, or (C)
impossible to achieve (cy pres doctrine can still save charitable trusts)
▪ By Expiration: if trust contains term limit
▪ By Satisfaction of Material Purpose
❖ Creditor Access: creditors may typically attach present or future distributions to the
beneficiary (i.e., receive payment from trust in beneficiary’s stead) but NEVER the principle
➢ Exception—Spendthrift Trust: restrains voluntary and involuntary transfer of
beneficiary’s interest such that creditor cannot the debtor’s trust interest (i.e., by
garnishment or attachment) prior to distribution (limited exceptions for child/spousal
support creditors; judgement creditors who provided services to trust; State claims)
➢ Exception—Discretionary Trust: limits distributions solely to the discretion of the
trustee (in good faith) such that creditors cannot compel distribution even if
(A)discretion express in form of standard distribution or (B) trustee abused discretion
❖ Trustee Fiduciary Duties
➢ Duty of Loyalty: act in the best interest of the beneficiaries
▪ Remedy for Self-Dealing: beneficiaries may either (A) rescind transaction and ask for
purchase to be set aside or (B) recover any of trustee’s profits from breach
➢ Duty of Care (prudent administration): UPIA requires trustee to administer trust as
prudent person would using reasonable care, skill, and causation
▪ Assessed According to Entire Portfolio: investment and management decisions with
respect evaluated in as and part of an overall investment strategy
• Duty to Diversify: trustee not liable for economic change if prudently invest trust
assets (i.e., trustee liable if fails to diversify absent direction to contrary)
▪ Remedy for Breach: (A) suspending/removing trustee; (B) decreasing trustee
compensation; (C) compelling trustee to perform trust duties; (D) damages
❖ Principal and Income Allocation: receipts/disbursements allocated to State Law
➢ Principal: (1) takes proceeds from sale of principal assets; (2) takes all property received
other than money from an entity; and (3) pays extraordinary expenses and repairs
➢ Income: (1) takes receipt of rental payments; (2) takes money received (e.g., cash
dividends, investment interest) from entity and (3)pays ordinary expenses and repairs
❖ Passing of Trust Assets: gift/remainder pass according to terms of the trust
➢ Failure of Testamentary Trust/Distribution: passes either (A) under a residuary clause
in a will or (B) to settlor’s heirs
➢ Appointment: person who the testator gives the power of appointment to designate
who will receives specific property
▪ General Power of Appointment: unlimited class of people over whom the
beneficiary may exercise their power (i.e., to herself, to her creditors, etc.)
• Majority Rule: general residuary clause (e.g., “I give all my estate…”) does not
create a general power of appointment unless coupled with blanket exercise
clause (“e.g., including all property over which I have power of appointment)
• Minority Rule: general language may create general power of appointment even
without reference to the power in the instrument (e.g., “everything to my
husband”) unless instrument either (A) creates express gift in default or (B)
states that any appointment power must be specifically mentioned
▪ Limited Power of Appointment: limited class of people over whom the beneficiary
may exercise their power
➢ Class Gifts: class closes when 1+ member entitled to distribution (rule of convenience)
▪ UPC: when a class gift is made, each living beneficiary takes their share and
deceased beneficiary’s share passes to their issue (gift fails if none surviving)
▪ CL: if gift/remainder to beneficiary already vested and no applicable statute, their
share either (A) goes to whomever the deceased person specified in their will or (B)
through intestacy
▪ Application: where there is a gift to a class in a decedents’ estate, if testator gives
gift to group of unrelated individuals and one predeceased him, deceased does not
take (and neither do his descendants) unless the anti-lapse statute saves the gift