trust and estate outline

Trust &Estate by Rosenbury 2005

I. Introduction

A. The Mess of Family, Property and Death

1. In re Vickie Lynn Marshall (distributed via email)

B. Overview of the Probate Process, p. 34-47

All of the decedent’s assets at death can be divided into probate (property that passes under decedent’s will or

by intestacy) and non-probate property (property passing under an instrument other then a will which became

effective before death, including: joint tenancy property, life insurance, K with payable-on-death provisions,

interests in trust ( if the decedent has a testamentary power of appointment over assets in the trust the

decedent’s will must be admitted to probate, but the trust assets are distributed directly by the trustee to the

benes. named in the will and do not go through probate).

Testacy: a person dying testate devises real property to devisee, and bequeaths personal property to legatees.

Intestacy: heir = next-of-kin.

Probate performs three functions: (1) it provides evidence of transfer of title to the new owners by a probated

will or decree of intestate succession; (2) it protects creditors by requiring payment of debts; (3) it distributes

the decedent’s property to those intended after the creditors are paid.

If no will is probated within 3 yeats after death, the presumption of intestacy is conclusive. The time for

contesting probate of a will is dependent upon a statute in the particular jurisdiction.

Probate is not always necessary, as it cost a lot. It can be avoided by providing the property owner during life

transfers all his/her property into a joint tenancy or a revocable or irrevocable trust or in many states,

executes a K providing for distribution of K assets to named benes. on the owner’s death.

Universal succession: a different system from common law system: the heirs or the residuary devisees

succeed to the title of all of the decedent’s property; there is no personal representative appointed by a court.

II. The Default: Intestate Succession

A. Introduction to Intestacy, p. 71-74

* People wouldn’t make their own will, b/c can’t fact their own death and the cost involved. Whatever the

reason, a person who does not make a will or dispose of all his/her property by non-probate transfers,

necessarily accepts the intestacy law as his/her estate plan by default.

* General speaking, the law of the state where the decedent was domiciled at death governs he disposition of

personal property, and the law of the state where the decedent’s real property is located governs the

disposition if such real property.

* UPC§§2-101, 2-102, 2-103 (p.73)

B. The Surviving Spouse

1. Share of Surviving Spouse, p. 74-77

Policy of framing an intestacy statute: to carry out the probable intent of the average intestate

decedent. Under most current state law, it is to give the surviving spouse a 1/2 share if only one child

or issue of one child survives, and a 1/3 share if more than one child or one child and issue if a

deceased child survive, but there are variations. Under the UPC, §2-102 (p.73): if the decedent’s

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descendants are also descendants of the surviving spouse, and the surviving spouse has no other

descendant, the surviving spouse takes the entire estate to the exclusion of the decedent’s

descendants. Giving everything to the spouse and nothing tp the children, under these circumstances,

is a novel statutory solution. The provisions in subsections (3) and (4), giving the surviving spouse

less when either spouse has a child by a previous marriage, are also unusual. If there is no

descendant, most states and the UPC provide that the spouse share with the decedent’s parents, if

any. If not, the surviving spouse usually takes all to the exclusion of collateral kin; but some other

states provide to share with kin and their descendants.

In Hawaii, persons who are forbidden by law to marry can register with the state as “reciprocal

benes, which are given many of the benefits of surviving spouse, including the right to inherit under

the intestacy statute the same share as a legal spouse receives and the right to an elective share.

2. Who Qualifies as a Surviving Spouse?

a. Bigamous Marriages, handout

b. Same-Sex Couples, p. 492-500 and handout

In re Estate of Cooper: (study aid p.139) is the survivor of a homosexual relationship,

alleged to be a “spousal relationship” entitled to right of election against the decedent’s

will? NO

c. Unmarried Cohabitants, handout

d. Sex Changes, handout

C. Descendants

1. Who Qualifies as a Descendant

a. Posthumous Children, p. 97-98, 127-28 (notes 2-3) and handout

(遺腹子) it is a child’s advantage to be treated as in being from the time of conception

rather than from the time of birth, the child will be so treated of born alive. The Ct. has

establish a rebuttable presumption that is “if the child claims that conception dated more

then 280 days (normal period if gestation is 280 days), the burden of proof is usually

upon the child. The UPA (p.98) presumes that a child born to a woman within 300 (rather

then 280) days after the death of her husband is a child of her husband.

* a woman in LA giving birth to a girl using the sperm retrieved from her dead husband 30

hours after the man’s death. If the father didn’t consent?

* under the social security act, the state intestate succession law determines rights to SS

benefits for a dependent child. In1996, the SS commissioner agree to pay benefits to a

Louisiana child conceived after her father’s death even though under Loui’s law such a

child is not a heir; Arizona grant this benefit to a child conceived after father’s death and

recognized the child as the father’s heir.

b. Adopted Children, p. 98-114

Hall v. Vallandingham: Does the trial Ct. is correct in denying the four children 2


the right to inherit through their nature paternal uncle when these children

were adopted by their stepfather after the death of their nature father and the

remarriage of their natural mother. (the children adopted is not entitled to

inherit from their nature father.)

* this is for the preventing of dual inheritance. The Family Law Act plainly

mandates that adoption be considered a “rebirth” into a completely different

relationship. Once a child is adopted, the right of both the natural parents and

relatives are terminated, and b/c an adopted child has no right to inherit from

the estate of a natural parent who dies intestate, it follows that the same child

may not inherit through the natural parent by way if representation. (aid p.27)

* UPC §§2-113 ,2-114(p.101) but the inheritance rights vary from state to state.

* children born by reproduction technology, the “surrogate mother issue”.

(p.103-109) To determine whose child the true intent when making K, and the

best interest of the child is taken into consideration.related to inheritance.

* An adoption of adult can prevent will contest (in NY, adopt an adult is fine,

but can’t adopt an adult lover, but Delaware Ct. reject NY Ct.’s holding). The

adoption can’ not be set aside by the person persons who would have been the

heirs but for the adoption. But can attack an adoption decree on grounds of

mental incapacity, undue influence.

O ’ Neal v. Wilkes : the K is invalid, so the adoption of O’Neal null, such that she

is not entitled to inherit Cook’s estate property.

O’Neal was born out of wedlock, raised by mother, unrecognized by her father

(take no action to legitimize has, or provide support to her or her mother). She

was adopted by Cook by the K her aunt entered into with him.

* O’s father’s consent of the adoption is not necessary here b/c he never

recognized her in any manner. (but the law requires parent’s consent although

the child is physical custody of another b/c to arrange the adoption of their

child is an exclusive authority.) But her aunt’s relation with her is not a legal

custodian relation but merely a family obligation, so her aunt has no authority

to enter into the adoption K with Cook (neither does the relatives consent to

the K), so the K is invalid.

* Dissenting opinion: (p.112) where the child has fully performed the alleged K

over the course of many years or a lifetime and can sufficiently establish the

existence of the K to adopt, the K should be enforce regardless that the person

who consented to the adoption has no authority to do so. Reasons follow.

(p.112) (the policy of the requirement is to protect the child, but to strictly

apply it damages the policy) (p.113-14: if the foster parent performed the K, 3


although there is no formal K, their performance estopped them to deny the

adoption, therefore the child can inherit from them.)

c. Nonmarital Children, p. 115-17

Children born out of wedlock could inherit from mother, but the rule respecting inheritance

from father vary from state to state. (argument: discriminate against nonmarital child).

The rule to inherit from father: p.115-17

2. Share of Descendants, p. 86-90 and review handout

After the spouse’s share is set aside, the children and the issue of deceased children take the

remainder of the property to the exclusion of everyone else. When one of several children has died,

before the decedent, leaving descendants, all states provide that the child’s descendants shall

represent the dead child and divide the child’s share among themselves (take by representation). Son-

in-law and daughter-in-law are excluded as intestate successors in all states.

I. Per Stirpes (SP) (Strict per stripes)

II. Per Capita with Representation (PCR) the modern American approach

III. Per Capita at each generation (PCG) the UPC approach, equally near, equally dear.

* note: Negative Disinheritance: UPC§2-101(b) authorize a negative will, the barred heir is treated as

if he disclaimed his intestate share, which means he is treated as having predeceased the intestate.

D. Ascendants and Collaterals (祖先和旁係)

1. Share of Ascendants and Collaterals, p. 90-96

When the intestate is survived by a descendant, the decedent’s ancestors and collaterals do not take.

But when there is no descendant, after deducting the spouse’s share, the rest of the intestate’s

property is usually distributed to the decedent’s parents, as under the UPC. And if there is no spouse,

parent or descendant, the decedent’s heir will be more remote ancestors or “collateral kindred” (all

persons who are related by blood to the decedent but who are not descendants or ancestors) and in all

states intestate property passes to brothers and sisters and their descendants; the descendants of any

deceased brothers or sisters (nephews and nieces) take by representation in the same manner as

decedent’s descendant.

* “laughing heirs”: UPC §2-103, it does not permit inheritance by intestate succession beyond

grandparents and their descendants. (but some legislatures have moved to the opposite direction, ex,

permitting stepchildren and kin of a predeceased spouse to inherit when the decedent leaves no blood

relatives, ex: CA)

2. Review Problems, handout

F. Special Issues Regarding “Half-Bloods,” p. 96-97

In a large majority of states, a relative of half-blood (hb) is treated the same as a relative of the whole-blood.

This is the position of UPC§2-107. a few states where a hb Is given a half share (Virginia); few others, a hb

takes only when there is no other wb relatives on the same degree (Oklahoma).

E. Advancements (生前贈與), p. 128-31 UPC§2-109 (p.130)4


At common law, any lifetime gift to a child was presumed to be an advancement, a prepayment of the child’s

intestate share. This is based on the presumption that the parent would want an equal distribution of assets

among the children and that true equality can be reached only if lifetime gifts are taken into account in

determining the amount of the equal shares. This presumption has been changed in some states, where a

lifetime gift is presumed not to be an advancement unless it is shown to have been intended as such.

- to avoid this doctrine, the child has the burden of establishing that the lifetime transfer was intend ed as an

absolute gift that was not to be counted against the child’s share of the estate.

- if the child predeceases the parent, the amount of the advancement is deducted from the shares of his/her

descendants, if other children of the parent survive.

* Transfer of expectancy (p.130): the expectancy is not an interest at all, therefore, can not be transferred at

law. However a transfer may be enforceable in equity as a K for an adequate consideration.

G. Special Issues Regarding Transfers to Minors, p. 132-34

A minor doesn’t have legal capacity to manage property, therefore needs a guardian. 3 alternatives for

property management are: guardianship (conservatorship), custodianship, and trusteeship.

H. Bars to Succession, p. 141-57 and handout

1. Homicide: In re Estate of Mahoney: in the sate of Vermont, may a widow convicted of manslaughter in

connection with the death of her husband inherit from his estate? NO.

A person who has killed another id prevented from taking by descent or distribution from the person he has

killed. No one should be permitted to profit by his own fraud or take advantage and profit as a result of his

own wrong or crime. Therefore, the legal title passed, but it was subjected to a constructive trust, and the

equity hold the wrongdoer to be a constructive trustee and compel him/her to convey the property to the

heirs or next of kin of the deceased.

- One who has killed while insane is not chargeable as a constructive trustee.)

- The principle is that the slayer should not be permitted to improve his position by the killing. But, he

should not be compelled to surrender property to which he would have been entitled if there had been no

killing. The doctrine of constructive trust is involve to prevent the slayer from profiting from his crime

(prevent the unjust enrichment) but not as an added criminal penalty.

* UPC§2-803, bars the killer from succeeding to non-probate as well as probate property, “a wrongful

acquisition” of property must be treated in accordance with the principle that a killer can not profit from

his wrong. The killer is treated as having predeceased the victim, the UPC provides that the killer is treated

as having disclaimed the property, and under §2-801, the disclaimant is treated as having predeceased the

decedent.

2. Disclaimer: Troy v. Hart (read the study aid p.35)

The common law treat the heir who disclaim the inheritance as if title had passed to the heir and then from

the heir to the next intestate successor. And the disclaimant is treated as predeceased the decedent (UPC§2-

801) §2the advantage of this are saving estate tax and avoiding creditors.

I. Review Problems, handout5


III. Attempting to Manifest Intent: Wills (or Testate Succession)

A. Executing Wills

1. Testamentary Capacity

a. Mental Capacity, p. 159-65

In re Strittmater: the will that is the product of the decedent’s insanity is not valid.

*R easons for the requirement of mental capacity : ①the will should be given effect only if

it represents the T’s true desires. ②a mentally incompetent person is not definded as a

“person” in a legal sense. ③to protect the decedent’s family. ④to protect the decedent

himself carry out his true intent incase he becomes insane later and executes another will

produced under insanity. ⑤to protect the society at large from irrational acts. ⑥protect a

senile or incompetent T from exploitation by cunning persons (undue influence).

*The test of mental capacity: the T has to have the ability to know: ⑴ the nature and extent

of the T’s property. ⑵ the person who are the nature objects of the T’s bounty. ⑶ the

disposition the T is making. ⑷how these elements relate so as to form an orderly plan for

the disposition of the T’s property.

- The T must have mine and memory relevant to the 4matters, T must understand the

significance of his act. Testamentary capacity cannot be destroyed by showing a few

isolated acts unless they directly bear upon and have influenced the testamentary.

- capacity to execute a will requires less competency than the power to make a K or gift,

therefore a person has been declared incompetent and put under conservator has the

capacity to produce a valid will if during a lucid interval.

- Marriage require less mental competency then to make a will. (p.165)

- To draft a will for an incompetent person is a breach of professional ethics. The lawyer

however can rely on her own judgment regarding the client’s capacity.

b. Insane Delusion, p. 165-75

This is a legal concept refers to a false conception of reality, ex: involved the false believe

of a family member therefore to disinherit him. A man has insane delusion is not

necessarily mentally incapable. Only the part of the will caused by the ID failed.

In re Honigman: a man was obsessed by the suspicion that his wife is unfaithful. (p.42)

* an insane delusion is a belief not susceptible to correction by presenting the testator with

evidence indicating the falsity of the belief; a mistake is susceptible to correction if the

testator is told the truth. A will in mistake is valid to probate. (p.173, 2)

c. Undue Influence

i. Introduction, p. 175-84

To be undue influence in the eye of the law must be “coercion”, can be many ways

even though not actual violence. The Ct. develops the elements to examine,

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which are: ①the T was susceptible, ②the influencer had the disposition and the

opportunity to exercise UI, ③the disposition is the result of the influence.

But we still have to look into the case to determine what influence is undue.

Lipper v. Weslow: (aid P.44) the test of undue influence: whether such control was

exercised over the mind of the testatrix as to overcome her free agency and free

will and to substitute the will of another so as to cause the testatrix to do what she

would otherwise have done but for such control. The person with sound mind has

the legal right to dispose of his property as he wishes, even it’s an unusual

disposition. Those attacking the disposition have the burden to prove that it was

the product of undue influence.

the rule of undue influence applies when (1) a personal in a confidential relationship (2)

receives the bulk of the T’s property (3) from a T in the weakened intellect, the burden

of prove is shift to the person occupying the confidential relationship to prove

affirmatively the absence of undue influence.

If the part of the will id the product of UI, those part may be stricken and the remainder

is allowed to stand if the invalid part can be separated w/o defeating that T’s intent.

No contest clause: designed to discourage will contests but will defeat the safeguards

ex: “fraud”, “forgery”, “undue influence”… built around the testamentary dispoisition

of property. UPC: “probable cause rule”: the no contest clause will be enforce unless

there is a probable cause to contest.

ii. Bequests to Attorneys, p. 185-87

In NY, the surrogate must investigate any bequest to the attorney who draft the will.

In CA, invalidate any bequest to a lawyer who draft the will unless the lawyer is related

by blood or marriage to the testator.

iii. Sexual Relationships, p. 188-97

In re Will of Moses: sexual relationship with younger attorney for 7 years (occupying the

confidential relationship). Devising all her property to him drafted by another

lawyer not telling him.

d. Fraud & Tortious Interference, p. 213-22

Fraud occurs where the T is deceived by a misrepresentation and does that which the T

would not have done had the misrepresentation not been made, it is usually said that the

misrepresentation must be made with both the intent to deceive the T and the purpose if

influencing the testamentary disposition. That portion in the will procure from the fraud

is invalid. If the will been probated, the Ct. may use equity power to impose a

constructive trust on the wrongdoer.

- Fraud in the inducement: when a person misrepresent facts thereby causing the T to

execute or not to execute a will, including particular provisions in the wrongdoer’s favor,

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to refrain from revoking a will. (no intent to fraud but later change mind, the victim may

recovered on the theory of “secret trust”)

- Fraud in execution: a person misrepresent the will for T to sign.

* Tortious Interference with expectancy: a tort action for tortuous interference with an

expectancy is not a will contest (therefore a no-contest clause is not applied here). It

doesn’t challenge the probate or validity of a will but rather seeks to recover tort damages

from a 3rd party for tortuous interference. Punitive damage may be recovered.

e. Review of In re Vickie Lynn Marshall (Day 1)

2. Statutory Requirements

a. Attested Wills

i. Writing/Signature/Publication, p. 223-27

Formal requirements of executing a will: To prove there is an intentional exercise

of the power to determine the successors in ownership, the Ct. needs to be

convinced that the statement of the transfer was deliberately intended to

effectuate a transfer. Therefore for the purpose of the requirement of transfer

①there should be a ceremonial, and the term for this is “ritual function”. And ②

an “evidentiary function” for the proof presented to the Ct., and ③ to safeguard

the T at the time execution the will against UI or other forms of imposition, there

is a “protective function”. The requirement see UPC§2-502.

ii. Witnesses, p. 227-42

In re Groffman: the T should sign in front the witnesses or acknowledge the

signature in front of them. And the witnesses has to sign in presence of each

other, has to present at the same time (English and some jurisdiction in the U.S

approach, stricter then UPC), fail to meet the requirements, the will is not validly

attested. Some other circumstances described in p.234-36

Estate of Parsons: witnesses and also beneficiaries in the will. (CA probate code

§51: a gift to subscribing witness is void unless there are two other and

disinterested subscribing witness to the will) A subsequent disclaimer is

ineffective to transform an interested witness into a disinterested one b/c §51

looks solely to the time the will executed, and the propose of §51 is to protect the

T for UI and fraud at the very moment the T execute the will.

Here when there is no other two disinterested witnesses in the will, the witness’s

interest is void, so she has no interest to disclaim. (CA had adopted UPC§2-505)

iii. Execution/Proof/Safeguarding, p. 242-47

See the in class notes. Which law governs? The state of domicile and the land.

But if carefully draft the will, can avoid the problem of applying which state law.

The T ’ s declaration that the instrument is his will is called “ publication .” An

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UPC§2-505: (a) any person generally competent to be a witness to a will (b) a will or any provision thereof is not invalid because the will is signed by an interested witness. (broader view)


“attestation clause” is important b/c it proves that the will being duly executed.

“self-proving affidavit” typed at the end of the will, swearing before the notary public

that the will has been duly executed and then signed by the T and the Ws in front the

notary public who in turn signs and attaches the required seal. This is to prevent a

situation that the W is dead, and no one can testify the will. The will is valid w/o the

affidavit, but it makes it easy to probate the will. (UPC§2-504)

Self-guarding a will : to keep the will n safe place. (p.246-47)

iv. Curing Mistakes, p. 247-62 and handout

In re Pavlinko ’ s Estate : H and W signed the will of each other but themselves’, the

lawyer and his secretary were the witnesses. The will can’t be probated as H’s

will, b/c it is not signed by H clearly and unambiguous. if the Ct. open the door

for rewriting the will for equity, there will be countless fraudulent claims, and

the will act will be nullity. (Dissenting: T’s intent should be counted, H and W’s

wills are complementary of each other, and it’s the lawyer’s fault.)

In re Will of Ranney: the signatures of two witnesses on an attached self-proving

affidavit but not the will itself (b/c the attested clause for witnesses had been

omitted. This page is on the bottom of the will but neither numbered nor

attached, the attorney and a notary public are witnesses.

Self-proving affidavits and attestation clauses, although substantially similar in content,

serve diff. functions: Spa, are a sworn statements by eye witnesses that the will has been

duly executed. The Spa performed virtually all the functions of an Ac, and has the

further effect of permitting probate without requiring the appearance of either witness.

Ac, facilitate probate by proving an evidence that the T voluntarily signed the will in the

presence pf the witnesses. Which also permits probate of a will when a witness forgets

the circumstances of the will’s execution, or die before the T.

It would be ironic to insist on literal compliance with statutory formalities when that

insistence would invalidate a will that is the deliberate and voluntary act of the T, such a

result will frustrate rather than further the purpose of the formalities.

Accordingly, if a witness, with the intent to attest, sign a Spa, but do not sign the will or

the an Ac, clear and convincing evidence of their intent should be adduced to establish

substantial compliance with the statute.

b. Unattested Wills, p. 262-76 and handout

Holographic will: a will written by the T’s hand and signed b the T; attesting witnesses are not

required. Requirements for HW vary form state to state. A holographic will may be

presented by a lot of forms, not merely written on the paper.

In re Estate if Johnson: the statutory requirement that the material provisions be draw in the T’s

own handwriting requires that the handwritten portion clearly express a testamentary

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Correcting mistake in the will, the recent movement, see p.427-438

A substantial compliance doctrine: a harmless error in executing a will may be executed if the proponent establishes by cleat and convincing evidence that the decedent adopted the document as his/her own will.(dispensing power)


intent. If the portion not in handwriting is essential to the testamentary disposition, the

will can not be probated. Here the mere fact that the T used a blank form, if the printed

words maybe entirely rejected as surplusage, then the will can be valid. UPC§2-502 (c)

(p.227): testamentary intent can be established for a holographic will by looking at the

portions of the document that are not in the T’s handwriting; the official comment: the

holographs may be written on a printed will form if the material portions of the document

are handwriting. (statutory form wills p269)

Kimmel ’ s Estate : (conditional will: “if something happen…” p.274, can be probated) a letter

containing some testamentary provisions can be probated as a holographic will. b/c the

word containing in the letter strongly support the testamentary intent. (p.273)

c. Review Problems, handout

B. Will Components

Two doctrines that permit extrinsic evidence to resolve the identity the will beneficiaries or property passing

under the will, which makes it possible that those documents or acts not executed with testamentary

formalities can be used to have the effect. These are ⑴ the doctrine of incorporation by reference and

⑵ the doctrine of acts of independent significance. (These 2 doctrines shouldn’t be confused with the

doctrine of integration of wills and the doctrine of republication by codicil.)

1. Integration of Wills, p. 301-02

Will which not written in several papers, all papers should be present at the time of executed, the

paper intended to be a part of the will, should be integrated into the will. Thus, which sheets of paper

present at the time of execution, comprise the testator’s duly executed will?

-the will is stabled or ribboned by which the pages of the will are physically connected.

-sufficient connection of the language carrying over from page to page.

-lawyers can prevent from any problems from arising under the integration of the will doctrine by

making sure that the will is fastened together before the testator signs and by having the testator

sign or initial each numbered page of the will for identification.

2. Republication by Codicil, p. 302-03

When codicil, the will is treated re-executed (“republished”), it’s the update of the original will. Ex:

1st will is revoked by a 2nd will, but then a codicil of the 1st will is executed, the 1st will is republished

and thus the 2nd will is revoked by implication (“squeezed out”). Only when updating the will carry

out the testator’s intent is this doctrine applied.

※the difference b/w “republication by codicil” and “incorporate by reference” are”

-RC: only applies to a prior validly executed will,

-IR: applies to the instruments that have never been validly executed (unattested) and to be

incorporated into a will.

Few jurisdictions don’t recognize the IR doctrine, ex: NY, general doesn’t permit IR but the

codicil can republish and thereby give testamentary effect to a will that was invalid b/c of mental

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incapacity or undue influence (should be duly executed with required formalities.) But a codicil

can’t republish an instrument never duly executed with the required formalities.

3. Incorporation by Reference, p. 303-18 and handout UPC§2-510,

Clark v. Greenhalge: a specific, written bequests of persona; property contained in a notebook that

was maintained by a decedent, can be incorporated by reference into the terms id tat person’s

will. “a properly executed will may incorporate by reference in to it’s provisions and document

or paper not so executed and witnessed, whether the paper referred to be in the form of …a mere

list or memorandum,.., if it was in existence at the time of the execution of the will, and is

identified by clear and satisfactory proof as the paper referred to therein.

- this IR doctrine is not recognized in NY, Connecticut, Louisiana.

Johnson v. Johnson: UPC§2-513 (p.311): a valid holographic codicil can be used to republish and thereby

give effect to an unexecuted non-holographic will. (Study aid p.79)

4. Acts of Independent Significance, p. 318-19

If the beneficiary or property designations are identified by acts or events that have a lifetime motive and

significance apart from their effect on the will, the gift will be upheld under the doctrine of acts

of independent significance (also called the doctrine of nontestamentary acts)

UPC (1990) 2-512 EVENTS OF INDEOENDENT SIGNIFICANCE

A will may dispose of property by reference to acts and events that have significance apart from their effect

upon the dispositions made by the will, whether they occur before or after the execution of the

will or before or after the testator’s death. The execution or revocation of another individual’s

will is such an event.


C. Will Construction

1. Admission of Extrinsic Evidence

a. Mistakes in Drafting, p. 409-14

Mahoney v. Grainger: EE can’t be presented to try to prove the T’s intent in the will.

The will must be construed as it came from the hand of the T. mistakes in the drafting of

the will may be of significance in some circumstances in a trial as to the due execution

and allowance of the alleged testamentary instrument. It is only when testamentary

language is not clear in its application to facts that evidence may be introduced as to the

circumstances under which the T use that language in order to throw light upon its

meaning.

* personal usage exception: if the EE shows that the T always referred to a person in an

specific manner, the evidence is admissible to show that the T meant someone other than

the person with the legal name of the legatee.

* the plain meaning rule (no EE rule) had been critized.

b. Ambiguity, p. 417-27 and handout11


Estate of Russell: Roxy the pet dog. EE is allowed to resolve the ambiguity (EE is

admissible “to explain any ambiguity arising on the face of a will.)

c. Correcting Errors, p. 427-38 and handout

Erickson v. Erickson (supreme Ct. of Conn. 1998) the EE should be admissible to establish the T’s

true intent. (p.432-434 blue mark)

2. Changes in Condition/Status of Beneficiaries, p. 438-58

Death of beneficiary before the death of testator:

3. Changes in Property, p. 459-69


D. Revoking Wills

1. Revocation in Entirety

All states permit revocation of a will in 1 of 2 ways: (1) by a subsequent writing executed with

testamentary formalities, or (2) by a physical act such as destroying, obliterating, or burning the will.

Oral revocation is inoperative in all states for the assumption that that would open the door for fraud.

If a duly executed will is not revoked in a manner permitted by statute, the will is admitted to

probate.

UPC (1990) §2-507: Revocation by writing or by act: (a) A will or any part thereof is revoked:

(1)by executing a subsequent will that revokes the previous will or part expressly or by

inconsistency; or (2) by performing a revocatory act on the will, if the testator performed the act with

the intent and for the purpose of revoking the will or part or if another individual performed the act in

the testators conscious presence and by the testator’s direction. For purpose of this paragraph,

“revocatory act on the will” includes burning, tearing, canceling, obliterating, or destroying the will

or any part of it. A burning, tearing, or canceling is a “revocatory act on the will,” whether or not the

burn, tear, cancellation touched any of the words on the will.

a. By Subsequent Instrument, p. 276-77 and handout

Revocation by inconsistency: a subsequent will wholly revokes the previous will by inconsistency if

(1) the testator intends the subsequent will to replace rather then supplement the previous will, and

(2) if the subsequent one doesn’t expressly revoke it but makes a complete disposition of the

testator’s estate is presumed to replace it and revoke it by inconsistency, and (3) if not makes a

complete disposition, it is viewed as a codicil supplements a will rather than a replacement of

revocation. [UPC(1990) §2-507 (b)-(d)]

b. By Physical Act, p. 277-84

Harrison v. Bird:

F act: Harrison is the beneficiary of Speer’s will in 11/89, and Speer wanted to revoke her will in 3/4

1991, her attorney and his secretary tore the will into 4 parts in front of each other, then sent the

remainder to Speer with a letter states that she was without a will. After her death, the probate Ct

found the letter but not the 4 pieces of torn will, it ruled in accordance to the cousin, Bird. The circuit

12


Ct. ruled (1) that the will was not properly revoked because the attorney didn’t destroyed the will in

her presence and (2) there could be no ratification of the destruction of Speer’s will for not meeting

the requirements of the Alb. probate code §43-8-136(b) and (3) the pieces delivered to Speer was not

found after her death, could form an assumption that she revoked the will herself thereafter.

Therefore, the duplicate will possessed by Harrison was not the last will and testament of Speer. It

held that the estate should be administrated as an intestate estate and confirmed the letter of

administration issued by the probate Ct. to Ms. Bird. Supp. Ct.: if the evidence establisjes that Speer

had possession of the will before her death, but the will is not found among her personal effects after

her death, a presumption arises that she destroyed the will. Furthermore, a presumption arises that she

revoked her will and all duplicates even though a duplicate exists that is not in her possession.

However the presumption is rebuttable and the burden of rebutting the presumption is on the

proponent of the will. Here, the evidence Bird provide is not sufficient to rebut the presumption,

therefore affirmed the decision.

Note: Probate of lost wills: In the absence of statute, a lost will (or destroyed w/o the consent of the

testator , or with the consent of T but not in compliance with the revocation statute) can be admitted

into probate if it’s contents are proved.

In a few states, there are statutes that prohibit the above to probate unless the will was “in existence”

at the T’s death (and destroyed thereafter) or was “fraudulently destroyed” during the T’s life. But

this will in conflict with the state revocation statute (a will not legally revoked is barred from

probate.) The solution the Ct. held is, either the will not lawfully revoked continues in “legal

existence” until the T’s death or that a will destroyed by a method not permitted by the will

revocation statute has been “fraudulently destroyed.”

Thompson v. Royall

F act : the will of 9/4 1932 and the 9/15 1932 codicil were dully attested but possessed by different

person. And in 9/19, she decided to destroyed both but by the advice of her attorney, she retain them

and added the notion of “as a memorandum for another will if I desire to make same” on both doc.

and signed and possessed by only one person. After she died, her heirs and beneficiaries came to

probate the will.

Issue: whether the will of Mrs. Kroll had been revoked shortly before her death.

A nalysis : the effect revocation should meet (1) the doing of one of the acts specified, (2)

accompanied by the intent to revoke. This didn’t meet the statuary requirements of a certain act to

carry out the intent, “some writing declaring that an intention to revoke”: not her writing, only her

signature, and there is no physical evidence of cutting, burning, tearing, obliterating, canceling, or

destroying. If merely write on the margin or the back is not enough consisting the revocation of the

will, the writing itself should touch the writing of the will to consist physical destroy (revocation) and

with the intent to revoke. Therefore the will is ineffectual b/e T intended to revoke her will by the

writings not meet the statutory requirement and b/e not meet the requirement of physical action to any

13


writing part of the will.

Note: if use UPC(1990) §2-507 provide “whether or not burned… touched any words on the

will.” The words need not be touched but however need to be written on the same document.

c. By Operation of Law, (changing in family circumstances) p.298-300

Divorce can revoke any provisions in the decedent’s will for the divorced spouse (treats the divorced spouse

as having predeceased the testator) in very few states and in most of the states revocation occurs

only if divorce id accompanied by a property settlement. These revocation statues only applied to

wills not to other non-probate transfers.

UPC(1990) §2-804 (p299) applies to non-probate transfers as well as to wills. (the term “governing

instrument” means a deed, will, trust, insurance or annuity policy….

2. Partial Revocation, p. 284-85 and handout

While UPC(1990) §2-507 and the statute of many states authorized partial revocation by physical

act, several states can only revoke partial will by a subsequent instrument. And there are 2 reasons

for that: ① canceling a gift to one person necessarily results in sth/one else taking the gift, and this

new gift, like all bequests, can be made only by an attested writing. And ② permitting partial

revocation by physical act offers opportunity for fraud. b/e the one who takes the new gift might be

that one who made the canceling mark.

And if partial revocation by act is not recognized, the will must be admitted to probate in the form In

which it was originally executed if the original language can be ascertained.

3. Dependant Relative Revocation, p. 286-96

If the testator purports to revoke his will upon a mistaken presumption of law or fact, the revocation is

ineffective if the testator would not have revoked his will had he known the truth. This doctrine is

applied to carry out the T’s true intent. Ex, the T destroys his will under a belief that that a new will

is valid but for some reason it is invalid, if the Ct. find that the T would not have destroyed his will

had he known the new will was ineffective, the Ct, applying the doctrine of dependent relative

revocation, will cancel the revocation and probate the destroyed will.

Carter v. First United Methodist Church of Albany

F act:

R ule:

Estate of Alburn:

4. Revival, p. 296-98


E. Restrictions on the Power of Disposition: Family Protection

1. Protection of the Spouse

a. Introduction to marital property system, p. 471-73

There are two basic martial property system exist, the system of separate property and the

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system of community property. And the differences are:

‧ The system of separate property (common law system) the husband and wife own

separately all property each acquires (except those items one spouse has agreed to put into

joint ownership with the other). Under this system, whatever the worker earns is his/hers,

there is no share of earnings therefore, if one spouse works at home while the other one is the

wage earning spouse, the later one will own all the property acquired during marriage (other

than gifts or inheritances from relatives or gifts by the wage earner to the homemaker).

Then here is the ISSUE: what protection against disinheritance should be given the

surviving spouse who works in the home or at a low-paying job? Almost all states adopt this

system answer this question by giving the living spouse , by statute, an elective (or force)

share in the estate of the deceased spouse. And the elective share is not limited to a share of

property acquired with earnings, however it is enforceable against all property owned by the

decedent spouse at death.

‧ The system of community property (adopted by Arizona, CA, Idaho, Louisiana, Nevada,

New Mexico, Texas, and Washington, and Wisconsin) where the husband and wife own all

acquisitions from earnings after marriage in equal undivided shares, which is, all earnings if

the spouses and property acquired from earnings are community property. The death of one

spouse dissolves the community. The deceased spouse owns and has testamentary power only

over his/her one-half community share.

But the property acquired before marriage and acquired during marriage by gift, devise,

or descent is the acquiring spouse’s separate property.

‧ Therefore, under the separate property system, if the one who has no earnings during the

life, he/she has nothing to dispose if he/she dies first. On the contrary, the community system,

the one who dies first can dispose his/her half of the community property by will.

‧ Alaska enacted a statute permitting married couples to elect to hole their property as

either community property or separate property.

b. Rights of Surviving Spouse to Support, p. 473-80

i . Social security : under social security system the retirement benefits are paid to a

worker and his/her surviving spouse. It thus incorporates the principle of

community property that the benefits of earnings should be shared by husband

and wife. The benefits can shift to spouse but not to others.

ii . Private pension plan : This is funded by employers or jointly funded by employer and

employee contributions mushroomed in the twentieth century. It requires that the

spouse of an employee must have survivorship rights if the employee predeceases

the spouse. The purpose is to insure a stream of income to surviving spouse. If the

employee spouse survives to retirement age, the pension paid must be paid as a

joint and survivor annuity to the employee and his/her spouse. Unless the non-

15


employee spouse contents to some other form of payment and the pension is

vested, the surviving spouse must be entitled to a pre-retirement survivor

annunity.

iii . Homestead : UPC§2-402(1990). The Homestead law (probate homestead) was

decided to secure the family home to the surviving spouse and minor children,

free of the claims of creditors. The decedent has no power to dispose of a

homestead so as to deprive the surviving spouse of statutory rights therein. The

right to occupy the homestead is given in addition to any other rights the

surviving spouse has in the decedent’s estate.

iv . Personal property set-aside: UPC§2-403(1990). Related to Homestead is the right of

surviving spouse to have set aside to a certain tangible personal property of the

decedent up to a certain value. This is usually subject to several conditions and

limitations, but if these are met, the decedent usually has no power to deprive the

surviving spouse of the exempt items.

v . Family allowance: §2-404(1990). Every state has a statute authoring the probate Ct. to

award a family allowance for maintenance and support of the surviving spouse

(and often dependent children) the allowance may be limited by the statute to a

fixed period or it may continue after the will been contested or for the entire

period of administration. The “allowance”, as with the “homestead” and “personal

property set-aside”, is in addition to whatever other interests pass to the surviving

spouse.

vi . Dower:

1. At common law, a widow had dower in all land of which her deceased husband

had been seized during marriage and it is inheritable by the issue of the Hand W.

Once dower has attached, the H can’t sell the land free and clear of the wife’s

dower interest. No purchaser, bona fide or not, can cut off the W’s dower w/o her

consent. Dower functions today primarily to make the signatures of both spouses a

practical requirement to the sale of one spouse’s land.

2. At common law, a H had a support interest in his wife’s land, called curtesy. It

is comparable to dower except 2 points (p.479).

3. There are only 5 jurisdictions still recognize “dower”, where the surviving

spouse must elect to take dower, or to take a statutory share of the decedent’s

estate, or to take a share under the decedent’s will. As the statutory elective share

is almost always greater than dower, dower is rarely elected.

c. Rights of Surviving Spouse to Elective Share

i. Rationale, p. 480-84

All separate property system states except Georgia (is the only separate property

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state w/o an elective share statute) give the surviving spouse, in addition to any

support right mentioned above, a share in the decedent’s property. The policy is

that the surviving spouse contributed to the decedent’s acquisition of wealth and

deserves to have a portion of it, and this policy was carried out by statutes giving

the surviving spouse an elective share (forced share) of the decedent’s property.

The spouse can take under the decedent’s will or can renounce the will and take

a fractional share of the decedent’s estate.

In a few states, the elective share is limited to a life estate in one-third or one-half of the

decedent’s estate.

UPC(1990)A rticle 2 “ elective share of surviving spouse, general comment: partnership theory of

marriage:

The basic principle in common law states (title-based) is the marital

status does not affect the ownership of the property. The regime is one of

separate property, in which each spouse owns all that he or she earns. By

contrast, in the community-property states, each spouse acquires an ownership

interest in half the property the other earns during the marriage. By granting

each spouse upon acquisition an immediate half interest in the earnings of the

other, the community-property regimes directly recognize that the couple’s

enterprise is in essence collaborative.

The common-law states, however also give effect to the partnership theory when a marriage

is dissolved by divorce. When divorced, a spouse who sacrificed his or her

financial-earning opportunities to contribute so-called domestic services to the

martial enterprise stands to be recompensed under the equitable-distribution

system.

The typical elective-share law in common-law states, including the that provided by the pre-

1990 UPC, a surviving spouse may claim a one-third share of the decedent’s

estate, not the one-half share of the couple’s combined assets hat the partnership

theory would apply.

ii. Property Subject to elective share, p. 500-13

The original elective share statutes gave the spouse a fractional share of the

decedent’s estate, which implicitly meant probate estate. With the proliferation of

non-probate transfer, the Q arises whether the elective share should be extended to

some or all non-probate transfers.

(1) Judicial Decisions:

Sullivan v. Burkin: Change rule

Issue: Whether (the W’s claim was simply that) the inter vivos trust was an

17


invalid testamentary disposition and that the trust assets “constitute assets of

the estate” in which P has right.

Analysis: If the W is right that the trust was an ineffective testamentary

disposition, the trust assets would be part of the H’s probate estate. In that

event, we would not have to consider ant special consequences of the W’s

election under Mass law.

Conclusion: The trust was not testamentary in character and that the H

effectively created a valid inter vivos trust. Because:

1. The inter vivos trust is valid though it was testamentary. A trust is not

testamentary and invalid for failure to comply with the requirements of the

statute of wills merely b/e the settler-trustee reserves a beneficial life

interest and power to revoke and modify the trust. A trustee controls the

administration of the trust does not invalidate it.

2. Even if the trust was not testamentary on general principles the widow has

special interests which should be recognized.

(2) Uniform Probate Code

iii. Waiver: p. 517-21 & handout

d. Rights to Community Property, p. 521-25

1. basic information

8+1(Wis. Adopted UMPA, providing for CP under the name of marital property.) states

are CP states. And Alaska permits spouses to elect CP rather than SP is they so choose.

‧ CP in the U.S is a community of acquests. H &W own earnings and acquisitions from

earnings of both spouses during marriage in divided shares. All property that is not CP is

SP, of one spouse, but when in the case of tenancy in common or joint tenancy, is the

separate property of both.

‧ SP includes property acquired before marriage and during marriage by gift or inheritance.

‧ CP states: Income from SP is CP (Ida. Loui. Tex. UMPA, other CP states, income from

SP is SP.) whenever the characterization of the property is doubtful, the strong

presumption is that the property is CP.

‧ To avoid problem, couples can make agreement regarding the character of their

property. They may change CP into SP or reverse by agreement, or may change CP into a

joint tenancy, a tenancy in common, or sole ownership of one spouse. And they can agree

that all their properties is CP to achieve favorable income tax.

‧upon the death of one spouse, the deceased spouse can dispose of his/her half of the CP

which may be devised to whomever the deceased pleases, the same as SP. Tthe surviving

spo. owns the other half, which is not subject to testamentary disposition by the deceased

spo.

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‧ In CP raises problems as to which spouse to manage the property. States ordinarily

require both spouses to join in transfers or mortgages of community real property. Ex:

when H buys a life insurance with his earning during marriage but names A as

beneficiary, upon H’s death, the W’s right in the policy proceed? - CA, During H’s life,

W is entitled to set aside an entire gift and reclaim the property for the community. But

after death, W is entitled to set aside the gift to the extent of one-half. b/e a gift by H

during life of CP is treated as if it were a devise by H of his half share.

- TEX, the manager of the CP can make reasonable gift to others, but excessive gifts are

deemed in Fraud of the other spouse’s right. If it found so, the non-manager is entitled to

half the policy proceed.

- Other CP states divided b/w CA. and TEX.

2. P utting the survivor to an Election:

“Widow election” in CP states is applicable to widows and widowers nowadays, which

refers to when one of the spouse is the manager of CP (p.524-525)

e. Multi-State Couples, p. 525-30 and handout

‧ The conflict-of-law rules used to determine which state law governs material property

are: (a) The law of the situs controls problems related to land. (b) The law of the marital

domicile at the time personal property is acquire controls the characterization of the

property (that is, as separate or community). (c) The law if the marital domicile at the

death of one spouse controls the survivor’s martial rights.

‧ Although the state of the situs has the power to control it’s land, it may choose to apply

the law of the marital domicile. (UPC§2-202). Therefore, the right of a spouse to an

elective share in land located in the state shall be governed by the law of the decedent’s

domicile at death.

a. Moving from SP state to CP state:

Problem about the fairness of the surviving spouse arises.

The movable property: the ownership of movable property is determined by the law of the

state where the couple is domiciled when the property is acquired. When they in SP state,

all the property earned by H belongs to H and W is protected by the elective share, but

when move to CP state and continue to domicile in that state, property remains H’s as H’s

SP. BUT when H “dies,” the law of the state of domicile at the date of death governs the

disposition of movable property. But when neither spouse works in the CP state, there

maybe no CP for the surviving spouse. And the W lost her selective share protection and

is not protected in the CP. Therefore the law provides a remedy, “quasi-CP” in which

upon the death of the acquiring spouse, one-half of the quasi-CP belongs to the survivor

(the quasi-CP was treated as SP during life). The other half is subject to testamentary

disposition by the decedent. If the non-acquiring spouse dies first, she has no testamentary

19


power over it.

b. Moving from Cp state to SP state: The moving doesn’t change the preexisting property

right of the H or W. CP continues to be CP when move to a SP state. (the UDCPRDA

applied in SP states, which says that CP brought into SP states and all property (including

land in the state) traceable to CP remains CP for the purpose of testamentary disposition.

Unless the spouse agree to convert into SP) CP brought into SP state is not subject to

elective share.

f. Premarital Wills, p. 530-37

Estate of Shannon:

g. Review Problems, handout

2. Protection of Children

a. Intentionally Disinherited, p. 536-37, 550-51

b. Pretermitted Child Statutes, p. 537-50

IV. Trusts

A. Testamentary versus Inter Vivos Trusts

1. Overview, p. 351-52, 358-61, 386-96, 553-56

1. Revocable trusts: introduction: a revocable trust inter vivos trust is the most flexible of all will substitutes b/c the

donor can draft the dispositive provisions and the administrative provisions precisely to the donor’s liking. Typical

revocable inter vivos trust involving a deed of trust, the trust settler transfers legal title to property to another person

as trustee pursuant to a writing in which the settler retains the power to revoke, alter, or amend the trust and the

right to trust income during lifetime. On the settlor’s death, the trust assets are to be distributed to or held in further

trust for other invalid unless executed with testamentary formalities.

A trust is a management relation whereby the trustee manages property for the benefit of one or more beneficiaries.

The trustee holds legal title to the property and , in the usual trust, can sell the trust property and replace it with

property thought more desirable. The trustee owes fiduciary duties to the beneficiaries, including loyalty to them

and prudence in investments. If the trustee breaches one of these duties, the trustee is personally liable to the

beneficiaries. We call the beneficiaries’ interest in a trust “equitable title” b/c an equitable interests on beneficiaries

enforceable against the trustee who has legal title. The trustee can be one of the beneficiaries of the trust, if however

the trustee is the sole beneficiary, the legal titles merge, leaving that person with absolute legal title. There is no

trust, b/c the trustee owes no fiduciary duty to the anyone except himself. The Q is, does the settlor owe any

fiduciary duty to anyone (or created any equitable interesting anyone) other then himself? If not, there is no trust,

the settlor remains the absolute owner of the property.

When an individual manifests an intention to create a trust in property to be acquired in the future, and thereafter

confirms this intent by taking the steps necessary to transfer the property to the trust, the property so transferred

becomes subject to the terms of the trust even if he/she is settlor, trustee and lifetime beneficiary of the trust at the

same time.

The revocable declaration of trust (living trust). There is a way to avoid probate, that is, declare yourself trustee of

20


your property by using a revocable declaration of trust, with the trust property to pass to named beneficiaries upon

your death.

2. Use of revocable trust in estate planning:

a. Introduction:

b. Consequence during life of settlor

2. Review of In re Vickie Lynn Marshall (from Day 1)

B. Trust Requirements

1. Valid Purpose, handout

2. Settlor & Transfer/Present Declaration, p. 557-59

3. Trustee, p. 559-61

There maybe one or more trustees, and the trustee maybe an individual or a corporation. The trustee

may be the settlor or a third party, or a beneficiary. If a settlor intends to create a trust but fails to

name a trustee, a court will appoint a trustee to carry out the trust, “a trust won’t fail for want of a

trustee.”

The trustee hold legal title to the trust property; and beneficiaries have equitable interests. The trustee

is under the duty to administer the trust in the interest of the beneficiaries; self dealing is sharply

limited and for some transactions is prohibited altogether. The trustee must preserve the property,

make it productive, and, where required by the trust instrument pay the income to the beneficiary. If

the trustee has no duties at all, there is no trust, then the trust is “passive” or “dry,” and the trust fails.

When the trustee has no active duties so the trust fails, the beneficiaries acquires legal title to the

trust property. the law doesn’t impose upon a person the office of trustee unless the person accepts,

and once accepts the office of trustee, the person can be released from liability only with consent of

the beneficiaries or by a court order.

4. Intent, p. 567-75

There is not particular form of words is necessary to create a trust, the sole question is whether the grantor

manifested an intention to create a trust relationship. Where a grantor conveys property to a grantee

to hold “for the use and benefit” of another, this is a sufficient manifestation of an intention to

create a trust.

Jimenez v. Lee Supreme Court of Oregon, 1976

Facts 1. P. the daughter against D the father also the trustee of her trust.

2. firs gift was made in 1945, $1000 face value U.S saving bond which was registered in the names of D. and/or P and/or

P’s mother.this bond was purchased to provide funds to be used for P’s educational needs

3. second gift in the amount of $500 was made in 1956 by D’s client and she made identical gifts for D’s 2 other children,

the $1500 was deposited in the names of D and his 3 children.

4. in 1960, D. cashed the saving bond and invested the proceeds in common stock. The ownership of the shares was

21


registered as D., Custodian…for P. and the Joint saving was closed and $1000 was invested too, D also took the title to

this stock as custodian for 3 kids.

5. trial Ct.: there is no trust. D held the savings bond and the savings account as custodian. (P. contends that the gifts for her

educational use created trusts in each instance and tat the trusts survived D’s investment of the trust assets in the stock.)

Issue Does transfer of property with the intent that it be used for the educational needs of a third party create a trust?

Ana. 1. the donors didn’t expressly direct D to hold the subject matter of the gift “in trust”, but it’s enough if the transfer of the

property is made with the intent to vest the beneficial ownership in a third person.

2. the D admitted that the gifts from his mother and this client are for the educational needs of the children. And the letter

from the donor states the same. And the D is a lawyer.

3. the doctrine of merger defeated the intent? No, the trust was create for the benefit of P, the D brought the stock as

custodian does not expand D’s power over the trust property from that of trustee to that of custodian. And D’s action has

violate his duty to the beneficiary “to administer the trust solely in the interest of the beneficiary.

4. P was entitled to impose a constructive trust or an equitable lien upon the stock so acquired. P is also entitled to be

credited for any dividends or increment in the value of that part of the stock representing P’s proportional interest.

Whether or not the asset of P’s trust are traceable into a product, D is liable for that amount which would have accrued to

P had there been no breach of trust.

5. it is the duty of the trustee to keep full, accurate and orderly records of the statutes of the trust administration and of all

acts thereunder. Here D failed to do so, he didn’t keep separate records of trust income and trust expenditures. And the

record he kept were only for the purpose of defending the present suit. The letter in 1966 to P was inaccurate of the

amount of the trust and didn’t mention about the second gift.

6. some expenditure shows on the record clearly out side the purpose of an educational trust. Ex medical bills, this should

be obligations the parents own to their minor child.

Clu. The trial was error in both findings. D has the burden to prove that the expenditure is for the trust.

notes 1. Precatory language: the T express a wish that the property devised should be disposed of by the devisee in some

particular manner, but the language does not clearly indicate whether the T intents to create a trust or merely a moral

obligation unenforceable at law, the latter, is the precatory language. The problem could be avoid by clear drafing.

2. equitable charge: if a T devises property to a person, subject to the payment of a certain sum of money, to another person,

the T creates a equitable charge, not a trust, there is no fiduciary relationship.

5. Property, p. 581-84, 586-89

a trust is a method of disposing of, or managing, property, a trust can not exist without trust property.

Anything that is called property, can be transferred, may be put in trust. The Q is whether a

particular claim can be called property by a court.

Unthank v. Rippstein Supreme Court of Texas, 1964

facts

Issue May a promise to make payments on a monthly basis even after death be enforced as a trust?

Ana.

22


Clu.

Brainard v. Commissioner U.S court of appeals, seventh Cir. 1937

facts

Issue Is a settlor of a trust consisting of property to be received in the future responsible for the taxes on that property?

Ana.

Clu.

6. Beneficiary, p. 561-62, 597-608 and handout

1. The beneficiaries hold equitable interests, and the remedies available (the personal claim against the

trustee) to the beneficiaries for breach of trust. But this claim is no higher priority then the claims of

other creditors of the trustee, so this won’t protect the beneficiaries much. Therefore, equity gives

them additional remedies relating to the trust property itself, so the creditor of trustee cannot reach

the trust property. If the trustee wrongfully disposes of the trust property, the beneficiaries can

recover the trust property unless it has come into the hands of a bona fide purchaser for value. The

beneficiaries can also enforce the trust on newly acquired property which acquired by the

disposition of the trust property by trustee.

2. There must be one or more beneficiaries to whim the trustee owes fiduciary duties, someone who can call

the trustee to account. The exception to this rule is, the beneficiaries may be unborn or unascertained

when the trust was created, under this situation, it still can be a valid trust. But if at the time the

trust becomes effective the beneficiaries are too indefinite to be ascertained, the

attempted trust may fail for want of ascertainable beneficiaries.

Clark v. Campbell Supreme Court of New Hampshire, 1926

facts Decedent’s will create a trust under which all of his personal property, such books, pictures, antiques and rugs was to be

distributed to those of his friends that his trustee, in their sole discretion, chose. All remaining property was to be sold and the

proceeds added to the residue of the estate.

Issue Do “friend” qualify as an ascertainable beneficiary sufficient to sustain a bequest or private trust.

Ana. 1. Under common law, a bequest to an indefinite person is invalid. b/c there must be beneficiary or class thereof capable of

coming into Ct. and enforcing the gift, this rule applies to private but not charitable or public, trust.

2. charitable or public trust are enforceable even w/o an ascertainable beneficiary b/c the attorney general, on behalf of the

public, may seek enforcement.

3. the language of the will itself defeat the argument which said that the will did not intent to create a trust but was instead

an outright gift of the personal property to the trustees.

4. the language of the will is also defeat the argument that the will is to create a power of appointment in the trustees.

Clu. no

In re Searight’s Estate Ohio Court of Appeals, Ninth District, 1950

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facts Searight died in Nov. 1948 leving $1000 to be paid to Florence Hand at the rate of 75 cents per day for the care of his dog,

Trixie, until the dog died. If there was money remaining at the time of Trixie’s death, the money was to be paid to a list of

persons, provided that if they survived the dog. Hand accepted Trixie upon Searight;s death and was paid 75 cents a day until

Trixie died in Oct. 1949 when she was struck by a car.

Issue Is a trust in favor of a non-human beneficiary enforceable? (is the testamentary bequest for the care of the dog valid in Ohio

(1) as a proper subject of a so-called “honorary trust”? (2) as not violate

Ana. 1. This is not a gift for the care of dogs in general, it is not a charitable trust.

2. The trust is binding on the conscience of the trustee, thus, the trust is a valid gift so long as the rule against perpetuities is

not violated.

3. Here the purpose of the trust is to care for the decedent’s dog, and the person he entrusted with the task has accepted it.

This trust also does not violate the rule against perpetuities b/c it limits itself to the life of the god.

4. even the dog life lives an inordinate length of time therefore the trust violate the rule against perpetuities, the amount of

money here even when calculating in earned interest, cannot last foe that long.

Clu. The trust is valid.

notes Under the Wait-and–see doctrine, a Ct. doesn’t declare an interest invalid until the wait-and-see period expires. Hence, if the

jurisdiction applies this doctrine for the common law perpetuities period, as Ohio does, {Under the Rule against Perpetuities,

and “honorary trust to support a pet animal is void if it can last beyond relevant lives in being at the creation of the trust plus

21 years.} But if the jurisdiction applies Uniform Statutory Rule Against perpetuities, which provides a wait-and-see period of

90 years, and honorary trust seems to be valid for 90 years.

- CA: a trust for care of a designated domestic or pet animal may be performed by the trustee for the life of the animal.

- UPC§2-907(1990): a trust for the care of a designated domestic or pet animal is valid for 21 years or for the life of the

animal, whichever period turns out to be shorter.

7. Writing? Some Exceptions, p. 584-86, 608-17

notes: resulting trust and constructive trust (p.584-86)

Resulting trust: it is a trust that arises by the operation of law in one of 2 situations: (a) where an

express trust fails or makes and incomplete disposition, or (b) were one person pays the purchase

price for property and causes title to the property to be taken in the name of another person who is

not a nature object of the bounty of the purchaser. The latter situation is called a “purchase money

resulting trust.

As resulting trust arise by operation of law, even though the subject matter is real property, it is often

hold that are not subject to the Statute of Frauds. Moreover, resulting trust doesn’t contemplated an

ongoing fiduciary relationship, once a resulting trust is found, the trustee must reconvey the property

to the beneficial owner upon demand.

C onstructive trust : also arise by the operation of law and not by express terms of an instrument. This

trust a wide variety of situations imposed to give remedies to prevent unjust enrichment. A

constructive trust is under a duty to convey the property to another on the ground that retention of

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the property will be wrongful.

The usual requirements to impose constructive trust are: (1) a confidential or fiduciary relationship;

(2) a promise, express or implied, by the transferee; (3) a transfer of property in reliance on the

promise; (4) unjust enrichment of the transferee. But the remedy is not limited to these

circumstances. (ex: p.213-21, 322-28 141-47, 586 effect of death of donor).

Although an ineffective gift will not be upheld as an express trust, when the donee in reliance upon

the gift, so change his position that it would be inequitable to preclude him form obtaining the

property, a Ct. of equity will compel the donor to complete the gift by making an effective

conveyance. In such a case, the donor holds the property upon a constructive trust for the donee until

he makes an effective conveyance of it to the donee. It is merely imposing a duty on the donor in

order to prevent unjust enrichment.

N ecessity of a writing instrument :

- An inter vivos oral declaration of trust of personal property is enforceable.

- Inter vivos trust of land has to be in writing required by Statute of Fraud.

- A testamentary trust has to be created by a will required by the statute of wills.

- Under certain circumstance the Ct. will enforce an “inter vivos oral trust of land” or an “oral

trust arising at death”.

Olliffe v. Wells Supreme Judicial Court of Massachusetts, 1881

facts Mrs. Donovan died in 1887 leaving a will in which she gave her residuary estate to the Reverend Wells, the D, “distribute the

same in such manner as in his discretion shall appear best calculated to carry out the wishes which I have expressed to him”.

Wells was named executor of her will. Mrs. Donovan’s heirs, the P, brought the suit, challenging the bequest. At the time of

the trial, Wells contended that Donovan had orally expressed her wishes that he use the residuary estate for charitable

purposes, especially for the poor, aged, infirm and needy under the care of St. Stephen’s Mission in Boston, which Wells had

founded. (St. Stephen’s had been destroyed and wells had died prior to this case being decided.)

Issue Is a semi-secret trust valid? NO

Ana. 1. under the plain language of the will, the bequest have Wells no “beneficial interest” in the residuary estate.

2. the bequest substitutes the intent of the decedent with that of Wells is too indefinite to be valid, the next of kin of the

testatrix must take by way of “resulting trust”. (he is required to distribute all of the property bequeathed to some

unknown class of persons and for some unknown purpose.)

3. the discretionary authority granted to the D by the P, might result that the D won’t carry out the P’s intentions. It has been

held in England and in other states, that, if a person procures an absolute devise or bequest to himself by orally promising

the testator that he will convey the property to or hold it for the benefits of the third person, and afterwards refuse to

perform his promise, a trust arises out of the confidence reposed on him will enforce against him at the suit of such 3rd

person.. and in other similar circumstances, where an oral agreement is made and is referred to in the will, the same will

be enforced upon a proper showing of that the agreement was made.

4. BUT, there is an important distinction, b/c where the bequest is outright on it’s face, the imposition of the constructive

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trust does not impair the rights of the heirs to that property b/c they have non of that right. On the other hand, where the

bequest id not outright but is for some indefinite purpose, the right of the heirs as the equitable owners of the interest that

is the subject of the bequest, which they received by way of a resulting trust, are injured.

5. therefore the interest of the heirs can not be deprived by the conduct of a devisee or the intent of the deceased unless the

same is clearly expressed in the required legal form.

Notes 1. this case is the origin distinction b/w a secret trust and semi-secret trust

2. the distinction is: *secret trust: can be imposed a constructive trust upon the “said” trustee, b/c the will indicates no trust

and it’s Wells’ promise to the decedent that he will distribute the money as she wanted, so the EE allows to prove Wells’

intent; * the semi-secret trust: the will indicates that there is a trust but not identifies the beneficiaries (as was true in this

case), the legacy to Wells fails, but here, no need to prevent unjust enrichment, EE not allowed.

C. Types of Private Express Trusts

1. Discretionary Trusts, p. 617-31

Trust can be divided into mandatory trusts and discretionary trusts. In a mandatory trust, the trustee

must distribute all the incomes, then the trustee has no discretion to choose either the person who will

receive the income or the amount to be distributed; in a discretionary trust, the trustee has discretion

over payment either the income or the principal or both. (“spray trust” is one of discretionary trust, in

which the trustee has the discretion to determine how to distribute all the income in what amount and

who within the group of beneficiaries can get it, which means, the beneficiary consisting one or more

members might not receive income equally.) When distribute principal of the trust, the trust

instrument may specify that the trustee has discretionary power to distribute principal to the income

beneficiary. Such a power may be limited by a standard (“such amounts as are necessary to support

my wife I the style of living to which she has become accustomed”) or the trustee may be given

wide discretion.

Marsman v. Nasca Massachusetts Appeals Court, 1991

2. Spendthrift Trusts, p. 631-42

In a spendthrift trust, the beneficiaries cannot voluntarily alienate their interests nor can their

creditors reach their interests, it is created by imposing a disabling restraint upon the beneficiaries and their creditors.

(the opinion against the spendthrift trust: “it would be to form a privileged class, who could indulge in every

speculation, could practice every fraud, and provided they kept on the sage side of the criminal law, could yet roll in

wealth.” But more and more states have adopted the new rule.)

Shelley v. Shelley Supreme Court of Oregon 1960

Fact A standard spendthrift clause in the trust: “each beneficiaries hereunder is hereby retrained from alienating, anticipating, encumbering, or

in any manner assigning his or her interest or estate, either in principal or income, and is without power so to so to do, nor shall such

interest or estate be subject to his or her liabilities or obligations nor to judgment or other legal process, bankruptcy proceedings or claims

of creditors or others.” is included in trust.

Issue Whether the incomes and the corpus can be reached by “others” (creditors..., in this case, Shelley’s former wives for the alimony

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and the beneficiary’s children for support)? Yes

Ana. 1. It is clear that the trust placed no restriction on Grant’s right to receive income from the trust. Therefore he has an absolute

property interest in the income and it can be used to pay Patrica’s claim unless the spendthrift clause prohibit them from

doing so.

2. The interest of the beneficiary of a trust should be subject to the claims for support of his children, it’s not a sound policy to

use the welfare funds of this state in support the beneficiary’s children, while he stands behind the shield of immunity

created by a spendthrift trust provision.

3. Some jurisdictions recognizing the difference in martial and parental duties and held that a spendthrift trust is subject to the

claims for the support if children but free from the claims of the former wife. But the majority of the cases, however, hold

that a spendthrift clause will not bar a claim for alimony.

4. The duty of a husband to support his former wife should override the restriction called for by the spendthrift clause. The

same reason for requiring the support of the beneficiary’s children will be applicable to the claim of a divorced wife.

Conl 1. The beneficiary’s interest in the corpus is not made immune from the claims of alimony or support, but by the terms of the

trust, the disbursement of the corpus is within the discretion of the trustee, therefore Grant’s right to receive any part of the

corpus does not arise until the trustee has exercised his discretion and has decided to invade the corpus. Until that time. The

P(Grant) and former wife cannot reach the corpus of the trust b/c the beneficiary has no realizable interest in it.

2. clause (5) “in case of any emergency arising whereby unusual and extraordinary expenses are necessary for the proper

support and care”

notes The protection of spendthrift trust from creditors has several exceptions:

1. Self-settled trusts: a spendthrift trust cannot be set up by the settlor for the settlor’s own benefit. Creditors of the settlor can

reach the settlor’s interest in income or principal in a mandatory trust. Persons with earned (or inherited) wealth can protect

their assets from creditors by creating a self-settled spendthrift trust, so the spendthrift clause in these trusts is not effective,

but in Alaska and Delaware, if the trust is not created with the intent to defraud creditors then it can be created.

2. Child support and alimony

D. Modification and Termination of Trusts, p. 651-64

1. If the settlor and all the beneficiaries consent, a trust may be modified or terminated, the trustee has no

beneficial interest and cannot object. Such a right exists even if the trust contain a spendthrift clause. If

the settlor is dean or not consent to it, the Q arises whether the beneficiaries can modify or terminate

the trust if they all agree.

2. English court (1841): a trust can be terminated at any time if al the beneficiaries are adult and sui juris

and all consent.

3. English Variation of trust act (1958): a court may consent to modification or termination of a trust on

behalf of incompetent, minor, or unborn beneficiaries whenever the court finds it beneficial to these

beneficiaries.

4. In the U.S, the settlor’s intent cannot be set aside after his death.

In re Trust of Stuchell Oregon Court of Appeals, 1990

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fact 1. Stuchell, now deceased, established a testamentary trust for his grandchildren and their families under which the

grandchildren were to receive the income for life with the remainder going to their children.

2. One of his two surviving grandchildren had 4 children of her own, one of which is mental retarded and in state assistance.

While no guardian has been appointed for him, he resided in a state facility and receives Medicaid and social security

benefits.

3. in Dec. 1989, his surviving grandchildren, with the consent of all beneficiaries under the trust, petitioned the Ct. to modify

the trust so that if the mentally retarded great-grandchild survived the others, the trust would continue as a supplemental

needs trust until his death, and then be distributed to the surviving family members of Stuchell’s grandchildren. The

proposed modification was necessary to allow the mentally retarded great-grandchild from losing public assistance. The

trial Ct. dismissed the petition.

Issue May a trust be modified by the agreement of all beneficiaries?

con. NO (the judgment of the trial Ct. affirmed.)

Anal. 1. The common law rule: the trust may be terminated of all the beneficiaries agree and none are under a legal disability and

the modification does not frustrate the trust’s purpose. By this rule, it’s only applied to the termination of the trust and see

no reason here to expand it to cover modifications.

2. §157 of Restatement 2nd of trusts provides for modification if the purpose of the trust would be substantially impaired b/c

of changing circumstances not known to the settlor.

3. However comment b to the §157 states that a modification that is merely advantageous to the beneficiaries should not be

approved.

4. Here the sole justification for the modification is to protect the public assistance currently being provided to the mentally

retarded great-grandchild of Mr. Stuchell, who is a remaindermam of the trust. As such, the only purpose is to make the

trust more advantageous to the beneficiaries and is therefore improper.

notes 1. Ct.s in several states in recent years have reformed or modified a reust so as to obtain income ot estate ta advantages.

Sometimes the Ct. have corrected a lawyer’s error in drafting the instrument; at other times the Ct. have modified the trust

b/c of changed circumstances.

2. Drafting advices: when draft a trust that is to last into the unforeseeable future, ou should consider giving a beneficiary

(either the life tenant or a remainderman or an independent third party the power to modify or terminate the trust in the

form of “ a special power of appointment”, which is a power to appoint the property to, or modify a trust for the benefit

of, anyone except the donee. In Stuchell, the lawyer who draft the will some 40 years earlier did not, and could not,

foresee the future and did not write into the trust a means of changing the trust when circumstance change. The lawyer left

the testator’s family in a strait-jacket.

3. Unless all the remainder beneficiaries consent (which usually is not possible b/c. The remainder may ultimately vest in

persons now unascertained or unborn), relief is denied unless the trust is construed to contain a power or invade, express

or implied.

4. Deviation in exercising administrative powers: Ct.s have been much more liberal in permitting trustees to deviate from

administrative directions in the trust, b/c of changes of circumstances, than they have been in permitting modification of

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distributive provisions. Ex: the Ct. in Joseph Pulitzer’s will held that even though the sale of those stocks (the shares of

the stock are the asset of the trust) was prohibited by the settlor, the Ct. had power to authorize sale in circumstances

where the trust estate was in jeopardy, and the Ct. approved the sale.

5. “Claflin Doctrine”: a trust can not be terminated prior to the time fixed foe termination, even thought all the

beneficiaries consent, if termination would be contrary to a material purpose of the settlor. In he case of

Claflin v. Claflin, a trust was established for testator’s son, with principal to be paid to the son at age of

30. after 21, the son sued to terminate the trust, pointing out the he was the sole beneficiary. The Ct.

refused to permit termination as this would violate the intent of the T.

Generally, a trust cannot be terminated if it is a spendthrift trust, of the beneficiary is not to receive the principal

until attaining a specified age, if it is a discretionary trust, or if it is a trust for support of the beneficiary.

Such provisions are usually deemed to state a material purpose of the settlor.

In re Estate of Brown Supreme Court of Vermont, 1987

Fact 1. A .J. Brown, now deceased, created the trust in his will. Under the trust the fund was to be used to educate his nephew’s

children. The trust was to continue until the purpose of providing an education has, in the determination of the trustee, been

accomplished.

2. After the accomplishment of the purpose, the income of the trust and any part of the principal were to be used for the care,

maintenance and support of his nephew and his nephew’s wife, in the style to which they had become accustomed, until

death.

3. upon their death, the trust was to terminated and the remaining funds distributed in equal share to his nephew’s living

children.

4. the trustee complied with the terms of the trust. In 1983, the nephew and his wife petitioned the Ct. to terminate the trust,

arguing that the only remaining purpose of the trust was to provide for their support and that distribution of the entire trust

was necessary to accomplish that result. The remainderman, their children, consented to the termination. (the probate Ct.

denied)

Issue May the trust be terminated by the agreement of all beneficiaries?

Con. NO (the probate Ct. denied but the appellate Ct. reversed, this Ct. reversed the decision of appellate Ct. and reaffirmed the former)

Anal. 1. Under the law, an active trust may not be terminated if a material purpose of the trust remains to be accomplished. This is

true even if all the beneficiaries consent to termination.

2. the trustee argues that the trust cannot be terminated b/c it is both a support and spendthrift trust. This argument is w/o merit

b/c this trust is neither. However that the trustee is correct to content that the termination is not possible b/c the material

purpose of the trust in this case has not been accomplished yet and thus termination is not proper. This trust has two

purposes.

3. first purpose is to provide education, but all of the living children have received it and Brown’s nephew’s wife couldn’t have

more children as the trial Ct. determined, as such, this purpose has been accomplished.

4. the 2nd purpose is to assure the life long income for the nephew and his wife through management of the trust by the trustee.

This clearly indicates Brown’s intent (the trustee must provide for the “care, maintenance and welfare” ) to make sure the

29


nephew and his wife lived in the style they were accustomed to until their death. This purpose would be defeated if the trust

were terminated, since they could mismanage the funds thereby depriving themselves of the lifetime income Brown

envisioned.

note 1. A few states has enacted statutes that permit Ct.s to terminate trusts prior to the time specified by the settlor. Ex: permitting

modification or termination in changed circumstances which would defeat the purposes of the trust.

2. it may be possible to terminate a testamentary trust by a compromise agreement b/w the beneficiaries and heirs entered into

soon after the testator’s death.

3. Changing trustee: unless the trustee has been guilty of breach of trust or has shown unfitness, inasmuch as the settlor reposed

special confidence in the designated trustee, the Ct. will not change the trustee merely b/c the beneficiaries want to.

4. But now in some states, entire inventories if trust accounts are now routinely bought and sold b/w banks, should the

beneficiaries now be offered the opportunity to change trustees if they are disadvantaged by these transactions? UTA (1999

draft) §706 (p.663).

E. Charitable Trusts

1. Charitable Purpose, p. 859-65, 867-69 (start at note 2)

- A trust is a charitable trust if a trust that is for the benefit of a class of person (and not for the

benefit of the community at large) must be for the relief of property or for the advancement of

education, religion, health, or other charitable purpose. A trust if not charitable merely b/c it is for

the benefit of a class of people. Ex: a trust for the benefit of sick employees is charitable, but is not

if it’s for the general benefit of employees; a trust pay salary to law professor is charitable b/c of

education purpose.

- A trust may be a valid charitable trust although the person who directly benefit are limited in

number. Ex: a trust awarding scholarships or prizes for educational achievement is charitable.

- A trust to benefit political party is against public policy to endow perpetually to it, thus it’s not a

chartable trust, but a trust for the improvement of the gov. structure and method in a manner

advocated by a particular political party is one.

- The category to see whether it’s a chartable trust, see p.867 and 868

- Draft advice: be sure to write the exact legal name of the charity, and make sure if the client wants

an estate tax chartable deduction whether the charity is tax-exempt under the IRS code. A purpose

deemed charitable by a state court may not qualify for a federal estate tax charitable deduction,

which denied the deduction to charities that indulge in certain prohibited activities.

- Trust of “benevolent” or “philanthropic” purpose should be avoided, it may fail as a charitable trust

b/c the income can be used foe non-chartable purposes.

Rosser v. Perm (handout)

2. Modification of chartable trust: Cy Pres, p. 869-83 and handout

Cy pres: means “as close as possible” When a gift is made by will or trust and it is no longer possible

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to follow the instructions of the donor, a judge, estate, or trustee may apply the Cy Pres doctrine to

fulfill the donor's wishes as nearly as possible. It is usally applied in the case of a gift made for

charitable or educational purposes when the named recipient of the gift does not exist, has dissolved

or no longer conducts the activity for which the gift is made. In some cases, the Cy Pres doctrine is

used court disputes in which a judge must determine the appropriate substitute to receive the gift.

T he general rule is : (p.875) if property is given in trust to be applied to a particular charitable

purpose and it is or become impossible or impracticable or illegal to carry out the particular

purpose, and if the settlor manifested a more general intention to devote the property to charitable

purposes, the trust will not fail but the Ct. would will direct the application of the property to some

charitable purpose which falls within the general charitable intention of the settlor.

- Cy pres does not authorize a Ct. to vary the terms of the bequest, merely b/c the variation will

accommodate the desire of the trustee.

- to the extent that the term efficiency embraces the concept of relative need, it is not an appropriate

basis for modifying the terms of a testamentary trust.

Obermeyer v. Bank of America, N.A., Washington University (handout)

3. Supervision, p. 892-901

V. Fiduciary Administration of Trusts

A. Powers of Trustee, p. 950

The administrative power of a trustee is derived exclusively from the instrument creating the trust.

B. Duties of Trustee

1. Duty of Inquiry into Beneficiary Needs, p. 618-27 (review)

Marsman v. Nasca case:

2. Duty of Loyalty, p. 903-19

The trustee must administer the trust solely in the interest of the beneficiary.

a. not self-dealing

Hartman v. Hartle New Jersey Court of Chancery, 1923

Fact 1. Mrs. Dorothea died testate leaving 5 children. In her will, she named 2 of her son-in-law as co-executors, the D here. Her will

directed her executors to sell her real estate and distribute the proceeds equally among her children.

2. the Executors sold part of the real estate (the farm) at a public auction for $3900. They sold the farm to one of her son who

actually purchased the farm for his sister, and the sister happens to be the wife of one of the executors.

3. the proceed of the sale was distributed to the children. Subsequently the sis resold the farm for $5500.

4. one of the other children (P) brought the suit against the executor (and the ultimate purchaser of the farm, claiming the sale

was fraudulent disproved.) claiming that the executors violate their fiduciary duties by selling to the wife of one of the

executors.

Issue Is it a violation of an executor’s fiduciary duties to sell trust property to his wife? Yes!

Anal. 1. the law prohibits the sale of property by the executors and trustee to the wife of one of them w/o previous authorization by

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the Ct.

2. if the claim is true, the sale to the sis, even through her brother is illegal.

3. the settled law of this state is that a trustee cannot purchase trust property from himself at his own sale. This prohibition

applies equally to the trustee’s spouse, unless a Ct. has granted authorization for the sale by Ct. order.

4. neither the executors or the sis sought judicial authorization for this sale, as such, the sale was improper.

5. the farm, however, is now in the hand of an innocent purchaser and cannot be reclaimed. Instead, the sis and the executors

must account for the $1600 profit from the subsequent sale, each child is entitled to one fifth of that $1600 profit.

notes 1. self-dealing: good faith and fairness to the benes are not enough to save the trustee form liability. The benes can held the

trustee accountable for any profit made on the transaction, or, if the trustee has bought trust property, can compel the trustee

to restore the property to the trust, or, if the trustee has sold his own property to the trust, con compel the trustee to repay the

purchase price and take back the property. the only defense for trustee’s self-dealing is the authorization from the settlor or

the benes’ consent after full disclosure. Even then, the transaction must be fair and reasonable.

2. no-further-inquiry rule: p.905

3. Trust pursuit rule: when a trustee, in wrongfully disposing of trust property, acquires other property, the beneficiary is

entitled to enforce a constructive trust on the property so acquired, treating it as part of the trust assets. This also applied

where the property ends up in the hands of a third person, who unless be a bona fide purchaser for value and w/o notice if the

breach of trust. (p.906)

b. can not have conflict of interest

In re Rothko Court of Appeals of New York, 1977 (see the study-aid for detail)

facts Rothko is an expressionist painter, after he died testate and his paintings consisted of tremendous value. The executors was going to sell

his paintings to MNY and MAG. His daughter file a petition to enjoy 2 Ms from disposing the paintings and asked the executors to

return the paintings from 2Ms and asked to remove the executors.

Note Co-trustees: there is more then one trustees for the private, non-charitable trust, they must act as a group and with unanimity, unless the

trust instrument provides to the contrary. One of the several trustee does not have the power alone to transfer or deal with the property. a

co-trustee is liable foe the wrongful acts of a co-trustee to which he has consented o which, by his negligence through inactivity or

wrongful delegation, he has enabled the co-trustee to commit. It is improper for one trustee to leave to the others the custody and

control of the trust property. Charitable trusts where unanimity is not required of the trustees, action by a majority trustees is valid; UTA

and the restatement 3rd permits a majority of trustees’ action in the private trust.

3. Duty to Collect, Protect & Preserve Property, p. 919-20

A trustee has the duty of obtain possession of the trust assets without unnecessary delay. The

unreasonable delay depends on circumstances. Trustee is liable to benes. for not objecting to

executor’s disposition of inheritance. When obtain the property, the trustee has to preserve it

prudently. If real property is involved, trustee must keep building in repair, guard against theft, pay

taxes, and insure against loss by fire.

4. Duty to Earmark Property, p. 920-21

5. Duty Not to Commingle Funds with trustee’s own, p. 921-22

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It’s a breach of trust if commingled even though the trustee does not use the trust funds for his own

purposes. b/c that results to difficult tracing and hence subject to the risk that the personal creditors

of the trustee can reach them.

6. Duty Not to Delegate, p. 922-29

Shriners Hospitals for Crippled Children v. Gardiner: (read study aid)

General standard of prudent investment: must not delegate unreasonably, with professional advice as

needed, the trustee personally must define the trust’s investment objectives, and must also make the

decisions that establish the trust’s investment strategies and programs, at least to the extent to

approve the plans developed by agents or advisers. (p.927)

- the non-delegation rule has been abrogated in the restatement 3rd and UPIA, the authority impose upon the

trustee a duty of using care, skill, and caution in selecting an agent, when delegating to obtain the

advantage of the agent’s specialized investment or other skills. And of course the trustee must

review periodically the agent’s compliance with the authority granted.

7. Duty of Impartiality, p. 929-38

A trustee has the duty to deal with both the income benes. and the remainderman impartially. The

trust property must produce a reasonable income while being preserved foe the remainderman.

Dennis v. Rhode Island Hospital Trust Co. (read study-aid)

8. Duty to Inform and Account, p. 938-49

Fletcher v. Fletcher (read study-aid)

National Academy of Sciences v. Cambridge Trust Co. (read study-aid)

9. Duty to Make Trust Property Productive, p. 954-69

Estate of Collins (read study-aid)

The “prudent investor” rule: the trustee should exercise the judgment and care “which men of

prudence, discretion and intelligence exercised in the management of their own affairs, not in regard

to speculation, but in regard to the disposition of their funds, considering the probable income, as

well as the probable safety of their capital.” In making a loan, the co-trustee should use reasonable

care, diligence and skill, and shouldn’t act arbitrarily or in bad faith.

-Restatement 2nd of Trust: The trustee is under the duty to the beneficiaries to distribute the risk of

loss by reasonable diversification of investments unless under the circumstances it is prudent not to

do so. (p.963, UPIA §3)

-In buying a mortgage for trust investment, the trustee should give careful attention to the valuation

of the property in order to make certain that his margin of security is adequate. Must use every

reasonable endeavors to provide protection which will cover the risks of depreciation in the property

and changes in price levels. And he must investigate the status of the property and of the mortgage,

as well as the financial situation of the mortgagor.

-An “absolute discretion” does not permit a trustee to neglect its trust or abdicate it’s judgment.

C. Liabilities to Third Parties, p. 975-7633


UPC (1990) §7-306

011205 ① the note is on the distributed question

012405 ② the note is on the distributed question

011905 ③

Who is the spouse?

Spouse: the status from state may have 3 requirements:

2. Valid marriage licence

3. DP/CV/PB

4. common law in some states (New Hampshire) serves the FUNCTION, that is, when there is no 1and

2, but meet 3, can still be spouse.

Not spouse: no statues, and function is the grey area, but some states say that function doesn’t matter, because they

only recognize status, for example: bigamous spouse, same-sex spouse, sex exchange and unmarried cohabitants.

People without status but with function often lose.

Status V. Function

W ho is a child? Who id a child will always be a child for the purpose of intestacy

Child

1. Biological product of a female (when there is no marriage becomes the question of the 3rd category)

2. Marital children (are always deemed as child) ＊key

3. Acknowledgement of parents

4. Adopted legaly

Hall v. Vallandigham case:

The issue here is WHEN the children is adopted? Can the child still be at a valid position to inherit from its bio.

father? And the state of Texas is the state that the child can inherit from both of the bio. and adopted parent.

The Uniform Probate Code (p.101):

Maryland: the child can only inherit from the adopted parent.

Then the state law comes to play

Woodward case: the ultimate decision of the Ct.??

The child’s father was dead before the child was conceived which is under no marital circumstance, b/e the marriage

was over.

Mars. Ct.: determine the legal question, and the federal Ct. refer to state law to resolve the definition of children. So

here, the legal question is resolved but the fact hasn’t.

The Mars. Ct. has 2 approaches: ①children are children, should not set the hierarchy of them. ②children need to be

supported.

O ’ neal v. Wilkes :

34


Not a child

1. Is there a will, if no, it will be intestacy then we have to decide who is the child. ＊key

2. Is this a marital child, no non-marital child① boil. IV , then ACK paternity or boil. PM, then see state law.

② adopted: status or virtual/ functional

※ To determine who is a spouse or who is the child is the purpose of intestacy, b/c if you have a will, you don’t go

to intestacy. But why wouldn’t a will be enough? b/c ex: same sex marriage, there will be some relatives

challenge the will (depending on the family structure) then, when you have adoption, then it might not be

challenged.

012105 ④

Child

Status through

‧ Marriage (or)

‧ Biology

-IV: ACK Paternity / Ct. action

-PM: Within 300 days or consent overlap in UPC stepparents adoption.

‧ Adoption…………irrelevant…can be lovers

012605 ⑤

Involuntary Bars

- Homicide

- Abuse

- Abandonment/ adultery/ separated (some states ex: NY, MO, also fail to protect your children)

Voluntary Bars

Disclaim

- Tax ( but you still won’t be able to avoid federal tax)

- Avoid creditors

012805 ⑥

Will

Mental capacity, the elements:

1. What property

2. “natural objects”who would take under intestacy

3. disposition

4. orderly plan

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Testamentary Capacity

What’s the difference b/w MC and PC?

Strittmatter case (p.159)

1. Knows what is her property

2. She knows that she has concns

3. but decided to give all her property to National omen’s party

4. there is an orderly plan

Testamentary Capacity

1. have to show that you have mental capacity

2. have to show that you are not insane

Strittmatter case (p.159)

020205 ⑦

Mental capacity the testator mist know:

1. Nature/ extent of prop

2. Persons who are “natural objects”

3. dispositions in will

4. how above for ms orderly plan

Testamentary capacity

Requires mental capacity plus “not”

1. Insanely delusional

2. unduly influence

3. victim of fraud

when examine a will, first see the testator if he /she is mental incapacity under the 4 elements, then see the

testamentary capacity, and then, see if there is undue influence.

Unduly influence

“Will (here means a person’s mind) of another substituted for will of testator.”

p.177 provides 3 tests:

1. Susceptible.

2. Opportunity

3. Result

020405 ⑧

Invalidating wills:

Who are the heirs the proper distribution; is the will valid? How can one invalidate a will.

36


1. Mental capacity

2. insane delusion

3. undue influence

4. fraud

5. failure to meet statutory requirements

as a lawyer, talk and advice them that the potential possibilities the will is going to be contest, see the cases of

Lipper Moses Ksuffman.

Fraud

Misrepresentation:

1. in Inducement => misrepresentation of fact related to beneficiaries

2. in Execution => character/ content of will

You have to evidence the intent, and the elements are:

1. intent to deceive

2. for purpose of influence the document

3. but for causation

ex: the Carson case (p214) and the problem in p215.

When fraud, the Ct. is often reluctant to invalidate the will, so they often post it to constructive trust.

Tortious Interference (p.221) the elements are:

1. Expectency

2. Intentional interference with expectancy

3. Tortious conduct

4. But for causation

5. Damages, because here is the tort claim, and it’s possible to get punitive damage here.

Attested will => been witnessed

UPC: ①in writing ②signed by the testator and signed by 2 witnesses ③the witnesses has to sign in reasonable time.

W hen the witnesses is a beneficiary …

020905 ⑨

What a lawyer should do when executing a will:

1. came up with a document

2. make sure how many pages stable the will together

3. make sure the testator understand the will

4. the ritual function (formality)

5. providing a private room (more often is a conference room, to be as safe as possible) make sure enter or leave,

and the testator, the lawyer the witnesses and the notary should be in the room..

6. is this you will (the Q the lawyer should ask) and make sure that the witnesses hear that the will is approved by

the testator that it’s his/her will see footnote 11 p.244 =>the “publication” satisfied the criteria, the

37


requirement.

7. make sure if the two people wanted by the testator to be his/her witnesses

8. the witnesses should sign the will at the margin of each side

9. have one of the witnesses to read the attestation clause out loud to clarify that every one understand that they

are witnesses (ft.12)

10. the distinction b/w attestation clause and affidavit is that the affidavit is notarized, so it allows you to probate the

will without bring in the witnesses.( it’s not always one the same page and time is not an issue here) therefore a

notary is important for the will be respected., the reasons are follows:

⑴ play it safe

⑵ Luicianna, CA require a notary and 3 witnesses, but the notary can be one of the witnesses.

⑶footnote 13 (p.245)

to be a good lwyer, you had better follow the steps on p.242~246

when notarize, a notary follows a certain procedure which make sure that the document has a certain

credibility. Because the notary is an agent of the States, the function could ensure the accuracy so to serve

the evidential function. Follow the rules and be ethical is what the lawyer should do, while the notary has to

bear a certain responsibility, too.

Addressing mistakes in will execution: ‧‧‧

1. traditional view: invalided ( not meet the requirement)

2. Substantial compliance focus on execution

3. U.P.C.: dispensing the testator’s intent.

Paclinko case

Spouses sign each other’s will, and the Ct. didn’t permit to probate the will because the will didn’t meet the formal

requirements. (see the Groffman case at p. 227)

1. in this case, the residuary is the same

2. he is her brother

3. here there is a remedy against the lawyer => malpractice remedies. And the problem here is that they have to show

malpractice, but there exists a problem because the malpractice could be happen long time ago, therefore, the

lawyer may not be alive anymore! But there still a way out of this, that is the constructive trust.

Ranney case

‧They only sign the affidavit

Under certain states, it requires both attestation and clause and affidavit, and then,

‧have to have substantial compliance which focus on the execution.

The testator here was trying to meet all the requirements but b/e of the lawyer’s mistake here. ( and if it’s the witness’

fault, the witness is immune from responsibility.

U.P.C statute p.252, 257 ( p.259 1st Ph, 3rd sentence: when…)

The UPC substitute doesn’t talk about substantially compliance, it only talks about intent, and the Ct here was

approaching the “substantial compliance”.

38


‧UPC: dispensing the requirement as long as the testator got intent dispensing theory basic on the testator’s intent.

Hall case (handout)

The lawyer let his client hanging, let them wait, therefore it’s the lawyer’s mistake.

Here, the Q is why not adopt the UPC approach to see the testator’s intent? Because, the testator is dead so the

evidence is relies only on the survived, and it costs time, and if there is reliable testimony…

021105 ⑩

Sky dancer case

She call him “legatee” and the definition of legatee is the same as “ beneficiary”

The boyfriend take under will while the mom take under intestacy

Doc1. closed, b/e not signed, but notarized

Doc2. not a calid will

Doc3. even it’s a will, it’s not attested, Q here, do you have to give some gift with a document to prove the intent? No

Doc4. unsigned, not a will

Doc5. unsigned and no witnesses, not a will.

Bf’s argument: ① it’s a holographic will ②they have common law marriage ③doc1~5 has shown the testatmentary

intent. (p.1232)

but, it seems that every doc. are typed except the signature and shouldn’t be the holograph will.

and intent?? The docs. she prepared shows the intent.

Mom’s argument: considered about: ①different pagesit could be inserted other pages. (And there is not witnesses

signed on the affidavit?) ② the date of the affidavit signed was the not accordance with the docs. ③there could be a

suspicion that the Bf actually killed the her. ④why give multiple gifts in multiple date? And the strong arguments are:

①there might be fraud and ②it’s a draft=> not true indication of her intent.

Really should look at the differences b/w the documents, and refer to other countries’ judiciary point of view.

Holding: Not a will, and she died intestate. (And the Ct. of Montana here doesn’t apply the dispensing clause of UPC,

so it’s not a valid will.) But states like Colorado adopting the dispensing clause, so this might be valid under those

jurisdictions. But there is no witnesses what so ever!

As for the criminal accuse, (p.1234) there is no reasonable doubt. (the Bf has to prove beyond the reasonable doubt).

And like the Renny case of “the substantial compliance test”.

Types of will

1. Attested

2. Holography

① whether the will is in the state that recognized the holographic will? (p.263 fn.)

② nature of the handwriting

In re Estate of Johnson: Arizona doesn’t adopt the UPC so there’s no dispensing clause

39


It’s not an attested will, b/e it’s not witnessed, and subsequently examined by whether it’s a holographic will (the

three elements: handwriting, signature and the “material handwriting portions” has to show the “intent.”) in this case,

whether the material handwriting portions shows the intent of the deceased is rather vague. The test that the Ct. uses

was the test apply to the fact (agree or disagree and why and what kind of argument could we make?)

And the difference b/w this case and the skydancer case is that the will in this case has been signed and notarized.

(p.265) it says: “it’s the last will intestament.”

the intent here?p.266 “I nominate and appoint ….as executress (executor)” and he wrote the words “my estate”.

And who are those people that been named in the will, and we have no idea why they have the will!

whether “the material portion” in this case is in handwriting?? And the material means that the writing should

reflect the testamentary intent. Is the testamentary intent was established by his handwriting here?

how would the Ct. adopt UPC? And if it did, would the result be different? (p.227) you can interpret the

handwriting into that there is intent, and the context of the printed portion.

if adopt UPC 2-502(c), will you probate the will? Yes, but what kind of argument you could be stating that you

being faithful, ex: it’s handwriting and his intent.

The intent requires only the testamentary intent, it doesn’t have to be unambiguous or explicit intent.

Many courts require that the entire will to handwriting otherwise it will be invlid.

Kimmel’s case

Does this case meet the requirements of a holographic will?

Is it just a draft? He sent the letter that makes it a strong intent to be a will.

Is there testamentary mature? What are the languages in this case which indicates that?

- if everything happen (unclear what it actually means, but the Ct seems to interpret it as if I should die)

- important pepper

- not a normal letter

And then, whether it is a holographic will should be examined, b/e there is no functional test to guard it.

So we have to ask 1. whether there is testamentary nature and 2. is it completed? Is it still a draft?

021605 (11)

brief review:

1. capacity issue

2. statutory requirement so can only look at the document

①attested – dispensing power

②holographic – dispensing power ④ intent

③oral (p.226 fn.)

sometimes in cases, ①and ②are very unclear.

3. will components (what are the pieces that establishes a will)

- Republication by codicil

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- Incorporate by reference

(1) Existence? Clear/ satisfactory proof

(2) Referenced to (fn.26, p.306) article 5th

Clark case : even if there is no 1979 notebook, there were still a 1972 and 1976 memos.

The argument for the cousin: the 5th article only mention that there is “a” memo. (p.306)

- Should be clearly identified the notebook as memo

- Maybe still at the stage of drafting =>never be able to know that it’s her last will.

- Fraud? Not necessary here.

- * Whether the actual gift (sentence “the line”) in the notebook exists.

- There is a oral but can’t be sure that there is really a line in the notebook.

The Ct. (in MA, hasn’t adopted UPC dispensing clause) : ①memo doesn’t mean a certain type, and ②”a” memo

doesn’t mean “one”, and ③contemplated a multiple way by “in accordance with my known wished

‧ Is it permissible? The problem that NB as a codicil is that it’s not formal, doesn’t meet the statutory requirement.

(p.309 note 1)

Johnson case: the will is mixed with typing and handwriting. The trial Ct. denied probating, and the supreme Ct

of OLK went to the depth of “Republication by codicil”.

(P303, top) when you have an attested will, why does it matter so much that when republished by codicil, b/e it

only applied to a prior validly executed will.

The Ct.: ①but it’s sill a will even… and ②even if here is defected, the codicil heal the defect. (p.313)

The Dissenting: Integration: all the pages are exist at the same time when the will was executed, and in Johnson

case, there is only 1 page of will. And, if it’s a holographic will, the elements are: ①am I in the state that requires

the whole will should be in writing, and ②”material portion”. If met the 2 elements then we go back to

incorporate by reference, then we can say that when handwriting, the part of type writing has already existed.

Last year exam. Identify if the will has any document attached, not attached b/c nothing to attached.

021805 (12)

- Incorporate by reference (2 requirements)

- Republication by codicil P.314 3rd paragraph

- Reference theory

The handwriting part existed after the typing and the handwriting part was testified that it’s her will, the argument

here would be, It’s the codicil which republished the will or the Integration theory should be applied here because it’s

on the same page. BUT if applied “integration”, the will won’t be able to probate here because it’s not attested or it’s

not a valid holographic will for there is a part of it typed.

And BUT when the will is tore into two part, not integrated anymore, the argument for this will still be able to probate

will be: that consider the two part as separate, and constructive saver…

1 page integrated, 2 pages incorporate by reference ( and if we no longer sure who did the typing, we should start

to worried about “Fraud.”

41


(“Integration” requires more what consists the will.)

022305 (13)

1.2.3, not really look into the content of a will, and 4, is the interpretation of a will.

1. Capacity issues

2. Statutory Requirements

3. Will components ①Integration

②RBC

③IBR

④AIS

a. do you have a valid executed will?

b.

c. motive or signature apart from the will?

(p.318. 319) Problem 1:

- The right hand draw: what do I want to know about it?

i) Is there a save keeping purpose?

ii) Who else has access (the keys) to the draw?

- labeled envelops: like NY and TENN, many states says that 2nd and 3rd paragraph has no

difference, (IBR helps to solve why there are label envelops but could change name) so the

2nd and 3rd answers could be the same, we can use IBR to explain it, but still can’t say that it’s

for the purpose of save, b/e can’t see that.

Problem 2: the document you executed has to be existed at the time you execute the will, so

IBR can’t be applied in problem 2.

* Her brother’s testamentary intent(someone else’s) constitute an AIS. Barney id not bound by

his testamentary intent. And fraud here is not likely, because it’s her brother’s choice through

the will and the will has to be validly executed.

4. Will construction

Mahoney v. Gainger

What she wanted before she die, what did she tell the lawyer?

The Issue: what is the language “the heirs at law” refers to?

What could we assume? ①”the heir at law” means her 25 cousins, and ②the 25 cousins are not the heirs at law,

because the only heir at law is the aunt, and it’s because that she is in the 3rd degree while the cousins are on the 4th

degree, therefore, the aunt takes all.

Ct.: applied the “plain meaning rule” here, means the no extrinsic evidence (EE) permitted unless there is ambiguity.

(BUT, the language of the will provided ①the heirs at law, and ②divided among them.)

the Ct. made a distinction of ambiguity, which are: Paten v. Latent, and Equivocation v. mis-description. And in this

case there might be and very possibly a latent ambiguity, so the Ct. said that it’s the common language that the lawyer

42


should know, the Ct. was trying to stick to a bright line rule for the later cases.

The actually intent of “heirs at law”: “heirs at law” is actually a good language for many testators because they might

worry about that there might be other heirs qualifies during the period of ti,e that she executes the will and she

deceased. But it is apparently not a good language and it’s of the mistake of the lawyer so the Ct. was not willing to

modify the language.

- (1) is “substantial compliance” applied here? No

- (2) is UPC “dispensing clause” applied here? No

No, because the will has to be valid and it has to be executed so the (1) and (2) can be applied here. Here we are

discussing about “WILL CONSTRUCTION”, so these 2 alternatives don’t apply here.

Fleming v. Morrison

Roxy is a dog, in CA, you can’t give your assets to a dog

The Law: whether to let the EE comes in? (contract, Parol evidence)

The Ct. took the two steps process of plain meaning rule

I. step: p.421 bottom ~p. 422 2nd paragraph let the EE in to see if there is an ambiguity=> Roxy is a dog, it’s a latent

ambiguity, so the dog can’t take the share.

II. step: what is the EE that Quinn wants in? => “take care of Roxy.” (but the Ct. deems it as a “precatory”, which is, a

“moral obligation.” And the Ct. won’t let this EE in b/e it can’t be construed as it, b/e “take of Roxy” means that

Quinn takes all, which is not a proper construction, so the Ct. created a reasonable one “in equal share” to construe the

will.

Is the testator “delusional insane”? according to her background, she was an real estate management, she should’ve

known that the dog couldn’t take the share, so this might be an EE that she wants Quinn to take all, but the Ct ignore

this.

022505 (14)

Erickson case the wife wants the EE to be admitted which shows the decedent never had the intent to revoke the will

after the marriage. And the daughter doesn’t want the EE to be admitted.

The Probate Ct.: allows the will to probate regardless the statute (fn12) says that the will provided for the contingency

of marriage.

The Trial Ct.

The Supreme Ct.: should let the EE come in.

①Look at the plain language, the 4 corners of the language.

②Mistakes: i) the lawyer didn’t put the provision that the will won’t be revoked after the marriage

and the lawyer knew the reason why the will been executed (it was b/e that they were going to a

honey moon right after the wedding). ii) the lawyer had the opportunity to recover the mistake but

he didn’t and still made the same mistake.

- The stock: -he set up a corporation which is not going to probate.

-Under the judicial approach, we won’t even look at the fact about it (fn.15) and it

43


might be the reason that be put in fn.

-fraud, dress, undue influence….

1. The clear and convincing evidence was the lawyer made a mistake.

2. The testator was misled by the mistake.

Q: why not just go suing the lawyer?

- Unjust enrichment (malpractice doesn’t unjust enrich a lawyer)

- Encourage the lawyer to admit his mistake. (but actually the lawyer still screws up?)

- The cost of litigation will be higher b/e…

- How about the Paclinko case who signed the wrong will and the Mahoney case??

- The execution v. draft??

Flannery case

- The “laughing heirs”

- The will is clear and there is no residuary, but doesn’t mention about how it going to be when the wife pre-deceased.

- Personal usage argument.

1. There are about 5 reasons that why the Mars Ct. doesn’t want to apply “reformation”

2. The floodgate

3. Judicial resources

4. Statute of will??

5. Other cases are bad/ inapplicable

6. Testator confusion (are they going to know that if they follow the 4 corners of examination and…)

- the sister: it’s the policy to change the Mahoney opinion.

- The concurrence opinion:

030205 (15)

Traditional rule 1969 UPC 1990 UPC

Specific/ general gift Goes into residue If qualified.

Then to issue.

Residuary Intestacy ,, Go to other residuaries.

(eliminate the rule of

“no-residue-of-residue”

Class gift Surviving members ,,

Void gift: 1. when a person is not a person

2.

3.

ex: Roxy the dog, under the common law rule, there is “no-residue-of –residue”, so the residuary goes to intestacy.

44


Anti-lapse: the requirements have to be satisfied or it has to go to traditional common law rule.

And it’s a default rule, like contract, you can contract around it.

Allen v. Talley each of the predeceased siblings left surviving children, one of the children file the application to

probate.

Argument: (p442top) 1. there are two living siblings. 2. at what time does the “living” apply?

Did she intent to contract around the anti-lapse statute? The “state of intent” is clear that the deceased has to be alive

before the deceased die, then the anti-lapse statute not apply.

Plain meaning?

1990UPC: why are we give so much weight to that for them to K around the anti-lapse statute?

The approach is: to reflect the intent of the average testator (but how do we know that his/her intent is to K around the

anti-lapse statute?)

Jackson case: Issue: Is there any substitute beneficiary here?

The step children of the testator claim they have title of the land (property), and the person wants to buy the land

brought the suit. ( a marketable title claim)

- We have a lapse here.

- Does the anti-lapse clause save the gift ?

- Here the anti-lapse not apply(fn19) only apply to a certain heirs

- To have a substitute beneficiary?

Hofing v. willis (P448-449): “and “ can’t be read as “or”

Dawson case: fn20(p450) when deal with lapse question, ask the following question:

1. Is there a lapse?

2. Does the anti-lapse statute apply?

3. Is there a substitute beneficiary?

4. Can it be construed as a class gift?

Ct. reasoning:

1. Doesn’t include all the class member, only two, and

2. she gave them specific share

3. she knew how to…

4. she doesn’t use the “class” label.

So, this is not a class.

030405 (16)

Is there a lapse? If yes, will goes to residue, beneficiary or intestacy UNLESS:

1. Anti-lapse statute applies.

2. Will provides for substitute beneficiaries.

3. Can be construed as class gift.

45


Moss case:

1. What is the lapse?

2. Does an anti-lapse statute apply?

3. Is there a substitute beneficiary?

4. Can the gift be construed as a class gift, and what are the arguments on both sides?

5. Do you find the rationale of the holding compelling?

6. What could be a more compelling rationale? (Maybe there's something from our discussion of intestacy

that would be relevant?)

EJ predeceased (the lapse) there is no anti-lapse statute here b/e it’s a 1899 case, hasn’t enacted it yet. Besides, Moss

died without heir, even if we have the statute, won’t apply here.

Is EJ a member of class?

Lower Ct.: not a member of the class b/e, look at the language, EJ seems to be excluded by the class, therefore, goes

to residuary.

Issue: the wife has assigned a residuary to “Kinsberry” and that’s why the wife’s death matters, they don’t even know

who “Kinsberry” is!

Higher Ct.: was convinced by the …

Assume that EJ is going to take the share equals to the sister’s child, the old England PS situation.

Argument for “class”: 1. EJ was her niece, they are all at the same degree of relationship, (all nieces and nephew) this

gives weight that it is a natural class.

2. but they came from different family, then the share might be different because of the PS.

Q: If EJ has sibling , does this situation defeat the class?

Last year exam question:

1. If the handwriting on the will is found to be invalid (because it’s in pencil, just a draft, etc.), what lapse(s)

are present and what would likely happen to those lapses? How would your answer change if the handwriting

was found to be valid (either as a valid holographic will or valid holographic codicil)?

2. What happens to the gift to Frances? To Marybeth? (You will find p. 459-66 useful in answering these

questions, but we will not explicitly discuss the Wasserman case.)

3. What happens if there’s a lapse with respect to parts of the principal of the residue to be distributed under

the terms of Article IV?

Ademption:

1. What’s the difference between the identity theory and the intent theory?

2. How would you answer problem 1 on p. 466? Problem 2 on p. 467?

Common Law: General/specific gift

Only specific gift subject to ademption (a deem)

And take away/void.

p.463, 469, 459 : “my” Microsoft stockl.

46


abatement handout:

1. What are your answers?

2. How did you get there?

031605

Will maybe revoked by:

1. Subsequent Instrument

2. Physical Act

3. Operation of Law

* The best way to revoke a will is to complete destroy the “original” will, but this might result

in that the T end up without a will, and T’s estate will go to intestacy. so when destroy a will

should ask the client whether he/she wants to have a subsequent instrument.

* If the state you are in doesn’t apply UPC, and the subsequent will doesn’t include a

revocation clause, the SW can still revoke the previous will if it’s “inconsistency” with the

previous will.

* But under the UPC, even if your SW doesn’t include a revocation clause, it can still revoke

the previous will.

Subsequent instrument

Gilbert case: (not follows the UPC)

“The rest” here is kind of ambiguous, can any EE be admitted here to determine the term?

(The Roxy case overturned the plain meaning rule by setting the policy that “ you ought to see the extrinsic evidence

first then to determine whether the will is ambiguous or not. And the plain meaning rule stats that EE can’t be

admitted unless there is ambiguity in the will)

Thompson case:

“The witting at the back of the will” what does it stands?

(1) A subsequent instrument: it’s not a subsequent instrument because it’s not a valid attested will.

‧ Is the state of Virginia recognizes “holographic will?” Yes it does.

‧ But the handwriting is not total her own.

‧ And the reason why it’s not a valid attested will was because that the witnesses didn ’ t sign on it . If the UPC

apply here, the dispensing rule will apply and the T’s intent matters, so if there is any explicit EE shows the T’s

intent, the handwriting will count although it’s not from the T itself but only signed by him/her, and it doesn’t

even need the witnesses to sign.

(2) Is there a physical act to destroy the will? The Ct. held no, because the word should touch the word on the will,

that’s what suffice the physical act which destroy the will. Here, the Ct. gave much weight on that the words

should write on the words of the will not on the back of the will (if it’s on the back of the will, it can be viewed as

on a separate sheet) because the policy here is to avoid opening the possibility of “fraud.” The argument here

could be:

47


‧ Why does it matter if you write it on the front or back., because even if you wrote on the front, there still be a

possibility to fraud.

‧ See the “incorporate case” where the will was tore into 2 parts.

‧ In the case, the room for fraud is smaller for it’s on the same paper.

(3) See p.277, the statutory authority actually respect the testator’s intent, it says “whether or not the …tough the

words of the will.” So if the UPC governed this case, the will could be cancelled.

Physical Act

Harrison case:

When destroy a will, it should be done either by the testator or in front of the testator. And the policy support this is

that we want the testator to know what she is doing, and reduce the possibility of fraud.

‧ In this case, the Ct. made a presumption that if you can’t find the remaining pieces of the destroyed will, then we

presume that she intent to revoke the will. (She throw the pieces away might because that she thought the will had

been revoked, under the presumption, the act that she throw away the pieces is not the act of revocation.)

‧ It is similar to Erin case where involved revocation by operation of law, which, if you got married, the will

executed before your marriage will be revoked automatically by the operation of law. But in the Erin case, it’s the

attorney’s error for this to happen, so the Ct. let the will to probate.

‧ If the pieces been found, it’s a valid will, so it will be probated. And the lawyer should be punished because of

providing “incorrect legal advice.” And the remedy here could be ①malpractice remedy (but this is not the best

way b/e by the time the lawyer might already die or bankrupt…etc.) and ② construed will, follow the Erison

approach.

Operation of Law

1. Divorce: problem1, where the stepson takes all. Revoke the spouse, but not the spouse’s relatives. But the UPC

changed the approach, can goes to the children of pre-marriage.

031805

Partial revocation

1. Physical act prohibiting (always ask the first question: does the state recognize partial revocation?) and see the

UPC (p.277)

2. through a codicil (ex: Gilbert case)

3. divorce operation of law

The problems at p.285 (the use of pencil mark)

(a) A draft or final will?

On the base that there is no fraud (ex that there is no other has the access to the will) we are going to presume that

this is her handwriting.

(b) The state only permit to revoke the will wholly but partially for the policy of ① easier to apply and ② limited

the room for fraud.

(c) Here the question shift to “can you partially revoke a holographic will through a physical act (the argument could

48


be: there is no signature and no testamentary intent). But the policy perspective here is that fraud or the testator’s

intent might be to write another will. Is there an ambiguity here and can the EE been allowed to challenge the

unduly influence? If the answer is no, then we should ask that does it reflect the T’s intent or it’s only a draft. The

Ct. often presume that it is the T’s intent, and then the burden will shift to the person who challenge the will.

DDR

Requirement: 1. A valid revocation.

2. Mistake

3. Was the revocation depend on the mistake of law or fact.

Carter case: doesn’t apply DDR very well

the church want the 1963 will be probated, so we can presume that the church’s name was in the 1963 will and it can

take a part of the estate from the will. Meanwhile, Luther wants it intestacy.

The Ct.’s presumption:

(1) T made the markings b/e it’s in her possession.

(2) Revocation: cancellation

(3) The revocation is dependent on the effectiveness of ’78 will.

“The markings on the will”:

Ct.: there is no valid subsequent instrument so has to have a physical act so the will can be revoked.

‧ But the marking related to many material parts.

‧ This marking are made by pencil, might not be a valid holographic will, but still can be a presumption of

revocation.

‧ But the EE came in that the pencil markings were what she wants her lawyer to make a change, so the

presumption that she wanted to revoke the ‘63 will by make the markings and she thought that the ’78 will will be

valid.

‧ Look at the DDR doctrine, that it needs “a valid revocation”, the revocation can be challenged here, b/e it’s not

valid here.

‧ There is no evidence that she thinks that the ’78 will is effective so we might be able to say that she made a

mistake therefore the DDR doctrine doesn’t apply here. (if there is any mistake here, it’s not the mistake that

DDR needs for requirement, but merely a mistake that she didn’t take it to her lawyer.)

‧ The Ct. here is in favor of the pencil marking and deems it as a valid revocation.

Problem: some thought on the problem2 on P290

Would you apply DRR here? It’s possible that the testator mistakenly believed that the gift to Nancy was attested.

However, that doesn’t necessarily mean that the testator would want the gift to John to be given effect in he absence

of that mistake. The Houghton Court held that DRR did not apply, and the partial revocation therefore stood, because

by striking out John’s name, it was cleat that the testator did not want John to take. To disregard the revocation,

though the application of DRR, would thus not further the testator’s intent. However, hypothetically, it is possible to

49


imagine evidence that could cause the court to go the other way. For instance, what if John were Nancy’s father, and

John asked the testator to give the gift to Nancy (instead of John) because John wanted to eventually pass the gift on

to Nancy and he wanted to avoid estate taxed? ( remember our discussion of disclaimer, when we were discussing

intestacy?) if such evidence existed, then it would have been appropriate to apply DRR.


In the first situation, where the testator mistakenly thought Judy had died, it is likely that the Ct. would apply DRR

(and the Campbell Ct. did in fact apply DRR). This is because the mistake was recited in the term of the revoking

instrument (see limitations on DRR on p.291). Therefore, Judy would take $5000.

In the second situation, where the testator mistakenly believed he/her had already given Judy money, the Ct. would

likely NOT apply DRR (and the Witt Ct. refused to apply DRR) because the mistake was a factual mistake (as

opposed to a legal mistake) completely within the testator’s control.


We discussed problem 1 in class. Problem 2 is different because the second will was revoked by a subsequent

instrument, as opposed to a revocatory act. Therefore, pursuant to subsection (c) of UPC§2-509, H takes via intestacy

because the 1996 will wholly revoked the 1995 will and the testator didn’t call for revival of the 1995 will in the 1999

document.

Estate of Alburn:

① Milwaukee will

② Kankakee will

Do we have a valid revocation? There is a mistake, b/e she depended on that she if tore the Kankakee will the

Milwaukee will will revive.

‧ the Wisconsin law: the M will won’t automatically revive when revoke the K will, you have to re-execute the M

will so it’s will revive.

‧ Therefore there is a “mistake in law.”

‧ Here might be reduced to 3 outcomes: ① the court probate the K will, or ② look for the testamentary intent, or

③ ignore DDR, just revive the M will (but it’s not likely to success in this Ct.)

‧ Non of her heir get anything under the M will.

‧ Conclusion: if Wisconsin:

- Follow the majority approach, the M will will be probated

- Follow the English approach, the M will is never been revoked so it will be probated and doesn’t have to

consider about the revival of the M will.

- Follow the UPC §2-509, whether wholly revoke or partially revoke:

1. Wholly revoke, §2-509(a), it remains revoked unless revived

2. Partially revoke, §2-509(b), (the case here) because there are still substantial beneficiaries.

50


3. Either 1 or 2, the M will will be probated.

032305

Restriction of testamentary intent

1. Could you completely disinherit your spouse? If I have a complete written instrument maybe but not likely

successful b/e we have 2 systems which grant the surviving spouse property, which is, the surviving spouse is

entitled to a portion of the decedent’s property.

2. the property:

‧ SP system, provides “selective share” among the states except GA, but in GA, the surviving can still have the

right from the “support right”

‧ CP system, each of the spouses take one-half of the earnings from each other, which is the 1/2 undivided

interests.

‧ The support system: the policy of this is to “reward contribution” (the contribution includes house hold working,

and lost opportunities for working or gaining a higher pay) but this follows the question, is the spouse entitled to

those intangible contribution?

3. The support right v. property right.

‧ probate/ non-probate estate (see day 2) and the surviving spouse

‧ Support right: from what non-probate property does the surviving spouse titled to?

(1) Social security only available to the surviving spouse, (if you don’t have a surviving spouse, the SS goes

to the Government, the decedent has no right to dispose it.) and the policy for this is to prevent homeless,

comfort of retirement.

(2) Private pension plans (the ERISA right): the question raised when the employee dies after the retirement and

before the retirement the surviving spouse has entire right over pension (?). and also, the employee can not

use the pre-marital agreement to waver the ERISA right. (See p.476). Problem (p.300), revocation by

operation of law, so the gift to formal spouse was revoked. ERISA right preempts state law. (nearly all

states)

(3) Is the divorce revoke the pension beneficiary? If the support right is to reward the contribution, then when

divorced, the pension doesn’t automatically revoked, if you want to revoke it there are some action you

should do, which are for example, re-married or change your pension beneficiary. (If you never married,

you can name anyone under your pension beneficiary because you want your intent to be respected. But,

once you got married, you have to name your spouse to be your beneficiary.) Therefore, when remarried,

because marriage trumps any other intent, the new spouse will take the pension. And if there is no action

was taken, the ex-spouse will still entitle to the pension. So the problem on p.476, the pension will go to her

ex-husband b/e she wasn’t remarried. It’s the difference from revoking will by the operation of law

because: when married, you revoke your prior will by the operation of law, but when divorce or die, here the

concern is about pension plan of the support right.

‧ probate property: homestead, personal property, family allowance (Georgia focus more on this), Dower(for

51


widow)/ curtecy(for widower with children) (because there is no elective share)

‧ The assets subject to the elective share:

(1) In day 2, Probate estate (stands for what money is probate estate): [property subject to the will: joint

tendency, property in trust, life insurance, inter vivos gift…. There are not property of probate estate, but the

non-probate estate.]

(2) The distinction of probate and non-probate estate is a was to prevent disinherit the spouse.

(3) Sullivan case : they separate. Therefore the presumption is: maybe he wanted to leave his money to someone

else (kids or lovers). So he out his money to inter vivos trust. The duration of this trust? Is the a revocable

trust make a difference in this case. The trust property not probate estate, the elective share is only over the

probate estate. So she wants a bigger pie.

032505

CP SP

During 50/50 split of all the CP Title governs*=> don’t have to

To dispose CP has to get the consult other spouse doesn’t

other spouse’s consent have to get the consent

Divorce 50/50 Sullivan p.540

Equitable distribution=> ownership redefined=>50/50, all states follow

Death 50/50 ES (elective Share) => have to know what property are we taking the share, and

what amount we are taking from the share.

‧ CP: 8+1(Wisconsin) states is CP including CA and Texas, so the population is relatively much in this system.

‧ 1969 UPC: CA started to approve “no fault” divorce, thus, the one who’s status is lower loses the leverage to

bargain.

‧ *In SP, title governs, but when divorced, the one who owns title has to support the other one.

‧ * During the marriage, title used to govern, when divorced, the earnings acquired during the marriage was

accumulated to make an equitable distribution, the goal is 50/50 share.

‧ What property was included in the 1990 UPC (1990 UPC) expended by add many SP) and the difference from

the 1996 UPC:

(1) UPC (1990) §2-207:

a. Makes no distinction from the property acquire from the survivor’s and the decedent’s property.

b. Want to combine both spouses assets.

c. Very from the CP states ( 1969 UPC: title governs and using gift to make a difference).

d. How 1990 UPC operate? Looks at both spouses’ properties CP, and adding all property titled in the

surviving spouse’s name. so makes no distinction of CP or SP here.

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e. Purpose: if the survivor can take care oh him/her self, then won’t be over compensated.

(2) The amount of the share decided by the tendency of the marriage.

(3) a. Estate in CP: only the wages earned during the marriage. So if you got married and immediately your

spouse dies, you probably get nothing from the marriage, b/c it’s not likely to augment any accumulation of

the wages.

b. Estate in SP: a-third of his prebute estate.

(4) so 1990 UPC is trying to solve the problem by silding the scale.

- If there is no will, see the intestacy, and if there is, see the Shannon case.

- In CP states, you don’t need a elective share law governed by states.

- 1990 UPC is trying to implement partnership theory but it really prevent over compensation.

- Problem from the hand out. (the answers see the email for reference)

$24 million dollars, MD: 1/3, so 8 million; AZ (CP state) gets nothing from the painting b/c there is no SP law in the

CP states (movable property: anything other than lane). CA is a CP state, (see p.526 fn. 13) Quasi-community, only to

divorce, but we are talk about death here, so in AZ, don’t have to worry about it, but in CA, apply to both. Under

quasi-community, SP stays SP except the spouse who possesses property die first. So CA: $9million+ $2milllion (the

property in AZ)=$11million.

Problem 3: SPCP, the CP nature stays the same, so get $12millionif Byran die first, the D gets the $12million, the

problem is really about the SP regime, if you die first, and you don’t get any title under your name, you get nothing.

SP has some relief, but only base on the support theory.

033005

where does the money come from? From the estate of the testator. The order: abatment started with the residue (see

which state you are from) then the general request then…

Waiver: You need both spouses’ signatures.

The difference b/w will and the pre-marriage K: you can K around the default rule and because K is bilateral in which

you have to get tour spouse to sign, to consent; but when the T making a will, he/she doesn’t need to get the other

spouse’s consent. But even the pre-marriage agreement has the risk of fraud or undue influence.

Grieff case p.520-21 The appellate court in NY is the highest court, follows the precedent “In re estate of Gababe” and

Grieff (highest)states new test from the Garbabe case (follow but develop new test)

If use the new test to the Garbabe case, then what’s the result?

The new test: “shift the burden”

Garbabe, where the wife has to show the fraud, and the proponent doesn’t have to do anything

Grieff, where the wife only has to show “inequality” which is easier to show, foe example, you can show that you

don’t have money or you have less power, or the education difference or maybe that the hudband has relationship

with the attorney. So the burden of prove SHIFT to the proponent, so the proponent has to shoe there is an

53


ABSENCE of fraud.

- Then what’s to show for the absence of fraud? In Grieff, there are some elements can be examined, those are:

attorneys, consideration, signed prior the wedding (in family law, 30 days before wedding is generally considered

sufficient for they to think about it before signing.)

- But you might even don’t want the proponent to court to prove the absence of fraud, so a better solution for the

testator is to transfer the asset to non-probate property, ex: trust, an “irrevocable” one!

- But when the testator actually wants to give the asset to his kids, and his kids’ kids…, then try corporation.

- b/c the elective share only attached to “spouse,” so if you don’t even want to give the elective to your spouse,

then, don’t get married! Can stay in NY b/c NY doesn’t recognize common law marriage, so you can still be

functional spouses, but you don’t have marriage status, therefore, there is no elective shares.

Shannon case: she wants a half of the SP (b/c no earnings coming during marriage after they get married)

(see the Erickson case where the marriage effect the will)

- the argument for Beatrice: 1. there is a particular clause of the will and 2. that Shannon has received support (the

over compensation theory).

- Shannon’s argument:

- The Ct: following common law that the clause doesn’t include future spouse. “It is not sufficient to show that

the $2000 trust fund could be in lieu of a share in his estate, it has to be integrated with intent, see §6561 (b) =>

“statements of testator” or “ from the amount of the transfer”

- If UPC governs here, Shannon will get nothing. UPC is similar to CA, but more exception and is different in

amount. The policy here is, the testator’s intent is been weighted more, and it looks after children more.

- But you can always disinherit you children (except Luisiana), there is no such complicate statute as disinherit

spouse.--> the policy might be refer to the intestacy.

040105

Pretermitted spouse statute v. Elective share /CP the difference

Pretermitted spouse statute Elective share /CP the difference

apply Applied only to the will executed before the

marriage

apply to all spouses

Which takes more in SP states, the share is large (but the total

estate? P.535 notes, share of probate assets

only =>① individual statute of the state, ②

individual estate)

Here, in CP states, we are going to presume

the decedent’s intent that he/she wants the

spouse to take more then the CP property.

Augmented estate in SP states

- Protect the testamentary intent

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- Protect the surviving spouse

Pretermitted children statutes

Some states, you have to mention them explicitly if you want to disinherit them, while in some states, if silence in the

will, the policy presumes that the testator forgets to mention the children but not disinherit them.

Laura case

Their names were left out of the will.

If all the children dead, the estate goes to the grandchildren, but if one of them alive, the great-grand kids won’t get

anything. This refers to the Ct.: as long as the parent is named, whether it’s a gift or ..., that is not enough to

preclude….

Intestacy?--> presume the same thing here that is the parents will take care of the grand or great-grand child.

problem on last year’s exam: Rose is the “ after-born or adopted” child here. And she was born or adopted

after the codicil. The issue here is the codicil.

Azcuce case p.539

Seems like an unfortunate situation, (EE p.302, republication of codicil)

2nd codicil: b/c erpublicatiob by codicil is not applied automatically but only where update the will carries out the T’s

intent. So can argue that the 2nd codicil doesn’t carry out T’s intent, therefore doesn’t republish the 1st codicil and the

will doesn’t republish the prior will too, therefore Particia takes as a pretermitted child.

Q: if argue the above, there will be 2 possibilities: ① 2nd codicil sustained but doesn’t republish, and

② 2nd codicil revoked the entire will and the 1st codicil.

The last year exam problem: if it’s a valid holographic codicil, then it republishes the entire will then, Rose is no

longer an after-born child. (but here can argue that there is no publication b/c…) And here worth of noticing is that

Rose is actually Jessica’s child, and the pretermitted child statute only applied to T’s child.

Trust (the definition)

The settlor inter vivos testamentary

can be a trustee 1. declaration trust: no writing needed, and the settlor = trustee

2. deed

3. land: should be in writing (statute of fraud)

writing

p.559 the problem: if she doesn’t transfer the title, is the document valid?

If it’s a declaration trust, then it doesn’t need to be in writing, but if it’s deed, then in writing is required. Here the

trust id valid. But there is a possibility that A’s right be hurt, so the remedy is damage.

040605

Trust requirements

1. Purpose

55


(1) Valid:

a. Should be an lawful propose, ex: not promoting a drag, money laundry…etc, can not be criminal

conducts.

b.Can not contract to public policy

c. Can not violate the rules relating to perpetuities, because it might not be able to achieve the trust purpose.

(2) Intent (to create a trust):

a. Jimenez case : when the father has the title to the stocks, was he in the role of “custodian” or the

“trustee”? (p.133, custodian relationship)

- if trustee, the money has to be solely used on education

- if custodian, the money can be used on anything that is benefit to the minors. And, if he is

on the role of custodian, there will be no suit here b/c already run out the statute of limitation. (p.570,

fn.5)

- if it’s “trust”, the statute of limitation starts to run as soon as he received the accounting. And when it

is trust, there should be a fiduciary duty, so the Ct. says that this case is really in between of trust and

custodian.

- If the accounting shows that he didn’t use the money for educational purpose, she can use the

constructive trust (for the stock) to get the money acquired for the operation of the stocks.

2. Trustee: accept the duties (follows the terms, fiduciary duties…) and there are also age and competence

requirements.

The trustee has to take legal title, and it has to transform from the settlor to the trustee.

- How to evaluate whether a trust is established (p.561): when X takes the agreement and put his money in his

account, does it constitute acceptance?

- When the absence of the explicit refusal, so we have the acceptance? Is “silence” and “inaction” constitutes

acceptance for the role of trustee? Many Ct.s have recognized that “silence” and “inaction” represents a

disclaimer of a trustee, because acceptance requires duty on the trustee, therefore should be more explicit.

- But here, X put the money in hos save deposition, this constitutes a certain action that X accepts to be a trustee.

- For X, he can argue that “I am only a “bailee” (a bailee is a person who only keeps the money for save purpose)

So first has to determine whether X is a trustee or a bailee.

- What if the $100,000 is a piece of art, then X sold it to D and E; or X just gave the money to D and E instead of

A and B, and then D and E sold the property to Z, can A and B go after Z? NO, b/c (p.562) “if the trustee

wrongfully dispose of the trust property, the beneficiaries can recover the trust property unless if has come into

the hands of a bona fide purchaser for value.”

3. Property

(1) Identify and separate

a. Unthanks case:

- Holographic will?

i. Is the state recognize it? Yes, p.263 (fn.), Taxes is one of the holographic state.

56


ii. Is the will in writing? In this case, yes.

iii. The testamentary intent.

- He uses “estate” to describe his money, but “estate” mostly means “probate estate.”

- The Ct. says that it’s not testamentary in nature, so it’s not a holographic will, the will itself doesn’t

seem like a holographic either, b/c there is no “when I die” kind of usage in the language of the

instrument to show that this is meant to be a will and has testamentary intent.

- Craft is the settlor and the trustee (this is a declaration of trust: settlor and the trustee is the same

person), b/c there is a language says “as long as I live,” therefore it might establish to be a trust.

- The Ct. here is worried about: ① Iva Rippstein is sure not a spouse, so there might be an undue

influence. ② the Ct. concerned about what property should be put in the trust, b/c when all the

money is in the trust, it might all subject to the statute of limitation.

(2) In existence

a. Brainard case :

The problem here is the timing=>when does the trust become valid? At the time the trust was declared

the property has to be in existence. Here in this case is not, so is this case, when he credits the profits

to the beneficiaries, the trust becomes valid.

040805

Trust requirements

1. Purpose: valid and intent to manage for beneficiaries

2. Trustee: must accept, have duties, and take legal title

3. Property: - source: settlor, need intent and if settlor is not trustee, has to have delivery

- type: “separate and identifiable” and “in existence”.

4. Beneficiaries: has to have “legal standing” (there is an exception for this requirement, which is the “honorary

trust (pecatory trust)”, definite and identifiable.

C lark case : it’s a “testamentary trust” so it must be in writing. And the issue here is that “is friend an ascertainable

beneficiary?”

There might be somewhere in writing identifying who the friends are X, Y, Z….

According to the Ct., a friend can’t be an ascertainable beneficiary because there is a concern of “confusion.”

Legal Status v. Function: If it’s a child, then it’s easier to identify b/c the child has a “legal status” to be a child.

So, in this case, there is no legal status to be a friend as friendship is purely “functional” approach. (when is a

child be considered a child? Previous class discussion)

The Ct. seems to imply that the trustee might unduly influence the T. (p.600)

If you are going to give to others (other then your nature bounties, which means your kids next of kin…), you

have to be specific in the terms of the trust.

Searight case:

(1) testamentary trust:

57


a. If Trixie is a 6 months baby, will the trust be valid?

i A 6 months baby can’t go to the court ( just like the dog), but a guardian can go to the Ct. on behalf for her ,

so the baby certainly has a standing.

ii There will be no perpetuity issue here b/c the trust will be end when the baby reaches 21 years of age.

(2) Honorary trust (lack of beneficiaries):

a. A trustee accepts the moral duty to carry out the testamentary trust. And the trustee is presumed to be in

good faith.

b. If under UPC §2-907 (p.606), in 21 years the honorary trust is valid as trust.

c. Sidney case , what if it’s in CA or in Ill? Because it’s unclear that when a moral duty becomes a legal duty,

so more and more states passing adopting the provision approach b/c it can avoid to go thorough the whole

honorary trust discussion.

5. Device:

(1) Writing: a. testamentary trust

b. land

c. deed of trust => the settlor and the trustee is not the same (declaration trust where the trustee and the

settlor is the same)

(2) Resulting trust: “when trust fails.” (the second situation is not going to discuss here)

(3) Constructive trust: to prevent unjust enrichment

Mahoney case: (Vermont has no “slayer statute” when this case occurred, which provides that a slayer can’t be

benefited from the people he killed.)

Probate Ct.: give the property direct to the parents

Supreme Ct.: impose a constructive trust.

(3) Express trust v. Constructive trust: the major difference is that there is no fiduciary duty relationship in

constructive trust, so the beneficiaries can demand the property anytime.

(4) Secret trust: it looks like a gift, you have a will but you have a secret agreement for the distribution of the

gift, and you might not actually retain the gift.

* Constructive trust used here to prevent the beneficiaries from being taken advantage of. b/c it looks like a gift,

then the trustee might not actually fulfill the duty, then constructive trust is here to solve the problem.

(5) Semi-secret trust: you know that there is a trust, but you don’t exactly know what the trustee’s duty is and you

don’t know who the beneficiaries are. Therefore here, the trust fail. So, we use the “resulting trust” to solve the

problem.

041305

Trust

Express trust (inter vivos or testamentary) By operation of law

5 elements apply Device/Trustee, requirements don’t apply

58


* Mandatory trust

* Discretionary trust

* Constructive trust

* Resulting trust

- Under which situation a resulting trust will raise: when you try to create an express trust and it fails a resulting

trust raised. The one who will be benefited by the resulting trust is the settlor, (the estate goes back to the settlor).

But if the settlor died, it will goes to his /her heir under intestacy, but if he/she has a will (usually don’t) and it

includes the residuary clause, then it passes to the residuary devisee. However, if there is no residuary clause, they

go to the heir?

- Constructive trust arises to prevent unjust enrichment.

- Semi-secret trust is when a trust raises but lack of beneficiary, then the trust will fail b/c doesn’t meet the

requirements of the express trust. And the “resulting trust” arises to solve this problem.

- Secret trust which doesn’t present in a will that it is a trust but looks just like a gift. So there is a concern that the

trustee might not carry out the true intent of the settlor. For preventing unjust enrichment, then a “constructive

trust” will be imposed.

p.617 problem2, (all trust is private, b/c doesn’t have to make trust in public like a will does, there is no probate

process for a trust.) to set up a trust to benefit a lover outside the marriage: if Simon wants to put itin writing to prove

the arrangement, you can just give the instrument to Camilla, but to do this might blow the cover as well for the wife

will find out the affair, and this might open the argument of “undue influence” too. So the “spray trust” of

discretionary trust can be used here. (spray trust: there are multiple beneficiaries and the trustee has discretion to

determine which beneficiary can get the money, so there may be beneficiaries get nothing!)

- 1990 UPC includes irrevocable trust but must of the states don’t, (augment)

- Discretionary trust (can vary form type to types what money trustee grant to the beneficiaries)

Marsman case:

It’s a testamentary trust set up in the will. (Fn.19, p.619) MA has elective share of the life estate in one-tried of the

decedent’s estate. And the testatrix was doing the minimum that the state requires which is give her husband 1/3 of the

life estate.

- The trustee’s duty:

a. The principal: it’s for the trustee’s discretionary.

b. The income, this part is mandatory trust

- Under what circumstances can the money distribute to Cappy (he got remarried in 6 months)

- The holding: Farr did his duties as a trustee, but there are two duties he breached, which are:…

- So Marrgret might be unjust enriched, therefore imposed constructive trust on her, she is not going to get the

house, but she should be compensated (but not the house).

- When someone is Bona fide purchaser…(p.562)

Shelley case: Spendthrift trust

- The income is mandatory; and the principal is discretionary.

- The spendthrift clause on the clause 8 on p.633 is a classical one, this is particularly important here b/c the

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income here is mandatory.

- It is against public policy to prohibit the former wife and the children to require alimony and support. So the Ct.

decides that the ex-wife can access to the principal but has to wait until it been transferred to the beneficiary

- And the children are remained beneficiaries, they can challenge the trustee in clause (5)…”emergency”. But to

determine whether it’s emergency is trustee’s discretion, but the Ct. said that children should have the right to

reach the principal, b/c they are not just remainder beneficiaries, but also direct beneficiaries.

- Support trust: a trust that requires the trustee to make payments of income (or principal) to the beneficiary in an

amount necessary for the education or support of the beneficiary in accordance with an ascertainable standard.

The beneficiary of a support trust cannot alienate her interest, nor can creditors of the beneficiary reach her

interest.

Last year question B: no spendthrift trust here b/c no spendthrift clause here (except NY)

Could it be a support trust (which is that the trust is to maintain certain people’s (beneficiary’s) life standard that

he/she is accustom to

- If there is no spendthrift clause, does that mean that the beneficiaries can do whatever they want? Not exactly

right, b/c if there is a support trust, then the beneficiaries can’t alienate it. (p.642 note5 and the problem).

- Is a word “support” enough to establish a “support trust”?

- If it’s fixed amount, the trustee has no discretion but to distribute all the income.

041505

Express trusts

1. Mandatory trust

Hy brid spendthrift

2. Discretionary trust

> Support trust

Incoming beneficiary v. Principal beneficiary: depends on what property that founds the trust

Income: the beneficiary can only get the income deprived from the trust estate, it’s mandatory, the beneficiary is

“entitled to” the income payment, it is entitlement, and he/she has the property interest in the future payment b/c It’s

mandatory.

B/c of mandatory trust, the beneficiary has the property interest in the future payment, so he can assign the interest,

and likewise, the creditor can come in and require them, so if a settlor wants to make sure that the beneficiary keeps

the interest in as oppose to giving it away to someone else or to the creditors, they will include a spendthrift clause

(Shelley case, the spendthrift clause (8), p.633). It is the property interest that the spendthrift clause tries to affect.

So technically once the mandatory payment is made, the spendthrift clause is no longer apply and no longer restrict

the money, b/c once the money transferred, it becomes the beneficiary’s personal property, otherwise the beneficiary

wont be able to use it.

Expectancy v. interest (p.643 more detail) (with respect to the mandatory and discretionary turst)

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In the mandatory trust, a beneficiary has the interest on the income and can therefore assign it, likewise, the

creditors can come in to attack it. That’s why the spendthrift trust applies here (in NY where automatically include the

ST clause), but once the principal paied out, the spendthrift clause is out of the window. If it’s a discretionary trust,

the beneficiary only has a expectancy in the principal, so the bene. can’t assign the expectancy, and likewise, the

creditor can’t come in to attack it, b/c there is NO interest and no property there. So the spendthrift clause is not so

influential here.

The policy behind ST clause: testator and settlor has the right to decide the way to distribute their money to benefit a

certain beneficiaries not their creditors. Therefore, the people who inherit the money can avoid the creditors, it’s a

privilege. To respect the settlor’s intent. (see the case on p.639)

S elf-settled trust : “I generate the money myself to found the trust”, the spendthrift clause can’t be used here b/c the

settlor can’t not set up a trust for his/her own benefit (to avoid his/her own debt). The spendthrift clause is to help

beneficiary, not for the settlor. (ex, the people use the credit card (generate the money myself)to fund the trust for

myself, that is a self settled, the ST clause is not available here, the trust will fail here actually, b/c there is not trust

property, b/c the creditor will come in and attack the trust property.)

- people who is sophisticated enough, generally has a sum of money, so may create a trust include the ST clause.

Support trust v. spendthrift clause:

S upport trust: (p.642) when the trustee has to determine how much to pay to the beneficiaries, the beneficiary can not

assign his/her interest. Then build in a spendthrift clause to a support trust to prevent the creditors to attach to the

future payment, and likewise,

(problem on p. 642: “pay B income”, means the trustee has to pay all the income, it’s mandatory but that doesn’t mean

it’s a support trust, and there is no spendthrift clause.)

(last year exam, question B: the rent is the trust income here, the principal is the building and any other property that

built into the residue. (Jessica entitle to the income) It’s not a support trust b/c the language of “to pay the income to

the rest of Jessica’s life” b/c???, and the creditors can actually reach the income interest and the bene can assign it. On

p.4 document 3 we can know that Jessica is actually not on the sheet, so she has no any interest or expectancy in the

principal, the bank can go for the interest including the future income interest, b/c it’s not a support trust, but the bank

can not go after the principal. [The language of a support trust could be: “the trustee ‘shall to pay (the trustee have to

maintain)’ B that amount of the income necessary to … ( support education, maintain life style … ) ”])

Charitable trust:

1. The “beneficiary” element is different here. (so who is going to challenge the trust? The state attorney)

The beneficiary here should be:

a. “a type of group”

b. the group has to have “public interest”. (so it’s different from the Clark case where the group is “friend”)

c. the group has to be charitable

Rosser v. Perm: (handout) define “charitable”

- If the trust fail, everything goes to intestacy, b/c the will doesn’t include residuary clause

- (p.7 fn,2) the previous Ct. says that this is not a charitable trust b/c it’s a bzard sex, therefore it would not

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reasonable serve the societal benefit. But this Ct. says that the prior Ct.’s decision will be questioned today,

b/c the society may change the attitude toward sex, and the reasonable person may have diff view too.

- the state has the interest to make sure that the trust is really charitable b/c the beneficiaries don’t have to be

taxed. Like the Searight case (the dog), 2 issues there, one is that you can’t set up a trust for a dog b/c it has

no legal status and there is no bene to challenge the trust, but you can set up a procatory trust; the other one

is that the “rule against perpetuity”, charitable trust are exempt from that rule, it might go on forever, so the

state the interest to make sure it really is a charitable trust.

- (p.598) the “beneficiary requirement applies to private not to public trusts and charities. The basis assigned

for this distinction is the difference in the enforceability of the two classes of trusts:

*private trust: there is no one who can compel performance, with the consequent unjust enrichment of the

trustee.

*charitable trust: performance is considered to be sufficient secured by the authority of the attorney-general

to invoke the power of the court.

2. the

3. rule against perpetuities (just like the Searight case)

4. the trust modification

once the charitable has difficult to carry out the purpose (it’s not charitable), there are two choices, the trust can

either fail or be modified by the Court.

When the Ct. wants to modify a trust, apply the ……. Doctrine (p.875) the general rule:…

Obermeyer case: issue: (p.10 handout)…, the ct. 2 holding to the language of the trust:… there is a question that the

WU might not even able to accept the trust. b/c the problem is that the dental school is no long exist. WU says that

we still need the money. But the trust language says that trust fund be used exclusively to the benefit of the dental

alumni fund. But there is no dental alumni fund, moreover, there is not dental school! So we have to determine

that is there a general intent or a specific intent, b/c the Cy pres rule says that it only applied when the settlor had

meanifested a general intent.

Only reading the language, it seems clear a specific intent (exclusively use…). But the Ct…..but don’t know what

the intent would be…”as near as”… and if it’s not a trust, it’s a gift to WU…

(1.2.3.4 are the main distinctions b/w private trust and a charitable trust)

042005

Charitable trustthe testator’s intent, whether it’s general or specific…… see the Washington U case.

Modification: modification in private trust (as opposed to public trust, “charitable trust”):

The general rule is that: Trustee has no right to object if all beneficiaries consent to modify the trust even if there is a

spendthrift clause.

Stuchell case: in this case, the settlor is dead! But we know the settlor’s intent. (but if we know about the settlor’s

intent, then why does it matter if the settlor is dead or not? in this case, the settlor doesn’t now the great grandson

is retarded, there is a circumstance change, therefore it matters when the settlor is dead or not even though we know

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about the settlor’s intent)

The common law the D applied: if want to terminate the trust, there is a 3 points test: ①all of the

beneficiaries agree. ② none of a beneficiary is under a legal disability. ③ the purpose will be frustrated.

The argument here for the D is that : 1. if you can terminate the trust under the test, why not modify it, b/c to

modify seem less harsh. And 2. the modification can apparently deal with the change of circumstance.

The counter argument can aim at the differences b/w modification and the termination. And the Ct. says that

there is no need to change the circumstance here.

The Ct. step into the stand of the settlor, b/c the settlor is dead (the case will be much easier if the settlor is

still alive b/c can simple get his/her consent)

The trustee can not modify the trust without a permit for the court, otherwise the trustee will violet the duty as

a trustee. (there is also a possibility that the trustee just breach his duty)

The restatement has a broader approach then the rule the Ct. applied. The Ct. raised John’s status comment

b.--> there will be more advantageous to the beneficiaries if modified. ( the counter argument is that we have

to assume the settlor’s intent which is to help the beneficiaries, therefore it might be more benefit to John if

the trust been modified.) (then the Ct.’s argument would be: as the purpose of policy, the money should go to

the people who is more in need, and here, John has enough money to support his life.)

Could the settlor originally draft the trust to compliance with the situation? Yes, then the intent should be

respected even though the change of circumstance is not foreseeable.

The thing is that you can have comment b, but the settlor’s intent should be respected.

Oppose to the “advantageous” is “disadvantageous”, so is John being more disadvantageous if modified? It

really depends on how much money that John can get after the modification.

The intent of the trust is to HELP people, so if the situation in the future turn out to be disadvantageous to the

beneficiaries, then the trust should be modified whether the situation is unforeseeable.

There is power for one of the beneficiaries to determine who could be benefited in the trust, this take out the

power from the court to one of the beneficiary, but the Ct. still has the authority to look over if the beneficiary

exercise this right properly.

Duty of the trustee: (p.903)

The overall task of the trustee is to carry out the intent of the settlor. To do so, the trustee has to look into the trust

instrument (specially what the trustee should do)

(handout 2002 exam Q):

duties:

1. a duty not to delegate to co-trustee

2. duty of loyalty

a. should not self-dealing: Lori resold the property and acquire the difference of $75000, which implied that the

price previous sold is under the market price.

Hartman case: where suggest that the it’s a “strict liability” for the trustee not to self-dealing.

then there is the “no-further-inquiry” rule which stands that it doesn’t matter how you deal, you are posed the

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strict liability. If it’s self dealing, there is “no-further-inquiry” rule, but how to determine if it’s self-dealing

if not inquiry??--> once it’s being determined as a self-dealing, then, no further inquiry. I f it ’ s self dealing,

apply Hartman case: the Hartman issue self-dealing no-further-inquiry rule breach of duty. Self-dealing

implies that you make a profit form the estate.

The constructive trust can’t not be posed on the bona fide purchaser (p.906), it can only be posed on the self

dealer or on the one who has the profit (in the problem, it’s Phoebe or the father)

* So the trustee has to have the whole amount of the profit return to the trust estate, so the difference of $75000

has to be returned to the trust estate (added on the $350,000 to be $425,000). If the amount has been spent or

partially spent, should go after the trustee. (when see self-dealing, the amount of 75000 was deprived from the

trust estate. This is one difference from conflict of interest.)

b. should have no conflict of interests:

To determine whether there is conflict of interest, have to see whether there is “unfairness” this is the

differences b/w conflict of interests and self-dealing.

* So Phoebe makes a decision to invest, and the investment decision benefit her husband, although don’t know

whether the investment hurt the trust or not, we know that the trustee didn’t invest solely for the benefits of the

beneficiaries but for her own benefits as well (her husband bonus), so the one who get the bonus is her

husband, not the beneficiaries, therefore, there is a conflict of interests.

In re Rothko: make a distinguish b/w self-dealing and conflict of interests.

3. duty not to co-mingle

4. duty of impartiality

042205 What duty is breached??

1. Duty of loyalty

- No self-dealingno further inquiry, so normally, you don’t even look whether it’s fare or not, except

practically, (p,905) if the trustee involves in self-dealing, gain the profit meet the MV or even above the MV,

what’s the beneficiaries going to do with that? Thumbs up! The key is that you should get beneficiaries’

consent (either before or after), the self-dealing has to be full disclosed. Then you are not self-dealing. The

practically matter is that if the beneficiaries benefited from the self-dealing, then they will likely to approve, then

there is no breach. Otherwise, if you don’t have bene. consent, there is no further inquiry, even if, it might be fair,

so it’s all about the bene.’s consent.

- No conflict of interest

The difference b/w the two: Self-dealing=> sale to yourself or someone related to you

Conflict of interest=>not selling to yourself. Not all of the COI is a breach of duty as long as it’s not unfair.

Whether the trustee is make the profit for beneficiaries or for him/herself

If you have an interest independent from the trust, the conflict is not always breach of loyalty has to be unfair.

(p.912)

The trustee is totally fine to be a beneficiary, is there conflict?

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2. Duties regarding to property

- Collect and protect

- No commingling

- Earmark

* The difference b/w earmark and commingling, discuss the problem of 02’ exam, the trustee there just fail to

earmark the trust property, b/c she invested the property under her own name. No commingling here.

* The traditional rule of not earmarking or doing the commingling is the breach of duty is changed, not the trustee

will be held liable only when fail to earmark is the reason due to the loss of the value of the property.

- Make the property productive

- No delegation

- Co-trustee or professionals

3. Duties regarding to beneficiary

- Inquire Information needs (Cappy case)

* The problem: “Steve”, there is a lack of communication, it’s a breach of the duty to inquiry into needs (Cappy)

- Impartiality

* Dennis case: 3 buildings in the case, the value drop, and the remainderman beneficiaries complain that it is b/c

of the mishandling of the property. B/c the drop of the value of property is the responsibility of the trustee for

failing to maintain the property. (the income benns has no complaint b/c by not selling the building, the rent

keep coming in, there is no affection to them.)

* The Ct. here concerns about ① duty of impartiality and ② the duty to make a prudent investment (to make the

property productive): you have to have a prudent investment plan. And there is a ③ duty to diversify, here the

trustee made no diversification (p.935)

- Inform and Account (p.933)

Dennis case, the value of the building is the highest in 1950, the Ct. here worry about the “duty of impartiality”

and the “the duty to make the property productive” you have to have an investment plan, and the prudent man

should make a reasonable decision to diversify the risk, so there is a “duty of diversify” to allocate the risk. And

there is another concern is the “duty to inform and account”. The trustee did not appraise the property

appropriately and didn’t keep accounting for 55 years! Here don’t have to worry about the statute of limitation.

The trustee has to keep the record so the bene. could challenge it!

Other problems in the handout: p.918 problem1 and the 02’ exam: “a co-trustee may not grant to another co-trustee

the discretion power which be exercised together only.” So the duty of Lori and Phoebe, Phoebe could be hold liable

as a co-trustee b/c she just left the country and let Lori do everything, b/c she has the duty. P should like at least call L

every week, concerning about the investment. And there is a possibility in the problem, that the trustee is not diligent

enough, and there might be a breach of duty that the trustee doesn’t inquiry the need of the benes.

Have to worry about that the income be generated and the corpus to be maintain too!

L as a remainder bene., (there is other income bene.) doesn ’ t treat herself differently from others, so here can bring a

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duty impartiality, not solely about the conflict of interest

What do we need to know if we have to determine a duty of impartiality? B/c she sold the building, it could be

harming the both class of benes.( income and the remainder benes.).

* With “speculation”, there is huge potential for upside and downside (to lose all the corpus) as well, so this is how

“duty to be prudent” investor to make property productive related to the “duty no to be impartiality”. You have the

speculation of upside of the income doesn’t mean that you can forget about preserving the principal. So b/c of this

policy against speculation, the trustee tends to over preserve the property to avoid being hold liable, so it’s related rti

the “duty not impartiality” (b/c if preserve the property, then the remainder bene get less then the income bene.)

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trust and estate outline

Documents

Transcript of trust and estate outline