Wills Trusts Outline

8/2/2019 Wills Trusts Outline

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(iii) joint-tenancy in both real and personal property (securities) decedents interestvanishes upon death.

II Intestacy: An Estate Plan by DefaultA. The Basic Scheme

a. Decedents intent is the driving force behind the intestacy statute.(i) statute designates statutory distributees as a premise that no decedent would

prefer escheat of property as opposed to distribution to surviving relatives(ii) there are several situations where an intestacy statute takes effect

- decedent dies without a will- decedents will is defective in whole or in part

(a) where a will contains a defective residual clause, intestacy lawgoverns disposition of property not distributed under the will

(b) in cases of testamentary trust, where a trust lacks a contingencyfor failure clause, principle reverts to testators estate anddisposed of in accordance to intestate law

- will is successfully challenged- will presents a negative disinheritance in NY

(a) NY EPTL 1-2.19: a decedent may leave a will directing hownot to dispose of his property

(b) the remainder of the family takes according to the intestate statutory distributee schedule

(c) disinherited person is treated as predeceased and does not take(d) disinherited persons issue may take (as per anti-lapse statute)

- outside of NY negative disinheritance is generally not permitted(a) a negative disinheritance clause is only effective as against a

will(b) if will is not probated the disinherited person takes under

intestacy

B. NY EPTL 4-1: Intestate Successiona. Where property is disposed of by intestacy, all debts, administration expenses and

reasonable funeral expenses shall be deducted.b. If decedent is survived by:

(i) a spouse and issue = $50.000 and of residue to spouse and balance to issue byrepresentation

- NY and UPC states adopt the by representation scheme of distribution(a) EPTL 1-2.10 Issue Defined:

(1) descendants in any degree from a common ancestor,including adopted children

- a contrary intention to include/exclude descendantsmay be indicated

(2) adopted children governed by common law- complete cut-off from natural parents- complete assimilation into adoptive family- Best Case rule: unless expressly named in a will; or a

gift is otherwise made expressly to an adopted outchild child is completely cut off from inheritingthrough natural parent.

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(3) NYDRL 117 [adopted children and cross-adoption] post1986 rule- where the decedent is the adoptive childs

i. natural grandparent; or ii. descendant of such natural grandparent

- AND one of the adoptive parents isi. married to the childs natural parent

(remarriage situation); or

ii. childs natural grandparent (grandparentsadoption situation); or

iii. descendants of childs natural grandparents(aunt/uncle adoption situation)

- the adoptive childs right to inheritfrom and througheither of natural parents does not terminate

- adopted child has three line of inheritance (naturalfather, natural mother and adoptive parent)

- when a child is related to decedent through adoptionand through natural relationship the child-i. inherits under the natural relationship; unless,

ii. the decedent is also childs adoptive parent(then the kid inherits as a child) [if the grandparent did the adopting

and later died the child is treated

as a son. If someone else did the

adoption, the child preserves itsnatural status towards the decedent]

- adult adoption statutorily acceptable- not allowed in NY (homosexual or heterosexual) ifa

sexual involvement is present between the parties(4) Non-maritals NY Rule-

- marriage at any time, even subsequent to birth, childis deemed to be legitimate; even if marriage issubsequently voided.

- however, if a woman marries another man or severalmen, presumption will not attachEPTL 4-1.2: Proof of Lineage i. a non-marital is a legitimate child of his

mother.- such child and his issue will always

inherit from his mother and her kinii. a non-marital is a legitimate child of his

father and may inherit from him and his kinonly if:1. paternity has been established by an

order of filiation/ or both parentsexecuted an acknowledgement ofpaternity

2. father has signed an instrumentacknowledging paternity

3. paternity is established by clear andconvincing evidence AND the father

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has openly and notoriouslyacknowledged the child as his own

4. blood genetic marker /DNA testadministered to the father (some otherevidence is needed to establishpaternity)- DNA alone will only suffice

if unchallenged

- an agreement obligating thefather to pay support will notsuffice

(b) EPTL 1-2.16 Representation:- effective when a descendant predeceased the decedent- only applicable in cases of class gifts (to my issue/children)- disposition or distribution by means of sharing, where

property is divided into as many shares as there aresurviving issue closest to the decedent (which contains oneor more living takers). The issue of predeceased

heirs/distributees take equally from the combined shares ofthe predeceased ancestors.

(c) EPTL 1-2.14Per Sterpes:- only effective where two or more descendants in the same

generation predeceased the decedent- only applicable in cases of class gifts (to my issue/children)- disposition or distribution by means of dividing property

into equal shares amongst the issue closest to the decedent,whether living or if predeceased those with surviving issue.The surviving issue of predeceased descendant each take ashare allocated to its ancestor.

(d) EPTL 1-2.11Per Capita:- disposition or distribution of property where each surviving

issue takes equally in his own right- only applicable in cases of class gifts (to my issue)- disregard for the exam

(e) Application:(1) Intestate

i. Representation is used for all people who dieintestate post 1992

ii. Per-Sterpes applies to intestate distribution prior to1992

(2) Wills -i. If a will is silent as to distribution scheme of a class

gift and was executed prior to 1992 Per Sterpesapplies

ii. If a will is silent as to distribution scheme of a classgift and was executed after 1992 Representationapplies

iii. A will may explicitly indicate the scheme ofdistribution

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(ii) a spouse and no issue = all to spouse- even if parents and siblings are in the picture they get nothing- parents are excluded only if decedent died after 1992- under UPC interest of parents is preserved

(iii) issue and no spouse = all to issue via representation scheme(iv) one or both parents and no spouse or issue = all to surviving parents(v) issue of parents and no spouse, issue or parents = all to issue of parents by

representation.- this includes siblings of decedent and their issue (i.e. nephews and nieces)

(vi) grandparents or issue of grandparents(1) to maternal grandparents and their issue by representation,(2) to paternal grandparents and their issue by representation; OR(3) if only one side has surviving issue, all to the side with surviving

issue(vii) great-grandchildren of grandparents = to paternal side and to maternal side per

capita(viii) half-bloods are treated as whole-bloods

- distributees conceived before death and born after the decedents death, take

as if they were born prior to death

C. NY EPTL 2-1.6: Simultaneous Death Doctrinea. Where disposition (whether testate or intestate) depends on priority of death; and there is

no sufficient evidence to determine the order of death, the property of each person is to bedistributed as if he had survived the other- if wills are involved, the beneficiary is deemed to have predeceased the decedent if

both died simultaneously- under UPC for intestacy purposes one must survive for 120 hours to be deemed a

survivor- NY only requires sufficient evidence of survival, no specific temporal requirement

b. The survivorship statute applies to intestacy and to testamentary instruments- unless provided otherwise in the instrument- decedents do not need to be husband and wife and could be any other relative who

is a statutory beneficiary for purposes of intestate lawc. Exceptions - the survivorship statute does no apply to:

(i) EPTL 2-1.6 (d) Insurance Contracts- where the insured and a beneficiary die together, the beneficiary is deemed

to have predecease the insured and the proceeds pass down to secondarybeneficiary or a subsequent valid beneficiary; or

- if no beneficiary is named as an alternative, proceeds pass to the policyholder decedents estate

(ii) EPTL 2-16 (c) Joint Tenancy- where two or more joint tenants die in a common accident, the property is

divided as if the decedents were tenants in common (equally divided)

D. Bars to Succession:a. Both intestacy and testate succession may be barred.

- the barred beneficiary is treated as is he had pre-deceased the decedent- the issue of a barred person may nonetheless take under the anti-lapse statute- anti-lapse statute imposes a constructive trust (passing of property by operation of

law trust is held for meritorious beneficiary)

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- NY does not recognize constructive trustsb. EPTL 4-1.4 Parental Abandonment:

i. No portion of any estate shall pass to any parent who had, before the child hasreached the age of 21-(a) failed or refuse to provide for the child; or(b) abandoned the child

- regardless of whether the child died prior to reaching 21st b-dayii. UNLESS:

(c) the parent resumes her duties prior to death and continues the relationshipuntil childs death or his 21st b-day;

- the parent is treated as if she has pre-deceased the child- the parental abandonment does not apply where the child writes a will

leaving property to the parent

d. Slayer Doctrine:i. NY Rule [Riggs v. Palmer] a slayer can not take in a will or in intestacy. NY

prohibits wrongdoer from benefiting from any wrongful act, including:- murder;- manslaughter;

- criminally negligent homicide- any killing even unintentional(a) recovery is allowed where the death occurred under exculpating

circumstances (duress/self-defense, etc.) and the beneficiary is absolved ofcriminal liability.

(b) killers devisees are innocent of the crime and may take from decedentsestate.

(c) no statute in NY; governed by common law [Riggs]ii. EPTL 4-1.6 Disqualification of a Joint Tenant

(a) a joint tenant convicted of murder in first or second degrees of another jointtenant shall not be entitled to distribution of any monies contributed by the

deceasedjoint tenant.(b) the convicted joint tenant is entitled to the monies he contributed.

- technically an exception to a slayer doctrine, where the killer takessomething; albeit his own contribution

iii. UPC 2-803 Slayer Statute:(a) a killer is barred from succeeding to non-probate as well as probate

property.- killer is treated as if he had disclaimed his share of inheritance- UPC 2-1106 Disclaimer Statute: a person who disclaimed his property is

treated as if had predeceased

- criminal conviction of felonious and intentional killing is conclusive- acquittal is not dispositive (question of heightened burden of proof)(b) UPC courts are split as to whether killers issue may take. [Primerica (Mo.)]

vs. [Estate of Mueller (Ill)] p. 130

e. Renunciation/ Disclaimer of Propertyi. In general, a beneficiary under a will or intestate statute may disclaim a gift in full

or in part. The donee must accept the gift for it to be valid. However, one shouldnot be compelled to accept a gift against their will.- disclaiming beneficiary is treated as if he had predeceased the decedent

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- disclaimer theory is applicable to life insurance proceeds, employeebenefits, trusts, and other non-testamentary transfers

- transfer occurs without the gift ever vesting- once disclaimed, the property passes to alternative or supplemental

beneficiaries- disclaiming party has no control over the property and can not direct it

ii. Exceptions to Disclaimer(a) Tax Liens

- if the IRS has a tax lien on disclaiming party, the government will reach theassets and satisfy the lien against the property disclaimed. [Drye]

(b) Medicaid Eligibility- a party disclaiming a gift may not qualify for subsidized medical assistance,

since the disclaimed property is considered to be part of the partys assetsiii. Statutory Requirements for Disclaimer

(a) must be in writing, signed and acknowledged before a notary(b) must be accompanied be a separate sworn affidavit attesting to the fact that

no consideration was received in exchange for disclaimer- unless consideration is authorized

(c) disclaimer must be irrevocable- to be filed with Surrogate within 9 months of decedents death

iv. EPTL 2-1.11 (d): Limitations on Disclaimer(a) where a disclaimer by one party effects distribution of property to another,

the disclaiming party is treated as if she did not pre-decease the decedentbut died on the same day but subsequent to the decedent.

(b) Example: I dies leaving two children A and B. A has four kids (C,D,E,F),while B, who predeceased I had only one child (G)

[I]A [B]

C, D, E, F G- in a distribution according to representation scheme, the shares are

to be divided at the nearest level with surviving issue (on the facts:A gets and G gets Bs )

- if A disclaims, shares would be made at the lower level of grandchildren. Thus Is assets are now equally divided into 5 shares.

- whereas, prior to As disclaimer G would have been entitled to ,post disclaimer G walks away with a mere 1/5.

- EPTL 2-1.11 (d) requires distributionper sterpes; since, Asdisclaimer effects Gs inheritance.

- consequently, C,D,E,F will only succeed to As and G retains Bs

III Wills: Capacity and Contests

A. Mental Capacitya. Mental capacity requirement by the law of wills is minimal. To be competent to make a

will, the testator must be:i. 18 years of age or older ii. and must be capable of knowing and understanding in general way:

1. the nature and extent of his or her property2. the natural objects of his bounty, and

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3. the disposition that he or she is making of that property, and also4. be able to relate these elements to one another and form an orderly desire

regarding disposition of the property. [Restatement of Property]- the tests refer to capability and not actual knowledge- average intelligence is not required, testator must have mind and

memory relevant to the four matters mentionedb. NY Rule for mental capacity requires Sound Mind and Memory regarding four above-

mentioned elements [Restatement of Property]

- one can not draft a will for another without being confident of mental capacity tomake a testamentary transfer

- two witnesses are needed to attest to the capacity- the proponent of the will carries the burden of proving capacity, usually it is easily

proved by due execution.- mental capacity is often challenged on grounds of drug use or mental illness- prejudice towards men would not be interpreted as a sign or symptom of incapacity

[Strittmater was a product of its time]c. [Estate of Wright] -testamentary capacity can not be destroyed by showing a few isolated

acts, foibles, idiosyncrasies, moral or mental irregularities or departures from the normalunless they directly bear upon and have influenced the testamentary act.

- mental incapacity must effect testamentary distribution

d. Insane Delusions a person may have a sufficient mental capacity generally to execute awill but may be suffering from an insane delusion so as to cause a particular provision in awill or perhaps the entire will to fail for lack of testamentary capacity.- only part of the will caused by an insane delusion fails- insane delusion is a legal not a psychiatric concept- courts will often find that the testamentary disposition took place in a lucid period- delusion is a false conception of reality (a belief notwithstanding evidence to the

contrary)- Split:

(i) Minority: -if there are any factual basis at all for testators delusion; it is notdeemed insane.

(ii) Majority: -a delusion is insane, despite some factual bases for it, if a rationaperson in the testators situation could not have drawn the conclusionreached by the testator.

B. Undue Influencea. Influence is not undue unless the free agency of the testator was destroyed and a Will is

produced that expresses a Will, not of the testator but of the one exerting the influence- coercion is an essential element of the influence- the contestant has the burden of proving:

1. existence and exertion of influence2. the effect of such influence was to overpower the mind and will of the

testator3. the product is a will or a gift which would not have been conveyed but for

the exertion of influenceb. The following situations alone will not suffice:

i. existence of confidential relationshipii. physical and/or mental susceptibility to undue influence,iii. extent to which the wrongdoer participated in preparation/procurement of the will

or will substitute;

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iv. whether the donor received an independent advice from an attorney or othercompetent disinterested advisor;

v. will or substitute were prepared in secrecy or in haste;vi. whether donors attitude towards others has changed due to association with the

wrongdoer;vii. whether there is a material discrepancy between old instrument and the new oneviii. disposition of property would be regarded as unnatural, unjust or unfair by a norma

observer

- contestants have the burden of proving undue influence; to trigger thepresumption it must be shown that a confidential relationship existed +something more.

- Presumption shift the burden back to the proponent- proponent has the burden of proving validity of the will by preponderance

of evidencec. Confidential Relationship triggers a presumption of undue influence in conjunction with

above-mentioned factors.i. bequests to attorney-drafters a concern of impropriety compelled many

jurisdictions to view such bequests to attorney-drafters with a legal presumption ofundue influence

- presumption can be rebutted by clear and convincing evidence by theattorney

- attorney solicited to draft a will in which he is named as a beneficiary mustadvise his client to seek an independent counsel on this matter

ii. NY Rule if the gift is bequeathed to an attorney-drafter, NY law requires thelawyer to come forth with a satisfactory explanation of the gift (automatic PutnamScrutiny).- the drafter-attorney will be required to submit aPutnam Affidavitwith an

explanation- where the affidavit is deemed insufficient, aPutnam Hearingwill be held- the process will take place regardless of whether the will is challenged, and

if challenged burden remains on the contestant (the prong of confidentialrelationship has been satisfied)

- courts may actsua sponte

C. Undue Influence in Naming an Executora. Executors although not entitled to any corpus of the inheritance, executors receive fees

for their services and have authority to appoint an attorney.- attorney-drafter should not exert undue influence upon a testator compelling him to

appoint the attorney to serve as an executor- prior to statutory enactment, some instances involved up to three executors thus

doubling or trebling the costs of estate execution [M/O Weinstock]

b. SCPA 2307 (a) Commission of Attorney Executor:i. attorney-drafter has a duty to inform the client of:

(a) the fact that executor need not be a lawyer; and(b) executor is entitled to fees deducted from the estate prior to any of the

beneficiary; and(c) if attorney-drafter is selected to serve as the executor can subsequently

appoint himself as an attorney for the estate and additional reasonableattorney fees will be levied

ii. testator must then:

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(a) execute a written statement attesting to attorneys disclosure(b) the statement must be witnessed by at least one witness, but not the

attorney-drafter(c) writing may be prepared after the will was already drafted, but the

disclosure must take place prior to execution.- any non-compliance, if proved, will decrease the executors fees by

half, but attorney fees will be paid in full- no absolute restriction on attorney-drafter-executor role

- an ordinary disclosure statute- statute applies to wills of decedents who diedafter 12/31/1996,

regardless of when the will was executed; however,iii. Wills executed prior to 12/31/1996, if they name the attorney-drafter as an executor

must be re-executed.- a good-faith reason may waive the requirement (i.e. testators incapacity)- a mere fact that attorney could not trace the will would not suffice

c. SCPA 2313 in wills executed after 1993, no more then two executors (non-attorneys)are allowed, unless the decedent provided that the executorial commissions to beshared or some other arrangement.

D Frauda. A disposition based on misrepresentation is void. A three-prong test applies to invalidate a

will on the grounds of fraud:i. a known misrepresentation must exist,ii. testator was deceived by the misrepresentation, andiii. the deception touched (or affected) the disposition.

b. Fraud is an intentional tort; thus, the element of intent must be present (i.e. knownmisrepresentation). A mere mistake or negligent misrepresentation will not suffice.i. lawyer who made the misrepresentation:

- in NY: only the client, who stands in privity with attorney has a cause ofaction sounding in contract or tort. [Dead people dont sue]

- other jurisdictions allow tort action (tortuous interference with expectancy)or contract action (malpractice suit) to third party beneficiary. [FatherDivine: constructive trust formed]

c. Challenge based on fraud is hard to prove; the extent to which it affected the disposition isprimarily dependant on circumstantial evidence, which is often unavailable at probate.

E. No Contest Clausesa. A no contest clause is valid.

i. despite the existence of a probable cause for contest (NY Rule)

- usually provides a beneficiary with a gift which is contingent on beneficiaryrefraining form contesting the will

- the clause must be sufficiently baited to deter contest- in other jurisdiction, contestant will not forfeit the gift if the will containing

the no-contest clause was contested based on probable cause

ii. NY exceptions to no-contest clause wills (possible to contest a will withoutconsequential forfeiture)(a) Forgery

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- if forgery or revocation by subsequent will is shown, no-contestclause will not trigger forfeiture

(b) Infant/ Incompetent- guardians of infants and incompetent beneficiaries owe a fiduciary

duty to their clients and may contest the will to serve the clientsinterests. Such contests will not trigger forfeiture

(c) Procedural steps- initiating discovery, prior to actual challenge

- objection to jurisdiction of probate court- disclosure of documents to probate court- refusal to join a petition to probate a will, to execute consent or

waiver of notice to probate proceeding, etc.- instituting or joining an action to construct a will

IV Due Execution and FormalitiesA. Execution

a. EPTL 3-2.1 Execution and Attestation of Wills:Will must be in writing (unless an exception: holographic will)

- Typewritten (videotaping would not suffice)- numbered pages- stapled- advisable to initial each page- all errors must be eliminated, or must have the testator and witness initial

the changes and must refer to the error in the attestation clause- allow language to carry over onto next page to demonstrate continuity- one original and very few copies to be produced- dating although not required is preferred, thus to establish sequence in cases

of multiple willsWill must be signed at the end

- physical end- may be signed in testators name (whatever that may be, so long as he may

be identified), or with an X- to be signed by the testator, or - in the name of the testator, by another person in testators presence and at

his direction (signor must sign own name and address (only name is vital)(a) anything following the signature will not invalidate the will, unless

this matter is necessary to probate the will(b) matter following the signature shall not be given any effect

iii. Testator must sign in the presence of each attesting witness, OR thesignature shall be acknowledged by the testator to each of witnesses to have been

affixed by him.- at least two attesting disinterestedwitnesses are required- witnesses need not sign in the presence of the testator, so long as they were

present at the time of his signing or acknowledgment- the signature or acknowledgement need not be simultaneous with both

witnesses present- acknowledgment requires physical presence of testator and the witness- if signing or acknowledgement to take place at different time for each

witness, must be done within 30 days of each other

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iv. Publication testator must at some time during the execution declare toeach witness that the instrument with his signature is his last will and testament.- no need to publish or read aloud the contents of the will

Two attesting witnesses must be physically present- testator must ask the witnesses to serve this purpose- both witnesses must attest to testators signature (affixed or acknowledged)

within 30 days- lawyer may sign, since he can be called to testify SCPA 1404 (below)

- both must affix own signatures and addressesvi. Precise order is not necessary

b. Proving the will: SCPA 1404 Examination of Attesting Witnesses:i. Prior to probate, two attesting witnesses must be produced if:(a) could be located; and(b) competent to testify

- if witnesses are unavailable, must show that searched with duediligence; they are dead or incompetent

- may need to depose witnesses even if located in differentjurisdiction

ii. Attorney-drafter may be called to testify(a) a self-proving affidavit will absolve the attorney of the need to produce

attesting witnessesiii. SCPA 1406 Self-proving Affidavit

(a) instrument executed at the same time as the will in which the witnessesswear as to all relevant facts (mental capacity, procedure)- not required by statute (but absence isprima facie negligence)- a precaution in case witnesses will be unavailable- may be used to impeach a witness testifying against the will

(b) affidavit carries an evidentiary purpose- constitutes a deposition of witnesses

- expedites the process of probate- less costly then search for witnesses

(c) affidavit is not dispositive evidence- witnesses may be called if contestants rebut the presumption of

impropriety- surrogate may simply disregard the affidavit

c. Safeguarding the Willi. only one will should be execute, few copies may be produced

- discourage duplicationii. the custody of the will is within the testators discretion

- attorney should not persuade or induce the testator to surrender the custodyB. Joint and Mutual Wills

a. Joint Wills a single document intended as the will of two (usually spouses), or morepersons. When one testator dies the instrument is probated as one testators will, when theother dies, the same instrument is probated as the will of the other.i. most courts hold that the mere execution of a joint or mutual will does not give rise

to presumption of contract not to revokeii. UPC 2-514: a contract to make a will or devise, or not to revoke a will or devise,

or to die intestate, if executed after 1990 may only be established by:(a) provisions of a will stating material provisions of the contract,

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(b) an express reference in a will to a contract and extrinsic evidence provingterm of the terms of the contract. or

(c) a writing signed by the decedent evidencing the contract.- the execution of join or mutual wills does not create a presumption

of a contract not to revoke

b. Mutual Wills separate instruments of two or more persons that contain similar orreciprocal (mirror-image) provisions.

c. Join and Mutual Will a single instrument for two or more persons with the reciprocalprovisions

C. Components of Willsa. Doctrine of Integration all papers present at the time of execution, intended to be the part

of the will, are integrated into the will.- all pages must be physically connected and should never be disassembled- the language should carry over onto the other pages, thus to evidence continuity- may even ask the testator to sign and initial each page of the will for identification

b. Republication by Codicil a will is treated as re-executed (republished) as of the date ofthe codicil.- a will is treated as if it were executed when its most recent codicil was executed,

whether or not the codicil expressly republishes the prior will, unless the effect sotreating it would be inconsistent with the testators intent

- applies only to a prior validly executed will

c. Doctrine of Acts of Independent Significance an act by testator that has some purposeother then to alter or augment a testamentary conveyance. These acts that occur after thewill is executed should be given full effect when distribution is made.- the will states John should take my car at the time of execution testator owns a

beat-up Buick. At death, testator owns a Class S Mercedes. John, the lucky bastardtakes the Mercedes.

d. Incorporation by Reference any writing in existence when a will is executed may beincorporated by reference if the language of the will manifests this intent and describes thewriting sufficiently to permit its identification.- unlike republication by codicil, this doctrine may apply to incorporate into a will

any language or instrument that have never been validly executed(i) NY Rule -NY does not in general permit incorporation of unattested

documents in to a will;- any extrinsic instrument must be attested and comply with

testamentary formalities in order to be incorporated- Exception: a pour-over wills that refer to trust and its terms of

disposition(ii) UPC2-513: A will may refer to a written statement or a list to dispose of

items not otherwise specifically disposed of by the will, other then money.To be admissible the writing:(1) must be signed by testator;(2) describe the items and the devisees with reasonable certainty

- writing must be in existence before execution- will must show intent to incorporate

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- must be clearly identified by the willD. Miscellaneous

a. Holographic Willsi. EPTL 3-2.2 Soldiers and Sailors Will

(a) an holographic will, if made wholly in the handwriting of the testator (butnot attested), or even an attested oral will is valid if made by a member ofarmed forces during a declared war or undeclared armed conflict; and

(b) the following factors are present:

- two witnesses are required if the will is oral- actual military service- in the war zone (includes war-zone reporters and merchant marines)- support personnel included (clergy, advisors and medics)

(c) the will loses its effect not when the conflict is over; but- one year after discharge for soldiers; unless lack of capacity- three years for marines; unless lack of capacity

b. Conflict of Laws Governing Willsi. Generally, the will is probated according to laws of the jurisdiction where the

decedent is a domiciliary or where he deceased (personal jurisdiction issues)

- real property is distributed according the laws of a jurisdiction where theproperty is located

ii. In NY, a will may also be probated under the laws of a jurisdiction where it wasexecuted- regardless of the testators domicile- allows NY courts to probate an out-of-state holographic wills

iii. A will may be probated according to the laws of the state where there was personaljurisdiction over the testator at the time of execution or at the time of death.

c. EPTL 2-1.7 -Presumption of Death:ii. A person is presumed dead if he is absent for a continuous period of three

years and(a) after diligent search has not been located; and(b) no satisfactory explanation is offered as to his disappearance

iii. Presumption of death is effective on the date three years after theunexplained disappearance, and is operative in:(a) any action or proceeding involving any property;(b) contractual or property rights contingent upon persons death; or(c) administration of persons estate

iv. A death may be presumed at any time prior to three years margin if facts

suggest that the person as been exposed to perils consistent with likely death- very relevant post 9/11

d. Reformation of Wills (also discussed later)v. General rule is no reformation of wills unless

- no objections (consensual)- tax advantages allowed by law- In re Snyde Exception

vi. Snyde Exception: an error on the face of the mirror-image wills (wrong signatures),the court carved out an exception exclusively on these facts to avoid injustice

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e. Order of Abatement of Legacies for purpose of creditor claim satisfactioni. Abatement takes effect if the estate has undergone some transformation from the

time of execution until the probate; thus, it is impossible to satisfy all the gifts:- assets shrunk prior to death- outstanding debts

ii. All the intestate property (undistributed by the will) abates first, unless- a good all-inclusive residuary clause is present

iii. If no intestate property exists or assets were insufficient, the order of abatement isas follows:(a) all residuary disposition

- all gifts that dispose of the rest/ the residue of property(b) general disposition

- pecuniary (monetary)gifts satisfied out of the general estate- legacies that require sale of any portion of estate property for

satisfaction- i.e. I give $10,000 to James

(c) demonstrative disposition

- monetary gift from a specifically identified source- i.e. I give $10,000 to James from the sale of a Blackacre- a hybrid disposition: it is specific only to the extent that the source

exists, if the source does not exist it is a general gift- demonstrative gifts do not adeem like a specific disposition- if the source does not exist it is treated as a general gift

(d) specific disposition- any gift specifically identified in the will- specific dispositions are subject to a doctrine of ademption ( if the

gift exists at the time of death, the donee gets it; if not, there isnothing to give)

- abates pro rata

iv. NY Rule: physical identity doctrine(a) if the gift described in the will is not identical to one present at probate, the

NY law allows transfer if the description matches physical identity of thegift.- I give my Mercedes M class to Johnny; Johnny discovers that

decedents Mercedes is an S class, he will take.

f. Contracts to Make Wills vii. An agreement, promise or undertaking is unenforceable unless it is in writing and

subscribed by the party to be charged therewith if such agreement, promise orundertaking is a contract to make a testamentary provision of any kind- a contract to make a will or not to revoke a will can be established by an

express statement in the will. The provision must manifest a contractbetween the parties.

- NY cases that founds a contract merely from the use of possessivepronouns; we, us, our in a joint will are no longer good law

V Revocation of Wills

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A. Revocation of Willsa. In general, it is in the nature of wills to be revocable.

- revocability allows for the freedom of testation- some statutory limits to revocation apply- revocation must be expressed and be executed with appropriate formalities; or,- must be expressed by an unequivocal act of revocation (burning, tearing, cutting,

canceling, obliteration or other act of mutilation)

b. EPTL3-4.1 Revocation of Wills; effects of codicils:i. a revocation or alteration intended by the testator, may be effected in the following

manneronly:(a) a will or any part thereof may be revoked or altered by:

(1) another will.(2) a writing clearly expressing the intent to revoke or alter, executed

with the formalities prescribed for the execution and attestation of awill (codicil)

(b) a will may be revoked (wholly) by:(1) an act of burning, tearing, cutting, cancellation, obliteration or other

mutilation or destruction thereof performed by:- the testator - another person in testators presence and at his direction

(with two witnesses testifying to the process) revocationby proxy

- any marking of the will must touch the writing- crossing off a signature may suffice

(c) revocation of a will revokes all codicils thereto- here codicils are treated as part of the will- revocation of a codicil does not revive altered will

(d) revocation of the original will, revokes all duplicates

- if executed in duplicates and one is destroyed, presumption is thetestator intended to revoke all the duplicates

c. Implied Revocationi. if a will does not expressly revoke the preceding will, but a subsequent will is

wholly inconsistent with the preceding one, the initial will is deemed to beimpliedly revoked.- use of the implied revocation doctrine is very rare, since all boiler plate

wills contain the revocation provision invalidating preexisting willsii. if subsequent writing is not wholly inconsistent with the preexisting will, it is a

codicil.

- a codicil (assuming its aptly executed) will supplement the will but will notrevoke the will in its entirety

- revocation of a codicil will not result in nullification of the will or any partthereof (here the codicil is treated as a separate instrument)

iii. if both preexisting and subsequent wills are consistent with each other and thesecond will does not expressly revoke the first one;- both wills will be enforced

d. Revocation by Codicili. Revocation of the will revokes all codicils thereto

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- codicil and will treated as the same instrumentii. Revocation of a codicil does not revoke the will to which it relates; unless,

(a) the codicil revokes the second will and republishes the pre-existing will (thewill revoked by the second will); thus revocation of the codicil will revivethe first will (which did not exist prior to execution of the codicil)

iii. Revocation of a codicil does not reinstate the gift it revoked; unless,(a) the revocation of the codicil in itself republishes the will purporting the gift.

e. Partial Revocationi. A will or any part thereof may be revoked only by writing of equal solemnityii. NY does not allow for partial revocation by act

- can not literally cut someone out of a will

f. SCPA 1407 Probate of Lost Wills:i. Lost or destroyed will may be probated if it:

(a) was duly executed, and(b) has been established that the will was not revoked(c) all provisions must be clearly and distinctly proved by

- the attesting witnesses; or - a copy of the will ; or - a complete memo or attorney notes produced

ii. If a will is last seen in testators possession and was not found after his death, thereis a rebuttable presumption of intentional revocation by physical act.- extrinsic evidence will be allowed to enter to rebut the presumption- presumption does not attach if the will was last seen with an attorney or an

adversely affected party

f. EPTL 5-1.4 Revocatory Effect of Divorce:i. If after executing a will, testator is divorced or the marriage is annulled or nullified

and dissolved, unless the will expressly provides otherwise:(a) any disposition or appointment made to the former spouse is revoked

- former spouse is treated as predeceased- appointment of guardianship over children is not revoked

(b) the revocation may be revived by remarriage to the former spouse(c) this provision does not apply to

(i) inter vivos trusts; or(ii) will substitutes

g. Revocation by Operation of Lawi. Divorce any disposition to a spouse is extinguished upon the final decree of

divorce (See above)ii. EPTL 5-3.2 Birth after the Execution

(a) Where a child born (or adopted) after the execution of the will and was notmentioned or provided for in the will; either- by testamentary disposition (in a testamentary substitute); or- inter vivos settlement (nominating as insurance policy beneficiary)

(b) If other children are provided for, the after-born (adopted) child is treatedequally, and may share proportionally with the rest of the class.

(c) If testator died without other children after-born is entitled to his intestateshare

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(d) If testator provided for some children to the exclusion of the other, the after-born is treated as a member of the class for whom testator had provided.

(e) If the intention of the testator to make exclusion limited in application, theafter-born takes in intestacy [post Ashby exception]- the rest of the will is probated

(f) In none of the testators children is provided for the after-born takes nothing

B. Revivala. Revival revocation of a revoking instrument automatically revives the revoked

instrument.i. EPTL 3-4.6 NY No Revival Statute:

(a) a later will which revokes or alters the prior one, the revocation of the laterwill does not, of itself, revive the prior will or any provision thereof.

(b) a revival (in whole or in part) is only effective by:(1) aptly executed codicil which in terms references to a prior (revoked

will)(2) republication of the prior will in writing

- must declare revival

- must be aptly executed(3) re-execution and re-attestation of theprior will

- must go through the whole process again

b. Dependant Relative Revocation not a revival but a common law equitable doctrine. DRRdisregards revocation by act for the lack of necessary intent, where the revocation wasintended to be contingent on the validity of a pre-existing instrument.- usually applies to revocation by act with intent to revive a revoked instrument- revocation must occur due to a mistake of law- revival does not occur (second will was not properly executed, but the properly

executed first will was already destroyed/ or the properly executed second will is

destroyed hoping to revive the first in jurisdiction with no revival)- purpose is to effectuate the intent of the decedent and to avoid intestacy

i. NY common law recognizes DRR, but so far all application comes fromAppellate Division and not from Court of Appeals.- must argue both applicability and inapplicability

VI Will Substitutes

A Types of Will Substitutes non-probative transfers by which, one may transfer property afterdeath, while avoiding probate. For a transfer to be non-probative it must be- a present but a revocable transfer; or

- a transfer of title triggered upon death, or- contracts payable on death

a. Life Insurance the beneficiary designation in a life insurance policy servesprecisely the function of the designation of a devisee in a will. Similar to a will:(i) the interest of a beneficiary is ambulatory non-existent until death(ii) policy is revocable until the death of the policy-holder

b. Pensions Accounts all pension accounts contain will substitutes

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words in the will cannot be disturbed by evidence that another meaning wasintended.- the plain meaning attaches to the words of the will- some court will look for devices to escape the plain meaning rule, some

exceptions include:(a) personal usage an extrinsic evidence may be permitted to prove

testator attached a different, personal meaning to the term used inthe will

(b) patent vs. latent ambiguity some court will distinguish betweenpatent and latent ambiguity and allow extrinsic evidence in instancesof latent ambiguities- wills where two beneficiaries would qualify for a disposition- where two properties fit the description of a gift devised in

the will- historically no extrinsic evidence was allowed for facial

(patent) ambiguities- NY court will allow extrinsic evidence regardless of whether

ambiguity is latent or patent(c) misdescription a mistake in the detailed description of a gift

(technically a latent ambiguity), where a mistake can be stricken ordisregarded and he gift remains identifiable the gift stands- disposition of a 23 Blackacre in NY will stand even if

testator owns 32 Blackacre in NY; assuming thats the onlyproperty she owes in NY, the gift is identifiable if themistaken description can be ignored.

- NY recognizes misdescription theory (physical identity)(d) gifts by implication where the dispositive provision does not

provide for a contingency (that actually occurs), some courts reserveto the doctrine of probable intent.- the court will study the extrinsic evidence (family

circumstances) and the testamentary disposition. Then, thecourt steps into testators shoes and makes a decision thetestator would most likely have made

- very limited in application in NY, must be compelled by thecontents of the will

(ii) no reformation rule traditionally reformation of wills was not allowed.Reformation is not interpretation but an actual change of the will to conform to theintent; the will is then enforced as corrected an equitable remedy of legalinstruments. NY allows reformation in very limited circumstances:(a) Tax purposes as authorized by IRS

- charitable remainder trusts are subject to taxation without the

requisite statutory language; thus, language will be supplied(b) Upon mutual consent of the parties(c) In re Snyde: wrong signatures on mutual wills

- where the mistake is patent and the intent of the parties is faciallyevident

B. Death of a Beneficiary Prior to Testator if a devisee does not survive the testator, the deviselapses (it fails). The general rule is no transfer may be made to a deceased person. Unless specifiedin the will all devices are conditional upon survivala. Effects of a Lapse under Common Law Default Rule

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(i) any pre-residuary gift will lapse into the residuary- includes specific, demonstrative or general devise

(ii) if the devise of the entire residue lapses, because the sole residuary devisee or allresiduary devisees predecease the testator the heirs of the testator take in intestacy(quite often it would be the same people).

(iii) class gifts if the devise is to a class of persons, and one member of the classpredeceases the testator, the surviving members of the class divide the gift- if the class is identified by name, in NY the member who predeceased (his

estate) nonetheless takes. (To my children: John Jack and Jen)(v) void devise where the devisee is dead at the time of the will is executed, or the

devisee is a dog or cat or some other ineligible taker, the devise is void.- the transfer to pets may be achieved through a trust

b. Anti-lapse Statute the statute does not prevent lapse of the devise, it merely substitutesother beneficiaries (usually issue) for the dead beneficiary if requirements are met.(i) In general, a typical anti-lapse statute provides that if devisee is of a special

relationship to the testator and is survived by issue who survive the testator, theissue is substituted for predeceased devisee.- an anti-lapse statute applies to a lapsed devise only if devisee bears a

particular relationship to the testator specified in the statute- anti-lapse statute, supersedes the common law where applicable, is also a

default; it applies unless the testator specifies its inapplicability- if a testator states that the anti-lapse statute does not apply and does not

provide an alternative, the common law default rules govern.(ii) NY EPTL 3-3.3: Anti-lapse Statute unless the will provides otherwise,

(a) Wills Prior to 9/1/1992: Whenever the disposition is made to testatorsissue orbrotherorsisterand such beneficiary dies during the lifetime of thetestator leaving issue surviving such testator - the disposition will not lapseand will vest in surviving issueper sterpes

(b) Wills Post 9/1/1992: Whenever the disposition is made to testators issue orbrotherorsisterand such beneficiary dies during the lifetime of the testatorleaving issue surviving such testator - the disposition will not lapse and wilvest in surviving issue by representation.- dispositions made in (a) and (b) if made to issue, brothers, sisters as

a class are treated as if they were made to devisees by theirindividual names

- no benefit is conferred to surviving issue of a devisee who diedbefore execution of the will if disposition is to a class.

- if the gift is made to brothers/issue as a class the issue of thedevisee takes only if the devisee had survived the execution

(iii) NY EPTL 3-3.4: Anti-lapse statute is a default rule. If the residuary disposition isineffective in part and the anti-lapse statute is not applicable (due to testatorsindication), and no alternative disposition is provided, such disposition will vest inthe remaining residuary beneficiaries.- requirement of survivorship: the majority of cases hold that an express

requirement of survivorship (if she survives me) states an intent that theanti-lapse statute not apply (gift will not vest in devisees issue)

- NY: language if she survives me is insufficient to overrule the anti-lapsestatute. Testator must expressly state that the gift shall lapse if she does notsurvive me

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Witness-Beneficiarya. EPTL 3-3.2 Competence of Attesting Witnesses-Beneficiaries:

(i) An attesting witness to a will who benefits under the same will by disposition orappointment of property is a competent witness and compellable to testify as to theexecution as if no disposition or appointment has been made.(a) any such disposition or appointment to the witness is void unless:

- at the time of execution there are at least two other attestingwitnesses to the will not benefiting from the will.

- if one of the two other witnesses is benefiting from the will, he cannot renounce for purposes of competence

(b) subject to (a) any such disposition or appointment to the witness is effectiveunless:- at the time of probate the will can not be probated without the

testimony of the witness-beneficiary(c) where a witness-beneficiary is also an intestate distributee, the intestate

share may not exceed the deposition to the witness in the will.- most states abolished the witness-beneficiary statutes as ineffective

and too technical.- NY still has the statute

Ademptiona. ademption by extinction where a specific devise in a will does not exist at probate, the

property is deemed to adeem if not owed by the testator at death(a) specific devises the doctrine of ademption applies only to specific gifts.

- I give my NY apartment, if apartment is not owned by the testator it hasadeemed by extinction

- stock in closely held family corporations is deemed specific legacy- any disposition of publicly-traded securities that is identified as my stock

in is a specific gift(b) general devises a gift of a general benefit and not a particular benefit, it never

adeems.

- I give $100.000 this gift without more is payable out of generalproceeds

- NY Rule: a gift of a publicly traded security without identifying is treated asa general gift and is satisfied out of general proceeds if it does not exist inestate

- I give 1000 IBM shares, if it is not in the estate, the value of the securitiesis assessed at the time of death

(c) demonstrative devise a hybrid devise: general gift from a specified source;demonstrative gifts do not adeem. If the testator does not owe the source fromwhich to receive the general gift, the executor must sell other assets to satisfy the

devise.- I give $100.000 from the sale of my GM stock if no/not enough GM

stock exists, the executor must sell other assets to produce $100,000- the source is identified.

VIII Rights of a Surviving SpouseA. Introduction

a. Title Theory all but eight states have title theory; a common law theory where husbandand wife own separately all property each acquires

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- items one spouse has agreed to put into joint ownership with the other are ownedjointly

- the title theory states impose a duty of support during lifetime (maintenance incases of divorce) or at death (equitable distribution of marital property (not 50/50)) elective share is a mechanism of support

- NY is a title or separate property jurisdictionb. Community Property husband an wife own all acquisitions from earnings after marriage

in equal undivided shares

- death of one spouse dissolves the community; deceased spouse owns and hastestamentary power over only his or her one-half community share

- only items purchased with the earnings of one spouse would belong to both, thiswould not include inheritance by one spouse.

- property purchased prior to the marriage is not community property- neither spouse may unilaterally transfer community property to a third party

B. Elective Sharea. Property Subject to Elective Share the spouse is entitled to one-third of decedents

probate estate. The assessment of the probate includes all but one (life insurance) willsubstitutes.

i. EPTL 5-3.1: personal property- New York statute sets side the personal propertyfor the benefit of surviving souse and issue under 21, such property is not countedtowards the net probate estate.(a) all housekeeping utensils, musical instruments, furniture, appliances not

exceeding in aggregate value of $10,000(b) family bible, pictures, video tapes, books, etc. not exceeding the value of

$1,000(c) domestic animals and food for 60 days not exceeding $15,000(d) one motor vehicle not exceeding $15,000(e) money or other personal property not exceeding $15,000

- the amount set aside by the statute may amount to approximately

$56,000 (not calculated for purposes of the elective share)- set-aside property is completely exempt from creditors

ii. EPTL 5-1.1 (A) - a personal right is given to a surviving spouse to elect againstthe will if the share under the instrument is less then the statutory minimumallotted to a surviving spouse.- the right is personal and can not be exercised by the surviving spouses

representative- the surviving spouses guardian or executor may elect against a will due to

spouses incapacity- the spouse electing against the will is treated as predeceased for purposes of

the subsequent will probate; she forfeits her testamentary disposition.(a) EPTL 5-1.1(a) applies to decedents who died after 1992 the

pecuniary amount equal to or greater then:(1) $50,000; or (2) if capital value of net estate is less then $50,000, then such

capital value; or(3) 1/3 of the net estate

- most likely the election will always be in favor of theone-third of the estate

(b) Deathprior to 1992 the surviving spouse is entitled to:

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(1) 1/3 of elective share estate if survived by issue- the net estate is calculated differently than EPTL 5-

1.1 contemplates- life insurance, government bonds and pension funds

were not calculated for purposes of elective share(2) if no surviving issue

b. Elective Share Estate the estate is calculated to include:

(1) probate property (everything disposed of by the will)(2) intestate property (property not within the scope of the will)(3) the testamentary substitutes (EPTL 5-1.1-A (b))

- decedents property is calculated regardless of where it is located

c. Testamentary Substitutes included in the Elective Share Estate under EPTL 5-1.1-A (b) any interest passing absolutely to a third party (and to the spouse, for purposes of credit)

i. Gifts Causa Mortisii. Irrevocable Gifts made within a year of death

(a) Exception:

- gifts made prior to marriage- gifts made under IRS Code 2053: annual exclusion to as many

person as desired of approximately $12,000 annually(b) Exception:

- unlimited transfer to medical or educational facility- untaxable in any amount- must be paid to the provider directly

(c) gifts to charities are included in elective share estateiii. Totten Trusts andv. Joint Bank Accounts and Tenancies by the Entirety

(a) amount actually contributed by the decedent; or

(b) of the whole amount- if created after the marriage- if a post-marriage joint tenancy existed between a decedent and a

third party a surviving spouse must prove the amount contributed bythe decedent (consideration furnished test)

- if a joint tenancy between the decedent and a third party existedprior to the marriage, the consideration furnished test still applies,but the surviving spouse is entitled to half of the interest in that jointtenancy.

- all property with the right of survivorship are included- government bond or jointly registered securities

(c) if the surviving spouse is the sole beneficiary, she takes the whole amountand only half is credited against her share- initial burden is on the estate to prove the decedents intent was not

joint ownership but mere convenience- burden is then shifted on the spouse to prove greater contribution to

the accountvi. Any disposition in contractual arrangements

(a) revocable lifetime trust- where the power to revoke/consume/invade/dispose of a principal is

retained by the decedent;

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- revocable trusts may be created prior to marriage(b) irrevocable trusts

- only included if created after the marriage- only if created after 1992- decedent retains income for life

(c) actual contractual arrangement- some question as to whether decedents interest in a contract is

calculated in the elective share estate

vii. Pension Funds(a) Exception: if the pension fund is qualified (i.e. 401K) it is treated as a joint

bank account and only 50% - if surviving spouse is the beneficiary underthe policy- if the surviving spouse is not a beneficiary under the policy, the

whole amount is included in the elective share estate

viii. General Power Presently Exercisable(a) a general power presently exercisable over property makes the possessor the

absolute owner and is calculated for purposes of the elective share estate asa testamentary substitute

- either held at death by the decedent; or- conveyed within a year of death

ix. Securities Registered T/O/D or P/O/D- US Savings Bonds are included- where the federal law preempts the parts of EPTL, and the payments are

made to beneficiaries under the bonds, the surviving spouse has remedialaction against the beneficiaries

- ratable contribution will be made by all who have an interest in decedentsestate

d. Notice a spouse seeking to elect against the will must give noticei. within six months of issuance of letters to the beneficiaries by the executor; but

ii. not later than two years after the decedents death

C. Waiver a. A spouse may waive her right to elect against any or particular will (or not to treat a

particular trust a testamentary substitute), at any time during the lifetime.b. To be effective the waiver or release must be:

(1) in writing; and(2) subscribed by the maker thereof; and(3) and acknowledged in the manner required for conveyance of property

- notarized- witnessed

c. A waiver is valid even if executed:(i) before (prenuptial) or after marriage (postnuptial)(ii) at any time(iii) unilateral (by maker) or bilateral (by both spouses(iv) with or without consideration(vi) absolute or conditional

d. A waiver may be challenged on the grounds of:(i) fraud per se

- where one party affirmatively and intentionally mislead the other

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(ii) failure to disclose all assets(iii) lack of independent legal counsel(iv) NY Rule [Grief]: if a spouse can show a specific fact-based inequality the burden is

shifted to the estate to demonstrate no overreaching

D. Disqualification of a Spousea. EPTL 5-1.2: A spouse is deemed disqualified for purposes of intestacy, elective share,

and family exemption if:

(i) a final decree of a divorce/annulment/dissolution on the grounds of absence isissued and recognized by the jurisdiction of the state at the time of decedents death

(ii) marriage was void because incestuous/bigamous/ or prohibited(iii) the spouse had procured outside the state a final decree or judgment of

divorce/annulment/nullification/dissolution of marriage that is deemed invalidinthe state of NY- disqualification by estoppel

(iv) spouse abandoned the deceased spouse and such abandonment continued untildeath

(v) spouse who had a duty and the means to support the spouse and has not done sountil the death

- unless the duty was resumed and continued until death

E. Revocatory Effect of Divorce/Annulment/Nullity of Marriagea. EPTL 5-1.4: if will is not changed after the divorce, any disposition or appointment of

property made by the will to the former spouse and any provision naming the spouse asexecutor/trustee/ is revoked by operation of law;- unless, the will expressly provides otherwise- if not stated otherwise, divorced spouse is treated as predeceased- only applicable to immediate divorce of the testator and not to a divorce of a family

member to whom a disposition is madeb. a provision revoked by divorce, should be revived by remarriage to the former spouse

- the EPTL 5-1.4 applies to wills only and does not apply to will substitutes

F. No Forced Share for Childrena. In NY, a decedent is not required by law to provide for his children in the will, even if they

are dependant.b. Revocatory Effect of an After-born

- see above on pages 16-17- the exclusion of a newly-born child is treated as a mistake (child is allowed to take

in intestacy)

IX. Trusts

A. Introductiona. Trust a fiduciary relationship in which a trustee holds legaltitle to specific property to

manage, invest and safeguard the assets for the benefit of designated beneficiaries whohold equitabletitle.

b. Types of Trusts the trusts are usually classified into three categories:(i) express trusts arise through property owners expressed intentions to create a

trust relationship with respect to property(ii) resultingtrust usually arises from presumed intention of the property owner

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(iii) constructivetrust not really a trust, since these trusts do not integrate an elementof intent, but a useful equitable remedy in cases involving fraud and unjustenrichment

B. Express Trustsa. An express trust formally requires asettlorwho delivers legal title to the trustee with

intention to create a trust to be held for the benefit of designated beneficiaries.- a trust will stand so long as the purpose is legal- no consideration is required to form a trust

- express trust may be an inter vivos or testamentary (if testamentary express trust,the requirement of property is satisfied at death (Parella: advisable to use someproperty, a $20 for formality purposes)(i) express trusts are further classified as:

(1) private trusts - trust that has one or more definite and ascertainablepersons as beneficiaries- where the income is paid to specifically identified individual

or class- EPTL 7-1.16: lifetime trusts are irrevocable unless

expressly provide that are revocable (revocation/amendmentmay be accomplished via a will)

(2) charitable trusts a trust for a purpose that is considered to benefitthe public at large and can not be for the benefit of identifiableindividuals upon whom the settlor wishes to confer a private benefit.- motive of the settlor is irrelevant, what matters is the

objective purpose of the trust (relief of poverty,advancement of education or religion, health orgovernmental administrative purposes)

- charitable trusts are exempt from the rule of perpetuities- cy pres powers are applicable to charitable trusts ( where

the purpose of a charitable trust becomes impossible orimpracticable to fulfill it literally, the court will examine the

trust for settlors general purpose and enforce it accordingly)- cy pres powers will not apply if court finds no general

purpose or the gift is specific

(ii) discriminatory trusts discriminatory trusts will be stricken. Althoughprivate discriminatory action is not per se illegal, courts will deny probate inorder to avoid the requisite state action for purposes of 14 th Amendmentclaim.

b. Delivery without delivery of legal title in the trust assets to the trustee, a mere expressionof intent to create a trust has no legal consequence

(i) lifetime trusts only valid upon transfer of assets into the trust (must be funded).- titled assets must be formally transferred to the trustee (deeds, stock

certificates and documents evidencing ownership)- settlor/trustee must register title in the name of the trust (the deed need not

mention the trust)- all other assets may be transferred by a valid assignment and detailed

description of property- a mere recital of assignment, without more is ineffective for purposes of

delivery

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- delivery of real property must be accompanied by writing satisfactory to thestatute of frauds

- EPTL 7-1.15: Every estate property may be disposed of by lifetime trust(ii) testamentary trusts delivery occurs upon the will taking effect (upon death),

however it is nonetheless wise to make a nominal delivery of a $20.- a trust always requires to have property subject to equitable duties

c. Trustee any designated individual may serve as a trustee if is of legal age and is not

incapacitated. A trust will not fail for the want of a trustee.(i) Trustees Legal Title unless the trust also names the trustee as a beneficiary, the

trustee only holds a legal title to the property therein. Upon trustees death orresignation, or if no trustee has been named, the Surrogate Court will appoint one.- upon termination of the trust, the legal title to the assets vests in the

beneficiaries (no need to re-convey)- if two or more trustees are named, they hold legal title in joint tenancy

(ii) The Merger Doctrine - equitable and legal titles will merge where the trust onlydesignates a sole trustee who is also a sole beneficiary. Thus, no trust occurs but theconveyance is an outright gift.

(iii) Anti-Merger Statute EPTL 7-1.1: A trust is not merged or invalided because a

person (including the settlor) is the sole trustee and sole current beneficiary, as longas at least one other person who holds a beneficial interest in the property, such asvested or contingent remainder interest

d. Intention to Create a Trust for a trust to stand the language must clearly express settlorsintention to create an equitable duty in respect to the property.(i) Precatory Language language evidencing a mere desire or an aspiration creates a

gift to the beneficiary and is not a transfer of a legal title to a trustee.- [Ex: The property to A,I would like him to give it to B]- no black letter law dealing with precatory language ( assessed on ad hock

basis)

- trust requires a fiduciary duty to be mandatory, not merely desirable(a) Ambivalent Language another form of precatory language but a bit

uncertain- it is my wish and desire does not create a mandatory obligation- some courts found language such as I desire, I request meant to

be an enforceable obligation(b) Motive the settlor must impose an enforceable obligation on the

transferee. An expression of a motive for the transfer will not suffice tocreate such obligation- to my sister so she will have sufficient funds to

(ii) Expressed Intent expression of intent must be sufficiently definite that a court can

enforce it, particularly the description of the trust property, the beneficiaries, andtheir interest.(a) Term Trust use of the term will not necessarily create a trust, and its

omission will not necessarily preclude its finding(b) Trust Terms where the trust lacks terms such as duration, disposition of

property or does not give trustee any active duties to perform, the trust isknown as passive or dry trust and property passes directly to thedesignated beneficiary as an outright gift

C. Formalities of Creation and Revocation of Trusts

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a. Writing Requirement EPTL 7-1.17: All lifetime trusts must be in writing, signedbythe settlor and at least one trustee (unless the settlor is the sole trustee), and either(i) acknowledged before notary public; or(ii) executed in the presence of two witnesses who also must affix their signatures

- contracts to create a trust in the future, whether of real or personal property,must be in writing and signed by the creator

- a lifetime trust is irrevocable by the settlor unless the power to amend orrevoke the trust is expressly reserved in the instrument

b. Amendment or Revocation EPTL 7-1.16: Any amendment or revocation authorized bythe revocable trust must be in writing and signed, and unless otherwise provided by thetrust instrument, must be acknowledged or witnessed in the manner required for creation oftrust.- written notice of amendment and revocation must be delivered to the trustee within

a reasonable time- failure to give notice does not affect either the validity or effective date of the

amendment or revocation

D. Transferability of Beneficiarys Interests

a. Spendthrift Trust a trust in which, by statue or more often by virtue of the terms of thetrust, the beneficiary is unable voluntarily or involuntarily to transfer his or her interestinthe trust.- the beneficiary can not sell, assign or give away his right to future income or capital- the beneficiarys creditors are unable to collect or attach such rights- created to provide a fund for maintenance of the beneficiary which will be secure

against his own improvidence(i) Statutory Spendthrift Rule EPTL7-1.5(a): In NY, all trust income

interests are given spendthrift protection by statute, in absence of expressprovision to the contrary.- once the income is distributed to the beneficiary, he may do with it

what he wishes (and only then is reachable by creditors)- but creditors in NY may not attach or garnish the trust income- in most other states the settlor must expressly indicated that the

spendthrift protection is integrated into the trust(ii) Express Authorization of Transferability EPTL7-1.5(a) 1: a settlor may

chose to override the statutory spendthrift rule by expressly authorizing thetransfer of a trust income.- if authorized, the income is subject to voluntary and involuntary

transfer (may be reached by creditors)

(iii) Trust Corpus and Interest the statutory spendthrift rule applies only to

trust income, not to interest or principal. Remainder interests in corpus canbe transferred unless provision is inserted expressly prohibiting suchtransfer.

b. Exceptions to Spendthrift Trusts(i) Provider of Necessities a creditor who furnishes necessities (food, clothing,

shelter, medical care etc.) can reach the beneficiarys income interest in a trust byappropriate judicial process

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(ii) NY Excess Income Rule EPTL7-3.4: the income in excess of the sum necessaryfor the education and support of the beneficiary is subject to claim of creditor.- the beneficiarys station in life and income from other sources are to be

considered in making the determination of reasonable need- 7-3.4 is the last resort remedy and the creditor must have exhausted all

legal remedies to no avail- creditors can not invoke 7-3.4 without first going after the CPLR 10% levy- providers of necessity and claimants of alimony and child support need not

prove excess income (they have general standing)

(iii) Child Support and Alimony EPTL 7-1.5 (d): a beneficiarys income interest canbe reached in a suit to enforce a child support or alimony obligation.- a trust income may be assigned as part of alimony or child support

(iv) Federal Tax Liens the federal government may assert a tax lien against a trustbeneficiarys income interests

(v) Judgment Creditors In NY judgment creditors are entitled to levy upon 10% ofthe in come due a debtor-beneficiary under the spendthrift trust.

- a creditor must first resort to the 10% levy and only then can proceed under7-3.4

c. Settlor as Beneficiary No Spendthrift Protection(i) EPTL7-3.1 a disposition in trust for the use of the creator is void as against the

existing or subsequent creditors of the creator- property owner cannot use a spendthrift trust to insulate his assets from the

reach of the present or future creditors- if the self-settled trust contains a spendthrift clause, the settlors interest

may nonetheless be assigned and reached by creditors(ii) Revocable Trusts if the settlor reserves the power to revoke a trust under which

he is also a beneficiary, the settlor is treated as the owner of the trust property as faras his creditors and a spouse electing against the will are concerned- creditors may reach the income and assets in its totality

(iii) Irrevocable Trusts if the trust is irrevocable and the settlor retains some but not allof the beneficial interest in the trust, his creditors can reach the full amount of theinterest retained by the settlor, but no more.- where the settlor only receives a lifetime income, the whole lifetime income

may be reached- if the conveyance (in form of an irrevocable trust) was fraudulent, the

creditors may reach the entire trust property that was transferred with anintent to defraud creditors

(iv) Remainder Interests there is no statute or other rule prohibiting a remaindermanfrom transferring or assigning his interest in the trust principal, the creditors are notprohibited from reaching the remainder interest.- remainder interests are freely transferable, unless the trust contains a

spendthrift clause applicable to such interestsE. Discretionary Trusts

a. Discretionary Trust distributions of income are at the trustees discretion. The trusteemay in his discretion distribute so much of the trust of the trust income to the beneficiariesas he deems appropriate.

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- under a mandatory trust the trustee must distribute all trust income to thebeneficiary according to a set schedule

b. Creditors Rights under Discretionary Trust a creditor can not reach a beneficiarysinterest in discretionary trust unless and until the trustee decides to exercise his discretionto distribute income to the beneficiary.- once a trustee exercises his discretion and makes a distribution, the beneficiary

becomes entitled to income; creditors may levy under above exceptions.- if the trustee decides to distribute income, a judgment against the beneficiary must

be satisfied at least at 10% rate

F. Supplemental Needs Trusta. Supplemental Needs Trust EPTL7-1.12: a discretionary trust established for the benefit

of a person with sever and chronic or persistent disability. The trustee may NOT expend ordistribute trust assets in any way that may supplant, impair, or diminish governmentbenefits or assistance for which the beneficiary is eligible.- the trust will not disqualify person for Medicaid eligibility- the trust may not be claimed by the governmental agency for service provided- the purpose of the trust is to supplement the needs of a disabled beneficiary with

services not provided by the state

X. Termination Revocation and Administration of TrustsA. Termination

a. Means of Termination there are few possible ways a trust may terminate.(i) termination according to trusts terms(ii) termination of trust by settlor(iii) termination of trust by beneficiaries

b. Termination According to Trusts Terms a trust will terminate automatically at theexpiration of the time specified in the instrument. If there is no direction that the corpus tobe paid out to designated persons, the trustee holds on a resulting trust for settlor or her

successors in title.

c. Termination of Trust by Settlor(i) Revocable Trusts a revocable trust may be terminated at anytime.

- all trusts (except for Totten Trusts and bank accounts) are irrevocable by thesettlor unless the power to revoke is expressly reserved

(ii) Irrevocable Trusts EPTL7-1.9: if the settlorand all beneficiaries consent, a trustcan be revoked or amended even though it is a discretionary trust or spendthrifttrust.

- revocation or amendment must be acknowledged before a notary public- the statutory right to revoke the trust with the beneficiaries consent exists

even if the trust states that it is irrevocable(a) All Beneficiaries Must Be SuiJuris consent of all beneficiaries is

required. If any beneficiary (whether of a vested or contingentinterest is incompetent or a minor, the trust can not be revoked- the settlor can terminate the trust with the consent of all

persons beneficially interested in the trust.

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- for purposes of termination, the class of interest holdersidentified as my heirs do not have a beneficial interest andthe settlor can terminate the trust (assuming all adultbeneficiaries in being consent to termination)

B. Administration of Trustsa. NY Fiduciary Powers Act lists all the powers a trustee has and may exercise without a

court order and without express authorization in trust termsi. Trustee has a power to:

1. Sell real or personal property at public or private auction- specific testamentary legacies can not be sold for purposes of

investment2. Mortgage property3. Lease property for up to 10 years4. Make ordinary repairs5. Contest, compromise and settle claims6. Distribute up to $10,000 to minor via his parent or guardian

ii. Unless other wise authorized, trustee can not:1. Borrow money

2. Continue a business3. Make extraordinary repairs or improvements4. Abandon or demolish real property5. Keep funds uninvested6. Pay debts barred by statute of limitation or suspended by bankruptcy7. Commingle funds

b. Personal Liability a trustee may be personally liable for the losses suffered by the trust ifthe conduct was not authorized by either trust terms or NYFPAi. Exculpatory Clauses a clause that removes or limits liability for ordinary negligence

or a clause that modifies the trustees duty to file accounting

1. testamentary trusts such exculpatory causes are invalid by NY statute2. lifetime trusts exculpatory clauses are perfectly valid in lifetime trusts

ii. Self-Dealing prohibition against trustee entering into transaction with trustproperty that benefit the trustee in some way.- trustee can not buy or sell assets for himself- trustee can not borrow trust funds- trustee can not loan funds o the trust, any interest earned on such loan

belongs to the trust. Any security interest received in connection with thetrust funds is invalid

- trustee can not profit from serving as a trustee except from compensation

- trustee has a duty to segregate trust assets from personal funds

c. Beneficiarys Remedies if trustee breaches any fiduciary duty by self-dealing orexercising a power not given to the trustee in addition to bringing action to remove thetrustee, beneficiary has option to:i. ratify the transaction and waive the breach of trust if assets appreciated in value; orii. sue for resulting loss in a surcharge action.

- No Further Inquiry Rule - in the event of self-dealing, the courts willimplement a no further inquiry rule (the breach of fiduciary duty is an

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automatic wrong; good faith, reasonableness or fairness of terms is nodefense

d. Effects of Self-dealing Bona Fide Purchasers and creditors who relied on the trusteesapparent ownership of the trust property are protected. Therefore, a BFP or a creditor whobuys trust assets from the trust without knowing that she was dealing with a trust will retaintitle.- even if the BFP had knowledge of the trustees status, she is protected if knew

nothing of self-dealing- indirect self-dealing: the self-dealing rules also apply to sales or loans to trustees

relatives and business partners or associate, or entities with which has professionalaffiliation

C. Trustees Investment Powersa. Uniform Prudent Investor Act trustee may make investments as would be required by

prudent men of discretion and intelligence seeking reasonable income and preservation ofcapitali. Portfolio Theory - the Act is based on modern portfolio theory of investing and

prudence is measured by the conduct of when the investment decision was made,

no on the outcome or performance.ii. Custom-tailored Investment Strategy trustee is prudent so long as he operates off

of the following considerations:- general economic conditions- possible effect of inflation or deflation- the expected tax consequences of investment decisions or strategies- role of each investment within overall trust portfolio- the expected total return from income and capital gain- need for liquidity- any differing interest of income beneficiaries and remainderman

b. Uniform Principal and Income Act under the UPIA (above) a trustee has a duty todiversify the trust portfolio. He is allowed to invest for total return without breaching hisduty of fairness to income beneficiary vis--vis remainderman. The Uniform Principal andIncome Act gives trustee an adjustment power.i. adjustment power a power to adjust total return between income and principal,

and allocate capital gain to income. Trustee must consider following factors inexercising the adjustment power:- purpose and expected duration of the trust- intent of the settlor as to respective interests of the beneficiary- the net amount of ordinary income and capital gain available for allocation- circumstances of the beneficiaries

- the need for liquidity, regularity of income, and preservation andappreciation of capital

- any increase or decrease in value of the trust assets- whether the trust gives the trustee the right/power to distribute principal- effects of economic conditions and effect of inflation ad deflation, and- anticipated tax consequences of an adjustment

XI. Future Interests

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A. Future Interest Capable of Creation in O the Grantor:a. Three Categories:

i. Thepossibility of reverter1. accompanies only fee simple determinable2. Ex: fee simple determinable depends on the language (Frank Sinatra conveys to

Orwell so long as popcorn never conveyed on premises: F has possibility ofreverter, while Orwell has fee simple determinable

ii. The right of entry (the power of termination)

1. accompanies only fee simple subject to condition subsequent2. Ex: R conveys to Rachel, but if coffee is ever consumed on premises, R has a right

to reenteriii. The reversion

1. future interest that arises in O the grantor, who transfers less then what he has otherthen a defeasable fee (leftover)

2. Ex. O may carve out a term of lesser quantum (a life estate (to A for life) or a termof years (to B for 90 years))

B. Future Interest in Transferees if held by someone other then the grantor must fall into one of threecategories

a. A Vested Remainder(three species)i. the indefeasibly vested remainder

ii. the vested remainder subject to total divestment (complete defeasance)iii. the vested remainder subject to open

b. The Contingent Remainder (see infra)c. Executory Interests (two species)

i. the shifting executory interestii. the springing executory interest

C. Distinguish Vested Remainders vs. Contingent Remindersa. What is a remainder? a future interest created in the grantee, that becomes possessory at the

natural conclusion of the preceding life estate or a term of years. [Ex: Forest Gump is theproverbial remainderman remainderman is sociable, patient and polite (patiently waits for histerm)

i. remainderman never travels alone, will always accompany an estate of known fixedduration (usually a life estate or a term of years)

1. [Ex: To A for life, then to B: B is the remainderman, while the A has the life estateof a known fixed duration]

ii. remainderman is patient and polite never follows a defeasable fee; if the interest isdefeasable, the beneficiary of this misfortune is never a remainderman (usually anexecutory interest holder who takes in instances of a divestment)

b. A remainder is vested if it is both created in ascertained person andis not subject to any conditionprecedent.

c. A remainder is contingent if it is created in unascertained persons or is subject to a conditionprecedent, or both.

i. Remainder is contingent if created in unborn or unascertained persons. [Ex: to A for lifethen to Bs first child: A is a live, B does not have any children, thus the remainder iscontingent because the taker is yet to be born/identified]

ii. Remainder is contingent if it is subject to condition precedent a condition is a conditionprecedent if it is a prerequisite to remaindermans taking. [Ex: condition precedent =

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prerequisite; to A for life and if B had reached the age of 21 then to B (the age contingencyis the prerequisite to Bs taking) B has a contingent remainder]

D. Limitation on Contingent Remaindersa. Rule of Destructibility of Contingent Remainders

i. At common law, a contingent remainder would be destroyed if:1. still contingent when the preceding estate has ended

a. [Ex: to A for life, and if B had reached the age of 21 then to B. If A is dead

and B is 19 years old the state of the title:i. historically at common law Bs contingent remainder would be

destroyed. It was still contingent at the time the preceding estate hadrun its natural

Wills Trusts Outline

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