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Outline - Trusts & Estates

I. Law of INHERITANCE = the power to transmit property at death A (Who) Right to Inherit / Transfer Property: (i) Donor's Right to Transfer...Dr has right to transfer their property as they see t that is: i (1) PROTECTED by the 5th Am = Dr may transfer property at death as they see t, and the gov CANNOT take / prevent such a transfer without providing JUST COMPENSATION Hodel v. Irvings (USSC '87): Indian Land Consol. Act; frac. bad -> gov tried to x by reverting devised shares to the tribe 1) RULE: if the value of a Dr's transfer is more then de minimus, abrogation of that transfer constitutes a TAKING for which the gov must provide just compensation 2) HOLDING: Afrmed - constitutes a TAKING b/c state's regulation caused inheritance shares to divert from B w/o their being providing just compensation 3) TAKE: Gov CAN reg. inheritance, but is LIMITED by requirement to provide just compensation to intended Bn ii (2) (RoC) CONTROLLED by Donor's Intent...court's primary goal in interpreting a donative instrument is to ascertain & effectuate the DONOR's INTENT for the distribution of his property at death MAJ / UPC 1-102(B)(2) (Policy): freedom of disposition...court's main function is to facilitate will's distribution, NOT regulate the wisdom of wills (Con) Dead Hand Control = the extent of control a Tr has AFTER death over his property -> public policy is weary of such b/c it can't account for changed circumstances 1) Changed Circumstances = court assumes the Dr inability to PREDICT the future leaves him unable to re-negotiate will conditions he typically would if was alive ex: Tr gives estate to G if marries by 27; G turns 27 unmarried -> if Tr alive might change terms if sees G trying iii (3) LIMITED by law and policy...though courts try to follow Tr's intent, there are limitations Will Conditions = Dr's often put conditions or restrictions De's must fulll in order to receive their bequest 1) Incentive Clauses = ENCOURAGEs certain behavior -> conditions distributions to a Bn upon the occurrence of desired behavior ex: "W: all property to son, IF he becomes a lawyer" -> VALID, but there may still be issues (what denes lawyer) 2) Holdback Clauses = reduces or suspends distribution under certain events (Effect) If condition is VALID, the transfer takes place only if the condition is met If Dr's restriction found INVALID, the transfer takes place as if the condition had not been imposed (Rule) Any restrictions or conditions placed on a bequest by the Donor are VALID, UNLESS: 1) Illegal 3) Impossible 4) Against Public Policy (very grey area)... a disposition is NOT a violation of public policy if it is REASONABLE 2 Big Issue Areas: a Destruction of Property...generally, conditions ordering property destroyed upon the Tr's death are INVALID as AGAINST public policy v. Destruction DURING Life...able to destroy own property when alive, but not dead, b/c courts don't like the uncertainty of changed circumstances Balancing Test: in determining if the property can be validly destroyed, must ask: i (i) WHO owns the property? (ex: Dr. wants patient records destroyed; INVALID -> patients own records) ii (ii) Balance the WASTEFULNESS v. Public Policy of DR's INTENT - ex: B directs house to be burned down -> too wasteful & destructive b Restraints on Marriage...depends on the type of restraint: (Rule) Validity depends on the TYPE of restraint: i (i) General / Absolute Restraints are against public policy & VOID (ex: Estate to X if he never marries) SAME: Divorce -> conditions encouraging divorce are VOID DIFF: Remarriage of Widow -> restraints on the remarriage of widow are generally valid ii (ii) Partial Restraints are VALID if reasonable (ex: positive cond.: Estate to X if he marries a jewish girl) iii (iii) Limitations may be VALID (ex: neg condition -> X takes the prots of my trust "so long as single") (ii) BENEFICIARY's Right to Inherit v. Dr's Right to Transfer...Dr's right is PRIMARY, & controls Bn's right to inherit (UNLESS invalidated) (ex: Tr wants all assets sold & the cash proceeds burned -> burning cash is illegal, thus invalid) (ex: F devises all property to D IF she "always do the right thing" -> INVALID b/c too vague) 2) Uncertain / Vague

i (Rule) Beneciary's (i) have NO natural, fed or state constitutional right to receive property, by will or otherwise, from one's parents (ii) any protection is STATUTORILY created, and can be limited / regulated as they see t ii (Policy): Passing Wealth at Death...often debated if gratuitous wealth should be transmitted from generation-to-generation OR if it should be passed back tot he state to even the classes out 2 Main Historical Views of Inheritance rights 1) Blackstone / Jefferson (Pre-1980's) = not natural but statutory creatures that the state has the ability to regulate - why...thought once man died he ceased to have control over earthly possessions & they went to those around him (usually children) ---BUT---> resulted in headstrong, disobedient children (thought entitled to parent's estate) 2) Locke (Post-1980's)...right to transmit at death is NATURAL -> protects CHILDREN over the KINGs (i.e., state) as unclaimed estates escheat to the state iii (Applied) Shapira (1974): will conditioned $ to sons on them marring a jewish girl w. jewish parents by the age of 28 ISSUE: Is the condition either (i) unconstitutional OR (ii) contrary to public policy, and thus unenforceable? HOLDING: No - not unconstitutional OR contrary to public policy b/c Father had RIGHT to distribute his $ to sons as he saw t, & Sons had NO RIGHT to that $ - his father is generously offering it to him IF he fullls the condition TAKE: Dr's intent controls WHO has a claim of right to his property after Dr's death No beneciary has a NO natural / state / fed constitutional claim of right to Donor's property -> must abide by Dr's wishes/conditions B (What) Donor can devise PROPERTY acquired: (i) BEFORE death...Always - Dr's can always devise property acquired during his lifetime (ii) AFTER death...Sometimes - if property comes to Dr's estate after Dr's death, & the will does not deal devise such property the Dr is PARTIALLY INTESTATE i Issue: WHO should go to - intestacy heirs OR will devisees? 2 Common Approaches: 1) MAJ (UPC)...statute dictates passing property WILL devisees UPC 2-602 (1990): a will may pass all property & after acquired property. A will may provide for the passage of all property the Tr owns at death & all property acquired by the estate after testator's death 2) MIN (FL)...issue not dealt with statutorily --thus--> DEPENDs on case-law of the JURISDICTION (likely intestacy) FL...a will is construed to pass all property which Tr owns at death &... acquired after the execution of the will -> includes property AFTER the WILL, but not AFTER DEATH (How) Probate Process = transference of the decedent's estate i 2 TYPEs: Every Estate Property = Probate Property + Non-probate Property

Probate = property that passes under the D's WILL or by INTESTACY Non-probate = property that passes outside of probate under an INSTRUMENT OTHER than a WILL ex: joint tenancy property, both real & personal life insurance K payable on death (POD) provisions interests in trusts ii FUNCTIONs: Probate Process performs 3 core functions (1) Provides evidence of transfer of title to the New Owners (clearing title & making property marketable again) (2) Protects creditors by providing a procedure for payment of debts AND (3) Distributes the Decedent's property to those intended after the decedent's creditors are paid iii PROCESS (brief overview) (1) Appointing a PERSONAL PRERESENTATIVE to oversee the winding up of the decedent's affairs - 2 Types: (i) Executor (named in will) OR (ii) Administrator (appointed by court if not named in will / dies intestate) (2) Opening Probate (3) Formal v. Informal Probate - Formal...court supervises every action* of the personal rep in administering the estate *time consuming & costly -> used if LOTs of money or interested parties that might contest the will - Informal...personal rep administers the estate W/O COURT supervision, EXPECT if an interested party asks for a court review (4) Barring Creditors of the Decedent (5) Closing the Estate II. Law of INTESTACY = DEFAULT ESTATE PLAN -> laws that govern the distribution of an intestate decedent's probate property - Intestacy = D dies leaving NO will v. Testacy = D leaves a WILL (= doc providing for the disposition of D's property at death) v. Partial Intestacy = D leaves a WILL, but it disposes of only part of the probate estate -> the part of the estate not disposed of by the will passes by intestacy 2

v. Partial Intestacy = D leaves a WILL, but it disposes of only part of the probate estate -> the part of the estate not disposed of by the will passes by intestacy A (POLICY) roughly half the population dies intestate - people don't create wills b/c (i) unpleasantness of confronting mortality & (ii) time & costs Pros of Wills: (1) family protection...preserves the economic health of the family after a death (2) pick estate administrator...ID trustworthy individual or trust co to administer the estate (3) provide for minor kids...designate guardians for minor children (4) achieve tax savings (5) reduce probate costs of waiving a required bond B (USEs) (1) Default Estate Plan...intestacy laws are used to dispose of ANY property not disposed of in the D's estate i Wills, Trusts & Non-probate Transfers are ways to OPT-OUT of the intestacy rules ii FOR Intestate & Partially-Intestate D's alike...if D dies testate but fails to dispose of ALL his property via his will, the non-disposed property passes under intestacy laws (2) Interpretation Tools...intestacy laws are often used to interpret wills, trusts & donative documents C (JURISDICTION): Type of PROPERTY determines which state intestacy laws govern if personal property...state where D was domiciled at death if real property...state where THAT piece of real property is located D (SOURCE of Law): each state has their own, but UPC has developed a well-regarded model act UPC i v. Restatement...both rep bias of the time & the reporter writing it R is less political, but more inuenced by the reporter who writes it b/c it doesn't have to be passed ii (History): originally passed in 1969 - major changes in 1990 & 2008, including: parent-child relationship rules -> adapted to changes w. assisted reproductive technology & adoption will execution formalities simplied spousal elective share iii (Provisions) 2-101: GENERAL - Intestate Estate 1) (a) (Die W/O Will) any part of a D's estate not effectively disposed of by will passed by intestate succession to the D's HEIRs as prescribed in this Code, EXCEPT as modied by the D's will (= partial intestacy) 2) (b) (NEGATIVE Will) a D by will may expressly exclude or limit the right of an individual or class to succeed to property of the D passing by intestate succession. If that individual or a member of that class survives D, the share of the D's intestate estate to which that individual or class would have succeeded passes as if that individual or each member of that class had disclaimed his/ her intestate share 2-102: Share of the Spouse (see below) 2-103: Share of Heirs Other than Surviving Spouse (see blow) 2-105: [ESCHEATs to State) No Taker = if there is no taker under these provisions, the intestate estate passes to the state E (WHO) Heirs...intestacy laws determine which HEIRs receive the D's property Heir = person determined by intestacy laws to receive property via an INTESTATE ESTATE -> ONLY upon D's intestate death, are Heirs are CREATED & become INTERESTED PARTIES to the probate of Ds estate i v. Heir Apparent = person who stands to be an heir once a person dies Hs ONLY created upon death --thus--> HA's have no legal interest in D's estate (only expectancy, which can't be transferred at law) ii v. Devisee / Legatee / Beneciary = those who are given property via a TESTATE ESTATE (i.e., a will) No Heirs in Testate Estates -> only created in an intestate estate Potential Heirs: i (1) Surviving Spouse v. Disinherited Spouses...SS's have spouses that die w/o leaving a will = VALID DS's spouses die leaving a will, but it leaves NO property to the DS = VOID 1) RULE: Forced / Elective Share = statutorily set minimum share a D can leave a surviving spouse (Policy) view of marriage as an economic partnership ---thus---> law wont completely let one spouse cut the other off from what they helped earn (Use) for spouses who survive TESTATE D's (Effect) elective = no matter what the SS is left (more or less), they can CHOSE to take the statutorily set minimum share(P (UPC) sets the min. at the same as if the D spouse died intestate & does NOT take length into account a v. FS...many take the LENGTH of marriage into account Traditional Marriage 1) MAJ: surviving spouses get at least 50% of the estate (v. in practice...most people want ALL their estate to go to their SS) policy...view of marriage as an economic partnership (especially when give ALL to the SS) 2) FLORIDA 732.102: Spouse's Share of Intestate Estate - the intestate share of the SS is: a (1) [No Kids] if there is no surviving Dd of the D, the ENTIRE intestate estate b (2) [D/SS kids ONLY] if the D is survived by 1+ Dds, all of whom are also Dds of the SS, & the SS has no other Dd, the ENTIRE intestate estate c (3) [D has outside kids] If there are 1+ surving Dds of the D who are not lineal Dds of the SS, 1/2 of the intestate estate 3

d (4) [SS has outside kids] If there are (i) 1+ surviving Dds of the D, all of whom are also Dds of the SS, AND (ii) the SS has 1+ Dds who are not Dds of the D, 1/2 of the intestate estate 732.103: Share of Other Heirs - the part of the intestate estate not passing to the SS under 732.102, or the entire intestate estate if there is no SS, descends as follows (Descending Order -> GO to each prong until nd a LIVING RELATIVE): a (1) [Children] to D's Dds b (2) [Parents] If there is no Dds, to the D's FATHER & MOTHER equally, or to the survivor of them c (3) [Siblings or Nieces/Nephews] if there's none of the foregoing, to the D's Bro & Sis & the Dds of deceased Bro's & Sis' d (4) If none of the foregoing, the estate shall be divided -1/2 of shall go to the D's PATERNAL kindred, & 1/2 to the D's MATERNAL kindred in the following order: (a) [Grandparents] to the grandfather & grandmother equally, OR to the survivor of them (b) [Uncles/Aunts/Cousins] if there is no grandparents, to uncles & aunts & Dds of deceased uncles & aunts of the D (c) [No M/P --goes to--> other side] If there is either no paternal kindred or no maternal kindred, the estate shall go to the other kindred who survive, in the order stated above e (5) [No FAMILY -> Family of D's Spouse] If there is no kindred of either part, the whole of the property shall go to the kindred of the last deceased spouse of the D as if the deceased spouse Bros & Sisters 3) UPC 2-102: Share of the Spouse = the intestate share of a D's SS is: [**MAKE sure to look at each clause] (1) the entire intestate estate if: a (A) [No Kids / No Parents] no Dds or parent of the D survives the D; or b (B) [D/SS kids ONLY] all of the D's surviving Dds are also Dds of the SS & there is no other Dd of the SS [**D MUST have children for this to apply -> doesn't count if no children] (2) [If PARENT, no kids] the 1st [$300K] + 3/4 of any balance of the intestate estate, if no Dd of the D survives the D, but a PARENT of the D survived the D (3) [SS has outside kids] the 1st [$225K] + 1/2 of any balance of the intestate estate, if all of the D's surviving Dds are also Dds of the SS & the SS has one or more surviving Dds who are not Dds of the D a ex: D's estate = $400K; survived by H, their kids A & B & H's previous kid, D; - SHAREs...H = 225K + [(400K - 225K) / 2] = $312.5K; A/B = (400 - 312.5) / 2 = $43.5K per child; D gets ZERO (4) [D has outside kids] the 1st [$150K] + 1/2 of any balance of the intestate estate, if one or more of the D's surviving Dds are not Dds of the SS a ex: D's estate = $400K; survived by H, their kids A & B & D's previous kid, C; - SHAREs...H = 150K + [(400K - 150K) / 2] = $275K; A/B/C = (400 - 275) / 3 = $41.7K for each child Untraditional or Marriage Alternatives...is spousal intestate succession recognized for these partners? 1) Bigamy...if 2nd+ SS can take depends on if SS knew -> if YES = INVALID; if NO = possible remedy via putative spouse doc 2) Common Law Marriage...depends on if state probating in recognizes CLM 3) Cohabitants...depends on jurisdiction -> some have become more lenient in giving cohabitants a share 4) Divorce...law holds a couple is married up until the MOMENT there is a decree they are no longer married ---THUS---> even if mid-divorce, SS still gets a spousal share 5) Same-Sex Marriage / Dom. Partnership...recognized ONLY in the State that is married or registered as domestic partners in DP - usually have to register w. state to obtain full rights under DP statutes Simultaneous Death...when D dies at the same (or close to) time as his/her spouse, who INHERITs from whom? 1) POLICY: (i) courts want to limit litigation -> when spouses die so closely together, too heart wrenching to watch families ght (ii) courts presume if die at same time, Ds would want THEIR FAMILY (& not the spouses family) to get their property - if one predecease the other, one spouse's family will get the WHOLE estate, instead of it being split btw the 2 - longer period of survivorship makes that easier to do 2) RULE: Survivorship = standards by which to prove that one spouse survived the other, THUS inheriting from them Burden: party claiming one spouse outlived the other has the burden to prove so Effect: if can prove, surviving spouse inherits from predeceasing spouse, before passing to the SS's family if cannot prove, law presumes beneciary predeceases the decedant Standards: (*exact time of death not needed -> just need to prove deaths in relationship to each other) a Uniform Simultaneous Death Act (1940, rev 1953)...must prove survivorship by SUFFICIENT EVIDENCE b UPC 2-104...must prove survivorship by 120 hours (5 days) by CLEAR & CONVINCING evidence ii (2) Descendants (Dds) (Policy) intestacy laws reects society's tendancy to take care of CHILDREN rather than the PARENTs, even if the child is an able-bodied adult & the parent an aging & elderly person (MAJ Rule) (i) after the SS takes their share (see above) AND (ii) if the D has surviving Dds (both children & Dds of deceased children) = D's Dds take the rest of the D's estate to the exclusion of ancestors and collaterals (i.e., all other relatives) 1) EXCEPTION: Disinheritance of Dds Effect: if Dds effective disinherited, they are treated as if they predeceased the intestate D Rule: to disinherit their Dds, Ds must a (1) Negatively Disinherit the Dd (i.e., "I hereby disinherit my son, B") AND b (2) Afrmatively Dispose of the Disinherited Party's Portion (i.e., "...and give B's portion of the estate to his child, C") WHY BOTH? neg disinheritance NOT enough - any part of the estate not accounted for in a will passes by intestacy i neg disinheritance creates a circular argument...D disinherits B -> w/o direction of who to pass it to, B's portion of the estate passes via intestacy -> intestacy laws pass D's estate to D's Dds, which includes B 4

neg disinheritance creates a circular argument...D disinherits B -> w/o direction of who to pass it to, B's portion of the estate passes via intestacy -> intestacy laws pass D's estate to D's Dds, which includes B Modern Day a (MAJ) Loose Interp. = above not completely necessary -> will treat disinherited Dd as predeceasing the D, so that the estate will pass to the Dd's Dd's, but NOT to the Dd HYPO: Tr disinherit bro, B but doesn't indicate who takes his share; B has kids X & Y; MAJ...court treats B as predeceasing Tr, & estates passes to X & Y via intestate succession b (MIN) Strict Interp. = if only neg disinherit, Dd will likely get the portion D trying to w/o via intestacy statutes HYPO: same as above; MIN (strict interpretation)...estate passes by intestacy to B (Method) Representation = a person's right to take the share of an estate that a predeceased ancestor would have taken (i.e., dead child's Dd represents the dead child & divide his/her share among themselves) 1) 3 Competing Systems of Rep:
English / Strict Per Stirpes (1/3 State + FL) START: D's kids + follow lineage Modern Per Stirpes (1/2 States) START: 1st live gen + follow lineage = depends on IF... (i) ANY Kids survived the D, follow English Per Stirpes estate is divided = at the 1ST generation where there are living *per stirpes = English / Strict takers Modied VERTICAL Equ....passed same as english, but w. diff START pt. (1st gen of living takers, instead of automatically at D's children) UPC / Per Capita @ each gen. (12 States + UPC 2-101-6) Re-START each gen. + ignore lineage = (1) divide estate into as many equal shares as = divides estate into as many shares as there are: (i) living kids + RULE each dead kid, NOT how many Dds have) there are: (i) living Dds in the generation nearest D & (ii) deceased Dds w. Dds in the same gen. (2) allocate 1 share to each surviving Dd in the nearest living gen,; THEN (3) combine deceased Dd's remaining shares & (4) DROP down remaining estate to next gen & divide equally among Dds if parents didn't take (5) repeat (2-4) until all estate is gone VERTICAL EQUALITY...each line POLICY of descent is treated equally by being given an equal share to split HYPO these rules apply to all 3 above systems: - descendants = children, grandchildren, etc.; but NO children's spouses Gen. RULES - if there is a Dd that is (i) deceased and (ii) w/o any Dds, they are IGNORED for the purposes of representations -> why? there are no heirs -> if passed to them, it would escheat to the estate; presumed D don't want that - if parents / ancestor has received a share of D's estate, any of their LIVING Dd do NOT take -> why? would result in double-share taking; assumed that parent/ancestor will pass along their share when they die HORIZONTAL EQUALITY...('equally near, equally dear') treats equally each taker at each gen. w. the other takers at that gen.

(ii) deceased kids w. Dds (count (ii) NO Kids survived the D, the

(Dening) Descendants = person following in lineage in direct descent from D (i.e., kids & grandkids; NOT spouse, bro, niece) - Potentially INCLUDE as well: 1) Half-Bloods = half-sister / half-brother -> have ONE ancestor in common (same father or mother) v. Step-Sibling...NO ancestor's in common FLORIDA...if estate gets to siblings, then half-bloods given only a 1/2 share of whatever whole-blood relations are given a Exception: if all siblings are half bloods, they will all be treated as whole-bloods 2) Adopted Children = adoptive children included in term "heirs at law" POLICY: trending change from Old View (NDI) -> New View (LDI) b/c more step-parent adoptions = child keeps ties w. the biological parent & biological families, while also has new ties w. new adoptive parent a no dual inheritance suppose to cut ALL ties w. bio parents (out with old, in with new), --BUT--> in step parent adoptions, its purpose doesn't apply & hurts kid by cutting them off from family b state CAN regulate which family can inherit from b/c inheritance is a PRIVILEGE granted by state, not a natural right 3 APPROACHEs: all allow inheritance from ADOPTIVE parents, but differ on whether can also inherit from GENETIC parents a (1) No Dual Inheritance (MAJ + Old View) = adopted child can inherit ONLY from adoptive parents/relatives (NO inheriting from genetic family) b (2) Limited Dual Inheritance (UPC/MIN + Trending Mod View - limited inheritance from genetic family) = adopted children can inherit from either (i) adoptive relatives & (ii) genetic relatives ONLY IF the child is adopted by a stepparent c (3) Dual Inheritance...adopted children inherit from both adoptive parents & genetic parents/relatives 3) Adopted Adults: USE: common act to adopt an adult in order to for them to receive the benet of being a Dd (ex: H adopts W so will be included in Mother's class gift to all her children) POLICY: is this moral or legally acceptable to circumvent intestacy laws w. adoption laws? 5

 RULE: split majority on whether adult adoption to affect a class gift is acceptable a (Old Rule): Permissible b (New Rules): Impermissible...adult adoption for the purpose of bringing that person into a class gift is not be permitted WHY...court wont allow a aw in the adoption law to do violence to the Tr's intent -> one law must give way - presumed intent -> court infers Tr's intent, believing the Tr CLEARLY couldn't intend/expect this - this is especially true b/c adoption CANNOT be undone -> once adopted, that person is their child for life UPC 2-705: persons adopted after reaching 18 are excluded from class gifts to the adoptive parent's children, issue, descendants or heirs by someone other than the adoptive parent UNLESS the adoptive parent was the adoptee's stepparent or foster parent, or the adoptive parent functioned as a parent of the adoptee before the adoptee turned 18 4) Equitable Adoption (aka Virtual or Adoption by Estoppel) USE: intestate estate of parents w. informally adopted child (= when child adopted w/o formal K, but in effect only) - determines if estate can pass to adopted child -> meant to PROTECT kid adopted in effect, but not legally a (Limited to) (i) use against Adopting PARENTs ONLY -> child can only use to inherit from parents, but not other family members parent cannot use to inherit from the adopted child (protects child ONLY) (ii) INTESTATE ESTATES only - most don't allow doctrine's applicaition in testate estates EFFECT: if proven...(i) adopting parents (or estate of APs) are estopped from denying a formal adoption of the child (ii) child = adopted child -> permits child to inherit from the adopting parents MAJ Rule: Estoppel Theory = oral K to adopt a child is INFERRED btw the child's genetic parents & adopted parents IF (i) the adopting parents take the child into their home AND (ii) raise it as their own child a (Burden) on CHILD -> high standard of clear & convincing evidence b (Policy) reasonably foreseeable detrimental reliance = look for Child-Adoptive Parent RELATIONSHIP -> don't look for actual K, instead look to ACTIONs to nd the K WHY...some cultures don't go to attorney's for everything; if child needs taking care of, they just take the child in i if child does everything they are suppose to do (i.e., acts like a child to the parent), others should be estopped from denying that child inheritance from the person they have known & treated as their parent MIN Theories: a (i) K Theory...STRICT theory -> must fully comply with each element POLICY: very uneffective -> strict readings have harsh consequences for kids (who the rule is meant to protect) i CONs of K Theory: (1) Commits virtual FRAUD upon the child if adoption is not honored...child acts as a child & believes they are the child of the adoptive parent; if denied that due to formalities, commits fraud upon the child (2) No meeting of the Minds -> child performs, but is too young to understand if K not completed on both ends (3) EA meant ot PROTECT the CHILD -> formal requirements don't do that well (4) Bio Parents are dead/gone -> the only interests in jeopardy are the child's RULE = to prove an informal adoption must show: i (1) agreement btw natural & adoptive parents, both of which are competent to K for the disposition of the child ii (2) performance by all parties involved...natural parents by GIVING UP CUSTODY child by LIVING W. the adoptive parents foster parents in TAKING CHILD INto their home & treating as their own iii (3) intestacy by the foster parents b (ii) Family Relationship Test...LOOK FOR: surrender of ties by bio parents, companionship of the child, child performs & acts like a family; love & affection; adopting parent call the child their child 5) Posthumous Children (PC) = a child conceived BEFORE, but born AFTER its father's death MAJ Rule (FL & UPC) = child treated as full human being from the time of conception rather than from the time of birth IF (i) the child is born alive (**UPC -> adds child must survive X amount of days) AND (ii) it is to their advantage to do so EFFECT: child may inherit from father --why--> child treated as if born DURING the father's life (gives FULL child status) 6) Nonmarital Children = child of unmarried parents (= all all or to each other) USE: when a child's parents are not married (at all OR to each other), the Father must be legally determined BEFORE a child can inherit from him POLICY: inheritance is very much determined by use of the Parentage Act a 1970's: Parentage Act...started dramatic change in law's treatment of NM children; determine ways to est. paternity by starting to look at F's relationship w. CHILD, instead of the MOTHER WHY...recognized relationship there even w/o relationship to mom, & that a child had a right to that accuracy of father b Today: with more public acceptance, many jurisdictions allow inheritance from BOTH parents, even if not married BUT, most of the battle is fought during the PARENTAGE proceeding not the inheritance proceeding RULE: a (Main) NM kids are allowed to inherit from their fathers if paternity est in one of the following ways: (1) subsequent marriage of the parents (2) acknowledgement by the father; following creates PRESUMPTION of paternity: i signed afdavit OR put self on birth certicate (as long as mother didn't object) 6

ii took on fatherly role -> took child in, acted as father to the child New Parentage Act...requires child live w. father for rst 2 yrs of child's life (a) pro...high standard ensures child is freed up for adoption in reasonable manner of time if F not committed (b) con...if mother w/holds child's existence from father, he may give up rights w/o knowing he did (3) adjudication during the life of the father (*Best Proof: DNA TEST -> many don't use, but would be best safeguard) (4) after his death, clear & convincing proof (*maj allow / min require child est. parentage BEFORE the father dies) b (Legal Presump) = HUSBAND presumed to be father of child born (i) during the marriage (even if invalid) OR (ii) w/in 300 days post-marriage (even if divorce) OR (iii) prior to marriage to the child's mother - est. by the Parentage Act -> based on MARITAL type behavior - BURDEN on the presumptive father to rebutt the presumption (should do ASAP if want to be effective) c (Exception) = Non-Bio parent will remain the LEGAL parent even with counter evidence when... (i) too much time has passed -> child already formed relationship w. non-bio parent & treat as parent (ii) divorce's child support or custody issues...legally held to parental duties if acted as parent long enough ex: W tells H at divorce he is not the father; H still = F, will get custody & must pay child support (iii) switched at birth 7) ART Children (Assisted Reproductive Technology) = means of causing pregnancy other than via sexual intercourse (Policy): should all ART factual settings be treated the same, despite M/F being genetic linked in some cases but not others a Questions to ask...who is the PARENT? who gets CUSTODY? Easiest Cases...H & W are the genetic providers Harder Cases...H or W not genetically linked to the child (Types) a (1) Posthumously Conceived Child (PCC) = child that is conceived AND born after 1+ of the child's genetic parents die v. Posthumous Child...NOT same -> PC = conception when father IS ALIVE; PCC = conception post-death v. Non-Marital Children...SAME -> legally, marriage ends at death --thus--> child conceived outside of marriage Policy: in determining should inherit, 3 competing state interests must be balanced i (1) Best Interest of Child...the child is innocent -> should rights be denied just b/c of how brought into the world? allowing kids born post-D's death to inherit has potential to pit child/fam v. child/fam ii (2) Orderly Admin of Estates...heirs/creditors need certainty via prompt & accurate administration of estates iii (3) Respect People's Reproductive Rights INTESTACY...do PCCs receive the same inheritance rights of natural children under intestacy laws? i Rule: MAJ = in intestate estates, PCC are allowed the SAME inheritance rights as natural born children IF (a) surviving parent (or child's legal rep) can demonstrates a genetic relationship btw CHILD & D (b) survivor parent (or child's legal rep) establish that the D afrmatively consented* (i) to posthumous conception AND (ii) to the support of any resulting child (*purpose...to prevent fraud under the intestacy statute) v. UPC...same + adds in TIME LIMIT from date of D's death (child in utero w/in 36 mo. or born w/in 45 mo.) v. FL...NOT allowed for intestacy -> PCCs can inherit ONLY IF expressly provided for in the D's will TESTACY i Express Gifts...YES, PCCs can inherit expressly made gifts ii Class Gifts...DEPENDS -> asks should class gifts be interpreted to include PCCs? (Rule) if a governing instrument is silent, a child born of new biotechnology w. the consent of their deceased PARENT is entitled to the same rights for all purposes as those of a natural child (a) FOCUS: PCC's PARENT's consent, not Gr -> if Gr gives to parent's issue, usually want ALL of issue to take (b) TIME LIMIT? becomes an issue if closing an estate, but not when administering a trust (c) v. UPC...same + adds TIME LIMIT from estate distribution date (child in utero w/in 36 mo., born w/in 45 mo. or living on date of distribution) (v. intestacy...focus on date of death, not distribution) b (2) Surrogacy (Policy) asks the question -> WHO is the legal MOTHER? very little & inconsistent regulation on this b/c: i lots of MORAL issues and conicting policies involved - mainly: right to reproduce baby selling...is agreeing to gestate a child & then renounce rights akin to baby selling? what if you get paid more then expenses? what if you're genetically linked to the child? ii these issues often face SAME-SEX COUPLEs -> providing them w. very little certainty if decide to have kids should the nongenetic parent adopt? K can't cure all -> HUGE public policy implications (Rule) WHO is the legal MOTHER? i (1) Legal PRESUMPTION that the birth mother = the legal mother AND biological mother = the legal mother (*historically, these went hand-n-hand) ii (2) If the birth mother & biological mother are NOT the same person, courts have taken 1 of 2 approaches - either: (i) GENETIC RULE...biological mother = legal mother (ii) INTENT RULE...person who intended & set into motion the child's birth = legal mother *in cases of where NO mother intended the child's birth (i.e., child only has fathers), courts split on whether child's birth certicate can be listed w. no mother 7

(ii) INTENT RULE...person who intended & set into motion the child's birth = legal mother *in cases of where NO mother intended the child's birth (i.e., child only has fathers), courts split on whether child's birth certicate can be listed w. no mother 8) Guardian OR Conservatorship of Minors = NOT Dd, but appointed via will or state to (i) care for child & (ii) manage minor's $ TYPEs (not tested on most of these): a (1) Guardianship of the PERSON = has responsibility for the minor child's custody & care (i.e., natural parent until die), but NO authority to deal w. the child's property b (2) Guardianship of the PROPERTY = given duty of preserving property left to the minor & delivering it when reach 18 AVOID at all costs -> too much court involvement, incurs lots of fees, leaving minor w. little money c (3) Conservatorship = guardian of property w. investment powers similar to those of trustees If no trust, WAY to GO -> much more exible and less court interference in what is going on d (3) Custodianship = a person who is given property to hold for the benet of a minor under the Uniform Transfers to Minors Act or Uniform Gifts to Minors Act Best only for small gifts - if big gift, better to use trusts e (4) Trusts = most exible and highly customizable property management arragnement BEST -> deal w. later (Exception) Advancements = a inter vivos gift intended to COME OUT of a Dd's intestate share 1) POLICY: look at D's views of the money -> ADV = view money as a PREPAYMENT on Dd's share of D's estate v. Gift...view money as given FREE & CLEAR w. no strings attached -> Dd KEEPs $ & doesn't take out of share v. Loan...view money w. expectation of REPAYMENT during D's lifetime *if don't repay before D's death, Dd = estate debtor -thus-> must repay OR have it taken out of estate share 2) RULEs: must determine... (i) Is there an ADVANCEMENT? a (Old View) Common Law: PRESUMED anything parent gave a child IS an ADVANCEMENT policy...assumed parent would want ALL assets (during life & after) equally distributed among children burden...CHILD must rebut presumption w. clear evidence b (Mod View) UPC / FL...(i) PRESUMED anything parent gave a child IS NOT an advancement, but a GIFT (ii) UNLESS, (a) D's contemporaneous writing (= at time of giving) indicates an advancement OR (b) Dd acknowledges it is an acknowledgement in writing policy...law changed b/c impossible to keep accounting & pointless (= if child favored in life, likely favored in death) (ii) if ADV, how to determine heir's shares? a HOTCHPOT System: (i) Advancement added into the total of the Estate (ii) Total of the Estate is divided by # of Dds (iii) Dd gets a share MINUS the amount of the Advancement iii (3) Ancestors & Collaterals USE: only if there is NO (i) Spouse OR (ii) 1st-Line Collaterals = D's Dd, D's Parent's & D's Parent's Dds METHOD (Maj) = estate splits (1/2 to paternal & 1/2 to maternal side) & passes to D's Ancestor/Collateral kin either by*: - 1/2 states cut off at GPs & their Dds - Collateral Kin = all persons who are related by blood to the D but who are not Dds or ancestors - *MUST have Table of Consanuinity to complete 1) Parentelic System = following stock columns --> START w. D & go down each stock column until nd an heir 2) Degree-of-Relationship System = estate passes to the closest of kin, counting degrees of kinship - degrees of kinship = # of steps down to the claimant from the common ancestor w. D -> *listed on Table of Consanguinity 3) (Possible) Heirs of Last Resort...if NO heir found above, some statutes pass to the following: Step-Children In-Laws STATE...ALWAYs the last place if no kin is found, the estate escheats (goes to) the state F (EXCEPTIONs) Bars to Succession...even if in line to inherit from an intestate estate, the following will prevent it: (1) Homicide (aka Slayer Statutes) = law barring murderers from inheriting from their victim i (MAJ): WHEN...intentional killings only -> intentional manslaughter, murder, but not unintentional manslaughter - recklessness will not prevent a person from taking HOW...law implemented either by: 1) treating murderer as if PREDECEASED the deceased victim 2) let murderer take --then--> law imposes a CONSTRUCTIVE TRUST on the property, which passes property to D's other heirs (Policy) CT = tool of EQUITY --b/c-> property acquired by unconscionable mode, equity treats him as a constructive trustee & compels him to convey the property to others (2) Disclaimer = when an heir/devisee declines to take the property left to them i RULE: (MAJ): ALLOWED -> in order to complete transfer, gifts (inter vivos or by will) must be accepted by the Donee (De) - exception: IRS...if US a creditor of De, assets treated as if the De held the property --thus--> US can take their share (METHOD): if disclaimed, De is treated as if PREDECEASED the Donor (Dr) or time of distribution --THUS--> property passes to the De's HEIRs (if none, then the the Dr's Heirs) ii PURPOSE: allows for post-mortem estate planning - usually do either to: 8

 (i) Reduce Taxes...either: (i) gift or estate taxes are avoided if property passed straight to De's Heirs from the Dr's estate OR (ii) De's Heirs are in a lower tax bracket & will pay lower taxes if its passed to them (ii) Keep Property From Creditors...if indebted to creditors, De can protect his share by disclaiming it 1) EXCEPTION: IRS (see above) 2) Use in Bankruptcy = use of OK as long as disclaimer made prior to the ling of the bankruptcy petition DATE of FILLING: Relation Back Doctrine = for all purposes, a disclaimer relates back to the date of the Dr's death

III. WILLs = Type of ESTATE PLANNING -> document by which a person directs his or her estate to be distributed upon death A (CAPACITY) Testator must have CAPACITY in order to execute a will 2 Types: i (1) Mental Capacity = a Tr must have MENTAL CAPACITY in order to have a VALID WILL Policy...mental capacity is required, but the threshold is LOW 1) Why require at all? Protects Tr...assurances to the sane that decisions they make will be honored even if they become incapacitated later protect the incapacitated from eploitation Protect D's Family (historic view of family an economic unit & inheritance contributes to reciprocal care) 2) But only require a LOW threshold b/c public police is more worried about protecting Trs in LIFE then DEATH Capacity Thresholds
Form of Legal Obligation Marriage (Transfers in DEATH) Will Protection of Property v. Testamentary Freedom Protection of Property v. Individual Autonomy *v. Transfers in LIFE - lower threshold b/c public only worried about protecting Tr from impoverishment, NOT worried about protecting the Tr's HEIRs (Transfers in LIFE) Irrevoc. Lifetime Gift / K / Deed Protection of Property v. Freedom of K *v. Transfers in DEATH - higher threshold b/c worried about person becoming IMPOVERISHED during lifetime --causing--> them to end up on the public dime

Competing Policies

LOW threshold------------------> further RIGHT move, the more protection that is required ------------------------------------> HIGH threshold & the higher the threshold for capacity will be

a Transfers in DEATH v. Transfers in LIFE example: HYPO: D declared incapacitated on 8/5/51 & a guardian is appointed; D signed will on 6/20/57; D dies in Oct 1957 i Lifetime Transfer...if challenging K Tr signed look to the mental health statute -> capacity threshold HIGHER Mental Health Statute...prior order of incapacity = CONCLUSIVE evidence of incapacity ---thus---> PRESUMED incapable of K or intervivos gift ii Transfer at Death...if challenging WILL Tr signed look to the probate statutes -> capacity threshold LOWER Probate Statute...PRESUMED sane -> contestant has burden to prove incapacity on the DAY of EXECUTION - even if prior evidence of incapacity, presumption of sanity holds; - must have evidence of capacity on the DAY of execution Rule: UPC 2-501 / Restatements = to be competent to make a will, the Tr must be: 1) an ADULT (18+) 2) of SOUND MIND (low requirements) = must be capable of knowing (NOT actual knowledge) & understanding in a general way (i) the nature & extent of his or her property (i.e., generally know what you own) (ii) the natural objects of his or her bounty (= who court believes the estate naturally would go to -i.e., by intestacy laws) - courts have a tendency to favor ANY family (even if they are distant, distant relatives) over non-family (iii) the disposition that he or she is making of that property, AND (i.e., must understand what you are doing w. your property) 3) capable of RELATING these elements to one another & forming an orderly desire re the disposition of the property AND (i.e., must be able to write a will or dictate wishes) 4) ALL the above must exist at the TIME of the WILL's EXECUTION - people can regain competency...even if evidence of prior incapacity, must have evidence of incapacity at the TIME of execution Burden of Proof: 1) (MAJ - Willson) Presume CAPACITY (i) Will PROPONENT must est. a prima facie case that the will was DULY EXECUTED then the (ii) --burden shifts--> Will OPPONENT has the burden of est. a LACK of CAPACITY (at time of execution) Types of EVIDENCE: a Diseases & Wills Incapacity Automatically, BUT it could hurt In re Estate of Washburn (SC of NH 1997): executed 3 wills w. the last one vastly changing what she originally had i HOLDING: 3rd will declared invalid b/c found that the Tr was INCOMPETENT (1) Will Proponent...showed that the will was duly executed (2) Will Opponent..evidence presented to REBUT a PRESUMPTION of CAPCITY: (a) Tr acted forgetful at her sister's funeral - forgot family members (b) Diagnosed w. Alzehimers 1 yr later (c) Drastric change in will in a matter of 3 weeks ii TAKE: Diseases & Wills...evidence that Tr is suffering from Alzheimer's/Dementia close to execution of the will INCAPACITY automatically, but it could hurt 10

TAKE: Diseases & Wills...evidence that Tr is suffering from Alzheimer's/Dementia close to execution of the will INCAPACITY automatically, but it could hurt b Wacky / Eccentricity Incapacity Wilson v. Lane (SC of GA 2005): family challenged T's will due to lack of testamentary capacity i HOLDING: Afrmed - the will is VALID (1) Will Proponent...showed that the will was duly executed, the form is correct, etc. (2) Will Opponent...evidence presented to REBUT a PRESUMPTION of CAPCITY: (a) Appointed Guardian for some affairs AFTER she made the will (b) Peculiar...strange fear of house ooding ii TAKE: must be careful of AGEISM...being elderly, eccentricity, forgetful or odd does NOT mean a person does not have mental capacity -> there must be MORE Professional Responsibility...a lawyer may not draft a will for a person they believe is incomepted, BUT the L may rely on their own judgement of the client's capacity & work with a client they believe is borderline 1) BEST OPTION...preserve evidence of the C's testamentary capacity ii (2) Insane Delusion = a Tr must NOT be suffering from an INSANE DELUSION in order to have a VALID WILL v. Mental Capacity...SIMILAR, but may not be same - can suffer from one & not the other (i.e., Tr has MC, but suffers from an ID) BOTH bear on testamentary capacity & could invalidate a will v. Mistake / Delusion...D = a false conception of reality that CAN be corrected if the Tr is told the truth (DOESN'T invalidate a will) ID = a false conception of reality that CANNOT be corrected by presenting the Tr w. evidence indicating the falsity of their belief (DOES invalidate a will) Frequently LItigated Delusions 1) Unfaithfulness of Spouses (ex: spouse leaves surviving spousse out of will b/c falsely believed they cheated on them) 2) Parentage of Children (ex: often if child is left out of estate b/c parent believes the child is not theirs) 3) Imminent Harm by Others (ex: paranoia causes Tr to believe others want to harm him) 4) Demonic Possession by Others MAJ Rule: a Tr is suffering from an INSANE DELUSION if: 1) Tr has FALSE BELIEF = Tr has a (i) false concept of reality AND (ii) adheres to that belief against all evidence & reason to the contrary (i.e., NO rationale person would adhere to the same believe if given same evidence) just ECCENTRIC...mere eccentricities, prejudices or religious beliefs do NOT by themselves constitute I.D. a these may be factors in determining if Tr has the requisite mental capacity, but don't alone constitute an I.D. hypos...(i) Tr hears voices that tell him to execute a new will & leave money to Pres. Obama = I.D. (no voices inside head + changed will on basis of I.D. = material affect) (ii) Tr believes in ghosts I.D. b/c no conclusive proof ghosts do/don't exist (rationale person could believe the same) 2) Some FACTUAL BASIS OK...even if there is some factual basis for the belief, the delusion is still insane IF a RATIONALE PERSON could not have drawn the same conclusion (Min) If there is ANY Factual Basis for the delusion is is NOT INSANE 3) CAUSATION btw I.D. & Will = the insane delusion MATERIALLY AFFECTED or INFLUENCED the will - ASKs...was the will's dispositions rationale for this person's life? OR was it drastically diff then previous most would think? (v. Min) Insane Delusion MIGHT have caused or affected the will = presumption of causation if there is (i) an I.D. + (ii) an unnatural disposition (but, hard to know what is natural) Applied: 1) In re Strittmater (NJ 1947): old-maid, lived w. parents, never married; hated men, left all $ to Ntl Woman's Party (feminist org) HOLDING: Court INVALIDATED will b/c believed she suffered from an I.D. that led her to leave her estate to the NWP a What was the insane delusion? ALL males are EVIL Problem's w. Ruling...(i) Crt never sought out whether Tr had a RATIONALE REASON for hating men or her parents (ii) Crt assumed b/c didn't leave $ to "natural objects of her bounty" that her will was materially affected - evidence suggests otherwise -> hadn't spoken to family in years; vol everyday at NWP TAKE: (i) Court must look at if a REASON for the I.D. (i.e., basis that would make it not a false concept of reality (ii) If Tr's doesn't leave to her "Natural Bounty" Material Affect -> ask if disposition was rationale for Tr's life 2) Breeden v. Stone (SC of CO 2000): hit & run; lots of drugs & alcohol, handwrote a will & killed himself HOLDING: Will = VALID...yes, Tr was suffering from I.D. (very paranoid, thought FBI / friends / family after him); HOWEVER, this did not materially affect how he disposed of his estate; lots of evidence prior to then of bad relationship w. family that would of prevented him from leaving his estate to his family TAKE: (i) Must have CAUSATION btw I.D. & how disposed of estate -> ask of disposition typical of this Tr (ii) Holographic Wills & Capacity...look at Tr's PENMANSHIP for evidence of capacity (look normal? motor skills ok?) Dead Man's Statute (Min) = these statutes refuse to allow an INTERESTED PARTY (i.e., person entered K w.) testify about ORAL statements made by the Tr/Dt 11

1) MIN (old rule)...follow above WHY...because the Tr/Dt cannot defend himself -> he is the only other person who knows what really happened & he's dead 2) MAJ (new rule)...repealed above FL repealed + enacted a new exception to the hearsay rule: a If evidence is admitted that the D made a binding oral K w. the W prior to death, the etate can rebut contrary evidence even if hearsay B (CONTEST) = when a will is challenged as being INVALID Remedy: i (i) (Most Common) INVALIDATION...if Will Opponent proves his contest grounds, the will is INVALIDATED Possible CON: Tr's estate is likely to pass by intestacy ii (ii) CONSTRUCTIVE Trust = an equitable doctrine that acts upon the GIFT in the possession of the wrongdoer (or as soon as it's in the WD's possession) & compels the WD to turn over the gift to the RIGHTFUL Donee v. Contest 1) Contest...acts upon & invalidates (in whole or part) the WILL --causing--> those gifts pass via remainder clause or intestacy 2) Constructive Trust...acts upon & invalidates the GIFT --causing--> those gifts to be REDIRECTED to their rightful owner - court can't RE-WRITE a will, therefore they must nd another way to get gifts to the rightful donees Policy: Equitable Doctrine...CT ACTUAL trust, but in theory makes those w. the property "trustees" for the rightful owners - for when property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the benecial interest, equity converts him into a trustee Use: RARE - can be used for Fraud / Duress / Undue Inuence / Unjust Enrichment, BUT likely only if 1) Post-Probate Remedy = if delayed in making a will contest OR past the point when a will contest would be useful 2) Fraud / Duress / UI used to PREVENT a person from revoking an old will or signing a new will For both guilty & innocent parties...the F/D/UI that invalidates the transfer to the wrongdoer may be the act of the WRONDOER or an Innocent 3P (if unjustly enriched, then equity calls for them to not get the benet) Applied: Latham v. Father Divine (CoA NY 1949): follower of Father Divine (cult leader) who left FD the majority of her estate, but later changed her mind, drafted a new will leaving her estate to her cousins, was prevented from execution by FD murdering her 1) HOLDING: Duress found, but invalidating the will would do no good b/c would cause the estate to pass intestacy & wouldn't go to Tr's nieces (as she expressed she wanted it to); - constructive trust the RIGHT remedy (1st case to expand the use of the CT) Warning Signs...as a lawyer, should know in drafting that if any of the following exists it will likely CAUSE the will to be contested: i new testamentary scheme mades radical departure from previous plans ii Tr has multiple or blended families from multiple marriages iii Tr imposes the sort of conditions on a bequest that are likely to anger the beneciary iv Tr makes a disposition to a mistress or other unpopular person w. the family v unnatural disposition (i.e., cut out close family) vi large bequest to drafter BEQUESTS to ATTORNEYs 1) UI...(MAJ) Rule...UI is presumed if an attorney-drafter receives a legacy, EXCEPT when the attorney is realted to the Tr 2) Fiduciary Appointments...attorney-drafters can also have conicts of interest in wills that name them as executor or trustee b/c the duciary is usually entitled ot fees MPR Rule 1.8: in obtaining the C's informed consent to the conict, the L should advise the C concerning the nature & extent of the L's nancial interest in the appointment, as well as the availability of alternative candidates for the position Strategies to AVOID will contests: i (1) Record Building Recorded Video Discussions Professional Examination of Capacity -> NEVER use your own judgement to determine if client is incompetent; get a pro Use Disinterested Ws...pick people who would present well in court; tell them their importance; what they need to observe/watch for Inter Vivos Trust...harder to upset a trust if the settlor had a course of dealing w. the trustee Letter to the L...have Tr set out details of disposition want in a letter to the L & reasons for it -> keep letters in le in case of contest ii (2) If Tr wants to MAINTAIN SECRECY Inter Vivos Trust or Gift...can't challenge a gift -> its a done deal; & if necessary, Dr able to testify in court & explain decision if needed iii (3) Sooth Feelings...if some will provisions are going to hurt feelings, a lawyer might try: Family Mtg...gives Tr chance to explain rationale Letter or Video Explanation iv (4) No Contest Clauses (aka In Terrorem Clause) = clauses that provide that IF a beneciary contests the will they'll shall take nothing or a token amount INSTEAD OF the provisions originally bequeathed to the beneciary Policy: controversial - pro...enforcing the clause discourages unmeritorious litigation, family quarrels & defamation of Tr's rep con...might inhibit a lawsuit that would prove lack of capacity or undue inuence Effective? ONLY if going to leave those likely to contest the will a sizable portion --> otherwise, they have nothing to lose Rule 12

1) (MAJ) enforce no-contest clauses, UNLESS there is probable cause for the contest how works...(i) if probable cause to contest the will (ex: strong evidence of UI) + (ii) beneciary challenges will --then--> beneciary will still get originally bequeathed provision, no matter if win or lose why...reduces the risk to the contestant of bringing a contest, but ONLY IF there is a colorable basis for the claim 2) (MIN + FL) NO enforcement of no-contest clauses at all Will Contest Grounds: At-a-Glance: Lack of Capacity...Tr CRAZY Undue Inuence...Subtle COERCION Fraud...LYING Duress....Overt COERCION i (1) Lack of Capacity (see above - for mental capacity or insane delusion) (+ often alleged with Undue Inuence b/c mental status overlaps w. the susceptibility elements of UI) ii (2) Execution Formality Defects (see next chapter) iii (3) Undue Inuence (UI) = COERCION -> when the will of the Tr is coerced into doing that which she/he does not desire to do RULE = if the Will is the product of UI ---then---> the will is INVALID Will v. Inter Vivos Transfers...treated the SAME -> if the product of UI, then found invalid as well Whole v. Part of the will...if WHOLE - the entire will is invalid if PART - that portion will be separated out & stricken w. the remainder left to stand IF such can be done w/o defeating the Tr's intent or destroying the testamentary scheme (in not, ALL is invalid) TEST for UI = a donative transfer is procured by UI if the wrongdoer exerted such inuence over the Dr that it: 1) Overcame the Donor's FREE WILL, AND 2 Ways to Prove: a (i) Directive Evidence...UNLIKELY- generally, Tr is dead & actions/words of inuencer are neither witnessed or recorded, so courts often rely heavily on circumstantial evidence b (ii) Circumstantial Evidence =
(i) Condential Relationship btw Tr & Inuencer 3 Categories of CRs (relationship likely ts in 1 or more): (1) Fiduciary Relationships = where the CR arises from a settled category of duciary obligations - ex: lawyer-client; guardian-ward; dr.-patient; priest-parisioner; power of attorney *exception...if Attorney-Drafter receives a legacy, UI is presumed UNLESS the attorney is related to the Tr (2) Reliant Relationship = relationship based on special TYPEs of Suspicious Circumstances: - Inuencer...receives the BULK of the ESTATE PROCURED the WILL (huge red ag) - Dr...had weakened intellect or was susceptible to inuence changed attitude toward others due to relationship w. inuencer - Lots of SECRECY - OPPORTUNITY for inuence to occur - Or basically, result just appears to be one procured by UI -> Reasonable person would regard will as UNNATURAL or UNFAIR + (ii) Suspicious Circumstances

----gives rise to a------> PRESUMPTION Of UI (Burden Shifts to the Will's Proponent to rebut UI was here)

trust & condence - ex: Financial Advisor-Customer; Dr-Patent; Lawyer-Client; Guard-Ward (3) Dominant-Subserviant = where the Dr was subservient to the Inuencer's dominant inuence - where one always does what the other wants - ex: Caregiver-Ill/Feeble Dr;
Rebutted by proof that: (i) Inuencer acted in GOOD FAITH throughout the transaction

Rebutted by proof that: (ii) Tr acted FREELY, INTELLIGENTLY & VOLUNTARILY

2) (CAUSATION) inuence caused the Dr to make a donative transfer that the donor would not otherwise have made - there must be CAUSATION -> will must of been affected for this claim to exist BURDENs of Proof: 1) Will PROPONENT must prove the will was DUELY EXECUTED (*always rst) 2) --burden shifts---> Will OPPONENT must prove UNDUE INFLUENCE (or the presumption of UI from above) INDIRECTLY prove specic facts that give rise to a PRESUMPTION of UI --shifting the burden--> back to the Will Pr to rebut 3) ---burden shirts---> Back to Will PROPONENT to REBUT presumption of UI How to Rebut...prove by CLEAR, SATISFACTORY & CONVINCING EVIDENCE that: a (i) Inuencer acted in GOOD FAITH throughout the transaction (*remember...in CR, so Prop knows condential facts) b (ii) Tr acted FREELY, INTELLIGENTLY & VOLUNTARILY WHY fair to make Proponent Prove? (i) usually proponent = inuencer (ii) a person who benets from a condential relationship is in the best position to take precautions to ensure that proof exists that the transaction was fair & after the transaction, explain & justify it 13

WHY fair to make Proponent Prove? (i) usually proponent = inuencer (ii) a person who benets from a condential relationship is in the best position to take precautions to ensure that proof exists that the transaction was fair & after the transaction, explain & justify it Case Rules 1) Socially Unacceptable Relationship...Courts have used U.I. to INVALIDATE testamentary gifts between relationships they nd socially unacceptable (i) Unmarried Old Woman & Younger Man a In re Will of Moses (SC MS 1969): Unmarried Older Woman-Younger Man relationship - Tr was married 3 times, no kids; left estate to post-3rd husband lover (an attorney) HOLDING: Will found INVALID due to UI -> did not nd the presumption of UI to be rebutted i Suspicious Circumstance = "unnatural disposition" -> why unnatural? couple was UNMARRIED & she was older TODAY...would it be the same? hopefully not - at least the language would be different, more neutral b In Re Kaufmann's Will (NY 1965): Same-Sex Couple - R artists w. lots of $; W took care of the house & bookkeeping; R left all money to W & wrote letter explaining how much he loved W & why he left him his estate; family challenged ; HOLDING: Will INVALIDATED due to UI -> Court found that W pried on a weak-willed, trusing, inexperienced man i Court used letter R wrote AGAINST him as evidence to show what "inuence" W had over him --> shows that nothing R could of done would of convinced the court R & W really loved each other; product of social bias 2) Attorney-Draters that RECEIVE legacies give rise to a ----PRESUMPTION---> of U.I - EXCEPTION: if the Att & Tr are related (*however, still a good idea to avoid) 3) Stating REASONs for DISINHERITANCE in the Will...could be helpful in explaining, but generally best to keep it SHORT - the longer it is the more likely Tr will be either (i) Liable for Testamentary Libel OR (ii) Provking Disappointed Heirs to Challenge the will on principle alone Lipper v. Weslow (TX CoA 1963): challenger = deceased son's disinherited kid; attorney-son & beneciary wrote the will a HOLDING: No UI -> while there was a condential relationship, there was no suspicious activity Prof HD...believes the court did not look into the Son & Mother's relationship enough -> thinks there might of been UI - wrote the will & was beneciary (BIG red ag); had key to mom's house; didn't like deceased brother - also, explanation of why disinherited looked suspiciously like it had been written by an attorney iv (4) Fraud = DELIBERATE misrepresentation ---that CAUSES---> the receiver to do something they would of not otherwise done RULE = if the Will is procured by FRAUD ---then---> the will is INVALID Whole v. Part of the will...if WHOLE - the entire will is invalid (*same as UI) if PART - that portion will be separated out & stricken w. the remainder left to stand IF such can be done w/o defeating the Tr's intent or destroying the testamentary scheme (in not, ALL is invalid) TEST = fraud exists where the 1) Tr is Deceived by a deliberate misrepresentation AND deliberate = done w. both the (i) INTENT to deceive & (ii) the PURPOSE of inuencing the testamentary disposition 2) (CAUSATION) as a result, Tr does that which he would not have otherwise done (Specic) 2 TYPEs: a (1) Fraud in the INDUCEMENT = when a misrep causes the Tr to (i) execute or revoke a will, (ii) refrain from executing or revoking a will OR (iii) include particular provisions in the wrongdoer's favor b (2) Fraud in the EXECUTION = when a person intentionally misrep the character or contents of the INSTRUMENT signed by the Tr, which does not in fact carry out the Tr's intent v. Execution: I...Tr KNOWs/REALIZEs what they are signing, but has their MOTIVATION is not properly informed E...Tr does NOT KNOW or REALIZE what they are signing, but their motivation IS properly infomred Applied: Puckett v. Krida (1994 - Tenn): 2 Nurses hired for 24 hr care for Tr, isolated & turned the Tr against her family telling her they were wasting her money & wanted to put her in a nursing home; Tr executed will leaving all to nurses i HOLDING: Fraud & UI - they had a condential realtionship w. her - (1) as caretakers & (2) as power of attorney Classic Fraud case: (i) Deliberate Misep = lied about family (weren't wasting $ or wanting to put her in a home) (ii) Causation = b/c of misrep, Tr changed will beneciary from family -> nurses (a) = FitINDUCEMENT...misrep caused Tr to revoke, execute a will & include provisions for the wrongdoer - Tr knew she was changing her will & did so b/c of an improperly informed motivation v (6) Tortious Interference w. an Expectancy vi (5) Duress = when UI becomes OVERTLY COERCIVE -> a little more then coercion RULE = if the Will is procured by DURESS ---then---> the will is INVALID (*transfer compelled is invalidated) Whole v. Part of the will...if WHOLE - the entire will is invalid (*same as UI/Fraud) if PART - that portion will be separated out & stricken w. the remainder left to stand IF such can be done w/o defeating the Tr's intent or destroying the testamentary scheme (in not, ALL is invalid) TEST = duress is when: 14

1) a wrongdoer procures a donative transfer 2) by threatening to perform or performing a wrongful act that 3) (CAUSATION) ---as a result---> coerces the Tr into making a donative transfer that the Tr would not have otherwise made Alternative: Tortious Interference w. an Expectancy = tort claim to recover DAMAGES from a 3P for tortious interference i v. Will Contest - WC...probate claim - seeks to invalidate the will; shorter statute of limitations (starts when PROBATE started) TIw.E...tort claim - seeks damages; longer statute of limitations (starts when DISCOVER the fraud) ii POLICY...claim exists to protect the TESTATOR, not the beneciary, b/c Tr's FREEDOM to devise her property as she sees t has been interfered w. iii REMEDY: Damages (i.e., the inheritance/gift not received) iv USE: in practice, this remedy will be RARELY used - Basically will only be used when (i) Challenger has NO notice of probate; (ii) the SoL to challenge the will has run (starts at probate) & (iii) SoL for Torts has not run (starts when fraud / UI / duress discovered) v RULE (MAJ) = the tortious interference w. an expectancy claim of action exists where there is: (1) an EXPECTED inheritance or gift (2) an intentional inerference w. that expectancy through TORTIOUS CONDUCT (= fraud / duress / UI, but no mental incapacity) - tortious conduct must be directed at the Testator (person claim is meant to protect) (3) (causation) the interference ----caused----> the expected De to NOT receive his inheritance / gift; AND (4) DAMGES (5) P pursued any probate remedies FIRST, IF have (i) notice of probate & (ii) remedies were ADEQUATE - adequate = probate remedies were available &/OR probate remedies provided adequate relief - this requirement causes this remedy to be RARE -> only used when have UNUSUAL CIRUCMSTANCEs 1) Adaquate Applied: Schilling v. Herrera (CoA FL 2007): sick sister executes will leaving everything to bro & makes him her power of attorney; sister eventually goes to live w. nurse met at a rehab home; sister executes new will leaving all to nurse; nurse doesn't tell bro sister dies till 4 months later, when she's gotten through probate; TC denied b/c didn't exhaust probate rem ISSUE: does brother have a cause of action for intentional interference w. expectancy of inheritance? HOLDING: YES - probate remedies do NOT have to be exhausted where remedies available via probate are INADEQUATE a Here, probate was over w. before the bro knew of sis' death --thus--> not able to pursue probate remedies b/c probate done TAKE: TI w. an Expectancy is only going to be useful in the RARE situation w. specic UNUUAL CIRCUMSTANCES - but, keep it in mind -> good to know that there's more then one way to skin a cat C (EXECUTION) How to Create a Will - 2 TYPEs of Wills: (i) Attested Wills = formally executed will i POLICY: the required formalities of wills do serve functions (1) Ritual Function...the performance of some ceremonial for the purpose of impression the Tr w. the signicance of his statement (2) Evidentiary Function..helps supply satisfactory evidence to the court, b/c the formalities increase the reliability of evidence (3) Protective Function...formality safeguards Tr againse undue iniuence & other forms of imposition (4) Channeling Function...easier for courts to determine Tr's wishes if all wishes are recorded in a standardized form - helps w. drafting wills too -> helps give certainty in knowing what will work ii REQUIREMENTs: will must be... Overall Differences in Approaches
Traditional Requirements (MAJ) (1) In Writing (2) Signed by the Tr (3) Attestation by 2 Witnesses = (i) Tr signs/acknowledges --in presence of---> Ws (ii) W signs ---in presence of---> the Tr (iii) Ws DON'T have sign in the presence of each other (-minus-) No presence requirement + OR notarization option* (*majority does not follow the notary option) + 2 Ws must also sign in the PRESENCE of the each other (*in addition to tradition req. to sign in presence of the Tr) + Subscription Required v. UPC 2-502(a) v. Florida (Min)

3 Main Requirements...for a will to be formally executed it must be: 1) In WRITING = a reasonably permanent record of the markings that make up the will (NO videos) 2) SIGNED by the Testator PURPOSE...provies evidence of nality & genuineness -> distinguishing the actual will from mere drafts or notes METHOD of Signature = a Tr's Name in FULL (handwritten) b Handwritten Marks...mark, cross (X), abbreviation or nickname can be sufcient 15

c Assisted...if Tr is assisted by another in signing name/mark, such is VALID IF Tr intended to adopt the doc as his will d By Another...another may sign Tr's will in place of the Tr IF (i) at the Tr's direction AND (ii) in the Tr's presence e Any Other Symbol or Methodology...Tr's execution or adoption of any other symbol or methodology as his signature is VALID ---as long as---> Tr intended to authenticate the will - ex: electronically printed name, in full, cursive font (instead of previously used reg front)? YES, has been allowed ORDER: a (i) Signings = Tr rst ---then---> W second...generally, Tr must sign or acknowledge the will BEFORE the Ws attest - exception: single or continuous transaction...the order is not critical IF all sign as a single transaction b (ii) Handwritten Additions to will BEFORE the Tr signs will be VALID AFTER the Tr signs will be INVALID (just addtions, remaining will is still valid) WHERE to Sign (MAJ* + FL) = Tr & Ws must subscribe (= sig at END of the will) to the will *even if statute doesn't require it, best to put it at the END a End = Logical View -> general end of the doc, NOT the physical end - doesn't have to be the absolute last line, just generally at the end of the entire document 3) ATTESTATION by Witnesses PURPOSE: generally to atest is to bear witness to or certify as genuine -> the witnesses are meant to 'witness' in order to (i) ID the Tr as the one who actually signed the will; (ii) provide evidence of whether, at THAT point in time, the Tr had testamentary capacity & (iii) have 2 for corroboration WITNESSES (MAJ) = must be disinterested parties a (Def) Interested W = a beneciary of the will being witnessed (Possible) EXCEPTION: Beneciaries that don't receive a benecial dispositions, i.e., their share of the estate would of been greater under the intestacy laws (i.e., no will) then the will, can still be a disinterested W b (Rule) If an INTERESTED W attests to a will, then the majority of states x w. purging statutes (MAJ) Purging Statutes = allows a will attested to by an interested W to be admitted to probate by VOIDING the bequest to the interested W i Use: applicable ONLY when a W is needed for the will's validity ii Policy: by voiding the W's bequest, the W becomes disinterested --thus--> a qualifying witness iii (Possible) Exception: some states only purge the EXCESS over what the W would have received by INTESTACY Applied: Estate of Morea (NY '96): Tr had 3 Ws for his will's signing, including 2 that were beneciarys of the will i ISSUE: is either bequest void in order to have 2 independent witnesses? ii HOLDING: No - both witnesses can still receive their bequests b/c have 1 independent witness & Tr's son received less in the will then he would have intestate, thus he did not receive a benecial disposition from this will] ATTESTATION = requires both a (1) Ws to Witness...Tr must sign or acknowledge his signature in the PRESENCE (see below for def) the 2 Witnesses b (2) Ws to Sign...2 Approaches: (i) [Old - MAJ] Presence Req. = Ws sign the will in the PRESENCE of the Tr, attesting to the fact they saw the Tr sign (*but, Ws do NOT have to sign in the presence of each other) i Presence (def for both requirements) = 3 Approaches: (1) Line of Sight = Tr does not actualy have to see the Ws sign, but must be able to see them were he to look (a) Except: BLIND Trs - only req. to have been able to see Ws sign from where he was if Tr had power of sight (2) Conscious Presence = Tr, through sight, hearing or general consciousness of events, COMPREHENDs that the W is in the act of signing (a) v. LoS....CP is broader & vaguer (b) Try to keep out BARRIERs -> the less barriers the better; the more there are the less likely it will be allowed
IDEA that Tr is PHYSICALLY near enough to observe what's going on (though physical presence not stated to

be required) ii EX: Ws sign in diff room from Tr in the same house (Tr KNOWs Ws are signing)...NO LoS, but maybe CP W signs while on the telephone w. the Tr & telling Tr what he is doing...NO LoS, maybe CP (but, gets iffy when can't see - doesn't pass smell test; better chance if over video chat, but still not recomm.) (ii) [MIN / UPC 2-502(a)] NO Presence Req = presence req. dispensed w., instead providing for 2 other options: i (A) 2 Ws must (1) WITNESS Tr sign, (2) Sign in a REASONABLE TIME after witnessing the Tr sign or acknowledge his sig/will OR - v. MAJ... + timing requirement...delayed attestation OK if w/in reasonable time (-minus-) presence requirement...Ws don't have to sign in the "presence" of the Tr ii (B) W = Notary**...Tr acknowledges his will / signature to a notary public (or other indivdual authorized by law to take acknowledgements) *MIN...very modern clause that statutes don't traditionally include (though starting to - people like notaries) - purpose of change...attesting Ws is very complicated & have led to many wills being invalidated (a) "Other Individual Authorized by Law"...WHO? sometimes attorneys, but DO NOT sign your own client's wills = possible conict of interest - becomes too messy in which role you are playing (C's adovate? Obj 3P?) 16

"Other Individual Authorized by Law"...WHO? sometimes attorneys, but DO NOT sign your own client's wills = possible conict of interest - becomes too messy in which role you are playing (C's adovate? Obj 3P?) (b) PROs of allowing:
(1) Likely that a notarized Will will be as reliable as one w. 2 attesting Ws (2) Notary Duty of Verifying ID of person signing = greater assurance signature on will is the Testator's (4) Already allowed as a CURATIVE MEAURE -> notarized will allowed where ever harmless error allowed

WHERE to sign? a Attestation Clause = clause in the will that the W signs to that recites the will was duly executed *NOT actually required, BUT all attorneys use -> likely malpractice if you don't EFFECT = gives rise to a PRESUMPTION of due execution ---thus---> will can be admitted to probate EVEN IF W predeceases Tr or can't recall the signing b (Additional Protection) Self-Proving Afdavit = sworn statements by eyewitnesses that the will has been duly executed v. AC...substantially similar but serve diff functions, thus signing one is NOT like signing the other i AC...facilitate probate by providing prima facie evidence of due execution, BUT W must still show up (if alive) ii SPA... same as AC + FURTHER effect of permitting probate w/o requiring the appearance of either witness 2 TYPEs: i
1-Step Process = W signs TWICE SelfProving Affadavits = Ws sign ONCE to the attestation clause - WHY...afdavit language is PART of the attestation clause (one document) - Notarization of the afdavit required (1) Ws sign attestation clause ---THEN--> (2) W sign a separate afdavit that refers back to the AC - MUST have both sigs for proper execution - Notarization of the afdavit required 2-Step Process

iii WHO KEEPs a Will? 3 Possibilities: (1) Testator Keeps It - CON...Tr could damage, misplace, scribble on or relatives try to destroy it post Tr's death) (2) Law Firm Keeps It - PRO...have burden of keeping will & periodically reminding Tr it is in the rm's possession CON...some states discourage b/c feel it gives the lawyer a monopoly on the client's business - Tr must go back to that lawyer if want to change will, if for nothing else then to get the will (3) File w. COURT - CON...difcult to change the will quickly iv STANDARD (Traditional): Strict Compliance = for a will to be admitted to probate, it MUST be in strict compliance w. all formal req. - if will not in 100% = INVALID -> courts may NOT modify the will to bring it into compliance Policy: traditionally, procedure wins over substance > formalities serve a purpose & want for a CLEAR rule to avoid litigation - modern...moving forward, states/courts have started trying to balance this w. the need for fairness towards people w/o resources (i.e., can't afford lawyers that know the rules) & their right to dispose of their property as they want Exceptions: (Modern) Doctrines to Cure Defects = some crts provide relief to strict compliance for obvious execution defects 1) 2 TYPEs of Doctrines:
Substantive Compliance = the court may deem a defectively executed will as being in accord w. statutory formalities if there is clear & RULE convincings evidence that the purposes of those formalities were served (i.e., the defective execution still fullled the purpose of rules) = Statue Purposes...evidentiary, cautionary, protective FOCUS & channeling/formalistic - looks at how "close" Tr came to properly drafting will - were above purposes still met by what Tr DID do? Court DEEMs the defective WILL as being in accordance w. statutory formalities v. HE...SC brings the WILL into compliance w. rules, instead of dispensing w. the rule altogether (HE EFFECT ---thus---> under SC, as many rules as possible still must be met - How to REFORM? nd method where most rules possible are complied w. (SEE Snide below) Harmless Error Rule (UPC 2-503) = the court may excuse noncompliance if there is clear & convicning evidence Tr intended this to be his will (*UPC also uses for revocation; additions or alterations of the will; revival) = TR's INTENT and whether Tr intended doc to be his will, NOT whether the execution "substantially complied" w. the statute Court may DISPENSE w. the RULE requiring the lacking execution formalities - Hierarchy of Execution Formalities (*study found which formalities courts were more willing to dispense w. (i) Writing = INDISPENSABLE...most important b/c gives permanent to the terms of the will (ii) Sign = VERY important...gives doc nality & genuiness (iii) Attestation = LEAST important...protects against fraud/ duress/UI, but most people don't need protecting = HARMLESS ERROR is better than SUBSTANTIAL COMPLIANCE BETTER Approach? - Cons of SC...becomes a "near miss" standard -> ignores central issue of whether Tr's conduct evidenced testamentary INTENT & looks at how closely Tr came to accurately drafting a will - Con of HE...testamentary intent a moving target -> hard to dene, identify &/or analyze; Tr's often have MANY intents 17

= HARMLESS ERROR is better than SUBSTANTIAL COMPLIANCE BETTER Approach? - Cons of SC...becomes a "near miss" standard -> ignores central issue of whether Tr's conduct evidenced testamentary INTENT & looks at how closely Tr came to accurately drafting a will - Con of HE...testamentary intent a moving target -> hard to dene, identify &/or analyze; Tr's often have MANY intents

2) Applied (i) Substantial Compliance: In re Snide (CoA NY 1981): H & W Snide mistakenly sign each other's will; each will gave to each other & if did not survive, to their 3 chidlren; H dies & W offers the will H signed for probate (i.e., HER will w. H's signature) a HOLDING: Will VALID under Substantial Compliance...have (i) writing (but w. wrong names); (ii) Tr sig; & (iii) attestation How to Reform...use the SIGNED will & switch the names throughout back to his -> Tr signature crucial - if used his intended will, then court must overcome him NOT signing it (bigger formality issue) *Side Issue: GAL for Minor Child...contested the will as being improperly signed - GAL to do what's in the BEST interest of the child - here, child would of gotten more $ under intestacy then will - did GAL do right thing? should consult counselor, see what the home life is like; better for him to get $? (ii) Harmless Error: In re Estate of Hall (Mont 2002): J & B sign draft of "Joint Will" & attorney notarizes it w/o anyone else present; want to use as will until get nal version; J dies & B tries to use the draft as their actual will; child contests a HOLDING: Will valid - J destroyed his original will upon receiving THIS will = Proof of J's intent that then draft be his will (ii) Holographic Wills (MAJ - UPC + 1/2 states) = informal handwritten will exempted from the statutory requirements of attested wills v. Attested Wills...same basic requirements, EXCEPT HWs do not require attesting WITNESSES i POLICY: formality not needed b/c the fact that the will is completely in the Tr's handwriting gives plenty of evidence to ensure the will was not forged and that it directly expresses the Tr's desires BAD RAP, but truly have great USE...(i) many holographic wills are NOT contested, & (ii) often are the only viable option for those who can't afford an attorney OR are in extreme circumstances close to death ii RULE = holographic wills are VALID wills that are exempted from the statutory requirements of typed wills Holographic Will Requirements: 1) Testamentary Paper = asks is THIS writing meant to be a WILL? FORM: most likely PAPER, but not necessary - can take MANY forms & often used in extreme situations (ex: tractor fender, cigarette carton, bedroom wall, napkin, etc.) TOUCHSTONE Q...did the (i) Tr's INTEND to make a posthumous gift in for (ii) THIS writing? a "INTEND" = Testamentary Intent...is this writing intending to tell what the Tr wants to happen upon his death? (RoC) Conditional Wills = a will written to become operative if death occurs from a particular event occurs - (MAJ) courts do NOT limit to that event along, but instead interpret it as the Tr's TESTAMENTARY INTENT - read condition as a statement of what induced or motivated the Tr to write the will b "THIS writing"...is this the FINAL statement? or a draft? or Tr merely telling another of his intention? ex: T's letter to A telling her he plans to (i) leave her property at his death = Maybe HW ("planning" could = THIS is his will OR will make a will at a later date) (ii) have a lawyer draft a will to ensure that she inherits his property at death HW (states T's testamentary intent, BUT this paper is NOT meant to be the FINAL will; clearly telling intent to LATER draft the will) c FACTORs: Formality of Character of the Paper Words used...does it indicate what to do upon or contemplate death? Who notifying d Applied: Kimmel's Estate (SC of PA 1924): letter to sons telling them he has "very valuable papers [for them] if enny thing happens" & signed "Father"; Father died same day he wrote & sent the letter HOLDING: Paper is testamentary in character --thus--> VALID will i "if enny thing should happen to me" clearly = testamentary intent - the writing intended to tell what he wants to happen to his possessions upon his death ii *Prof not sure this is the FINAL will -> not sure if THIS writing = the nal will or if planned on having a will executed 2) SIGNED by the Testator METHODs = basically, any mark the Tr INTENDs to be their signature (*all same accepted methods as for attested wills - full names / marks / nicknames / assisted / by another) WHERE (MAJ) = will may be signed ANYWHERE on the face of the document a --however--> not signing at the doc's end may raise doubts about whether the Tr intended his name to be a sig 3) (i) WRITTEN in the (ii) Tr's Handwriting (i) must be written -> non-written forms do not count (ex: no video tapes; oral declarations, etc.) (ii) must be handwritten, NOT printed, by the Testator v. printed words...HWs usually encounter printer words in the form of pre-printed forms OR Tr's typed words a HOW MUCH must be handwritten? 3 VIEWs: 18

 (1) 1st Generation Statutes (10 states) = 100% - must be entirely written, signed & dated in handwriting of Tr (2) 2nd Generation Statutes (7 states) = signature & material provisions must be in Tr's handwriting - VALID if...court can ignore the pre-printed text &, reading only the written portions, make SENSE of the will - Con...causes issues w. pre-printed forms -> when should the preprinted formed be allowed? limited? (3) 3rd Generation Statutes (UPC - 9 states) = signature & material portions must be in Tr's handwriting + extrinsic evidence allowed to est. testamentary intent - Court can look at the pre-printed text to give CONTEXT to the handwritten portions as a holographic will i Applied: Estate of Gonzalez( SC Main '04): father partially wrote will on pre-printed form leaving estate to 3 of 5 kids Tr had a 2nd blank formed signed by Ws that he planned to copy this over to in order to make "neater" HOLDING: Valid will (a) Handwriting Fullled? YES -> the preprinted portions are incorporated to make it more clear its indeed a will (b) Final Expression of Testamentary Intent? Court found YES, but Prof NOT SURE
Tr had 2nd form going to copy over --thus--> this actual piece of paper NOT the absolute nal copy (who knows

what would of happen btw this one and copying over) D (MODIFICATION) Codicil = testamentary instrument that supplements an earlier will Rule: Modies the prior will to the EXTENT that is inconsistent btw it & the codicil - property not disposed of under the codicil remains untouched & is still disposed of in accordance w. the prior will i To Execute OR Revoke...must be executed w. the SAME formalities of either a (i) attested will OR (ii) holographic will Revocation of a CODICIL ---revokes---> ONLY the codicil, but not the original will Revocation of a WILL ---revokes----> BOTH the original will AND the codicil (even if the codicil is not destroyed) ii Includes: Tr's handwritten remarks on a formal wills = HOLOGRAPHIC Codicil -> not effective UNLESS put through the formal req. of a HW E (REVOCATION) Wills are ambulatory documents ---therefore---> they are subject to modication or revocation up until the Tr's Death 2 METHODs of Will Revocation (Tradition + UPC w. some additions) i (1) Subsequent Writing (= WILL or CODICIL) (i) executed with all the testamentary formalities of attested or holographic wills AND (ii) revokes the previous will either by 1) Expressly revoking any previous wills (ex: I, Sarah Redding, hereby revoke my previous will dated 1/1/11); OR 2) By Inconsistency = if the subsequent writing: completely disposes (100%) of the Tr's estate ---it presumptively---> REPLACES the PRIOR WILL partially disposes (99% or less) of the Tr's estate ---it presumptively---> is a CODICIL that SUPPLEMENTS the prior will ii (2) Physical Act (i) (WHO) TESTATOR must do the act & intend it to happen - subjective intent...if Tr accidentally tears the will, then such will not count as revocation (but only if can PROVE -> hard to do) - v. UPC...Same as Tradition + a 3P may perform the at IF in the conscious presence & at the direction of the Tr (ii) ACT = such as destroying, obliterating, tearing, burning or canceling the original will (a copy will NOT sufce) 1) Destroying...must do something to the WORDs of the will Lost Wills = presumption of destruction for a deceased Tr's LOST WILL if there is evidence that (i) the Tr HAD possession & (ii) the will cannot be found amount the Tr's personal effects a can be rebutted w. certain evidence (i.e., disinherited heir had access to the Tr's house or house burned down) b if above not proven, lost wills CAN be submitted to probate if its contents can be PROVEN (like, from a copy) 2) Canceling = (Traditional) hard term to dene, but likely writing OVER the words of the will -> must TOUCH or alter the words (iii) WHOLE v. PARTIAL Revocation...whole always OK, but some states only allow Trs to partially revoke by subsequent writings 1) why not allow? Canceling a gift to one person necessarily results in someone else getting THAT gift ---THUS--> making a new gift can ONLY be done through a testamentary writing (reqs. Tr sig, attested witnesses) Fraud...permitting partial revocation by physical act offers opportunity for fraud UPC 2-507...all the same, except add these additions for physical act: 1) If burn, tear or cancel the prior will the WORDS do NOT have to be TOUCHED 2) 3P may PERFORM the act, if in the conscious presence & at the direction of the Tr iii Applied Harrison v. Bird (SC AL 1993): Tr had will; called attorney & said wanted to "revoke"; attorney tore up will & mailed it to her; letter from attorney found, but no will 1) HOLDING: Will Revokved Atty tearing up NOT revoking act (traditional, Tr must do it OR UPC...Attorney must or done it in Tr's conscious presence) Presumption that Tr destroyed the will b/c (i) knew Tr had possession (via attorney's letter) & (ii) unable to locate the will Thompson v. Royall (SC of VA 1934): Tr exeucted will, executed a codicil; & then attempted to revoke the will & codicil by having her lawyer (the Judge) write on them they are "null and void" & then signing her name 1) HOLDING: Will NOT revoked & can be probated - writing on back of will N/A as subsequent writing OR physical act 19

 Subsequent Writing...didn't qualify - subject to the same formalities as a will (formal or holographic) a if formal will...Tr signed, had 2 Ws, but the Ws did not sign -> formal req. not met for formal b if holographic will...writing was not in Tr's writing -> HW req. not met for HW Physical Act...writing on BACK of will; didn't TOUCH the words -> must physically do something to the words of the will EXCEPTIONs: i (i) Dependent Relative Revocation (DRR) = if a Tr revokes his will based upon a mistaken assumption of LAW or FACT, the revocation = ineffective IF the Tr would not have revoked his will had he known the truth - ex: Tr destroys will due to belief that a new will is valid, when in fact it is invalid Tr revokes a later will mistakenly believing that, by doing so, he reinstates his PRIOR WILL POLICY: no intent -> the Tr lacks true revocatory intent - doctrine of PRESUMPTIVE intent, not actual intent (assume that the Tr would want this - don't/can't actual know that EFFECT: disregard the revocation & probate the destroyed prior will - DRR can apply in WHOLE or PART to the previously revoked will - PARTIAL Failure...if only certain portions of the alternative plan fail, DRR applies ONLY TO THE EXTENT necessary to give effect to the earlier will's provisions that will replace the failed provisions form the later will LIMITs: DRR applies only where... 1) there is an alternative plan of disposition that FAILs (= must have an ACTUAL, formal plan; not a draft) WHY: doctrine of presumed intent...b/c Tr has at least 2 wills, the court presumes the Tr prefers the older will to INTESTACY - ask...would Tr prefer the older will to intestacy? would she of revoked if she knew the new gift would NOT be effective? EXCEPTION: absolute revocation...if there is evidence that the Tr intended the destruction/revocation to be ABSOLUTE, then DRR will not be applied 2) where the mistake is (i) recited in the terms of the revoking instrument OR (ii) is established by clear & convincing evidence (but limited amount of extrinsic evidence allowed) INCLUDEs: Mistaken Revival...if there is evidence that the Tr revokes a later will mistakenly BELIEVING that it would reinstate a prior will ---then---> courts can apply DRR to revive the 2nd will a = presumed intent...by presence of wills, court presumes Tr did not want to die intestate - the greater the diff. btw intestacy & the wills, the greater the evidence Tr did not want to die intestate ex: Tr's codicil = "I revoke the legacy to J, b/c she is dead."; J is not dead; DRR? YES - mistake recited in the instrument Tr's codicil = "I revoke the legacy to J."; W testies falsely told Tr J was dead; DRR? NO - evidence not strong enough that W's statement is what lead Tr to revoke the legacy ii (ii) Revival = revival of a prior will based on revocation of a subsequent will USE: Tr executes Will #1 ---subsequently---> Tr executes Will #2, revoking W1 by an express clause or by inconsistency; ---subsequently---> Tr revokes W2 -> is W1 revived? 3 Approaches to Revival + UPC 1) (MAJ) Will #2 legally revokes Will #1 at the time W2 is executed, BUT (i) if W2 is revoked & (ii) the Tr intends to revive W1 --> W1 is revived 2) (Min - Com Law) W1 is not revoked UNLESS W2 remains in effect until Tr's death --thus--> revocation of W2 "revives" W1 why...theory is that, since a will does not operate until the Tr's death, will #2 is not legally effective during the Tr's life --thus--> W1 is not revoked by W2 3) (Min) W2 legally revokes W1 at the time W2 is executed & cannot be revived UNLESS (i) re-executed OR (ii) republished by being referred to in a later duly executed testamentary writing 4) (Min) UPC 2-509 (FL similar) Applies to Revocation by PHYSICAL ACT a (a) if W2 WHOLLY revokes W1 + Tr revokes W2 by a revocatory physical act --then--> W1 NOT revived - UNLESS will proponent proves that Tr intended the revocation of W2 to revive W1 b (b) if W2 PARTIALLY revokes W1 + Tr revokes W2 by a revocatory physical act --then---> W1 REVIVED - UNLESS will opponent can prove Tr DIDN'T intended the W2 revocation to revive the revoked parts of W1 Applies to Revocation by SUBSEQUENT WRITING (dealing w. at least 3 wills) a (c) if W2 revoked by W3 (= sub writing) ---then---> W1 NOT revived, UNLESS W3 indicates Tr intended W1 to be revived iii (iii) Revocation by OPERATION of LAW...changes in family circumstances upon which the LAW automatically changes the Tr's will, whether the Tr intended such or not DIVORCE = a automatically divorce revokes any provision in the Tr's will for the divorced spouse (+ possibly ex-spouse relatives) 1) MAJ = applies in ALL but a few states (for those, revocation occurs only if divorce is accompanied by a property settlement) 2) Re Ex-Step-Children...would a gift to Tr's step-child also be revoked? MAYBE, depends on statutes & cause law - some states revoke both gifts to the spouse & relatives of the spouse MARRIAGE & CHILDREN - policy...ASSUMEs Tr would of wanted to revoke any pre-marriage wills that do not account for the new spouse - pretermitted = omitted or left out -> refers to wills enacted BEFORE the spouse or child born & spouse/child left out of will 20

MARRIAGE & CHILDREN - policy...ASSUMEs Tr would of wanted to revoke any pre-marriage wills that do not account for the new spouse - pretermitted = omitted or left out -> refers to wills enacted BEFORE the spouse or child born & spouse/child left out of will 1) Pretermitted Spouse (MAJ) = if Tr executes will prior to marriage + new spouse omitted from will --then--> the new spouse is given his/her intestate share v. Elective Share...intestate shares tend to be HIGHER then elective shares - the law treats pretermitted spouses better b/c the will was made before the marriage --thus--> the law presumes the omission was a mistake EXCEPT if... a (i) it appears the spouse was intentionally omitted from the will OR b (ii) the spouse is provided for in the will (though spouse can instead get an elective or forced share) OR c (iii) will substitute w. the intent that the transfer be in lieu of testamentary provision 2) Pretermitted Child Statute (MAJ) = if a child is (i) born after the execution of the parent's will & (ii) omitted from his parent's will ---then---> the child is given a share of the parent's estate Only applies to WILLs - doesn't apply to other nonprobate instruments Effect...revokes the parents will to the extent of the child's share Share = either an (i) intestate share OR (ii) a share equal to other children that were provided for F (Ks RELATING to Wills) = person may enter a K to MAKE a will or NOT to REVOKE a will K v. Will: Will...no consideration / unilateral / conicts resolved in PROBATE, rather then the civil division Rules: to enforce such a K after Tr dies (i.e., if Tr failed to make the will promisedl), 3rd party beneciaries must sue i (i) under K law & ii (ii) prove a valid K How to Prove (UPC 2-514) = such Ks muay be est. ONLY by: 1) (i) provisions of a will stating material provisions of the K 2) (ii) an express reference in a will to a K + extrinsic evidence proving the terms of the K OR 3) (iii) a writing signed by the decedent evidencing the K. (execution of a joint or mutual wills doesn't create a presumption of a K not to revoke the will or wills) EX: A promises to give 1/2 of estate to X in exchange for X carring for A; wrote out a K; enforceable K? YES A promises B he will "remember B in his will" - enforceable K? NO - too vague Types: i (1) K to MAKE a WILL (MAJ)= when Tr promises to make a will in exchange for an agreement by the beneciary ex: will in exchagne for an agreement to marry, to serve as nurse & housekeeper or not to contest a will Requires compliance w. the STATUTE of FRAUDs (if SoF bars claim, beneciary MAY be entitled to restitution) ii (2) K NOT to REVOKE a WILL Mostly USED: when H & W execute a joint will or mutual will OR separation agreement in which W gives up things in exchange for a promise that the H will keep the children in his will 1) (i) Joint Will = one instrument executed by 2 persons as a will of both DON'T USE -> has lots of issues including proof of a K not to revoke btw the Trs 2) (ii) Mutual Will = separate wills of 2+ persons that contain similar or reciprocal (mirror-image) provisions COMMON...spouses favor each other, followed by common set of other beneciaries Elective Share OVERRIDEs: Via v. Putnam (SC of FL 1995): H & W1 have mutual will naming kids as beneciaries; W1 dies; H marries W2; H dies & W2 elects to take a pretermitted spouse share; Kids challenge 1) HOLDING: While Kids have a claim, W's claim is SUPERIOR -> FL has strong public policy protecting the SS of a marriage in existence at the time of the Tr's death; any K which discourages or retrains that marriage is VOID as against public policy G (CONSTRUCTION) Use...statutory/judicial default doctrines to use when certain problems arise w. the will (A) External COMPONENTs of a Will i USE: sometimes Tr's documents & acts not formally apart of the will, can BECOME apart of the will - purpose in logic & curing improperly executed wills -> often can be used to cure defects by Tr ii DOCTRINEs (*last two the the main ones) (1) Integration of Wills = integrating ALL pages present at execution as part of the will 1) (Rule) a multi-page docs/will is VALIDLY executed, even though only one page has the signatures of Tr & Ws, IF... all papers were present at execution Tr intended all the pages to be in his/her will a Tr's intention in integrate the pages is PRESUMED IF the papers have: (i) internal coherence (ii) physical connection 2) Practice Hint (asking for litigation if don't do the following) don't end sentences or paragraphs at the bottom of the page staple all pages together have Tr & Ws initial each page

21

 (2) Republication by Codicil = a will is treated as RE-EXECUTED (i.e., republished) as of the date of the codicil ex: Tr writes changes in margins of formally executed will; signs & dates; notes = holographic codicil that republishes entire will ex: If W2 revokes W1, but Tr later executes a codicil to W1 -> W1 is republished & W2 is revoked by implication (squeezed out) 1) (Effects): causes the prior will to be treated as if executed on the date of when the most recent codicil was executed 2) (Rule) Prior Will (or codicil) is treated as RE-EXECUTED (i.e., republished) as of the date of a codicil to it IF the PRIOR WILL (or codicil) had been validly executed (*by denition, if it was not validly executed, it is not a will or codicil) a v. DoIbR...allows a will to incorporate docs that have NOT been VALIDLY executed the CURRENT CODICIL is validly executed even if the codicil does not expressly republish the will (Exception) UNLESS such is inconsistent w. the Tr's intent (3) Doctrine of Incorporation by Reference...allows a will to incorporate informal, not validly executed documents ex: W states Tr wants to give a dime to every name in the Manhattan phone book; Manhattan phone book becomes PART of will 1) (Rules- UPC 2-510) = a writing be incorporated by reference into a Will IF the language of the WILL: manifests this intent describes the writing sufciently to permit its identication; AND the writing is in existence at the time the will is executed a Problem Area: Personal Property Lists...Tr's often want to incorporate a list/letter to the executor dictating how to dispose of their tangible personal property, BUT create, update OR change the list AFTER the will is executed SOLUTIONs: i (1) Use of BOTH Incorporation by Reference + Republication = if list is in existence at the time that the later codicil is executed, then at THAT TIME, the re-publication of the will allows the list VALIDLY be incorporated - incorporation invalid when will originally executed, BUT the later re-execution of the will allows the subsequently executed list to be validly incorporated ii (2) UPC 2-513 - Personal Property Lists (MIN + FL...not widely adopted ) = allows a Tr to incorporate a list to dispose of tangible personal property (*ONLY applies to PERSONAL prop) (a) if the list is signed & describes the items & devisees w. reasonable certainty AND (b) lists may be created or modied AFTER execution of the will 2) Applied: Clark v. Greenhalge (SC Hass 1991): Tr leaves all to cousin, who is the executor, & but directs in memo & notebook who & how much of her property is suppose to go to; refers to "memo" in will; G refuses to give C painting Tr noted for her a ISSUE: is the 1979 notebook incorporated into her 1977 will? b HOLDING: YES - notebook is part of will by using both: (i) incorporation by ref...will's reference to "memo" = notebk (*HD...not sure; will needs to be more express to incorporate the memo & notebook when only referencing the memo) (ii) republication...thought Ntbk executed post-will, it was OFFICIAL incorp when the codicil republished the will in 1980 Johnson v. Johnson (SC of Oklahoma 1954): Lawyer/Tr typed will, then hand-wrote few lines re bro at bottom, signed & dated a ISSUE: is the will meant to be ONE formal will OR a formal invalidly executed will & a holographic codicil ? b HOLDING: Valid will = formal invalidly executed will & a valid holographic codicil (= valid b/c the codicil incorporates the will by reference, thus republishing it (*HORRIBLE logic - no matter how you look at it this valid will) Ways to Look at the Document i (1) ALL (typed & handwritten portion) as a validly executed will? NO (i) if formal, no Ws; (ii) if HW, too much typed ii (2) Only TYPED as a validly executed will? NO - not signed / dated / witnessed iii (3) Only WRITTEN as a validly executed will? YES, handwriting ALONG satises requirements for a HW iv (4) Written as holographic codicil that incorporated the will by ref. & republishes it? NO (i) No Codicil - by def, a codicil is an ADDITION to a will; no will to begin w. b/c typed part not validly executed (ii) No Republication - only applies to prior VALIDLY executed wills (ii) No Incorporation by Ref - writing does not refer to or ID the typed portion (4) Doctrine of Acts of Independent Signicance 1) USE: executor's ability to properly identifying gifts under the will - gifts ID'd by an ACT or EVENT will be controlled by the circumstances at the TIME of the EVENT, not time of execution - effect...makes it easier for executor to property ID the gift by relaxes the requirement that something must be in the exact location specied OR look exactly as did at the time of execution -> these types of property move in & out in day-to-day life 2) RULE: UPC 2-512 = a will may dispose of property by reference to acts & events that have signicance apart from their effect upon the dispositions made by the will, whether they occur before or after the execution of the will or Tr's death - gifts ID'd by outside signicance (act or event) at disposition will be controlled by the time of event / act - look for reasons OTHER THAN the will - extrinsic evidence can be admitted to show the intent of the Tr's phrases ex: "the contents of my house" likely safe w. stock certif inside it (keep safe to keep separate from everyday stuff) 3) EXAMPLEs T desvises "car I own at my death" to D; T owns a toyota at will execution, later buys a Lexus; D gets the lexus 22

 T desvises "$1K to each of my Ee @ my death"; later, T res 2 old Ees & hires 2 new; T dies; NEW get the gift, & old don't (B) 4 TYPEs of Devises / Bequests: - ORDER distributed in: (i) Specic; (ii) Demonstrative; (iii) General; (iv) Residuary --then--> if property remains, it passes under (v) Intestacy Laws i Specic Devise = a gift of a particular identiable asset w/in Tr's estate that can be distinguished from any other estate property ex: grandmother's engagement ring; blackacre ii General Devise = a gift that intended to confer a general benet (= enhancement of wealth) & is to be satised out of the general assets of the estate ex: $100K to A iii Hybrid / Demonstrative Devise = GENERAL devise that is to be paid from a PARTIUCLAR source; UNLESS that source is insufcient, by which it should then be satised out of the general assets (same as general devise) ex: to A, $100K to be paid from the proceeds of sale of my Apple stock; if stock only worth $80K Tr's death, remaining $20K come for the general assets of the Tr (either from her cash or by selling off other assets) iv Residuary Devise = a gift of the REMAINDER of the ASSETs of the estate, AFTER all the debts & other gifts have been satised - Tr's attempt to make sure devise ALL assets, so nothing goes by intestacy - if the residuary clause doesn't exist or fails, anything NOT devised under ex: to A, all the rest, residue & remainder of my property & estate (B) Mistakes or Ambiguous Language in Wills i 2 TYPEs of Ambiguities: Patent = ambiguity appears on the FACE of the WILL - ex: clauses in the will are contradictory - in one cl., Tr leaves estate residue to A; in another, Tr leaves ENTIRE estate to A & B clause in the will is contradictory to what Tr asked Atty to draft - leaves estate to A, but Tr told Atty to leave estate to B Latent = ambiguity appears only when the terms of the will are APPLIED to the Tr's property or to the Beneciaries - 2 Types: (i) Multiple Fits...if a will clearly describes a person or things & 2+ persons or things t that description ex: devise to my niece Alicia & Tr has 2 nieces named Alicia (ii) No Fits...where the description in the will does not exactly t any person or thing ex: devise to Mr. & Mrs. Z, presently residing at Y & they don't live there ii POLICY: Law slow to allows courts reform of wills w. mistakes PRO...courts will take advantage if have the ability to reject seemingly clear words of the will CON...(i) illogical not to allow - courts are allowed to correct/admit EE for intentional mistakes (UI, fraud, lack of capacity), ---but if---> correcting an innocent mistake (i.e. a mistake made b/c a mistake was made) - that power had been withheld (ii) BLINDLY enforcing a testamentary disposition that misstates the Tr's true intent when the Tr can't defend his intent is too high a risk to take (iii) Executed writings create a strong presumption of representing the Tr's intent, but the presumption IS REBUTTABLE (iv) Only relief for Benf is MALPRACTICE LIABILITY, which isn't a cure - offers only damagers - Benf won't get as much as under the will & person items that are usually involved in a will can't be replaced w. $ 1) Causes & Effects of Will Defencts...shows why rule against reformation has changed
Effect: Lack of Volition Cause: Intentional Wrongdoing Undue Inuence, Duress (Relief Granted) Lack of Capacity, Insane Delusion (relief granted) Effect: Mistake Terms Fraud (Relief Granted) Mistake (NO relief)

Cause: Innocent Acts

iii 3 Approaches (evolved from traditional -> newer -> newest) (1) Traditional Approach (MIN) = 2 Rules - No Extrinsic Evidence (for patent), No Reformation 1) Plain Meaning Rule = if a will is duly executed, the court MUST follow the PLAIN MEANING of the words even if contradicted by extrinsic evidence Extrinsic Evidence = EE may be admitted to resolve ambiguous language, but the PLAIN MEANING of the WORDs of the will may NOT be disturbed by evidence that another meaning was intended a for PATENT ambiguity - EE NOT ADMISSIBLE b/c no ambiguity in the plain meaning of the words b for LATENT ambiguity - EE ADMISSIBLE (b/c the mistake is not in the plain meaning) Mahoney v. Grainger: Tr wanted to devise her property to her cousins, but lawyer instead devises the property to her "heirs at law" (only heir at law w. Tr's aunt); Cousins challenged the will; = a PATENT ambiguity i HOLDING: Will VALID - No EE (i.e., atty's testimony) allowed b/c the will language was PLAIN & had only one possible meaning 2) Rule Against Reformation = courts CANNOT CORRECT mistaken language in a will -> must interpret the words actually used, not the words Tr intended to use Reformation = equitable remedy that, if applied to a will, would correct a mistake term in the will to reect what the Tr intended the will to say 23

Reformation = equitable remedy that, if applied to a will, would correct a mistake term in the will to reect what the Tr intended the will to say (2) Newer Approach (MIN) : Movings --towards--> Reformations = covert reformation, but still no overt reformation - courts will not out-in-out openly reform - claim don't have the power to reform, but then nds a way to do it anyway 1) Arnheiter v. Anheiter (SC of NJ 1956): Tr directed property to be sold to benet nieces, but wrote wrong address (her interest was in the property at 304 Harrison Ave & address actually wrote was 317 Harrison Ave) HOLDING: Court wont insert the proper st. #, but instead simple deletes the improper # - remaining description sufcient 2) Estate of Gibbs (Wis 1961): got middle initial & address of devisee wrong HOLDING: Court comletely ignores the middle initial & street address & gives the property to the right friend (3) Newest Approach (MAJ - UPC 2-805) - Open Reformation / Extrinsic Evidence Permitted (for ALL ambiguities) 1) Open Reformation = courts drop the pretense & openly reform wills w. MISTAKEs (both patent & latent) (Rule) (i) STRONG (but rebuttable) PRESUMPTION that duly executed wills = accurately rep. the intentions of the Tr ---thus---> mistake (patent or latent) must be proven by clear & convincing evidence (i) If mistake proven, courts may REFORM the will to comply w. the Tr's proven intent courts will also often reform for tax advantages (i.e., assumption that paying more taxes then have to is always a mistake) 2) Extrinsic Evidence PERMITTED = ADMISSIBLE for both patent & latent ambiguities plain meaning no longer blindly followed -> EE admissible to prove a mistake was made for clear or ambiguous language 3) Applied: Erickson v. Erickson (SC of CT 1998): H executed will 2 days before marrying 2nd W; named W as beneciary, exectuor & guardian for many minor kids; upon marriage, statute automatically revokes any pre-marriage wills that do not specically make a contingency for the marriage; H's will REVOKED upon marriage ISSUE: should extrinsic evidence be admitted in order to determine Dec's intent that his will NOT be revoked? HOLDING: Extrinsic Evidence ADMISSIBLE to show Tr's intent that he did not want the will to be revoked a EE clearly shows Tr intended the will to account for new W (gave her the estate, guardianship of kids & executorship) b Merely scrivener's error not to include an acknowledgement of the wedding (C) External Changes in Beneciaries: DEATH i LAPSE = when a will devise FAILs because (i) a BENEFICIARY ---predeceases (or is deemed to) ---> the TESTATOR & (ii) Tr's Will fails to specify a contingent beneciary - why...all gifts by will are subject to a requirement that the De survive the Tr UNLESS the Tr species otherwise ---thus---> if a devise lapses, if fails & is terminated ii 2 STATUTEs...the default rules for dealing w. a lapsed devise is dealt w. under one of two following statutes: USE: if a gift lapses + Tr's will does not account for it, the executor should dispose of the gift under the following statutes 1) Both = DEFAULT RULEs - Tr can contract around either of the below statutes by indicating contrary intent in their will 2) *Well-Drafted will should NEVER lapse! Sound drafting tip...don't rely on presumptions - describe what will happen if the gift fails ex: "to A if A survives me, but if A does not survive me, to B if B survives me, & if both A & B do not survive me, to be added to the residue of my estate" (MAJ): STEPs to Analyze 1) If Bef & Tr were NOT RELATED ---then---> follow the common law's LAPSE Statutes 2) If Bef & Tr were RELATED ---then---> follow the ANTI-LAPSE Statutes (A) Lapse Statutes (Common Law Rules) = WHO the failed devise goes to depends on if TYPE of devise - USE: where anti-lapse DOESN'T apply (i.e. Bef-Tr don't have qualifying relationship) 1) If a Specic / General Devise lapses...the devise falls into the RESIDUE ex: T devises watch (= specic devise) to A; $10K (= gen devise) to B & rest of estate (= residuary devise) to C; - A & B die before T; under lapse rules, the watch & $10K go to C 2) Residuary Devise = (i) if the WHOLE residuary devise lapses, the Tr's HEIRs take by intestacy (ii) (MAJ) if a SHARE of the residue devise lapses, the lapsed share is divided among the other residuary Befs - treat as if the residuary beneciaries are part of a class gift - if one dies the other takes his/her share - ex: T devises her estate residue as 1/2 to A & 1/2 to B; A predeceases T; A's 1/2 share goes to B (NOT T's heirs) a v. (Min Common Law) No-Residue-of-a-Residue Rule = if a SHARE of the residue devise lapses, the Tr's HEIRs take by intestacy ex: T devises her 1/2 estate residue by to A & 1/2 to B; A predeceases T; A's 1/2 share goes to T's heirs (NOT to B) not followed anywhere - from the common law i why...purpose of a residuary clause is to AVOID anything at all in the Tr's estate going by intestacy --thus--> if allow a lapsed residuary gift to go by intestacy, such clearly goes against the Tr's intent 3) If a Class Member's Gift lapses, the SURVIVING MEMBERs divide the lapsed gift ex: T devises $10K to the children of A; A's child B predeceases T, but other child C survives T; B's share goes to C 4) Void Devises = if a Bef is (i) already dead at the time of EXECUTION of the WILL OR (ii) an ineligible taker (i.e., dog, cat, etc) the devise LAPSEs (use lapse rules above) 24

Void Devises = if a Bef is (i) already dead at the time of EXECUTION of the WILL OR (ii) an ineligible taker (i.e., dog, cat, etc) the devise LAPSEs (use lapse rules above) MIN VIEW: Estate of Russell (SC CA 1968): Tr gave specic devise to neice (only living heir) & residue to boyfriend & dog a HOLDING: Devise of 1/2 of the residue was VOID b/c the dog was an ineligible taker -> this 1/2 lapsed to Tr's heirs at law v. MAJ...the dog's share of the lapsed residue would of passed to the BOYFRIEND (the other residue Bef) b TAKE: Gifts to Pets...people do it all the time, but such a gift is VOID under a will b/c pets are ineligible takers - instead use a Honorary Trust...Te acts on behalf of the dog (B) Anti-Lapse Statutes (MOD/MAJ) = EXCEPTION to Lapse Statutes for Befs of a SPECIFIC RELATIONSHIP to the Tr 1) POLICY: Anti-Lapse statute are MISNAMED...they don't prevent lapse, they merely substitute other Befs for the deceased Def Doctrine of PRESUMED INTENT... a = court's belief that for predeceasing Befs w. a special relationship to Tr, the Tr would prefer a substitute gift to the Bef's descendants (rather than for the gift to lapse) ---why---> evenly spreads wealth among the family b ex: T devises entire estate: 1/2 to B (daughter); 1/2 to A (son); B predeceases T, leaving a child, C; T dies - under LAPSE...B's share passes to A, the other RESIDUARY Bef (A gets entire estate; C gets nothing) - under ANTI-Lapse...B's share passes to C, so A & C each get 1/2 of the estate (more evenly spread out) 2) RULE = For INDIVIDUAL Gifts (Specic / General / Residuary Devises) a (i) Predeceasing BEF & TR are of a below SPECIFIED RELATIONSHIP; & Specied by Statute - 3 main views from NARROW ---> BROAD that can include each of the following i (1) (Min) NARROW...De must be descendant of Tr ii (2) (MAJ -UPC 2-605 & FL) Moderate = De must be (i) grandparent or (ii) descendant of Tr's GPs (NO spouse) iii (3) (Min) BROAD...De can be all of the ABOVE + Kin of Tr's Spouse b (ii) Predeceasing BEF is SURVIVED by Descendants who survive the Tr c (EFFECT) ---THEN---> the Predeceased Beneciary's Descendants TAKE the lapsed devise ex: T devises home to niece, A & residue to B; A dies before T, leaving a child, C. T dies; what happens to A's share? - Narrow...Reg. Lapse applied - B & T's relationship is not qualifying (AL N/A); under reg. lapse - home falls into the residue, so B takes it - UPC...AL applies - B & T's relationship qualifying (B = Dt of T's grandparents) + C survives T; C takes the home - Broad...same as UPC For CLASS Gifts a (i) SAME Specied Relationship requirement from ABOVE; & b (ii) Predeceasing BEF is a member of a CLASS GIFT AND Class Gifts Test = was the Tr group minded? i (i) if used a class label (i.e., to A's children, my grandchildren, etc) = GROUP MINDED (= class gift) - number of takers can uctuate & is not known unti lthe distribution ii (ii) (Rest. + FL) if individuals named form a natural class OR Tr identied group by class label + individual names --then---> creates a rebuttable presumption that the Tr was NOT group minded ( class gift) EXCEPTION...if Class Member dead @ TIME of will execution - 2 approaches on how to treat deceased class member i Beneciary -> court assumes Tr did not have that member in mind as a Bef - no need to apply anti-lapse -> DCM never had a share of the gift ii = (UPC + FL) BENEFICIARY - treated same as above class members; anti-lapse applies - gift goes to Bef's Dts c (iii) Predeceasing BEF is SURVIVED by Descendants who survive the Tr --then--> Bef's Dts TAKE the lapsed devise NOT SURVIVED by Descendants --then--> Other Class Members SHARE the Bef's share 3) EXCEPTION: above is the Default Rule - Tr can contract around by indicating a contrary intent in the will Contrary Intent = shown either by: a (1) Words of Survivorship: "if he survives me" OR " to my surviving children" MAJ + FL...above sufcient to show contrary intent & anti-lapse statute is NOT APPLICABLE MIN (UPC 2-603) = INSUFFICIENT by themselves & anti-lapse will still apply i why...attys use above words as boilerplate language -> lay people unaware of their meaning, so the court shouldn't assume such language truly rep the Tr's intent ii good justication, but states have yet to adopt b (2) Words of Purchase or Limitation...not a black & white area, but such words provide guidance (i) "and" -> to A and her heirs = does NOT show intent that Tr wants A's heirs to be the substitute takers (ii) "or" -> to A or her heirs = DOES shows intent that T wants A's heirs to take if A predeceases (D) External Changes in Property...doctrines re what to do when the devised property changes btw will's execution & Tr's death i (i) Ademption by Extinction = when a will makes a SPECIFIC devise of real or personal property, BUT that property is NO LONGER owned by the Tr at death LIMITs: only applies to specic devises of real & personal property ONLY! v. general...legacy is NOT adeemed, but look to SATISFACTION to determine if might be extinguished v. demonstrative...legacy is NOT adeemed; instead25 other property must be sold to satisfy the legacy v. residuary...legacy is CONDITIONED on there being left-overs -> if no left overs, gets nothing

LIMITs: only applies to specic devises of real & personal property ONLY! v. general...legacy is NOT adeemed, but look to SATISFACTION to determine if might be extinguished v. demonstrative...legacy is NOT adeemed; instead other property must be sold to satisfy the legacy v. residuary...legacy is CONDITIONED on there being left-overs -> if no left overs, gets nothing EFFECT: 2 Approaches 1) Identity Test (MIN - Traditional) = if the specic devise is not in T's estate at death, the gift is EXTINGUISHED - treat as if Tr REVOKED the gift -> Bef gets NOTHING if the property disposed (sold or given away) prior to Tr's death LOTs of exceptions - courts will avoid ademption by nding: a construing the will at the time of eath b the item has "changed in form" NOT in substance c construing the change in the gift as a change in form rather NOT substance (sold $10 worth of Apple stock and bought $10 worth of Dell stock -> form = type of stock (apple or dell); substance = value (stays the same) d insurance proceeds replace original item e interpret the devise as general rather than specic (ex: "100 shares of Netix" --becomes--> the VALUE 100 shares of Netix") 2) Intent Theory (Mod/MAJ + UPC 2-606) = if the specic devise is not in the Tr's estate upon death, the Bef is ENTITLED to replacement for OR the cash value of the original gift if Bef can prove such was the Tr's INTENT Court tries to gure out what the Tr's intent IS or WOULD HAVE BEEN codies the exceptions to the identify theory + some additional exceptions some criticize this as spawning litigation & as changing what the testator intended to give Replacement...look for evidence of what the Tr considered to be the property that replaced the former specic devise a ex: Tr gives "my Ford to A"; Sells ford for BMW; does A get BMW? YES...Tr considered BMW her replacement for the F - Same, but Tr replaces w. Honda & BMW; which does A get? look at which is more used in the same way as the F Cash Value...look for evidence that Tr wanted to pass the value of the specic item on; give value? amount worth? etc. a ex: Tr gives "snuff bottles to W"; can't nd snuff bottles at Tr's death, don't know how many there were or their value; - does W get the value? NOT LIKELY...not readily able to ID their worth or how many their were Applied: In re Estate of Anton (not assigned to us) (Iowa 2007): Tr executed a will and made a specic devise of half her duplex to her step-daugter; Dt then gave birth daughter power of attorney; Birth D sold duplex to pay for a nursing home a HOLDING: Tr intent for Step-D to get CASH VALUE -> Step-D entitled to 1/2 the remaining proceeds from the sale of the duplex --why--> daughter sold the duplex NOT the Tr; only presume Tr wanted to get rid of property if the Testator does it ii (ii) Stock Splits = devised stocks that SPLIT before the Tr dies (i.e., 3-to-1 split = 100 shares becomes 300 shares), is Bef entitled to the new additional shares? (Old Rule) Literal Approach = NO -> only gave what the specic devise stated (New Rule) Substance Approach = YES, looks at the ECONOMIC TOTAL - a stock split is a change in form, NOT substance 1) (effect) PRESUMEs the Bef is entitled to (i) the additional shares received by the Tr as a result of a stock split & (ii) the stock dividends rebuttable...can be overcome with a showing of contrary intent policy...its a change in form, not substance a when stocks splits or dividends are given, the % of ownership a shareholder holds stays the same; b shares held after the split rep the same % of owenrship of the corporation as the # of shares help PRIOR to the split iii (iii) Satisfaction = a inter vivos gift from the Tr intended to COME OUT of a Beneciary's general devise under the Will - same concept as intestacy's advancements LIMIT: generally, applies only to general monetary gifts v. Specic...when a specic devise, usually the gift is treated as adeemed by EXTINCTION (not satisfaction) RULE: 1) (Old) Com Law: (i) Presumed anything parent gave child IS in SATISFACTION of the will's devise (in whole or part), (ii) UNLESS the gift is not of a similar nature to that devised by the will burden...CHILD must rebut presumption w. clear evidence 2) (MAJ-UPC 2-609 & FL)...(i) Presumed inter vivos gifts are NOT in SATISFACTION, but a GIFT (ii) UNLESS, Tr indicates his intention in writing for the gift to be counted as in satisfaction of the devise EX: Tr's will gives his son $50K & residue of her estate to her daughter; after execution of the will, Tr gives son $30K - common law...son only gets $20K @ Tr's death - modern / UPC...son would still get all $50K @ Tr's death iv (iv) Exoneration of Liens = should a SPECIFIC devise of real or personal property pass to a Beneciary free from encumbrances (i.e., free from the mortgage Tr is liable for)? LIMIT: only applies to specic devises of real or personal property (i.e., things that Tr could owe $ on) RULE: 1) (Old) Common Law = presume estate must pay liens --thus--> Beneciary takes property FREE of LIENs presumption that the estate should exonerates the property passed under the will from its liens ---REBUTTABLE---> by contrary language in the will 2) (MAJ) UPC / FL = presume estate does NOT pay liens --thus--> Bef takes the property subject to the lien UNLESS the will indicates to the contrary a general provision to pay debts is NOT enough 26

 why change? generally if estate pays off the mortgage, there wont be enough left to pay off the other devises v (v) Abatement = method of how to reduce devises when an estate has INSUFFICIENT ASSETs to pay both the debts & devises METHOD: order of reduction is determined by the TYPE of devise 1) Reduce Devises in the follow ORDER*: (i) intestate --> (ii) residuary --> (iii) general --> (iv) hybrid / demonstrative --> (v) specic *= the opposite of how it is given out 2) + w/in each class of devises, make reductions pro-rata (= make equal reductions to each Bef receiving that type of devise) EXCEPTIONs: statutes or the will can indicate a different order H (LIMITs: Restrictions on Tr's Power of Distribution) Rights of a SURVIVING SPOUSE (SS) i Intro to MARITAL Property Systems - 2 Systems
Separate Property (Common Law - MAJ) "What's mine is MINE. What's yours is YOURs" = H & W separately own all property each acquires during the marriage via wage-earnings, gifts or inheritance DEFINITION - no automatic sharing of earnings -> whatever that individual earns is THEIR money alone - before death or divorce, one spouse has no rights to other spouse's property POLICY Protection against DISINHERITANCE stresses...individual freedom & autonomy over earnings Elective Share = at death spouse can elect to take share of the other's property despite terms of the will Community Property (MIN, but 1/4 of US population lives in these states) "What's mine is OURs. What's yours is OURs" = both spouses jointly own all property acquired during the marriage, in equal, undivided shares - UNLESS (i) spouse receives the property via inheritance or gift OR (ii) both agree to separate ownership - both spouses can manage (spend/sell) ALL assets stresses...the economic partnership of marriage 1/2 Ownership = dead spouse owns a 1/2 interest in all the property & has testamentary power over that half - living spouse owns the other half

ii POLICY = law's attempt to protect surviving spouses & children iii TYPEs of Rights of the SS (A) Rights to SUPPORT...although the different marital property systems differ on a SS's right to share in the deceased's property, each jurisdiction does agree that SS's (& sometimes children) have a RIGHT to SUPPORT from the deceased spouse 1) Social Security = Surviving Spouse (SS) receives the worker's monthly benets (whether SS worked or not) if SS WORKED...once spouse dies, SS gets the larger of either THEIR check or 1/2 the deceased spouse's check if SS DIDN'T WORK (usual case)...once spouse dies, SS gets their deceased spouse's WHOLE check a is this UNFAIR? some believe so (but not HD) - penalizes those that worked - especially woman -> the typical case is for men to earn more then women & then die rst If Divorced...if marriage lasted 10 yrs +, the divorced former spouse of the worker STILL has a right to benets No right to transfer their right to benets to any other person 2) Ee Pension Plans = ERISA requires that SS of Ees must get survivorship rights to the pension plan - i.e., if Ee predeceases his SS, the pension plan must still pay out to the SS until her death - under a Contribution Plan, Ee or SS can also designate who payment is to go to AFTER they both are deceased Caution: Pension Plans MUST pay out to designated PAYEE + ERISA preempts state law that conicts = any state statutes that automatically revoke insurance or pension fund designated payees upon divorce are N/A to Ee pension plans a EXCEPTION: New Spouses at Ee's Death can take over a payee designated prior to the marriage ex: W designates H as beneciary; they divorce; W dies - who takes? Ex-H - if ex-W remarries before dying? NEW HUSBAND - if ex-W changed the death beneciary to her sister, S? S takes, UNLESS Dt had remarried Why invest in Pension Plans? TAX BENEFITs a pension plans are wonderful tax avoidance plans contributions & earnings on the plan are tax deffered pay taxes on distributions, but by then the Ee or SS are in a much LOWER TAX BRACKET (make less in retirement) TYPEs of Pension Plans - not all are the same a
Dened BENEFIT Plan (like an annuity) (i) at retirements, ANNUAL payments are made to the Ee/EE's SS (ii) payments continue until the DEATH of the Ee AND Ee's SS - post-death, NO LUMP-SUM -> payments are guaranteed to last for life, but NO payments past that - similar to annuity - guaranteed to last a lifetime, so take risk on how long you live Dened CONTRIBUTION Plan (i) while working, contributions are made to an identiable account & the Ee bears the market risk - v. Benet...CPs allow the Ee to have more control over the investment, but NOT guaranteed to last for life (ii) at retirement, withdrawals subject to distributions rules (iii) payments NOT guaranteed to last for life, but if do get lump-sum payout at the death of Ee & SS

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- similar to annuity - guaranteed to last a lifetime, so take risk on how long you live

(ii) at retirement, withdrawals subject to distributions rules (iii) payments NOT guaranteed to last for life, but if do get lump-sum payout at the death of Ee & SS

3) Homestead = right of SS to OCCUPY family home for life OVER (i) Deceased Spouse's attempts to devise it OR (ii) Creditor's claims WHY...designed to secure the family home to the SS & minor children, free of the claims of the decedent's CREDITORs HOW...protects by exempting the HOME as an asset creditors can go after - MAJ / UPC...only exempt up to a certain amount (UPC = $22,500) - some exempt the entire home, no matter the value 4) Personal Property Set-Aside = right of SS to receive tangible personal property up to certain value OVER the (i) Deceased Spouse's attempts to devise them OR (ii) Creditor's claims WHY...same idea as homestead -> meant to protect the possessions of the family & keep them for the SS & the kids HOW...exempts the items up to a certain VALUS (UPC = $15K) a INCLUDEs: household furniture, clothing, (maybe) car & farm animals 5) Family Allowance = support for the SS & children during the time it takes to PROBATE of the Deceased Spouse's estate probate court sets the award - to award a statutorily set amount to maintain & support the SS & children a UPC recommends a "reasonable allowance" (B) Rights to a SHARE of the DECEASED SPOUSEs (DS) PROPERTY 1) Community Property SS Rights = when the deceased spouse dies (i) community funds will be used to pay community debts (ii) D-Spouse gets 1/2 estate w. testamentary power over it (i.e., gets to leave it to whoever wants) (ii) SS gets 1/2 estate, & such is NOT subject to the will of the Deceased Sposue No Elective Share...not needed b/c each spouse is protected from disinheritance b/c outright ownership of 1/2 estate a own EVERYTHING equally -> split each & every thing (not just have net equal amounts, but acutally split everything) How to Calculate each spouse's 1/2 a (i) ID all property as separate or community b (ii) Of the community property, set aside 1/2 for the SS c (iii) Apply the DS's WILL or INTESTACY rules to the remaining 1/2 of community property (= DS's 1/2) Widow's Election...estate planning device used in CP states, that's similar to an elective share b/c forces SS to chose btw taking their legal interest entitled to OR taking under the will a Outdated name...used often by Hs for the W that didn't work & didn't know how to handle money b How Worked... (1) Via Will, H devises ALL the CP into a TRUST to pay the income to his W for life, w. remainder to their heirs (2) W must choose btw (i) electing against the will & taking her 1/2 of the CP (that she OWNSs) OR (ii) consent to giving up ownership of it & get income from ALL the CP i treated as if W transferred her 1/2 community inerest to the trust IN EXCHANGE for receiving a life estate in her H's 1/2 community interest ii tax implications need to be considered -> income tax disadvantage, so most estate planners don't recommend it Exception: DEFUNKED Marriage = many CP states end community property upon the marriage being "defunked" a (must prove) that the spouses have separated, and wont EVER get back together (hard to do) b (effect) spouse's earnings would be separate after that 2) Elective Share (MAJ) = SS may elect either (i) to take under the DS's will OR (ii) renounce the will & take a fractional share of the D's estate LIMITs: a (i) only used in SEPARATE PROPERTY states -> not needed in CP states b/c SS own half the D's estate b (ii) abandonment...some states don't allow election by spouses that abandon the other (very fact specic; hard to est) likely geared towards punishing men for moving our & leaving women POLICY:
POLICY: 2 Rationales - both lead to different effect on how the statute is carried out & used Elective Share AMOUNT (MAJ): 1/3 of ALL the D's probate property + certain nonprobate transfers PERSONAL to the SS? (MAJ): YES (*see below for more explanation) EP (MIN)...Not personal -> SS can devise her right to elect to another b/c SS earned that property (her's to give away) SUP(MAJ)...Personal -> the property is no longer needed b/c the SS is dead EP...awards SS 1/2 of D's property acquired DURING MARRIAGE SUP...justies a smaller share, but applies to ALL of D's PROPERTY (1) Economic Partnership of Marriage = SS contributed to the DS's acquisition of wealth & deserves to have a potion of it (2) Support = elective share required to provide the SS w. adequate support for the remainder of life

PERSONAL RIGHT (MAJ) = the right to elect the statutory share is the SS's ALONE - no one (heirs, etc.) else can make that choice for her - the very choice of election creates a legal interest in the SS 28 - not devisable...SS cannot devise her right to an elective share to another - not compulsory...no one can compel a SS to elect to take an elective share INSTEAD of under the DS's will

PERSONAL RIGHT (MAJ) = the right to elect the statutory share is the SS's ALONE - no one (heirs, etc.) else can make that choice for her - the very choice of election creates a legal interest in the SS - not devisable...SS cannot devise her right to an elective share to another - not compulsory...no one can compel a SS to elect to take an elective share INSTEAD of under the DS's will a Exceptions: (i) US Gov...as a creditor, the US Gov can likely compel a SS to elect one way or the other, whichever would give the SS more (in order to pay them back) i NO other creditors can do this (ii) Incompetent SSs = if a SS is legally incompetent, an appointed guardian may take on behalf of the SS IF it is in the best interests of the SS to do so i METHOD of Deciding: (MAJ) Broad...guardian looks at ALL the circumstances (SS's desires, math, age, probable life expectancy, etc.) - also take into consideration which policy state follows (support v. ep)...effects if guardian can take the election (can only elect if support needed? or does state consider this the SS's money?) (Min) Narrow...only do the math (i.e., under which would SS get more?) ii Applied: In Re Estate of Cross (Ohio 1996): W was incompetent w. Alzheimer's & living in a nursing home, fully supported by medicare; H left entire estate to his son; commissioner appointed by court elected on behalf of the W HOLDING: Upholds Election for W to take against the will, EVEN THOUGH currently fully supported by medicaid (a) why...in determining eligibility, medicaid takes into consideratino those sources of income that the receiver has a LEGAL INTEREST in (W has a legal interest in the elective share) --thus--> W was going to lose medicaid b/c she had the option ---thus---> electing the share is NECESSARY for her survival TAKE: In deciding whether to elect on behalf of the SS, guardians should consider what the SS would of wanted & if it was part of her overall estate plan (H likely left all to son b/c knew W taken care of by gov) -----balanced against----> the effects the decision WILL have on the SS PROPERTY SUBJECT to the ES...SS may elect a share of the DS's estate - what property is that estate comprised of? a Policy: should PROBATE & NON-PROBATE property should be included? arguments for including some non-probate: PRO Non-Probate: Preventing ES Avoidance...DS's can shelter their estate from the ES w. nonprobate instruments i as will substitutes get used more, the protections for SSs will be lost if exclude non-probate property ii analogized to divorce...at divorce, all marriage property split - shouldn't it be the same outcome when marriage ends in death? iii even if spouses are estranged they did help build up the marital property together b Patchwork of Approaches: JUDICIAL i (Traditional) Estate = Probate ONLY ii (Modern) Estate = Probate + Some Non-Probate - including: (i) (MAJ) Revocable Inter-Vivos Trust (Sullivan) + created by the DS -> does not include trusts created by 3Ps of which DS is a beneciary + during the marriage + DS retained sole general power of appointment (a) Sullvian v. Burkin (SC of Mass 1984): H created a Rev Inter Vivos Trust & transfers all his assets into it, excluding his estranged W & grandson; SS wants to include the trust assets in calculating her elective share
HOLDING: Crt allowed the trust to defeat the share in this case, but announced the above rule for future

(b) Bongaards v. Millen: rich mother put $ & apt. into a trust for daughter; daughter appointed remainder of the trust to her SISTER, but not her H; H wanted trust to be included in her estate from which he could elect
HOLDING: No Way - trust was created by 3Ps are not pulled back into the estate

i. why...trust $ didn't come out of the economic partnership of the marriage, but originated from a 3P (ii) Illusory Transfers = is the non-probate instrument being used really acting like a WILL? If yes = illusory (effect) trust is still VALID, but it is pulled back into the DS's estate to be subject to the elective share (a) KEY to Test = CONTROL...how much control is retained by the DS? can DS easily pull assets out?
ex: H has 2 bank accts; 1 w. daughters as payable-on-death Bef, & a 2nd joint account w. his daughters

- JT = NOT illusory b/c both H & daughter have a current interest & control over the account - POD = illusory b/c only H has a current interest & complete control; H could easily pull $ out (iii) Intent to Defraud Test = if the transfer of property into the trust were done for purposes of avoiding the elective share, the assets will be included in the probate estate for purposes of calculating the elective share (iv) Present Donative Intent Test = whether the DS intended to make a present gift into the trust STATUTORY: i Augmented Estates = statutes attempt to list which assets will & will not be considered in calculating the elective share -> the "augmented estate"

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Augmented Estates = statutes attempt to list which assets will & will not be considered in calculating the elective share -> the "augmented estate"
New York Elective Share Amount = greater of $50K or 1/3 of D's net estate = (i) Probate Estate + (ii) Specied Non-Probate transfers, such as: Property Subject to Elective Share - gifts made w/in 1 yr of death - savings accout trusts - POD accounts non payable to spouse; - lifetime transfers in which D retained certain powers = ALL property included in the DS's gross estate under the Fed Estate Tax Law Delaware = 1/3 of the DS's Net Estate

UPC i 1969 UPC...pretty much ignored b/c impossible to implement = Included 5 categories of property included in the Augmented Estate (a) Retained Life Estate (b) Revocable Trust (c) Joint Tenancy w. Someone other than Surviving Spouse (d) Death Bed Transfers in Excess of Gift Tax Exclusion (e) Property Given to Surviving Spouse ii 1990 UPC Changes: (a) Theme - Partnership Theory of Marriage - redesigned so closer to community property system & includes assets of BOTH spouses - includes assets of BOTH spouses - includes all probate AND non-probate (instead of using a list of what's included/not) (b) 2-203(b) Accounted for LENGTH of MARRIAGE...the longer the marriage lasted, the higher % the SS got of all the marital property (*FIRST statute to do so) - 15+ years = 100% Marital Property Portion (ALL of the marital property included)
If DS & SS were married to each other for... Less than 1 YR 1 yr but less than 2 YRs 2 yrs but less than 3 yrs 3 yrs but less than 4 yrs 4 yrs but less than 5 5 yrs but less than 6 6 yrs but less than 7 7 yrs but less than 8 % 3% 6% 12% 18% 24% 30% 36% 42% If DS & SS were married to each other for... 8 yrs but less than 9 9 yrs but less than 10 10 yrs but less than 11 11 yrs but less than 12 12 yrs but less than 13 13 yrs but less than 14 14 yrbs but less than 15 15 yrs or more... % 48% 54% 60% 68% 76% 84% 92% 100%

(c) 2-203(a) - Augmented Estates includes a schedule of Nonprobate Transfers (d) 2-202 - Elective Share = 50% of the marital-property portion of the augmented estate How to Calculate: (a) Calculate the Augmented Estate = ALL assets (both probate & non-probate) of BOTH spouses, (b) Calculate Marital Share = Augmented Estate x the % in the length of the marriage chart (c) Calculate Elective Share = Marital Share x 50% (d) Subtract SS's assets from the Elective Share - the remainder is to come from the DS's assets
DS's Non-Probate assets that automatically become SS's upon DS death credited to SS as an asset here

i. ex: DS life insurance policy payable to W...policy originally counted as DS asset, but subtracted as under this step as an asset of SS's
Negative Outcome = SS's elective share = $0 --> SS doesn't have to pay anything to the DS's estate

i. why...purpose of ES is to protect the SS, not the DS's estate FLORIDA i v. UPC...major differences are in Florida (i) No Length of Marriage...the amount of share is NOT affected by the length of marriage (SKIP Step 2 of UPC) (ii) Elective Share = 30% of the Augmented Estate, NOT 50% of a Marital Share of the Augmented Estate (iii) ONLY the DS's property is included in the Augmented Estate - SS's property is NOT included ii How to Calculate: (1) Calculate the Aug. Estate = assets of Deceased Spouse ONLY, including probate & non-probate property - similar to older UPC approach of listing some types of nonprobate transfers to include in the aug. estate (2) Calculate Elective Share = Marital Share x 50% iii Schedule of Property: that property that's included / excluded from the augmented estate
Property INCLUDED - Net Probate Estate (after paying bills) - Non-Probate: - Ds % interest in POD, TOD, Jt/ROS 30 - Revocable property - Transfers with retained life estate Property EXCLUDED - Irrevocable transfers - Transfers for adequate consideration - Transfers made with consent of spouse - Trust assets existing continuously from 10/1/99, - Premarital transfers to trust - Trust assets that prior to death were considered

- Irrevocable transfers - Net Probate Estate (after paying bills) - Non-Probate: - Ds % interest in POD, TOD, Jt/ROS - Revocable property - Transfers with retained life estate - Net cash surrender value of life insurance - Pension/Retirement survivor benets - Property transferred w/in 1 year of death if not FMV - Terminal interest property - Property transferred to satisfy elective share - Transfers for adequate consideration - Transfers made with consent of spouse - Trust assets existing continuously from 10/1/99, - Premarital transfers to trust - Trust assets that prior to death were considered nonmarital assets under equitable distribution statute (*= excludes property excludable in DIVORCE) - Property in special needs trusts - Property only held b/c general power of appt. - Homestead - Court ordered Life insurance, or proceeds beyond CSV

WAIVER = the right to an elective share can be waived a How: Written K / Agreement / Waiver signed by the SS b Most Common: PRENUP / POST-NUP Policy...strong public policy favoring ENFORCING prenups -> most will be upheld as long as entering the agreement was voluntary & down w. full knowledge Best Evidence of a Prenup's Validity...INDEPENDENT COUNSEL, some states even require it (Rule) UPC 2-213 - the requirements for a valid prenup are: i (b) A SSs waiver is not enforceable if the SS proves that: (1) hedid not execute the waiver voluntarily; or (2) the waiver was unconscionable when it was executed and, before execution of the waiver, he: - courts look for unconscionable, NOT UNFAIR -> big diff; courts will always enforce unfair - look for coercion...signed hrs before wedding; no independent counsel; deal leaves the SS on the gov dime; SS misled about DS's resources - must provide protections to SS b/c not an arms length transaction; formality VERY important (a) (i) [SS Knowledgeable] SS was not provided a fair and reasonable disclosure of the property or nancial obligations of the decedent; and = SS must be given a clear idea of the nature, extent & value of the DS's property & resources - best way: attach to prenup a net worth schedule of assets, liabilities & income - disclosure does not have to be 100% exhaustive, BUT enough to give the SS a clear idea of worth v. FL...no disclosure required (very unusual) - most things upheld (b) (iii) [SS] did not have, or reasonably could not have had, an adequate knowledge of the property or nancial obligations of the decedent. - if SS had an OPPORTUNITY to ask & discover the extent of DS's resources, but failed to do so --then--> going to be held to the prenup Applied: Reece v. Elliot (CoA TN 2006): H & W married in 2nd marriage; agreed that both would sign prenup so that their assets would go to their individual children; W saw list of H's assets, but they didn't have values; i W's PoV...prenup is INVALID for LACK of DISCLOSURE (i.e., she didn't have full knowledge of his assets) ii HOLDING: Prenup Upheld - wife had independent counsel & an adequate opportunity to investigate the value of the property listed; + just looking at the list, could tell H was wealthy even w/o the #s 3) Pre-Marital Wills (aka Pretermitted Spouse) MAJ Rule = if Tr executes will prior to marriage + new spouse omitted from will --then--> the new spouse is given his/her intestate share a v. Elective Share...intestate shares tend to be HIGHER then elective shares - the law treats pretermitted spouses better b/c the will was made before the marriage --thus--> the law presumes the omission was a mistake by the DS in failing to update the premarital will b EFFECT: (i) under presumption...rst, will is reduced under abatement so SS can takes their intestate share --THEN--> the remainder of the will is left intact & disposed of accordingly (ii) if presumption overcome, will upheld, SS denied intestate share but can still take an ELECTIVE share c BURDEN: Above Presumed - Will Proponent must show the omission was NOT a mistake d OVERCOME PRESUMPTION w. evidence of... (*above is default rule - can be overcome by evidence that the DS did not mistakenly omit the SS) (i) it appears the spouse was intentionally omitted from the will OR (ii) the spouse is provided for in the will (though spouse can instead get an elective or forced share) OR (iii) will substitute w. the intent that the transfer be in lieu of testamentary provision In Re Estate of Prestie (SC of Nev 2006): H & W married; divorce but remain friends; H gets older & sick; ex-W moves in & takes care of him; H makes a will w/o ex-W, but her a life estate in his condo; H & ex-W remarry right before he dies a HOLDING: the 2nd marriage revokes the pre-marital will - W takes an intestate share Case interesting b/c court refused to look to anything outside the WILL to overcome the presumption that H "accidently" left her out - H left her a life estate (evidence that's all he wanted to leave her) 31

b TAKE: Most States look beyond the WILL to overcome the presumption that DS "accidentally" disinherited the SS - if Will Proponent overcomes the presumption & SS denied an intestate share, can still take an Elective Share Rights of DECEDENTs OMITTED from the Will i Protection from INTENTION Omission = in every state except Louisiana, a child or other descendant has no statutory protection against intentional disinheritance by a parent v. Internationally...many other countries protect intentionally omitted children ii Protection from UNINTENTIONAL Omission = Pretermitted Child Statute (MAJ) = if a child is (i) born after the execution of the parent's will & (ii) omitted from his parent's will ---then---> the child is given a share of the parent's estate 1) Policy: Presume Omission = UNINTENTIONAL --rebuttable-> by evidence that such omission was on purpose - evidence to overcome...(below) left entire estate to other parent; omitted other children living @ time of will-execution 2) Limit: (i) Probate ONLY - N/A to Non-Probate - doesn't apply to other nonprobate instruments a why...allow nonprobate for spouses b/c care more about protecting spouses than about protecting children (ii) Child After-Born IF a CODICIL to the will is executed after the omitted child is born --b/c--> codicil republishes the will 3) Share Amount = (UPC 2-302) depends on IF (i) Tr had NO KIDs when executed will + Will doesn't devise (most) ALL of the estate to the omitted child's surviving parent ---then---> Omitted After-Born Child gets an INTESTATE SHARE a *if will devises to the parent = evidence OMISSION is PURPOSEFUL -> assume omitted child will inherit from parent (ii) Tr had 1+ KIDs living when executed will + Will devises to those THEN-Living Kids ---then---> Omitted After-Born Child gets a share EQUAL to the Other Children Provided for a *if kids living when will executed = evidence OMISSION is PURPOSEFUL -> assume parent intended to disinherit ALL children; statute will not let after-born children take under the will, if pre-born children can't take as well (= UNFAIR) b How to Calculate: (i) Total Up the property left to the Provided-for-Kids (-divided-) by Total # of Kids (= Provided-for + After-Born) = the SHARE amount for the Omitted After-Born Child (ii) Provided-for Kids' shares are REDUCED to get the share of the OA-B Child (iii) If Provided-for-Kids are getting unequal amounts, Kids getting MORE must proportionally contribute more I (ALTERNATIVEs to Wills) Non-probate Transfers = legal arrangements that pass property at death OUTSIDE of probate (i) Will Substitutes i v. Wills: W...(i) revocable during life; (ii) beneciary has NO interest before the Tr's death (iii) FORMAL - subject to the Will's Act formalities ii 2 General Kinds: Pure v. Impure
Pure Will Substitutes = each is (i) Revocable - Tr maintains complete lifetime dominion & (ii) No Interest in Bef - creates no interest in the Te until the Tr's death (*pure b/c shares the EXACT qualities a will features, but the law has come to treat them as gifts) Includes: Life Insurance Pension Accounts Joint Accounts Revocable Trust Includes: Impure Will Substitutes = lack one of the pure will substitute qualities Joint Tenancies

NP...(i) asset specic (ii) avoid probate (iii) INFORMAL - NOT subject to the Wills Act

*more property passes via non-probate at death than via probate

(why...creates an interest in the Bef before the Tr's death)

iii General Rules: WILL's ACT 1) RULE: Wills act formalities do not apply to ANY non-probate transfers + but, Courts like to see some formalities followed that offer the same protections as the WIlls Act policy...If a substitute for a will, shouldn't the protections the will's act formalities provide be required of non-probate transfers (= capacity, writing, Tr sig, attesting Ws)? a Evolution of Rule...from Pretence --to--> Open Acceptance (Old Rule) If a non-probate instrument found to be: TESTAMENTARY --then--> Will's Act Formalities Required Non-TESTAMENTARY --then--> Will's Act Formalities NOT Required i Testamentary = no interest arose when created + contingent on death bad rule b/c courts tried to nd contingent beneciaries had interest where they did NOT -> such a distinction is no longer made (TODAY) Courts look to make sure the Testator is protected via FORMALITIES that offer the same protection as the Wills Acts - look for the formalities the testator went through to create the non-probate instrument - HD indicates...if enough to offer some protection to the Tr, courts will nd the instrument is VALID i ex: in creating a revocable inter vivos trust, Settlor signed 4 diff docs, 4 diff times & led them w. a court in creating a POD account for daughter, Decedent led documents w. a bank & the $ is held by the band 32

ii UPC 6-101 = all the below listed (but not an exhaustive list) are non-testamentary & not subject to the will's act a provision for a nonprobate transfer on death in an insurance policy, K of employment bond, mortgage, promissory note, certicated or uncerticated ecurity, account agreement, custodial agreement, deposit agreement, compensation plan, pension plan, individual retirement plan, Ee benet plan, trust, conveyance, deed of gift, marital property agreement or other written isntrument of a similar nature is NONTESTAMENTARY SUBSIDIARY RULEs of the Law of Wills: courts / statutes still unclear on which apply - here are some general rules - specic rules for the diff. non-probate transfers are listed below 1) Policy...should OTHER WILL RULEs apply to will substitutes as well (RoCs, etc)? PRO: YES...will substitutes contain the core features of wills (revocable & ambulatory) & are really just nonprobate WILLs --thus--> they should comply w. all the requirements a will has too 2) Rules: Revocation = Law of Will's revocation rules (i.e., by subsequent writing, physical act or operation of law) may/may not by applicable to some nonprobate instruments, BUT they are NOT applicable to: - trusts (only the trust can determine how it is to be revoked) - life insurance (revocation or change of beneciaries is set by the life insurance policy) 3P Creditors (MAJ): in general, a Creditor can reach whatever non-probate property a Settlor could reach during life - Creditors can reach the property both BEFORE & AFTER the Settlor dies - Look at the Settlor's INTEREST prior to death - ask: was an interest retained? or did it already vest in the Bef? is the instrument revokable? a Reachable Transfers: Revocable Inter Vivos Trusts b Non-Reachable Transfers: joint tenantcies...settlor's interest disappears, so creditor cannot reach it; interest goes to joint tenant life insurance payable to spouse or child retirement benets payable to spouse or child US savings bonds w. a POD beneciary c Applied: State St. Bank & Trust Co. v. Reider (CoA MAss 1979): Tr put all assets into trust; Tr got loan & used his assets as collateral, forgetting they were subject to a trust; Tr DIED; can the Bank reach the trust property to repay the loan? HOLDING: YES - Bank can reach the trust property in order to full Tr's debt; TAKE: Trusts cannot be used as mechanisms to cheat creditors Lapse = N/A - generally, lapse / anti-lapse statutes do NOT apply to non-probate transfers a do NOT count on anti-lapse statutes as stepping in to determine what to do if a beneciary of a non-probate transfers doesn't survive the testator iv TYPEs: (A) Revocable Inter Vivos Trust (RIVT) = trust created during the Settlor's LIFE & over which the Settlor retains power to revoke - Inter Vivos v. Testamentary Trust...created via WILL --thus--> it is always irrevocable (Rev can be IV or T) - Revocable = (1) Sr retains the right (i) to revoke the trust; (ii) to income from the trust; (iii) reach the trust principal; (iv) change Bef (*basically can change the plan for a RT at any point prior to death) (2) Becomes IRREVOCABLE upon the Settlor's Death 1) (Policy) MOST similar to a will & MOST exible of all will substitutes b/c Donor can draft both the dispositive & the administrative provisions precisely to the Dr's liking & can easily amend w/o going through the formalities of the Will's Act 2) (Background on Trusts) Trust = arrangement whereby a trustee holds the property in a duciary capacity for the benet of the 1+ beneciaries a Trustee (Te)...holds legal title to the property Te CAN = Be, but only if not the sole Te OR sole Be b/c then would owe no duties to anyone except himself b Beneciaries (Bef)...hold equitable title to the property c Settlor / Grantor / Trustor...person who creates the trust 3) (Creation) RULE: Wills act formalities do not apply to ANY non-probate transfers (including revocable inter vivos trusts) 2 Potential Ways: a Deed of Trust = Settlor transfers property to be held in trust to the Te b Declaration of Trust = Settlor simply declares himself to be Te of certain property for the benet of himself during his life, w. the remainder to pass to others at his death 4) (Trustee's Duties) = until the Settlor's death, Te's duties are OWED to the SETTLOR (OLD) Te (& Settlor w. power to revoke) ----owes duty to---> Contingent Beneciary (Farkas) a however, action for breach was useless b/c if CB brought suit to enforce, the Settlor could change the Bef b Old Approach: Farkas v. Williams (SC of IL 1955): F purchased stock 4 times in his name "as trustee for Williams"; W worked for F; F wrote "declaration of trust" to go along w. stocks & signed it (but didn't comply w. Wills Act); ISSUE: was the trust a testamentary TRUST (= invalid b/c didn't comply w. Wills Act) or inter vivos TRUST (= valid)? 33

 RULE: (OLD) Te (& Settlor w. power to revoke) ----owes duty to---> Contingent Beneciary (Farkas) HOLDING: Trust = VALID inter vivos trust b/c the trust created a contingent interest in F TAKE: Old Rules - Wills Act not required for Trusts + Contingent Bef don't have ANY interest until Sr's death - (HD) If looking at whether an INTER VIVOS TRUST is an ATTEMPTED testamentary disposition, look at the FORMALITY of transaction; wills act enacted to prevent fraud -> this is what the court should be looking for (MOD) UTC 603 = (i) Before Sr's Death, the trust remains REVOCABLE & Te's --owes duties to--> the SETTLOR - why...only the Settlor has vested interest in the trust during her life (ii) After Sr's Death, the trust becomes IRREVOCABLE & Te --owes duties to--> the BENEFIC. - why...upon Settlor's death, the contingent beneciary's interest VESTs a Effects: (i) Contingent Bef has NO interest in the Rev. Trust UNTIL it becomes IRREVOCABLE (= on the Sr's death) i WHY? to give the Sr the ability to do whatever he would like w. the trust property while he is still alive makes the RIVT more like a WILL - if the CB had an interest could challenge the Te &/or Sr's decisions *however, as stated above, such a power would be useless, as the Sr retains the power to change Befs ii UTC 603...(a) while a trust is revocable [and the settlor has capacity to revoke the trust] rights of the beneciaries are subject to the control of, and the duties of the trustee are owed exclusively to, the settlor if in brackets = OPTIONAL language (FL has omitted the brackets) (ii) Contingent Bef CANNOT challenge RIVT UNTIL the Settlor's Death - even if, there is evidence a 3P Te took actions or looted the trust w/o the Settlor's approval / knowledge - if Settlor's Capacity in question, might be able to challenge any changes she makes on incapacity grounds i WHY: must have an interest in the trust to challenge it --> CB's have no interest until the Settlor's Death (when the trust becomes irrevocable) ii Applied: Linthicum v. Rudi (SC of NV 2006): E/M appointed as Bef to RIVT; Settlor amended the trust, naming R as new Bef & succeeding Te; C declared incapacitated; E/M challenge amendment to trust as incapacity/UI ISSUE: Do E/M have standing to challenge trust am. when made by the Settlor during the Settlor's lifetime? HOLDING: No Standing - CBs can't get standing until trust becomes irrevocable (i.e., at time of death of settlor) (a) *HD...E/M should of challenged C's amendment as VOID under INCAPACITY 5) (Subsidiary Rules from the Laws of Wills) when do other wills laws (besides the WIlls Act) apply to will substitutes? Policy: many believe that "subsidiary" laws of wills (revocation, forced shares, slayer rule, death of beneciaries, creditor's rights, presumptions, etc) should apply to will substitutes a PRO: these rules reect judgements based on a lot of history on death & what a Tr usually wants b CON: many of these issues arise during PROBATE c Restatements 7.2 Although a will substitute need not be executed in compliance with the statutory formalities required for a will, such an arrangement is, to the extent appropriate, subject to substantive restrictions on testation and to rules of construction and other rules applicable to testamentary dispositions. 3P Creditors: see above - creditors can reach (during Settlor's life or death) whatever the Settlor can reach prior to death Revocation (MAJ): will revocation rules N/A to trusts - trusts ALONE sets the terms of HOW to revoke itself - trust sets out how to revoke itself in the original writing -> court MUST follow a Practice Advice: if drafting, make VERY clear (i) method of revocation for a trust & (ii) if that is the only method of revocation courts are still unclear on what subsidiary rules to apply to will substitutes & there's little statutory guidance --thus--> MAKE SURE TO BE CLEAR want will to revoke the trust? differs by jurisdiction if this is allowed b v. UTC - Broader Approach (c) The Settlor may REVOKE or amend a revocable trust: i (1) by substantial compliance with a method provided in the terms of the trust; OR ii (2) if the terms of the trust do not provide a method or the method provided in the terms is not expressly made exclusive (i.e., there can be more than one), by: (A) a later will or codicil that expressly refers to the trust or specically devises property that would otherwise have passed according to the terms of the trust; or (B) any other method manifesting clear and convincing evidence of the settlors intent. c Applied: In Re Estate & Trust of Pilafas: trust & will executed -> but the son can't nd the trust or will in Tr's possessions postTr's death; does the common law presumption of revocation if will not found in Tr's possession apply to the trust? HOLDING: NO - Trust is upheld; copy of the trust provided that it could only be revoked in writing by the Settlor i Court held that the trust alone could set the terms of its revocation - and the will's physical act rule did not apply (B) POD (Payable on Death Ks & Other Nonprobate Transfers) & TODs = designations by owner of WHO is to take on their death - aka Multiple Party Accounts (more then one name is on the account) - ex: Bank account that names who it is to be paid to upon the holder dying K Clause btw partners that provides, at a partner's death, their interest in the partnership be paid to his surviving Widow

34

1) PODs v. TODs: PODs...apply to cash -> POD clause can be attached to bank accounts or Ks that could be paid out to the Testator, but instead direct the Payor who to pay to on the Testator's death a revokable at any time b no current interest -> only a future one Depositor maintains explicit lifetime dominion, but designates Bef to take upon death TODs...apply to real property = allows the owner of real property to execute a deed that names the beneciary who will succeed to ownership at the owner's death (UPC adopted) a revokable at any time b no current interest -> only a future one c if recorded, beneciary can get the land at the owners death W/O going through PROBATE 2) RULE: PODs are non-testamentary & the Wills act formalities do not apply + but, Courts like to see some formalities followed that offer the same protections as the WIlls Act - Ks w. POD clauses or POD bank accounts offer enough formality Do NOT create interests in the Beneciary upon being named -> Bef interest does not vest until the Tr dies Policy...many courts held these to be testamentary, but legislatures passed laws making them non-testamentary 3) Estate of Hillowitz (CoA NY 1968): H/Tr partner in an investment club; K btw partners provided at death that partner's interest in the partnership be paid to his surviving Widow; K was not subject to the formalities of the Will's Act ISSUE: is the K's provision a testamentary disposition of property --thus--> must comply w. the Will's Act to be valid? HOLDING: NO - the K is VALID; the formalities of signing a K (offer, acceptance, bargain) are enough to protect the partners (C) Donative Transfers = inter-vivos GIFTs! (D) Life Insurance = non-probate transfer if it names a BENEFICIARY (= either an individual or a trust) probate transfer if it names the ESATE or doesn't name anybody 1) Policy: LI is a time-honored method of avoiding probate and getting assets in the hands of family members QUICKLY Key Quality of Life Insurance is that it is to pay out QUICKLY 2) Revocation / Change in Beneciaries (MAJ) = law of will's revocation by operation of law (i.e., divorce or marriage) DOESN'T apply to life insurance (MAJ) insurance policy rules CONTROL revocation and how beneciaries of the policy are changed a why...insurance co are to pay out quickly -thus-> must have certainty of who to pay + its a K, therefore the terms of the K should control b Applied: Cook v. Equitable Life Assurance Socity: Tr named ex-W as benecary of life insurance; remarried & forgot to change; Tr did write a holographic will that purported to change the designation; ISSUE: did the divorce revoke ex-wife as beneciary OR can a will change a beneciary of a life insurance policy? HOLDING: NO - Ex-W is still the Beneciary; Tr had plenty of time to properly change the Bef according to the terms of the K (which required for the Tr to submit a request in writing to the Insurance Co to change Befs) (E) Pension & Retirement Funds = required to pay certain benets to the surviving spouse 1) TYPES: US Savings Bonds 104(k) IRAs Pension Plans - 2 TYPEs (listed in more detail above under SS's Rights) a 2 Types: Deined Benet Plan Dened Contribution Plan (F) Multi-Party Bank & Brokerage Accounts 1) TYPEs: (1) POD Accounts = Bef has no rights in the account until Tr dies --then--> Bef gets the balance (2) Agency or Convenience Account = B has the power to draw on account during A's life, but only for the convenience of A, & not for any other purpose a No Survivorship Interest -> the agency dies w. the person (i.e., B does NOT get the balance on A's death) b ex: elderly person -> add persons to someone to an account as an agent -> they have the right to deposit & withdrawl on behalf of that person (like if they went to the grocery store for them; ran errands; etc.) (3) Joint Tenancy w. Right of Survivorship Accounts = both A & B have power to draw on the account & the survivor solely owns the balance of the account, which doesn't pass through probate a Right of survivorship -> when one party dies, the Deceased's interest dissipates, and the survivor owns the WHOLE account b Donative Intent = when one party (A) adds another (B) to a JT w. RoS account, it is ---PRESUMED---> A had a donative intent and was gifting part/all of the $ in the account to B ---UNLESS--------> rebutted w. clear & convincing evidence to the contrary ex evidence...asked for diff type of account; restricted the other party's spending Problem...banks often give customers a joint tenancy form w/o regard to the customer's particular intention, - courts often must gure out what type of account was intended 35

 How Much does each Party OWN? depends on the jurisdiction: - effect...they amount they own = (i) amount that party can withdraw & (ii) amount a creditor can reach i look at CONTRIBUTIONs (UPC approach) ii give each HALF iii give each interests in ALL c Varela v. Bernachea (CoA FL 2005): B opens account & adds mistress, V, as joint tenant w. right of survivorship; B never restricts Vs spending privileges; B suffers heat attack; his daughters bar V access to hospital; V withdraws $280K from account; B demands a return of the funds w/drawn by V; Bank complies over V objections HOLDING: It's a Joint Account & V entitled to 1/2 of what was in the account the day she withdrew the funds i Rebuttable Presumption that B gifted the funds to V when he added her - no evidence to rebut (B let V freely spend) (ii) Pour-Over Wills = a will that contains an express clause giving some or all of the Dt's probate proerpty to the Te of the Dt's revocable inter vivos trust (RIVT) to hold & distribute pursuance to the terms of the trust i In Practice - How it Works: (i) Settlor APPOINTs Trustee of an Revocable Inter Vivos Rev Trust (ii) Settlor NAMEs Trustee as the beneciary of... - ALL Will Substitutes (as the Trustee to hold under the terms of the trust, not personally - NP Beneciary = Trustee of RIVT) - Pour-Over WILL (as the Trustee to hold under the terms of the trust, not personally - Residue Beneciary = Trustee of RIVT) - do via a Pour-Over Devise = a provision in a will that (1) adds property to an inter vivos trust OR (2) funds a trust not funded during the Tr's life, but whose terms are in the trust instrument that was executed during the Tr's life (iii) ----EFFECT----> EVERYTHING goes into the trust, through which the Settlor dictates how his estate should be devised - to change her estate plan later, Settlor only needs to amend her RIVT (don't have to go to each individual doc) - Settlor lays our estate plan in the TRUST -> Te has a duciary duty to carry out the Settlor's wishes ii Policy: really a weighing of a WILL v. RIVT PROs: 1) BEFORE the Settlor's Death convenient package - consolidates the disposition of ALL of Tr's property, probate & non-probate - to change estate plan, Settlor only needs to amend her RIVT property management by duciary...good for Trs that have LOTs of investments & don't pay much attention to them a can name Te w. expertise in nancial management...Te knows what their doing + have duciary duties requiring them to take care of the Tr (while here) & carry out the Tr's wishes (once Tr dead) incompetency...good planning tool for dealing with incapacity -> name Settlor as co-trustee, w. trust providing that either cotrustee may act alone w. respect to the trust property *trust/wills should ALWAYs have provisions addressing what to do in case of incapacity of any of the players (Sr/Te/Bef) - use to determine who/how control is automatically turned over to if the Settlor becomes incapacitated 2) AFTER the Settlor's Death avoids probate costs...some argue that the costs of paying a Te are lower then going through probate (*HD questions...) more dead hand control...allows Tr to control their estate from the grave for longer - $ can remain in trust even after Tr dies, only going to the Des once they have met the conditions Tr has set quicker & less delays...income & principal can be disbursed to the Befs quicker no publicity...trusts are NOT public record, but probate papers are CONs: 1) trustee can become incapacitated...might need to appoint 2 Tes & have a provision of what to do if one becomes incompetent 2) 3P players...trustee might have to jump through a few more hopes to prove to 3Ps that has legal right to manage Sr's property 3) no tax advantage...same both wasy 4) creditors...probate's SoL for creditors to claim debts by is a SHORTER period of time that starts running at the Tr's death iii Special Rules: iv Creation Rule (MOD/ UPC / MAJ): POWs are authorized VIA STAUTE, b/c common law doctrine did not property support them UPC 2-511 - Statute allows... 1) POWs can be created W/O the trust being in EXISTENCE @ the time of will's execution (gets around IbR) 2) POW Trust DON'T need CORPUS at creation - VALID if set to receive property @ Sr's death (gets around DoIS) traditionally, trusts must have some corpus as creation, BUT POW Trust are completely funded at DEATH; the assets poured into it only at death 2 Views How...(i) exception to trust creation rules (*HD...nds problem w. - long standing rule to just toss aside) (ii) the trust corpus = the RIGHT to receive the money (present interest) 3) UPC 2-511(a) A will may validly devise property to the trustee of a trust established or to be established during the testators lifetime by the testator or at the testators death by the testators devise to the trustee if the trust is identied in , the testators will and its terms are set forth in a written instrument, other than a will, executed before, concurrently with, or after the execution of the testators will ... . The devise is not invalid because the trust is amendable or revocable, or because the trust was amended after the execution of the will or the testators death. Policy...POWs founded on common law doctrines that were awed and did not property support them 36

1) Incorporation by Reference = a will can incorporate by ref a doc IN EXISTENCE at the time the will is executed Basis...allowed a POW to incorporate the RIVT FLAW...only allows reference to docs only as they were in existance AT THE TIME of the execution of the will -thus-> if the trust was later amended, those amendments would not get incorporated into the will b/c not 2) Independent Signicance = will may dispose of property by referring to some act that has signicance apart from disposing of probate assets (like ref to an inter vivos trust that disposes of assets during life) Basis...allowed the trust to not be in existence when the will was executed FLAW...trust had to have some assets in it before the time of the Tr's death (w. POW, RIVT now funded until Sr's dies) v Revocation Rule: will law's revocation by operation of law via DIVORCE ---transfers---> to revoke a POW trust NOT the rule of every court WHY...under a POW, the will & trust only make sense as a PACKAGE - belief that if one is revoked (upon divorce, the POW will be) --then--> the other should be too b/c the two make up one estate plan, and cannot be severed - also, the trust is incorporated by reference into the will - therefore, if the will is revoked, the trust is not funded vi Clymer v. Mayo (Mass 1985): prof at BU; had pension plan, life insurance & POW; H was Tr & Bef of trust w. nieces and nephews taking the residuary; W & H divorce; W changed beneciary of life insurance from her H, but didn't change anything else HOLDING: H's interest in the trust was revoked by statute -> the statute only applied to wills, but the trust was incorporated by reference into the will (iii) Joint Tenancies in REAL PROOPERTY = method of jointly owning property, where upon the death one joint owner, the survivor owns the property ABSOLUTELY, freed of the D's interest in the property i 2 Types: Joint Tenancy Tenancy by the Entirety ii POLICY...Survivor comes to own the property entirely b/c the D's interest vanishes at death --THUS--> no probate necessary b/c no interest must pass ot the survivor iii v. WILL...JT's are... (1) Irrevocable...imperfect will substitute b/c its not revocable; once make the person a joint tenant, there is no taking it back unless you buy them out (i.e., they own the interest) (2) Not Devisable...the person that will get the land is the JOINT TENANT -> have no choice in who to leave to (3) Post-Death unreachable by CREDITORs (iv) Planning for Incapacity i Best Tools: (1) Revocable Inter Vivos Trust...see above (2) Durable Power of Attorney (MAJ) = creation of an AGENCY relationship whereby the agent (= attorney-in-fact) is given a written authorization to act on behalf of the principal that continues throughout incapacity of the principal until the principal's death - the CRUX of the 'durable' PoA as a planning tool is that it last through INCAPACITY 1) v. GENERAL Power or Attorney...agent's power terminates on the principal's incapacity 2) EFFECT: allows 3P to transact with the agent on behalf of the principal agency relationship - each of the parties has a role & resposibilities: a Principal...if competent, can terminate the durable power at any time b Attorney-in-Fact...owes the Ppal the duciary duties of loyalty, care and obedience 3) SOURCE of Law: Common Law Agency Law modied by State Statutes 4) v. TRUST Durable Power ceases on the Ppal's Death If AiF dies, power TERMINATEs unless Ppal names a successor a if Trustee dies, court appoints a successor trustee AiF does not own Ppal's property & their powers are strictly construed a Trustee...has all the pwoers of an outright owner of the property 3P more comfortable in dealing with a Trustee, than with an AiF 5) SCOPE of POWER 2 Views: a (1) Strict Construction = strictly construes the powers given to the AiF, requiring the Ppal to give EXPRESS EXAMPLEs of what the AiR can/cannot do basically, if the power is NOT expressly listed, the AiF can't do it b (2) Intent Theory (BROAD View) = scope of a AiF's powers are construed to EFFECT the principal's intent examine the express terms & the context of the instrument as a whole to give effect to the Ppal's intent if it appears the powers are BROADLY drawn (i.e., gives power to transact all business & a variety of general acts) --then--> each particular task w/in the grant of authority does NOT have to be spelled out in exacting detail if it appears Ppal RESTRICTED the powers of the AiF more, then the court will look for more express grants for the power Limit...Ppal cannot give an AiF the power to make, amend or revoke the Ppal's WILL can give an AiF the power to create, modify or revoke a TRUST (but such a power must be expressly granted) a Why the difference? Courts are becoming less rigid & trusts are the vehicle that society is doing it through --THUS--> likely don't want to import the rigid rules of wills 37

Courts are becoming less rigid & trusts are the vehicle that society is doing it through --THUS--> likely don't want to import the rigid rules of wills ii Health Care Decisions (MAJ) = each person has a constitutional right to make health care decisions for herself, including the right to refuse medical treatment HOW to DETERMINE what those decisions are: 1) If clearly expressed, the person's wishes will be honored - (i) may state wishes about terminating medical treating OR (ii) appoint an agent to make the decision for her 2) If not clearly expressed, then look to: (i) the STATE...have ability to assert an interest in favor of preserving life & prevent the withdrawal of treatment - default state public policy = preserving life (ii) Patient's SPOUSE / NEXT of KIN...health care decisions (subject to the state's interest in preserving life) fall to relatives in the following order: a Spouse, unless legally separate b Adult Child c Parent d Adult Bro or Sis (iii) Patient's Advance Directives - can be CRUCIAL if patient has specic requests - used mostly in END of LIFE stages, not for prolonging life a 3 Types: (1) Instructional Direcitves = specify treatment patient wants in either end-of-life situations OR in the event of incompetence i Patient's INSTRUCTIONs ii Types: living will or medical directive iii How...either by generally description OR by way of hypothetical ex of how one wants to be treated (2) Proxy Directives = designate an agent to make health care decisions for the patient i Types: health care proxy or durable power of attorney for health care ii Agent STANDARD: Substituted Judgment = asks whether the agent chose what the patient had or would have chosen in that situation iii WHO to chose? Most often FAMILY members are chosed - must consider very carefully WHO you want...want someone your close enough to, but also someone who can handle it PROs...known you the longest; same religious beliefs; often, best interests at heart; nancially/emotionally/care taking burden likely falls on them CONs...stand to nancially gain; emotionally might not be able to handle it; hard decision to put on them (good idea to leave directive telling them what you want); might be diff religion and disapprove (3) Hybrid Directives = incorporate BOTH instructional & proxy, directing treatment preferences & designating an agent to make substituted decisions iii Organ Donation Problem...more demand than supply -> very low organ donation rates US: people must OPT-IN in order to donate 1) why not make the default rule an opt-out? i.e, it is PRESUMED that people would want to donate, unless they state otherwise 2) have done in other countries and has worked out well - donation rates up dramatically

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IV. V. TRUSTs = Type of ESTATE PLANNING -> a devise under which property is held by one(+) person(s) for the BENEFIT of other(s) A WHY USE? PRIMARILY...a trust provides the ability to separate the benets of ownership from the burdens of ownership Provide for Beneciaries Increase exibility in distribution Obtain professional management Provide for successive enjoyment of property over several generations Secure tax benets (if irrevocable) Avoid probate with its delays and costs Insulate trust property from beneciarys creditors B TYPEs of Trust LABELs:
Business Trusts Charitable Trusts...created to benet a charitable purpose Private Trusts...created to benet individual beneciaries Revocable...Settlor can amend the trust, Tes, Inter Vivos Trust...created during the Settlor's life, either via Declaration or Deed of Trust Testamentary...created in death via the Settlor's will property or Beneciaries any time before their death Irrevocable...once created, the Settlor cannot amend the trust (w. some exceptions)

C SOURCES of LAW Restatements of Trusts (1st, 2nd & 3rd) Leading Treatises: Scott & Bogert Uniform Laws: Uniform Trust Code (2000) D CREATION REQUIREMENTs: (1) INTEND to CREATE i (Rule) Settlor must intend to transfer property to hold for the use & benet of another (= creating a a trust realtionship) Touchstone Question...did the grantor manifest an intention to create a trust relationship? Written or Verbal...no written doc required - look at ALL the circumstances to determine the Settlor's intent; LOOK FOR: - v. Will...huge change from a will -> much less formal & easier to create 1) Identify the PARTIEs 2) Identify the RES 3) Identify the METHOD of TRUST CREATION 4) Specify the INTEREST release by the Settlor 5) Sepcy the FORMALITIES required FUNCTION over FORM: no specic words or language are required -> just the Sr's intent to create a trust relationship 1) KEYWORDs...look for the words "keep for" or "maintain for the benet for..." 2) STRONG, Denite Language...the language must giving directions on how a Settlor wants certain property handled v. Precatory Language = language merely creating an unenforceable moral obligation -> doesn't create a trust a when Tr expresses their "wish", "hope", or "recommendation" of how they would like the De to use the $/property b ex: "I wish, but do not legally require, that C permit D to live on the land" ---NOT---> a Trust & A can't be forced to comply WAYs: 1) Inter Vivos Trust (created when Settlor is ALIVE) (i) Declaration of Trust...Settlor = Trustee --requires--> neither delivery nor deed of the property being given, just the verbal declaration by the Settlor of intentions (ii) Deed of Trust...Settlor Trustee ---requires---> a deed or trust or actual delivery of the trust property to the Trustee creates the trust either a when alive = Inter Vivos Trust...may be created by either: 39

2) Testamentary (created when Settlor DIEs) = via WILL ii v. CUSTODIAN Uniform Transfers to Minor Act (UTMA) - CREATED the idea of Custodians 1) Custodian = a person who is given property to hold for the benet of a MINOR 2) How to Create...can be est. easily w. form from nancial institution, in trust, or in will "Property transferred to a person (can be a donor) as CUSTODIAN for the benet of [minors name] under the [states name] Uniform Transfers to Minors Act." 3) v. TRUST...a custodianship: incorporates the default rules under the State Act -> no need for the trust document (trust creates its own rules) used for SMALL estates & Donor is often the custodian (trusts can be used for big & small estates) little supervision - duciaries duties, but not under court supervision leaving the custodian w. LOTs of more discreation little accounting required, UNLESS its requested or challenged by someone (trust must submit accounting often) Jimenez v. Lee: suit against father for $ from grandmother given to father for her education; F considered himself the "custodian" of the $, cashed in the gifts & bought closely held stock & didn't keep accounting; custodianship or trust? 1) HOLDING: Trust formed via oral direction - custodian has less duties & requirements then trusts, thus even if F upheld custodian rules he violated the trust rules by taking stock as custodian, not diversifying or keep accounting iii v. GIFT: Gifts...require Dr deliver the property to the De & De accpt Trusts...DON'T require delivery --why--> Settlor is often the Te, & thus already holds the property 3 Ways to Deliver a GIFT 1) Physical...actually give De the property 2) Constructively...give the De the means of obtaining the property (ex: key) 3) Symbolic...give the De something symbolic of the object (ex: written instrument) v. Trust...if donor of a gift fails to make delivery, can a gift be characterized as a declaration of TRUST? VIEWs DIVERGE: 1) Some YES...similar to harmless error -> if a Dr's INTENT is obvious, Ct can effectuate it via a trust (b/c no delivery req) 2) Some NO...would defeat purpose of requiring delivery to effect a gift if could just get around by making it a trust instead Hebrew Uni Assoc v. Nye (CT - 2 Cases): E announced was giving H's library to a Uni, issued press release & told 3Ps; E died before completing cataloging; her will left a residuary cl to a charity; can Ct construe gift as a trust so delivery not req? a 1st Holding...NO TRUST - b/c E lacked intention to create a trust; Court wouldn't "fudge on the law" of trusts b 2nd Holding...GIFT via Constructive Delivery *HD...very loose CD def (suppose to be as complete as prop. allows - Ct fudges on law of gifts b/c E's intent so clear) (2) ALL 3 PARTIEs (Settlor / Trustee / Beneciary) i (Rule) Merger Rule = 1 person can fulll ALL 3 roles, BUT, if do, there must be an additional BENEFICIARY (i.e., Te must also owe duciary duties to someone else OTHER than herself) ---if not---> Te owns both equitable & legal title, which then MERGE making the trust FAIL ii (i) SETTLOR (Sr - grantor / donor / decedent) (a) party who creates the trust (b) supplies the property & (c) divides the ownership (i.e., selects the Trustee & Beneciaries) iii (ii) TRUSTEE (Te) (a) owns legal title & has the responsibilities of ownership (i.e., can sell, replace & invest the property as sees t) 1) Bifurcation of the Trustee...b/c Te owns legal title to the trust property & personal property, he's basically splits into 2 PEOPLE: Trustee as the TRUSTEE...(i) Te can sue / be sued / transact / pay creditors on behalf of the Trust (ii) Trust Creditors...have recourse against trust property, but NOT against Te's personal property - why...the trust is not a legal entity, so can't do it itself; Te acts as the representative Trustee as a PERSON...(i) Te can sue / be sued / transact / pay creditors on OWN behalf & such does NOT effect the trust (ii) Personal Creditors...have recourse against Te's personal prop ONLY, but NOT against trust prop. (b) owes beneciaries duciary duties ---breach--> of which, such Te to be denied compensation, subject to PERSONAL liability & removed from post ---why---> Te has managerial authority of the trust property, but the Be bear the consequences of the Tr's decisions 1) duty of loyalty...Te must administer the trust solely in the interest of the beneciaries -> NO self-dealing 2) duty of prudence...Te is held to an objective standrd of care in managing the trust property 3) subsidary rules...several that reinforce the loyalty & prudence; including: duty of impartiality...btw classes of beneiaries duty to not commingle...btw trust property & Tr's own property duty to inform and account...to the beneciaries (c) WHO can be Te? LOTs of options: 1) Single or Multiple people...Te can be an individual or corporation; 2) Te = Settlor &/or Beneciary --BUT--> Te must owe duciary duties to someone OTHER than himself (if not equitable & legal titles would MERGE & the trust would fail) Remainder Beneciary ENOUGH (i.e., A can be the Settlor, Tr & Beneciary, if when he dies the remainder goes to another) 3) Private or Commercial 3P...many companies offer professional Trustee services 4) NO ONE - courts will NOT let a trust fail for lack of a Te -> court can always appoint a Te if Settlor fails to name a valid Te iv (iii) BENEFICIARIES (Bef) 40

 Beneciaries hold: 1) Benecial Title...Bef receive the BENEFIT of the trust 2) Equitable Title...Bef have the RIGHT to ENFORCE the trust via: claims against the Te personally for breach of trust right to recover property wrongfully disposed of UNLESS it comes into the hands of a bona de purchaser for value (Traditional Rule) 1) To be VALID, a trusts must have (i) Beneciaries of a trust must be ASCERTAINABLE, & there must be at least ONE a UNBORN OK - "to A's (who is childless) for the benet of future children" = VALID b/c limited, identiable class b why...(i) Te must owe someone duciary duties (ii) that person must keep the Te accountable & (iii) the court must knows who has standing to enforce the trust) (ii) If CLASS GIFT, the class must be capable of legally denable limits a ex: "my relatives" OK, but "my friends" is not - no legal def of friends, so could be limitless (iii) Trustee CANNOT have power to select WHO the Befs are or what the Class' LIMITs are a v. Powers of Appointment: PoAs...PERMISSIVE directions that give a BEF the power to chose other Bef (appointes) Gives FLEXIBILITY - appointes don't have to be identiable, but same enforcement rules do not apply Trusts...trust directives are MANDATORY -> Te's cannot be given POWERs to chose who gets the benet b v. Modern Approach (Min - UTA + FL) = giving Te a PoA to select a BEF from an indenite, unascertained class is VALID --IF---> there is at least ONE person who can meet the description LIMIT...still subject to the RAP 2) EXCEPTIONs: (i) Charitable Trusts...by denition, must be for the benet of an indenite class + Atty. Gen. has the power to ENFORCE the trust & keep it accountable (ii) Trust for NON-Charitable PURPOSEs / PETs a (Rule) = not an actual trust, but an arrangement where the Transferee has the unenforceable, MORAL OBLIGATION (but not duty) to apply the property received to the Transferor's designated WISH, UNLESS: (a) gift violates the rule of perpetuities OR (b) the gift is capricious (*taking care of pets is NOT capricious) b (Use) ALLOWs a transferee of property that was meant for a trust keep the property & use it for the transferor's wishes EVEN THOUGH the attempted trust failed c (Policy) result of many leaving trusts to pets, which FAIL (pets don't have legal standing -thus-> can't enforce a trust) Courts allow these types of arrangements b/c believe they have a good purpose & mean well Not CHARITABLE b/c CTs can't be for a specic individual / specic pet d (2 WAYs to ACHIEVE):
Honorary Trust + Transferee is NOT obligated to carry out settlor's purpose + If Transferee declines the property, resulting trust imposed ---reverting---> the property to Sr or Sr's Estate Statutory Purpose Trusts + Statutory trust for pet animal or other nonchartiable purpose + UTC 408-9 & UPC 2-907 authorized + Court authorized to REDUCE excessive trust property & provide for ENFORCEMENT by Settlor or Court Appointee

(3) TRUST PROPERTY (aka Res / Corpus) i (Rule) to declare a trust, the Settlor must put property into the trust that is: (i) IDENTIFIED or INDENTIFIABLE...Sr must expressly declare what property is to fund the trust (*can be as little as $1 OR a transferrable interest in property) (ii) TRANSFERRABLE (iii) Sr has an EXISTING INTEREST in 1) Future Property / Prots...can sometimes be used a res DEPENDING on the Settlor's right to it INVALID RES if...Settlor doesn't have a right, but ONLY an EXPECTATION or HOPE of receiving the property/prots a Stock Prots...stockholder has NO RIGHT to make a prot from his stocks - only the HOPE b ex: Brainard v. Commissioner: in 1927, H declared he was creating a trust of his 1928 stock prots for the benet of W, kids & mother; H didn't declare the stock prots as gain under theory they went to fund the trust HOLDING: NO Trust - H had only the hope of making prots; prots must FIRST be received by H, BEFORE he can put them into the trust TAKE: if creating a trust out of future property / prots that only have a hope of receiving, the Settlor must FIRST RECEIVE the property ---then---> manifest their intent to create that trust at that time VALID RES if...Settlor may assign FUTURE EARNINGs from a PRESENT K (present K = present property right) - present K = present property right -> the potential prot is MUCH more certain then just an expectation or hope - why...future yield from an existing property right can be transferred) a WHY...when a K right = the trust res, the beneciary is like a creditor (i.e., the $ is not currently paid, but legally req to be at some point in the future); BUT, there are DIFFERENCEs:
TRUST (re the beneciary) (1) Bef has an EQUITABLE Interest in the trust property (2) Bef receives INCREASEs & DECREASEs in the value of the property DEBT (re the creditor) (1) Creditor has NO INTEREST in specic property, ONLY has choice in how go after property (2) Amount of debt stays the SAME

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TRUST (re the beneciary) (1) Bef has an EQUITABLE Interest in the trust property (2) Bef receives INCREASEs & DECREASEs in the value of the property (3) Creditors can't REACH the trust property. (4) On Sr's death, SoLs starts running when the Te repudiates the trust

DEBT (re the creditor) (1) Creditor has NO INTEREST in specic property, ONLY has choice in how go after property (2) Amount of debt stays the SAME (3) Creditors can't REACH trust property (4) If death of Sr, specic SoL applies to Creditor's claims against a debtor (2-4 yrs)

b EX: In writing, (i) O declares himself Te of any prots he makes from his stocks during the next yr. VALID Res? NO - Prots not certain - only hoped for (ii) O declares himself Te of all his stocks, w. any prots from stocks going to A. VALID Res? YES - stocks provide existing property that Settlor has an ownership right to & interest in O puts in trust for A: (i) 5% of the prots of a musical play, IF I produce it & if there are any prots VALID? NO - gratuitous statement about gift might make in future; no K right to those prots (ii) 5% of the prots of a musical play that I have the exclusive K right to produce VALID? YES - O has present right in the K, making the prots much more certain ii (Exception) POUR-OVER WIlls... inter vivos trusts that will be funded by a pour-over will (4) (POSSIBLY) Written Instrument...gen, no writing is req. to create a valid trust, BUT some state statutes might require a writing i INCLUDING: (i) Wills Act = Testamentary trust, which are created via WILL, which ---MUST---> comply w. the formalities of the Wills Act 1) EXCEPTION: (i) Where the Te is to deliver personal property at the SETTLOR's DEATH (ii) BUT, the trust was funded INTER VIVOS (iii) ---effect---> the trust is an INTER VIVOS trust & does NOT have to be in writing 2) Secret v. Semi-Secret Trusts...both = testamentary trusts that FAIL b/c the terms of the trust are not written in the will - WHY...Sr attempts to create a TRUST in a will via a devise (where the De = Te), BUT the trust FAILs b/c Sr did not overtly name/ID the Beneciaries (only told the Te in secret) - USE...this issue usually only comes to light when the De/Te breaks promise to Settlor & keeps the property - EFFECT--> question of WHO the devised property now goes to (Sr's heirs / residul cl. takers OR the intended, unknown Bef) (MAJ) OLD VIEW
Semi-Secret Trust = desire to create the trust appears on the FACE of the will, BUT the terms are undisclosed (ex: "To A, to distribute in the manner that I have expressed to Him") EXTRINSIC EVIDENCE to prove? NO - Courts don't allow EE to ID the intended Bef b/c not needed to prevent unjust enrichment - why...wills' face plainly states De is not to to personally take the property REMEDY: Resulting Trust - forces De to transfer property back to the Settlor or Settlor's estate (*going to Settlor's heirs via intestacy or residuary clause) REMEDY: Constructive Trust - forces De to transfer the property to the intended Beneciaries EXTRINSIC EVIDENCE to prove? YES - Needed to prevent UNJUST ENRICHMENT -> Courts must admit EE to determine the De was suppose to take as a Te Secret Trust = face of will shows an ABSOLUTE devise of property, but the De has promised Dr that he would use the $ for the intended purpose (i.e., in will, nothing indicates De to hold property as Te)

(Min) MODERN VIEW...takes position that a constructive trust in favor of the intended Bef should be imposed in BOTH situations - difference in above remedies is arbitrary -> both present the same problem, should both have the same remedy

(ii) Statute of Frauds...requires transfers of real property to be in writing 1) REMEDIEs...what courts do if land is transfered and to be held in a trust orally created: (MAJ) Permit the Trustee (= Transferee) to retain the land a EXCEPTION: a constructive trust for the beneciaries will be imposed where the transer was (i) wrongfully obtained by fraud or duress; (ii) where the Transferee was in a condential relationship w. the Transferor OR (ii) where the transfer was made in anticipation of the Transferor'r death E FAILED TRUST...equitable remedies when trust fails (i) Resulting Trust = not an actual trust, but used to transfer Te's legal title to the trust res ---back to---> benecial owner (Sr or Sr's Estate) i 2 SITUATIONs to use in: (1) Equitable Reversionary Interest = when an express trust (i) fails or (ii) makes an incomplete disposition (= all Bef dead, but still has trust rest) - ex: O devises property to X for the benet of A for life & then to A's descendants; A dies w/o descendants; - resulting trust imposed to revert the property back to O (if still alive) or O's estate (if dead) 42

 (2) Purchase $ Resulting Trust = unless its a gift, when X purchases (& gets title) property w. Y's money ---THEN---> X holds the title in a resulting trust for Y & must convey the property to Y if demanded to - ex: (likely situation) A has bad credit, so B (boyfriend w. good credit), gets the title to the car, but A makes all the payments - if A demands the title, but B wont give it - resulting trust imposed to revert the title to A (B holding as Te for A) F DISTRIBUTIONs from the Trust Fund RIGHTs of BENEFICIARIEs to Distributions = DEPEND on the TYPE of trust i TYPEs of Distributive Rights: (i) Mandatory Trusts = trust directs distributions w/o an an exercise of discretion by the Te as to the amount / timing / taker ex: To N, in trust, to pay the income to K for life annually, & on K's death, N must pay the corpuse to C & S, equally 1) Bf's RIGHT to Distribution = MANDATORY -> Te must distribute the income to Bef (according to the schedule set out by the Sr) v. discretionary trust...MT are straight forward - if Tr doesn't perform according to the schedule, Bef can take to court to enforce DT much more grey area - court must give the Trustee room to assert discretion (ii) Discretionary Trusts = trust directs the Te to exercise judgment in deciding AMOUNT / TIMING / TAKER of the income or corpus ex: To N, in trust, to pay so much of the income & principal to my children, as N, in her absolute discretion decides 1) Bf's RIGHT to Distribution = NONE - Bf's has no right to receive a distribution --UNLESS--> Te fails to act when (i) duciary duty OR (ii) the Sr's standards call for a distribution 2) LIMITs...to keep in check the latitude given Tes, their discretion to distribute is subject to the following limitations: (i) Fiduciary Duties: a Duty of Reasonableness & Good Faith (Default Rule) = courts will not interfere w. the judgment of the Te so long as he acts reasonably (objective) & in good faith (subjective evaluation) EXCEPTION: Extended Discretion = when Sr modies the default standard by expressly giving a Te SOLE & ABSOLUTE discretion subject to no limitations i Effect...NOT ABSOLUTE - the language eliminates the duty of reasonableness, but Tr still has a duty of good faith why...if eliminated the altogether, no duciary duty would be left &, thus, no trust would be left b Duty of INQUIRY (MAIN) = Te has an on-going duty to inquire as to the Bf's status & needs ---in order to---> determine WHEN such the Te needs to make a distribution POLICY: discretion doesn't allow Te to sit on his hands -> must actively keep tabs on Bf to determine their need REMEDY: Constructive Trust...if Tr breaches their duty of inquiry, the court will impose a constructive trust on the amounts which SHOULD have been distributed to the Bf Marsman v. Nasca: S died leaving a trust w. F(lawyer/drafter) as Te & H as Bf; Te had mandatory duty to pay H income at least quarterly & discretion to distribute principal for H's "comfortable support & maintenance" i HOLDING: F breached duciary duty to INQUIRY -> never looked into or gave H distribution from principal, even though aware of evidence that he was struggling in life (F helped H take out mortgage on house to pay bills; require H to make written requests for extra $; deeded house to H's step-daughter for more $) ii TAKE: (i) Never work w. both CURRENT & REMAINDER Bf --> huge ethical conict of interest (ii) Asking Bfs to request disbursement is OK & PRUDENT c EXCEPTIONs: (i) Exculpatory Clause = clause in trust protecting the Te against personal liability for breach of trust --UNLESS--> Te is willfully/intentionally negligent, reckless, indifferent, or acts in bad faith i (MAJ) If Te = DRAFTER --then--> clause is INVALID, unless the Te/Drafter can prove (i) the clause was appropriately used AND fully explained / disclosed to the Settlor (ii) if Te accused of willfull negligence, etc, Te/DRAFTER must prove he DID NOT commit such (ii) Mandatory Arbitrary Clause = trust clause requiring claims for breach of trust must be resolved by arbitration i ENFORCEABLE? Unresolved -> does this preclude judicial review of Bf's right? DON'T KNOW; authority scarce (ii) Settlor Purpose: Settlor often provides a PURPOSE or STANDARD, which dictates HOW the Te must exercise his discretion a (Rule) Te has DUTY to ascertain & implement the standard the Settlor set Courts give GREAT weight to such standards when considering whether the Te properly exercised his discretion (Roc) FACTORs Te should look at in determining the Sr's intent: i (MAIN) Trust doc in its ENTIRETY...the intent may come from an impression of the overall document ii Relationships btw the Settlor & Beneciarys...asks what would Sr had wanted for the Bf in certain situations iii How far $ can realistically go...# of Bfs; amount of $ in trust; how much each Bf has received to date iv Other ASSETs of Bf...default rule Te is NOT to take into consideration, UNLESS expressly authorized by Sr to do so Question of if Sr wants the trust to (i) provide Bf w. a SET level of income, regardless of other assets OR (ii) only to be a SAFETY NET, giving Bf income if others become inadequate v Rainy Day?...did the Sr intent the Te to be CONSERVATIVE in spending, preserving $ for a rainy day or remainder beneciaries OR LIBERAL in spending, ensuring that the Te comfortable in the current time b COMMON Purposes for Trusts: "Comfortable Support & Maintenance" Trust = Te is to use discretion to make payments in order to keep the Bf at the standard of living he is accustomed to at the time they become a Bf i Drafting Advice...(i) include specic standard of living (ex: make sure can keep house); (ii) if $ liberally spent to keep the Bf at that standard Support Trust = authroizes the Te ONLY to make distributions as is necessary for the Bf's support i v. CS&M...Support trust is for necessities ONLY, while CS&M is for keeping Bf at the level above necessities use to 43

 (iii) Hybrid (PRACTICAL) = contain BOTH discretionary & mandatory language ex: To N, in trust, to [MANDATORY] pay annually all of the income to my kids in equal shares & [DISCRETIONARY] so much of the principal to my kids as the Te, in the Te's discretion, determine is necessary for their health & education 1) TYPEs: Sprinkle / Spray Trust = Te must currently distribute ALL the the income (= mandatory), ---BUT---> has discretion to determine WHO takes & WHAT amounts (= discretionary) RIGHTs of BF's CREDITORs (if Bf Settlor) i POLICY: trusts are often used a money management tools w. the purpose of protecting $ from creditors 3 Best Ways to Protect Trust Property from Creditors: 1) Increase Te's DISCRETION 2) Spendthrift Clause (precludes Bf from alienating his interest in the trust) 3) Powers of Appointment (limit permissible appointees) ii GUIDING PRINCIPLE...a creditor's ability to reach a beneciary's interest in a trust DEPENDs primarily on: (i) If Bf = Settlor ---then---> Bf's creditors have a greater ability to reach that Bf's trust property (RIVT - Creditors can reach ALL res) - why...its against public policy to use a trust to try to SHIELD one's ASSETs from one's CREDITORs - below deals w. Bfs Settlor (ii) Creditors STEP INTO the Bf's shoes & receive ONLY what interest (i.e., distribution) the Bf would receive (no more, no less) - WHY: (a) Creditor's get their RIGHTs from the Debtors - if the Debtor can freely transfer the $, the creditor can reach it (b) Bf's interest in the trust (whether D or M) is FREELY TRANSFERRABLE (absent special provisions), whether voluntarily (by sale or gift) OR involuntarily (by creditor's reaching) - Terms...receiving interest = when Te pays Bf form the trust reach the Bf's interest = Creditor can force Te to pay OR can reach the trust property iii (Rule) whether a creditor can reach funds depends on the TYPE of Trust: TYPEs of Trust: 1) Mandatory Trust = (same as BF) Creditors can REACH & FORCE Te to distribute the income they would otherwise distribute to the Bf (i.e., according to the schedule set out by the Sr) 2) Discretionary Trust = (same as BF) Creditors rights receive $ is subject to the Te's DISCRETION, as set by the Settlor - WHEN a Te makes a distribution ---THEN---> Creditor can reach the $ - the Q is, when MUST the Te make a distribution 2 Approaches: a (i) (Common Law) Creditors rights DEPEND on the type of discretionary trust - 3 TYPEs: (1) PURE Discretionary = when Te has absolute, sole discretion / control over distributions i (RULE for Creditors) = Creditors cannot COMPEL a Te to pay (*why...Bf cant compel --thus--> C cant compel) -- BUT entitled to Court Order that if Te make any distributions, Creditor is paid FIRST ii (EFFECT) Creditor...may not get paid, but can deprieve the Bf from getting paid as well -> might put pressure on Bf to pay Te/Bf...STAND OFF - Te can just stop making payments -> also puts pressure on Creditor to settle (2) SUPPORT Trusts = Te obligated ot make distributions as needed for Bf's NEEDs i (RULE for Creditors) = Creditor cannot COMPEL a Te to pay (b/c Bf cannot compel payment), EXCEPT for: (i) Suppliers of NECESSARIEs (ii) Child Support Claims (iii) Alimony Claims (iv) Government (3) DISCRETIONARY Support Trusts (HYBRID) = combines unfettered discretion w. distribution standard i (RULE for Creditors) Treat SAME as PURE Discretionary Trust (no compulsion, but court order to pay C rst) (Possible 4) PROTECTIVE Trusts = Te directed to pay mandatory income to Bf --BUT IF---> Bf's creditors attach Bf's interest, Bf's mandatory income interest is AUTOMATICALLY changed to discretionary b (ii) (Modern) Eliminates distinction btw PURE discretionary & SUPPORT trusts, giving C the same rights re ALL discretionary trusts (no matter how much discretion) UTC 504 = Creditor CANNOT compel distribution of a discretionary trust, ---EVEN IF---> (1) the discretion is LIMITED by a standard (= treat all discretionary t. same) OR (2) Te abused his discretion ---EXCEPT---> Court may compel payment of ALIMONY or CHILD SUPPORT v. R3 60 = Creditors can COMPEL ANY distributions the Te makes or is required to make in the exercise of discretion 3) Spendthrift Trust = a trust that prohibits a Bf from (i) voluntarily alienating (sell or gift) her interest ---thus---> (ii) the Bf's Creditors cannot reach her interest (Rule) MAJ = ST are valid & enforceable a Policy: ST have been controversial on whether they should be allowed PROs...(i) Dr's property, not the Bfs - Dr should be able to impose whatever conditions they want (including no alienation) (ii) Not Unfair to Vol Creditors...voluntary creditors made the loan & accepted the risk of loaning the $ (iii) Allows parents that die early the same rights as ones that live long - if alive, can keep $ separate from child, giving ability to bail the child out, but creditors unable to reach CONs...(i) Unfair to Creditors...unfair to permit a Bf to enjoy property as a Bf, but not permit C to reach that property - esp. "involuntary" creditors (children or ex-spouses) (ii) Favors Rich OVER Poor...only rich use trusts - gives them way to shield from creditors, poor don't have 44

CONs...(i) Unfair to Creditors...unfair to permit a Bf to enjoy property as a Bf, but not permit C to reach that property - esp. "involuntary" creditors (children or ex-spouses) (ii) Favors Rich OVER Poor...only rich use trusts - gives them way to shield from creditors, poor don't have b Limits: (i) ONLY protects from compelled distribution - if Te vol. distributes, C can reach that property once its in Bf's hands (ii) Voluntary (sell or gift) v. Involuntary (creditors) Alienation...ST can bar BOTH, or only bar V, but CANNOT only bar INV i only barring V...leaves the Bf's interest reachable by Creditors ii only barring INV...against public policy -> if Bf has right to transfer, they must run the risk of Creditors reaching the $) c Creation: Sr must expressly include a ST clause in the trust - ST Clause = "Bf may not transfer her interest in the trust & Bf's interest may not be reached by Bf's creditors" d Exceptions: (MAJ + FL) UTC 503(b) = w. a court order, a ST provision is UNENFORCEABLE against: i (1) Alimony or Child Support Claims why...(i) involuntary creditor - kids don't chose their parents (though ex-spouses can) & (ii) might be left on gov dime if Bf doesn't pay - against public policy to allow Bf to shield self while gov pays Shelley v. Shelley (bad father who disappears)...judicial doctrine follows the same ii (2) Judgment Creditors who provide services for the protection of a Bf's interest in trust (i.e., Bf's LAWYER) & iii (3) State or US Gov claim iv (4) But NO Tort Victim Exceptions...UTC comments make it clear that the authors purposely left our tort victims v. Rests (Min)...leaves OPEN the possibility of tort victim exception Scheffel v. Krueger (child molester)...judicial doctrine follows - have also disallowed tort victims to recover v ---EFFECT---> C step into Bf's shoes (i.e., can ONLY receive what the Bf would have received - no more or less) 4) Self-Settled Asset Protection Trusts = allows SR to SHIELD assets from C by placing own assets in a trust & making self a BF (TRADITIONAL Rule) = Settlors CANNOT use a trust to shield own assets from Creditors (MOD Rule) = Some States & Overseas juris., in order to attract business, have AUTHORIZED Self-Settled Discretionary Trusts a States...not hugely successful -> if Settlor going to do this, going to go overseas, where there's more assurance b Overseas...successful -> US courts have no jurisdiction over overseas money, ONLY over the Bf that is in the US Judicial Response: Contempt of Court w. HIGH burden to prove the defense of impossibility i In Practice = Cat & Mouse Game BF...to successfully protect overseas $ from US Crts, must give up complete control (most unwilling to do 100%) Courts...look for any iota of control Bf retains & hold Bfs in contempt until they relinquish that control ii FTC v. Affordable Media: couple involved in ponzi scheme, put assets in trust in the Cook Islands (couple where co-Tes w. 3P); FTC brought claim to get $ for defauded investors, & couple claim is was impossible ot get assets b/c of duress provision in trust, which kicks Tes off if court order to compel payment; Court held them in COMTEMPT HOLDING: Impossibility IS a defense to contempt, but here, the inability to reach the $ was brought about intentionally by the couple (put duress clause in place &, as trust protectors, could of prevented it form taking effect) POWERs of APPOINTMENT = gives the person who holds the power the ability to direct a Te to distribute some or all of the trust property regardless of the distributive provisions of the trust i PURPOSE = to build FLEXIBILITY into trusts allows SRs to postpone & delegate decisions about WHO will receive future distributions, addressing problem changed circumstance by giving someone alive after SR dies the power to override the terms of the trust (if change warrants it) certain tax advantages (*HD didn't go into) ii TERMINOLOGY Donor (Dr)...creates the power (i.e., Settlor) ---gives to the---> Donee (De), who holds the power - De = ANYONE, but most likely given to a Beneciary of the trust - power = purely discretionary -> holder has NO duciary duty to ANYONE TRUSTEE...Tes w. discretionary power technically already have a Special PoA - v. Other Des...a Te's PoA is (i) subject to duciary duties & (ii) a replacement will be appointed if Te dies Objects / Permissible Appointee...persons De may distribute to Appointee...person who De does distribute Takers in Default of Appointment...person Dr expressly names to take IF the De fails to exercise the power iii VARIABLEs of PoA...Dr can use the following to customize the PoA he gives the De
General PoA = power is exercisable in favor of anyone INCLUDING De & De's Estate / Creditors / Creditors of De Estate WHO are permissible appointees (*dictates Creditor's rights) De Creditor's Rights: - Traditional Rule = C's have NO right UNTIL De exercises power in favor of ANYONE (himself or another) - Why...PoA = personal right, NOT a property interest & remains the Dr's property UNTIL the power is exercised - Modern Rule (MAJ - UTC/Rest) = C's have RIGHT to whatever property De can appoint self, even prior to De exercising PoA - if INTER VIVOS PoS...creditors can reach during De's life - if TESTAMENTARY PoA...C cannot reach until De's death 3 TIMEs: WHEN power can De Creditor's Rights = C's have NO right to reach trust property, before or after it is appointed - Why...Dr holds the property & De merely acts as an agent for Dr, deciding WHO (not including himself) to appoint the property to (De never has interest or holds the prop) Special PoA = power is exercisable in favor of anyone EXCEPT De & De's Estate / Creditors / Creditors of De Estate (*typically, Dr will ID small class of objects that excludes De)

45

(i) Presently Exercisable...PoA can be exercised INTER VIVOS -> Dr gives De ability to exercise power ANYTIME during De's life - How = "in Deed" -> exercised in a WRITING De executes inter vivos (can be via deed, will or some other legal instrument)

even prior to De exercising PoA - if INTER VIVOS PoS...creditors can reach during De's life - if TESTAMENTARY PoA...C cannot reach until De's death 3 TIMEs: WHEN power can be exercised (i) Presently Exercisable...PoA can be exercised INTER VIVOS -> Dr gives De ability to exercise power ANYTIME during De's life - How = "in Deed" -> exercised in a WRITING De executes inter vivos (can be via deed, will or some other legal instrument) (ii) Testamentary...PoA can ONLY by exercised via De's WILL --thus---> it is exercised at De's DEATH (iii) Postponed / Deferred...PoA is not exercisable, UNTIL (i) the occurrence of a specied event (ex: not until J reaches age 21) (ii) satisfaction of an ascertainable standard; OR (iii) passage of a specied period of time EXCLUSIVE v. NON-Exclusive - Exclusive (Default) = Pure Discretion -> De can appoint ALL the property to 1 or more objects, while excluding others AMOUNT that can be distributed - Default Rule -> PoAs are exclusionary, UNLESS the Dr indicates otherwise - Language..."to any one or more"; " to such of these" - Non-Exclusive = Dr gave De directions that De MUST appoint some amount to each object - Language..."to all & every one"; "to each & every one" (= must equally divide among all)

iv CREATION (Rule) PoA is created IF Donor (i) INTENDs to create a power (ii) by conferring DISCRETION on the De to exercise the power or not 1) FUNCTION over FORM: no specic words or language are required -> just the Dr's intent to create the power KEYWORDs...look for the words "power", "right to dispose of", "as pleases" a can be Express..."to A for life, remainder to such person or persons as A man appoint" Implied..."to A for life, & if A should die intestate, then to my daughter D in FSA" -> implies that De HAS PoA b v. Trust...De's must have DISCRETION -> if Dr tells De HOW to dispose of the property, De becomes a TRUSTEE ex: to A, to dispose fo in accordance w. a letter addressed to A dated 1/4/08 -> A getting LEGAL title, but not equitable c v. Outright Gift...no power if De gets the FULL FEE -> if get full fee, don't need power to be able to appoint the remainder ex: to my daughter, D, w. power to dispose of the same to whomsoever she chooses -> gives D FULL FEE Be CLEAR! Language will usually (i) Convey a LIFE ESTATE to De ---then---> (ii) Give De the power to appoint the Remainder a EX: "To A for life, remainder to such person or persons except A, A's estate / C / C of A's estate, as A may by will appoint, in default of appointment, remainder to B" = Special, Testamentary, Exclusionary Power w. default takers b v. Precatory Language = language merely creating an unenforceable moral obligation -> doesn't create a power when Tr expresses their "wish", "hope", or "recommendation" of how they would like the De to use the $/property ex: "I wish, but do not legally require, that C permit D to live on the land" ---NOT---> a Trust & A can't be forced to comply v EXERCISE of the Power (Rule - Restatements) To exercise a PoA a De must: 1) Comply w. the controls the DONOR placed on the power (i.e., excl./non-ex; testamentar/inter vivos; special/gen, etc); AND 2) De must INTEND to exercise the power - Look for the De's intent to distribute THIS property No BLANKET Exercise Clauses...De can't exercise PoAs via ONE blanket cl. meant to exercise all PoAs De holds at once (FUNCTION over FORM) no EXPRESS reference to the power is required, UNLESS Dr expressly required such: a Special Ref Req = if Dr requires De to specically reference a PoA in order to exercise it, the De must exercise the power via: (i) an INSTRUMENT (ii) executed AFTER the date of the creating instrument (i.e., instrument that created the PoA) (iii) that EXPRESSLY refers to the PoA Residuary Clauses...some jurisdictions allow the residuary clause in De's will exercise a testamentary PoA, DESPITE no reference to the PoA in the res clause (*why? general appointive property closely mimics property De owns outright) a MAJ Rule = PRESUMED that a residuary clause does NOT exercise a general or special PoA --UNLESS-> contrary intent shown by (i) REFERENCE on the face of the will (i.e., De exercises in will) OR (ii) [*Split on if allow] EXTRINSIC Evidence v. Restatement = PRESUME res. clause doesn't exercise PoA --UNLESS--> (i) PoA = General Power + (ii) Dr did not (or ineffectively) provide for Takers in DEFAULT v. UPC 2-608 = PRESUME res. clause doesn't exercise PoA --UNLESS--> (i) PoA = Gen Power + Dr did not provide for Takers in DEFAULT if the PoA is not exercised OR (ii) Tr's will manifests an INTENTION to include the property subject to the power b Min Rules = residuary clause exercises a (i) General PoA UNLESS contrary intent expressly appears & (ii) Special PoA IF the residuary Devisees are OBJECTs of the power LIMITs: HOW a De may appoint property (OUTRIGHT / in TRUST / SUBJECT to a new PoA), depends on if: 1) General PoA --then--> De may appoint as she wishes (outright / in trust / subject to new PoA) 2) Special PoA --then--> Further TRUSTs...(traditional) De CANNOT appoint in further trust, unless expressly permitted (modern) De CAN appoint in further trust SUBJECt to New PoA...(traditional) same as trusts (can't do) (Restatments) De can create a (i) GENERAL PoA in an original object/permissible appointees OR (ii) SPECIAL PoA in ANY person to appoint to an original object / PA EXCEPTIONs: if De attempts to exercise PoA, but the exercise is ineffective --then--> PoA FAILs, UNLESS below docs can remedy 46

1) Allocation / Marshalling = (i) Special PoA De expresses INTENT to exercise the PoA (ii) [De Blends =] when De blends the appointive property w. the De's own property in the distributive clause --causing--> some of the PoA gifts to FAIL (iii) [Effect] ---THEN---> the property is "unblended" to ensure that only eligible objects receive the appointive property a ex: A has Special PoA to appoint $100K trust property to his descendants; A has $350K of own assets - in will, A gives "all my property, including that under PoA, as follows (i) $100K to friend, B; (ii) remainder to daughter, D - B can't receive trust $ b/c not SPoA object --thus--> court allocates $ so that (i) B's $100K devise is from A's personal $ (**if A only had $50K, then B would only take $50K) & (ii) D's $350K devise includes $100K from the trust + $250K from A's personal funds 2) Capture = (i) if De of General PoA expresses INTENT to exercise the PoA; AND (ii) [De Blends =] when De blends the appointive property w. the De's own property in the distributive clause --causing--> some of the PoA gifts to FAIL (iii) [Effect] ---THEN---> the appointive property reverts to & passes through the De's ESTATE a v. Restatement...if there is a TAKER in DEFAULT, passes to the TiD before resorting to capture vi RELEASE of the Power (MAJ) = De may release the power to appoint the property, in whole or part, at any time Effect = treats as if De FAILED to exercise the PoA (next sections) K to Exercise = if a De of a testamentary PoA (or any other power not presently exercisable) 1) ENTERs an enforceable inter vivos K 2) to exercise the PoA in a certain way upon De's DEATH 3) --then--> the K is NULL & VOID why...violates the Dr's intent - purpose of testamentary PoA is so that De is able to make that decision up UNTIL death ---thus---> if De K that right away PRIOR to death, such a K is null & void as violating the PoA *ALTERNATIVE...while a testamentary PoA can't be K'd away inter vivosly, a testamentary PoA may be RELEASED inter vivos a (Rule) if the effect of the K = the effect of a release of the power --THEN--> a similar result can be obtained via RELEASE - some COURTs will effectuate failed K to exercise powers by treating the K as a RELEASE - ex: A has PoA w. default to A's kids; although A can't K w. kids to appoint to them, he can achieve the same by releasing his power vii FAILURE to Exercise PoA = when the De DIEs w/o exercising the PoA MAJ(Traditional Law) = if De fails to exercise his PoA, the appointive property passes to: 1) (rst) Takers in Default of Appointment; 2) (second) if no TiD, the property reverts to the DR or DR's ESTATE v. Restatement (Mod Law) = if no TiD, the appointive property reverts the property to the DE's ESTATE (not Dr's) --UNLESS--> De expressly refrained from exercising the PoA a policy...believes every PoA IMPLIEs a gift in default of appointment to the De or the De's estate EXCEPTIONs: if dealing with (i) a Special PoA + (ii) No Takers in Default + (iii) Class of Objects is Small & Ascertainable ---THEN---> the appointive property passes, in equal shares, to the OBJECTs (*implies Dr wanted to make gift to objects, rather than revert to the Dr's estate) G MODIFICATION or TERMINATION - Trusts can terminate NATURALLY (pursuant to its own terms OR when res is completely disbursed) PREMATURELY (if rev, its the SR's decision; if irrev, Te/Bfs must get court order to terminate ) (*M & T go hand-n-hand...if have power to terminate, then certainly have power to modify) POLICY: very difcult to do w/o SR's consent -> common law...generally more protective of the SR's intent modern law...evolving to favor granting BFs greater power over the trust (Rules) Premature Termination OR Modication i Revocable Trusts = Settlor has SOLE power to modify / terminate ii Irrevocable Trust = an irrevocable trust may be MODIFIED or TERMINATED when: (1) SR + All BF consent (even if Te objects) - Te has duty to protect SR's Intent -BUT-> if SR is alive + consents, such TRUMPs the Te's objections (2) Chain Doctrine (OLD) = (i) SR Dead + All BFs consent; AND (ii) T/M would NOT be contrary to a MATERIAL PURPOSE of the SR - i.e., if continuance of the trust as-is is necessary to carry out a MP of the Settlor, M/T not allowed 1) Material Purpose = difcult to dene - very fact sensitive, but some material purposes M/T would be contrary to are: (i) Spinthrift Trust (ii) Postponed Enjoyment = where BF is not to receive the principal until attaining a specied age (iii) Discretionary Trust (iv) Support Trust = trust ONLY to be used for NECESSITIES for the BF & nothing above that v. "comfortable maintenance & support"...very diff -> CM&S to pay for things above nec. UP TO BF's standard of living Applied: In re Estate of Brown (SC of VT 1987): trust to (i) support children's education -then-> (ii) support parent's lifestyle during their life -then-> (iii) any remainder to kid; parents want to terminate trust & use the remainder; children OK it (= all BF agree) 47

a HOLDING: No Termination Allowed - educational purpose fullled (all kids nished w. school), BUT the trust had an additional purpose of assuring the parents a "LIFE-LONG source of INCOME" --thus--> can't be terminated before their death Support Trust -> this trust goes beyond "necessities" & requires keeping BFs in the "style & manner accustomed" 2) v. MODERN APPROACH...liberalized conditions under which a trust may be modied if ALL BFs CONSENT (n/a to charitable trusts) Restatement 65...KEEPs the MP standard, but BALANCEs it against the NEEDs of the BFs a (Rule) M/T of trust OK if (i) All BFs consent (even if Te objects) + (ii) Court determines the REASONs to terminate --OUTWEIGH---> the unfullled material purpose = court attempting to BALANCE the MP v. the BFs NEEDs UTC 411...WEAKENs need for all BFs to consent --> relies on the COURT to protect unconsenting BFs a (Rule) M/T of trust OK if (i) meet CHAFLIN Doctrine (M/T not contrary to material purpose of trust) + (ii) IF NOT all BF's consent, interests of non-consenting BFs are adequately protected (3) Equitable Deviation Doctrine = 1) If DUE to a change in circumstances not anticipated by the SR; & (Policy) Does Te have a DUTY to modify if know of changed circumstances that would hurt the trust purpose? a UNCLEAR...modication EASIER now, but not sure Te has DUTY to modify (but, Te still req. to act in best interest of BF) 2) All BFs consent (even if Tr objects); & 3) [STANDARD] the court may MODIFY the terms of the trust IF (Traditional) continued compliance w. the trust terms would DEFEAT or SUBSTANTIALLY IMPAIR (= harmful) the trust purpose a HIGH Standard = (a) the change would have to harm the trust, & (b) modication be necessary in order to accomplish the trust purpose (NOT just advantageous to the BF) (Modern - UTC/Rest) modication would FUTHER the PURPOSEs of the trust (= tend to ADVANCE) a LOW Standard = (a) SUBJECTIVE view -> asks what the SR would do in this situation - modify or not? (b) STILL...NOT just enough for modication to be advantageous to the BF -> must further SR's purpose (c) UTC +: "the modication must be made in accordance with the settlors probable intention" 4) [EFFECT] (Traditional) Court may only modify the ADMINISTRATIVE terms of the trust (Modern) Court may modify Administrative + DISTRIBUTIVE terms of the trust 2 Types of Trust Provisions: a Administrative = HOW the property is going to be paid out b Distributive = WHEN & WHO the trust property gets paid to - policy...D goes the the HEART of the SR's intent, while A is just the means of achieving those objectives 5) Applied: In re Riddell (2007): GPs creat trust for child & 2 GCs to get principal when reach age 35; one GC, Nancy, suffers from schizophrenia; any $ received would be taken by med bill creditors OR unwisely spent; Te seeks modication to prevent payout HOLDING: Modication OK - (i) sickness = changed circumstance the GP/SRs did not anticipate & (ii) keeping $ in special needs trust would further the GP's purpose of providing support for N's during her lifetime (don't need to look at if frustrated) a Special Needs Trusts...Congress created to allows those w. SNs to protect their assets so they are available for public assistance, while allowing the trust to act as supplementary income (FAVORED by public policy) if INDIVIDUAL trust (set up for the special need purpose), state will get reimburse upon their death if 3P sets up the trust, the state does not get reimburse (4) UNECONOMIC Trusts = states authroize the termination of a trust if its value has decliend such that continued operation of the trust no longer makes econimic sense (5) DECANTING / CONSOLIDATION / DIVISION of Trusts - Decanting = pouring over of all assets of one trust into another trust that has updated terms OR under another state's laws - Consolidation = usually done for efciency, by elimitinating redundant costs & achieve efciencies in investment - Division = can divide trusts -> good if trust BF have diff tax or investment considerations OR the # of BFs makes admin of the trust unwieldly 1) POLICY...common form of MODIFICATION -> allows Te to break up trusts or put them together, giving the Te exibility in how the trusts are structured (to truly allow the Te to act in the best interests of the BFs) (6) TRUST PROTECTORs (Mod) = person named by the SR & given broad powers in order to build exbility into the trust 1) (Possible) TP Powers: SR can give/limit TP's powers - these are potential powers can give him: ability to replace Te approve modications to the Trust's administrative & dispositive provisions terminate the Trust & select a successor TP 2) Policy: TP to have similar powers to the SR ---but---> still an open question if the TP has duciary duties PROs: meant to improve FLEXIBILITY (i) purpose is to have a person that knows that SR well & can make decisions in the SR's place (ii) response to reality that SR's can't predict all the problems that will arise in the future (iii) can modify for tax advantages CONs: opportunity for abuse -> don't yet have a standard to hold TP to (duciary or not) (7) Trustee REMOVAL 48

1) POLICY: rules for Te removal must balance between: (i) setting a HIGH enough threshold so that the Te can carry out the Settlor's wishes in spite of Be disagreeing with them (ii) NOT setting so HIGH a threshold that shirking or mismanagement by the Te cannot be adequately deterred or remedied 2) RULE: (Traditional Law) = removal is permitted ONLY for CAUSE a Factors in determining Cause: (i) Dishonesty (ii) Material Breach of Trust (iii) Tes chosen by the Settlors are LESS likely to be removed by Courts (iv) If SR was aware of an asserted ground for removal at time of naming Te, that ground will not serve as a basis for later removal of the Te UNLESS the Te is entirely unt to serve (Modern Law) = (in addition to removal for cause) a Te can be removed W/O CAUSE if: a (i) removal is requested by ALL Qualied BFs AND Qualied BFs = all BFs who would be entitled to distribution IF the trust were terminated on that date *UPC...used multiple places - any time require consent of all BFs, only requires QBFs to consent i If BF = MINOR, consent can be given via: (i) Virtual Rep (= parent acts for the child) --as long as--> parent & child have NO conict of interest (P=TE/C=BF) (a) Parent-Child CoI Test = as to this particular transaction, are their interests the same? (Davis) (ii) Guardian ad Litem b (ii) party seeking removal est. to the court that: removal of the Te best serves the interest of ALL BFs removal of the Te is not inconsistent w. a material purpose of the trust AND a suitable co-trustee or successor Te is available and willing to serve Applied: Davis v. US Bank National Association (Missouri COA 2007) a HOLDING: Te removal allowed - very GOOD, non-cause reasoning for why to change Tes: (i) all qualed beneciaries agreed - Dad & Kids agreed - No conict in interest w. Dad rep. Kids b/c all had similar interests in the transfer - didn't benet one over the other (ii) best interest of the all the BFs - LOTs of reason for this...lower fees, given independent investment adviser, closer to all the BFs & the proposed advisor has a complete understanding of the BFs and their family's personal nancial situation (iii) material purpose of the trust would not be disturbed (iv) had another suitable successor Te in line - another bank b TAKE: If both parent & kids are BFs, parent can represent the kid's interest IF both have similar interests in the transfer (i.e., doesn't benet one over the other) (8) Termination by OPERATION of LAW: 1) Natural Expiration of the Trust Term (trust expires by own terms) 2) Depletion of the RES 3) Accomplishment of the Trust Purpose 4) Impossibility of Illegality of Purpose 5) Operation of the Doctrine of Merger H TRUST ADMINISTRATION POLICY: the essence and advantage of a trust (the Trustee), is also its WEAKNESS i if the trustee does performs his job poorly or steels the corpus, the beneciary is the one to suffer ii No FINANCIAL incentive for the trustee to perform his job well (don't reap benet of investing well) --THUS--> have a LEGAL deterrent, the duciary obligation = Te is subject to legal liability if perform job poorly iii TE's Powers v. Duties = Duties TRUMP Powers - TE's are not justied in exercising a power IF it is going to breach a duty Ps...generally, originate from the SR & may permit OR require TE to act in a certain way Ds...generally, originate from the LAW, require TE to act in a certain way & TRUMP POWERs Dividing the Ofce of TRUSTEE...the powers & duties of a TE can be concentrated in one person, OR divided up into several i WAYs: (1) Co-Trustees (2) Delegated Trusts = trust where the TE decides WHICH TASKs should be delegated & to WHOM they should be delegated to (3) Directed Trust = trust where the SR, through the terms of the trust, selected certain persons to make certain decisions & the TE MUST follow that person's directions (4) Trust Protectors = person selected by the SR & given the power to REMOVE Te, seek modication of the trust, ordering ditributions 1) v. Delegated / Directed Trusts...very similar, but there is a difference in the TASKs delegated - TP...delegates the power to modify or terminate the trust, remove & replace the Te or change the situs - DT...gives another the power to distribute or make investments TE Empowerment...Te given BROAD powers in order to fully perform their job of properly investing the corpus i 3 Main Approaches: (1) Incorporation by Express Ref...SR can incorporate by ref all or some enumerated statutory powers (instead of making own list) (2) Broad Te's Powers Act...grants TE's basic powers set forth in the statue (no express incorporation necessary) (3) Maximum Empowerment (UTC 815)...empowers TE with: 1) Power by the TERMs of the Trust + 49

2) ALL Powers over the trust property which an unmarried competent owner has over individually owned property & any other powers necessary to properly invest, manage and distribute the trust = BIG change -> TEs had been very restricted in yrs past, so the UTC included both: a (i) ABOVE...maximum empowerment language to convey the OVERARCHING, all-emcompassing power + b (ii) Laundry List of Powers...to demonstrate types of powers authors believed the language convey, BUT max. lang. meant to convey MORE than just that list) 3) NO 3P Liability...a 3P who, in good faith, deals w. the TE is protected from liability & is not required to inquire into the extent of the TE's powers The Fiduciary Obligation - 2 Main Duties + Other Subsidiary Duties i (1) Duty of LOYALTY = Te MUST administer the trust SOLELY in the interests of of the beneciaries Standard: 1) No-Further-Inquiry Rule = transactions involving self-dealing or a conict of interest are a PER SE breach of the duty of loyalty, --EVEN IF--> Te acted reasonably, in good faith & fair to the trust (court WONT even look at this) Self-Dealing = when the TE in his TRUST capacity & TE in INDIVIDUAL capacity (=TE or TE's Spouse) engage in a transaction Conict of Interest = when TE in his TRUST capacity & Party whom the TE in individual capacity has an interest with, engage in a transaction a EXCEPTION: Structural CoI = if conict of interest is created by the TERMs of the TRUST (not the TE) ---THEN--> don't use no further inquiry, but allow the Te to make the decision subject to judicial review b UPC 802(c): TE-trust entering into transaction w. any of the following creates a PRESUMPTION of a conict of interest ---REBUTTABLE---> by TE showing that the conict did not effect his duties (1) TE's Spouse (*really = self-dealing, as Te & Te's Spouse treated as same person) (2) TE's Descendants / Siblings / Parents OR their spouses (3) Agent or Attorney of the TE OR (4) Corporation / Other person / Enterprise in which the TE has an interest that might affect the TE's best judgment Vicarious Liability by Co-Trustee = Co-TEs who are (i) aware of the another Co-TE's breach via SD or CoI AND (ii) fail to act --are--> VICARIOUSLY LIABLE a Co-TE Decision-making... (OLD) Co-TEs must act jointly with UNANIMITY, unless the trust provides otherwise (i.e., can't act unless ALL agree) i supports VL b/c if one Co-TE committed a breach w. trust property, the others either (i) consented OR (ii) failed to act (NEW): Co-TEs can act on a MAJORITY + but Co-TE still have duty to take reasonable steps to prevent a breach of trust by Co-TE (if don't, VL) *failure to act due to the legal advice of counsel does NOT relieve a Co-TE from liability Defenses / Exceptions: 1) Terms of Trust authorize the transaction 2) All BFs consented after FULL disclosure Qualied BFs = all BFs who would be entitled to distribution IF the trust were terminated on that date *UPC...used multiple places - any time require consent of all BFs, only requires QBFs to consent a If BF = MINOR, consent can be given via: (i) Virtual Rep (= parent acts for the child) --as long as--> parent & child have NO conict of interest (P=TE/C=BF) i Parent-Child CoI Test = as to this particular transaction, are their interests the same? (Davis) (ii) Guardian ad Litem 3) Compensation...Tes are entitled to reasonable compensation 4) (UPC 802(b) +) Transaction APPROVED by COURT 5) (UPC 802(b) +) Latches..BF didn't commence a judicial proceeding win the time allowed 6) (UPC 802(b) +) Transaction involves a K entered into or claim acquired by the TE BEFORE they became TE Remedies: if duty of loyalty breached, BFs can get the following remedies 1) If TE-personal bought property from the trust ---compel--> TE to restore the property to the trust 2) If TE-personal sold HIS own property to the trust --compel--> TE-personal to repay the purchase price & take back property 3) If TE makes a BF's disposition to a person OTHER than the BF entitled to receive the $ --then--> TE is liable to the proper BF to make restitution unless the payment was authorized by a proper court 4) [Trust Pursuit Rule] If wrongfully sold trust property, BFs can impose a (i) CONSTRUCTIVE TRUST, UNLESS BPfV w/o notice (even though against a 3P - foces the 3P purchaser to convey the property back to the trust) (ii) UNLESS, the Purchaser = Bona Purchaser for Value w/o Notice --then--> TE-personal must pay appreciated damages a BPfV w/o N = not a SHAM, but a purchaser who bought in good faith, paid full value for it & wasn't aware of the breach b APPRECIATED Damages = FMV of Property @ time of TRIAL - FMV @ time of SALE v. if sell for UNDERVALUE = FMV @ time of SALE - Value TE-trust received (i.e., the prot BFs should of received) i SAME...both are breaches ii DIFF...Wrongful Sale = breach of LOYALTY -> involves misfeasance, thus the HIGHER appreciated damages imposed --impose damages--> to give BFs value of the property if it had NEVER been SOLD Undervalue Sale = breach of PRUDENCE (i.e., TE made poor investment decision & sold for too low a price) --impose damages--> to give BFs what they should of gotten in the sale 50

 Applied: 1) Hartman v. Hartle (NJ 1923): L appoints son-in-law to serve as TE; TE sells property to TE-wife (L's daughter), which was split among the siblings; TE-W quickly re-sold property for a prot (i.e., TE sold property to Wife for undervalue) HOLDING: Self-Dealing = Per Se Breach of L -> selling to spouse same as selling to self; W must pay prot made to siblings 2) In re Gleeson's Will (Ill App 1955): C leased property from G; G dies & leaves property in trust for G's kids w. C as TE; G died when C had 2 weeks left on the lease; C renewed his lease for the next year, increased what he was paying & gave larger share of his crop to the trust HOLDING = SELF-Dealing b/c as TE-trust leasing to TE-person --thus--> no further inquiry if C made good deal for trust a C likely did act in good faith & was reasonable (upped rent & crops; likely couldn't of found another tenant quick enough) --BUT---> all that is irrelevant b/c once you nd self-dealing = breach, no matter how honorable the TE's actions were 3) In re Rothko (NY 1977): painter left 800 works which 3 Co-TEs were to dispose of; did so w/in 3 wks, selling them greatly under value to a vendor 2 Co-TEs worked for in their individual capacity; painting values increased dramatically not long after sale HOLDING = Conict of Interest --thus--> BREACH of LOYALTY a remedy for wrongfully selling property is appreciated damages = the appreciated value of the paintings @ the time of trial ii (2) Duty of PRUDENCE = requires TE to invest / manage the trust property with such skill & care as a prudent investor would use in dealing with his or her own property OBJECTIVE Standard of Care: 1) Prudent Investor Rule (MAJ - UPIA/Rest) = requires a TE to invest & manage the trust's funds as a prudent investor would - History...statutes had lists of acceptable investments (forbid investment in stocks) & the prudent "man" standard - Adopts the teachings of Modern Portfolio Theory, reected below - OBJ. standard...asks "would a prudent investor of made the same decisions, if in the TE's shoes?" Included of the PIR: a (1) FOCUS: Portfolio as a WHOLE = TE's investments are judged by looking at total performance of the trust's investments WHY...TE's are encouraged to diversify & spread risk --thus--> likely have some investments that are riskier then others - as long as the risk is balanced out so only have a prudent level of risk, then OK i v. Historically...set lists of what could/nt invest in & judged acceptability of each investment INDIVIDUALLY, in isolation b (2) Duty to Diversity (MAJ) = TE must diversify the trust investments, so to spread the RISK - concentrating investments all in one spot creates a HIGH risk of losing all those funds - strictly enforced duty...common concept that NO prudent investor would risk not diversifying EXCEPTIONs (hard to prove & very LITTLE wiggle room) i (i) Special Circumstances = TE reasonably determine, due to S.C., the trust purpose is better served w/o diversifying In Practice...if believe have a special circumstance that excusing diversifying -> get COURT approval Ex: Family Farm held in trust -> needs to be sold & investments diversied for the benet of the trust - Family, as BFs, agree would prefer to take the loss, then sell --> look for SENTIMENTAL VALUE ii (ii) SR mandates otherwise in trust's terms = SR may expanded, restrict, eliminate or otherwise alter a TE's duty to diversity in the trust instrument WHY allowed: Duty to Conform...TE has a duty to conform to the terms of the trust = MANDATED direction...to override the duty to diversity, the TE terms must present strong language, that afrmatively directs the TE NOT to diversity (a) Permissive v. Mandated Direction
P...permits TE to retain an un-diversitied portfolio, but does not require it --DOESN'T excuse--> TE from DtD M...prohibits TE from diversifying investments OR investing in certain areas ---DOES excuse---> TE from DtD

(b) (Possibly) such a directive might put other duties on the TE:
(i) Duty to Challenge...if TE believes not diversifying would harm the trust (as most believe it would), such

a directive might put the onus on the TE to petition the court to modify the trust i. 2 Views on if Courts would grant... (1) Benet-the-BF Principle...Te's duty is to the BF, & has a duty to do what is best for them (2) SR's Intent...trust rep interpersonal aspects of the SR's estate plan, & the court should respect that
(ii) Duty to Inform...if the SR gives the Te directions the Te disagrees w., the Te must ensure the SR has

been FULLY INFORMED about the decision (if challenged, TE has burden to show consent) Applied: i Estate of Janes (NY 1997): H dies leaving 3 trusts, w. W benetting from 75% of the property in trust; 70% of that property was concentrated in Kodak Stock, which greatly decreased from H's death till W's death 13 years later HOLDING: Breach of duty to diversity -> no matter how "safe" believe an investment is, prudent to diversity the risk (a) little leniency given, since SR was the one who bought the concentrated stock --but--> still doesn't excuse c (3) Duty to Delegate (MAJ) = allows TE to delegate investment duties POLICY: evolved from prohibition -> encrouagement...in recognition that many TEs are unqualied to undertake the high standard of responsibilities inherit in managing a trust RULE (MAJ - UPIA 9) i (i) a TE may delegate investment & management functions to an investment expert ("agent") + Financially Unsavvy TE ---gives rise---> to a DUTY to DELEGATE 51

(a) = if TE has insufcient skills to properly invest the trust property, the prudent investor standard will REQUIRE the TE delegate investment responsibility to an agent Duty of Agents = (i) agents owe a DUTY to the trust to exercise reasonable care to comply w. the delegation terms (ii) breach of that duty, subjects the agent to COURT SANCTION ii (ii) BUT, TE retains a responsibility to exercise reasonable care, skill, and caution in: (1) selecting an agent; (2) establishing the scope and terms of the delegation; & (a) LIMIT: TE cannot delegate DISTRIBUTION powers to the agent -- ONLY investment decisions
Exception: Ministerial Task = distribution that requires NO discretion (i.e. agents can make mandated

distribution payments to BFs, as outlined by the trust terms) (3) periodically reviewing the agents actions. = once selected, TE cannot blindly follow the Agent's advice -> must maintain a viligent oversight of the agent ---Effect---> TE's complance w. all 3 above, relieves him of LIABILITY to the BFs for the Agent's Actions REMEDY for Mismanaged Funds: depends on if sold the trust property for: 1) UNDERVALUE (i.e., too low)...damages = FMV @ time of SALE - Value TE did sell for (i.e., the prot BFs should of received) *no malfeasance involved -> this only applies when TE made a POOR investment decision 2) RETAIN Assets too Long...damages = FMV @ reasonable time of diverstment (i.e., when should of sold) (-minus-) Value TE did sell for iii (3) OTHER Subsidiary Dutues (1) Duty of IMPARTIALITY = when a trust has 2+ BFs, TE must strike a balance btw them, giving proper consideration to each of their respective interests 1) Duty of EQUALITY...TE is to treat each fairly, but below consideration might lead to TE FAVORING one BF over the other (i) SR express or implicit preferences of treatment (ex: To W, then to our kids; TE should liberally spend the principal on W) a *Drafting Advice...SR's Intent CONTROLs -> make sure to be CLEAR how TE treats the BFs (ii) BF's conicting interest call for it (ex: medical needs trust for 2 siblings, where one sibling a physically handicapped) 2) Successive Beneciaries = when there are CURRENT BFs ---followed by---> REMAINDER BFs Policy: 2 Main Issues: a (i) Current v. Remainderman...generally, CBFs are paid the income the trusts generates, while RMFs are paid the principal = conicting interest of the 2 diff. types of BFs creates a TENSION, forcing TE to chose wether to: i try to build the principal (= safe investments w. little income b/c pays out to the remainderman) OR ii generate higher income (= riskier investments that make up the pay for current BFs) b (ii) TE has DUTY to invest for a TOTAL Optimal return Old Rule...impeded this duty b/c TE had to inure he was splitting btw investments that would generate income & principal New Rule...takes issue of having to invest for income v. principal out of the equation, --so that---> TE can completely focus on investing for a TOTAL OPTIMAL RETURN regardless of what form it takes Rule: a (Old - Min) Denes which types of GAINs go to which type of PROPERTY (income v. property) - Income = cash dividends on common stock & interest on bonds - Principal = appreciation in the stock or bond price b (New) 2 APPROACHEs...both cease tying what qualies as income or principal to specic types of investments (1) Adjustment Power (MAJ - Default Rule) = gives TE the power & discretion to reallocate the GAINs on the investments btw the INCOME & PRINCIPAL ---if TE feels---> that the total return on investment lead to unfair results i EXCEPTIONs: (i) If TE = BF, the TE is DENIED the power of adjustment (b/c involves discretion re how much $ TE would get) (ii) SR OPTs-Out...the above is a default rule & available the TE ONLY IF the SR does not provide otherwise (2) Unitrust = SR or statute sets a at % of the value of the trust principal to be paid to CURRENT BFs each yr i If TE = BF --then such is a--> Structural Conict of Interest & its only OK to convert to a unitrust if... (i) such is in the best ineterests of the BF or ENTIRE portfolio & (ii) subject to judicial review (to ensure the fairness of the TE's decision) (2) Duty to Collect & Protect Trust Property w/o unnecessary delay (i.e., as promptly as circumstances permit). (3) Duty to Earmark Trust Property = TE must designate property as trust property rather than the TE's own. (4) Duty NOT to Commingle Trust Funds w. TE's OWN Funds - even if don't misuse the trust's funds - this duty prohibits the mere MIXING of the two - v. Commingling Trust Funds w. OTHER Trusts = OK -> permissible as an investment strategy (5) Duty to Inform & Report to BFs 1) PURPOSE...gives the beneciary a stick with which to compel disclosure by the Te 2) RULE (UTC 813) = a TE shall 52

 (a) [General Duty] keep the qualied BFs reasonably informed about the administration of the trust & of the material facts necessary for them to protect their interests. (b1) upon request of a BF, promptly furnish a copy of the trust instrument (b3) notify the qualied BFs of an irrevocable* trusts existence [*N/A to revokable trust -> only applies once irrevok.] (c) [Annual Report] send to the (i) distributees & (ii) qualied OR nonqualied BFs who request it, an annual report of the trust (d) --UNLESS---> (i) BF waives the right to any of the above info OR (ii) SR authorizes the TE to withhold the information, IF on a reasonable basis (*not part of UTC) 3) Applied: Fletcher v. Fletcher (SC of VA 1997): Mother left a revokable trust w. one brother as TE; trust created 3 trsuts for other brother & his 2 kids; Bro-Be asked Bro-Te for an accounting of all 3 trusts; Bro-TE claimed SR orally authorized w/holding the info HOLDING: Bro-BF can have access to ALL 3 trust doc b/c all part of a cohesive trust instrument that creates his SR-Mother's estate plan a *HD...b/c this is mother's estate plan, court treating it as a WILL (= REQ. disclosure) -> not sure how far of app. this has COUNTER...Bro-BF is not a BF to the other 2 trust -> Bro-TE doesn't owe a duty to inform him of those (6) Duty to Account 1) (Rule) TE's DUTIEs... a (i) to give BF, upon his request, complete & accurate information as to the NATURE & AMOUNT of the trust property & Breach by FRAUD i 2 Types: (i) Fraudulent Account = where TE les a fraudulent accounting, but BF doesn't discover the fraud till later the BFs are not barred from reopening the accounting (ii) Contructive Fraud = where, in an accounting, TE makes (a) a factual rep. that turn out to be FALSE (v. reg fraud...CF - TE did not know rep was false when made it) AND (b) TE made those reps w/o undertaking reasonable efforts to ascertain the accuracy of the factual rep = TE must make reasonable effects to verify any facts he represents as true to the BF b (ii) to permit BF to INSPECT the subject matter, accounts & vouchers, & other docs relating to the trust BF's DUTIEs = to study the account presented by the Te, & make any objections at the hearing a BF doesn't object to any of the info + no fraudulent info --then--> BF WAIVE their right to future objection 2) APPLIED: National Academy of Scieneces v. Cambridge Trust Co; H left trust to W, but stopped the income if she got remarried; Bank gave accounting to remainderman, indicating that the W has never remarried when in fact she had (Bank never checked) HOLDING: Constructive Fraud...Bank never checked to see if W remarried, but yet represented that she was a Remedy = Bank liable for amounts erroneously disbursed to the W, instead of the Bank TAKE: if TE makes payments to a person OTHER than the BF entitled to receive the $, TE is liable to the proper beneciary to make restitution unless the payment was authorized by a proper court I CHARITABLE TRUST = trust for a charitable purpose v. Private Trust: SNAP-SHOT of difference i v. Private Trust...basic differences
Private Trust PURPOSE MODIFICATION Doctrine ENFORCEMENT OTHER For benet of an...ASCERTAINABLE BF CHAFLIN & Deviation Beneciaries Charitable Trust For benet of a...CHARITABLE PURPOSE w. an indenite # of BFs (no ascertainable BF needed) CY PRES & Deviation State Attorney General Exempt from (i) RAP and (ii) certain TAXES *what makes the CT label desirable

Requirements: i (RULE) Private Trust requirements (Tr's intent + 3 parties + Res) w. the following changes: (i) + Charitable Purpose = (1) Tr's INTENT must indicate the trust is for a (2) CHARITABLE PURPOSE 1) Tr's Intent RoC = a (a) SUBJECTIVE...look at what the TR was INTENDING to do with the property to b (b) MANDATORY, not precatory language...Tr's must direct the $ be used for a CP, not merely wish or hope that it will be c (c) SUBSTANCE over FORM...doesn't have to use the specic words, but the trust must have the EFFECT of one of the charitable purposes below Applied: Shenandoah...gave $ to school kids on the day let out for christmas & easter; HELD: Trust CT b/c not for a CP i Why... Education CP...no restrictions on how $ could be used + timing of $ given indicated kids wouldn't use the $ on education --thus--> the substantial effect of the trust did NOT benet education 53

Why... Education CP...no restrictions on how $ could be used + timing of $ given indicated kids wouldn't use the $ on education --thus--> the substantial effect of the trust did NOT benet education 2) Charitable Purposes (R3 28/UTC) v. Benevolent Trusts...unless the trust ref. one of the below CPs, a trust that merely performs kind acts or does "good things" is NOT a CT (ex: Shenandoah above) (1) the relief of POVERTY; a + Shenandoah Rule: CT a trust that conveys PURE FINANCIAL ENRICHMENT ---UNLESS--> the ultimate intended BFs are POOR or in NECESSITOUS circumstances (2) the advancement of KNOWLEDGE or EDUCATION; (3) the advancement of RELIGION; (4) the promotion of HEALTH; (5) GOVERNMENTAL or municipal purposes; and (6) OTHER purposes that are benecial to the community. a (RoC): courts generally construe this requirement narrowly & often requiring overlap with one of the above) (ii) Beneciaries Ascertainable, but instead BFs must be (i) an INDEFINITE # or (ii) a LIMITED # of BFs, but UNIDENTIFIABLE (iii) RAP is N/A Termination OR Modication - 2 WAYs - How to Analyze: (1) Has the CP become illegal, impossible, impracticable or wasteful? If YES, 2; NO, 3 (2) If is due to an ADMIN term of the trust? If YES, modify admin or distributive terms under ADMIN DEVIATION If NO, modify charitable purpose under CY PRES (3) Due to unanticipated change would modication further the trust purpose? If YES, admin terms under ADMIN DEV. i (1) CY PRES (modication to the CHARITABLE PURPOSE) POLICY: addresses risk of unpredicted changes --b/c---> CT can last FOREVER (due to no RAP), thus cy pres allows the court to redirect the trust funds to another charitable purpose if the charitable purpose becomes obsolete RULE: 1) If the chartiable purpose becomes ILLEGAL, IMPOSSIBLE, IMPRACTICABLE or (UTC +) WASTEFUL Illegal a Discriminatory Trusts = trusts created to furnish benets to members of a particular RACE, GENDER or RELIGION Illegal under the Equal Protection Clause IF (i) TE = Gov or (ii) Trust sets up a public instribution (MAJ): Use Cy Pres to remove the racial / gender / religious restriction Impossible...ex: CT for the cure of a particular illness, whose cure is eventually found ex: A created a CT to save the polar bear habitat; 50 yrs later, polar bear only live in zoos b/c no more habitat Impracticable a SELF-Imposed OK, if after period of time...ex: CT for rose garden on city property; after 30 yrs, moves garden to build new city hall; OK to apply cy pres -> after 30 yrs, expect that things need to be changed Wasteful (MOD/UTC) = if have so much $ that the trust will never be able to spend it all on that charitable purpose a v. Inefciency = ALL $ will be used, BUT there are more "compelling" needs that could use the money more BASIS for Cy Pres ---b/c---> would put all charitable gifts at risk b/c there's always more compelling needs then the gift the SR chose (not ct's place to Q wisdom of SR's gift) Buck Trust - trust to marion co.; corpus grew from $9M > $300M; could never spend that amount on marion co; = WASTE 2) SR manifested a GENERAL CHARITABLE INTENTION to devote the property to charitable purposes v. (MOD) PRESUMEs SR had a Charitable Intent --putting burden on---> Party OPPOSING Cy Pres' application a why...makes it easier on those seeking cy pres 3) ---THEN---> the court may modify or terminate the trust by directing that the trust property be applied or distributed, in whole or part, in a manner consistent w. the Settlor's Charitable Intent = trust does not fail OR revert to the SR/SR's estate + (MOD) UTC 413(b) = Cy Pres ---PREFERRED OVER---> SR's Express Gift-Over Clause (w. exception) *has changed the approach to CT's w. impossible purposes - no longer will automatically fail or revert a Exceptions: gift-over preferred to cy pres when... (1) Gift Over (i) reverts the property to the SR + (ii) SR still living; OR (2) Trust created LESS than 21 yrs prior If MODIFICATION...in naming new charity, the Court should consider the following factors: a (i) the charities PURPOSE b (ii) the LOCALITY of the charity c (iii) the nature of the POPULATION that would be served by the gift If TERMINATION...Te can pass the property to: a (a) If gift-over clause, to BFs named in a GIFT-OVER clause (cl. stating what is to happen if trust fails b (b) If NO gift-over clause, back to the SR via a RESULTING TRUST ii (2) ADMINISTRATIVE DEVIATION (modication to the ADMINISTRATIVE TERMs)

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 v. Cy Pres...CP = directed towards the Dr's ENDs -> allows for modication of the Dr's stated PURPOSE AD = directed towards the Dr's MEANs -> allows for modication of the Dr's prescribed rules of ADMINISTRATION RULE: 2 Situations which allow for modication: 1) (Traditional + UPC 412(b)) (i) when the ADMIN. terms of the trust ---cause---> the trust's charitable purpose to become Illegal, Impossible, IMPRACTICAL, WASTEFUL or IMPAIR the trust's administration; (OR - go to 2) (ii) ---THEN---> Court may modify the ADMIN Terms (*modify the admin terms BEFORE modify the trust purpose) a ex: CT directed Te to invest in U.S. Bonds only; return is low & res diminishing in value quickly; ask for deviation to diversify *Te might have DUTY to diversify, if such would be in the best interest of the charitable purpose 2) (+ UPC 412(a)) (i) If DUE to a CHANGE in CIRCUMSTANCEs not anticipated by the SR, a (Policy) Does Te have a DUTY to modify if know of changed circumstances that would hurt the trust purpose? UNCLEAR...modication EASIER now, but not sure Te has DUTY to modify (but, Te still req. to act in best interest of BF) (ii) modication would FUTHER the PURPOSEs of the trust a LOW Standard = (a) SUBJECTIVE view -> asks what the SR would do in this situation - modify or not? (b) STILL...NOT just enough for modication to be advantageous to the BF -> must further SR's purpose (c) UTC +: "the modication must be made in accordance with the settlors probable intention" (iii) ---THEN--> Court may modify the ADMIN or DISTRIBUTIVE terms of the trust a 2 Types of Trust Provisions: Administrative = HOW the property is going to be paid out Distributive = WHEN & WHO the trust property gets paid to - policy...D goes the the HEART of the SR's intent, while A is just the means of achieving those objectives Supervision i Fiduciary Obligation (Rule) = CT-Tes have the SAME duciary duties as Private Trust Tes ii Enforcement of Trust (Rule) Suit to enforce the trust may ONLY be brought by: 1) State Attorney General Rule: (MAJ) AGs have standing to the ---EXCLUSION---> of the SR, UNLESS SR expressly reserved a right to enforce a (v. MOD) AGs & SRs have DUAL STANDING, w. SRs or SR's estate having standing to enforce their charitable trust *Today...law is heading this way & many states allow still living SR's to have standing Policy: CT's have sooo many potential BFs, if BFs allowed to enforce the trust's corpus could be eaten up w. litigation alone ---thus---> consolidate enforcement powers in ONE main person - the AG a CONs: AG = Elected Ofcial --thus--> many times AGs enforced/didn't enforce CTs when it was politically advantageous Hershey's Charitable Trust...State AG (running for ofce), urged Hershey CT for boys to diversify (held 41% of Hershey stock) causing co to be taken over; town of Hershey outraged & AG switches position to getting injunction against sale - Hershey never sold - turns out TEs were corrupt & res depleted taking care of town, instead of the school (= CP) 2) Co-Trustee 3) Person who has a SPECIAL INTEREST (Rule) BF ENTITLED to receive a benet under the trust that is not available to the public at large or to an ave Be. a v. Mere Eligibility for Benet...a peson who is merely eligible w/in the Te's discretion for a benet from a charitale trust does NOT have a special interest standing 4) (Indirectly) IRS = the IRS indirectly enforces CT by investigating if the trust should retain their TAX EXEMPT status --thus--> upon investigation, CT must show that they are still comply with all requirements of CT Hawaii's Bishop estate J LIMIT: Rule Against Perpetuities (RAP): No interest is good / unless it must vest, if at all, / not later than 21 yrs afters some life in being / at the creation of the interest i Alternative = a CONTINGENT FUTURE INTEREST must either vest or fail for certain w/in a life in being + 21 years ii Use: to restrict on REMOTE VESTING interests (future interest contingent remainders) iii Policy Rationale: seeks to strict a balance btw: (1) Freer Alienability = effort to keep property MARKETABLE by making an owner's property rights more CERTAIN - certainty is needed in order for people to alienate land; RAP puts a time limit that prevents FIs that are not certain to ripen (2) Limits Dead Hand Control...curbs FIs by VOIDING them IF do not vest/fail for certain w/in the time period of anyone who possibly knew the SR (lives in being) + the next generation's minority (21 yrs) iv Breakdown of Rule: concerned w/ remoteness of the moment when no uncertainty remains if interest will vest of fail (1) "No interest is good" > any interest that violates (i.e., vests too remotely) the RAP is void (2) "Unless it must vest, if at all" > only applicable to unvested interest, & if they are certain to vest/fail (3) "Not later than 21yrs after some life in being" = Perpetuities Period = the time by which interest must be certain to vest/fail, - if not then by then --then--> the interest = "too remote", violates the RAP & is void 55

(3) "Not later than 21yrs after some life in being" = Perpetuities Period = the time by which interest must be certain to vest/fail, - if not then by then --then--> the interest = "too remote", violates the RAP & is void 1) Perpetuities Period = Lifetime of Validating Life + 21 yrs after their death - ask...will the unvested interest be certain to vest or fail within the perpetuities period? 2) 2 Step Process to Determine: (1) Determine the EVENT that will force interest to vest/fail (ex: to A, when she marries - event causing vest/fail = A's marriage) (2) ID Validating Life = person during whose lifetime + 21yrs the determined event is CERTAIN to vest/fail a Validating Life = must (1) been alive at time of conveyance & (2) must be directly tied to interest vesting/failing - effect = IF CANNOT nd VL, the interest violates the RAP & becomes viod - VL can be ANYONE, but it must be certain the interest will vest/fail during --thus--> likely needs to be person whose tied to the interest vesting or failing - ex: A = VL b/c CERTAIN the interest will vest/fail during her life -> if A dies unmarried = FAIL; if dies married = VESTED (4) "At the creation of the interest" = VLs must be determined at time interest is created 1) Time of INTEREST creation for...DEED or IRREVOCABLE Trust = When deed/trust take EFFECT (Gr deliver to Ge) WILL = when testator dies (& not before) REVOCABLE Trust = when the power to revoke TERMINATEs v How to Analyze: (a) ID each interest (b) Is interest Subject to the RAP? only if an UNVESTED Interests...4 types: 1) Contingent Remainders = either... (1) person not ascertainable OR (2) Subject to Condition Precedent (*other than natural conclusion of preceding PE) 2) Executory Interests = (1) Conveyance to 3rd party (2) Becomes possessory by divesting preceding possessory estate (usually by a condition precedent or subsequent) 3) Vested Remainders Subject to Open -> only vested interest included b/c not vested to all members Vested = must be (1) Ascertainable AND (2) NOT subject to Condition Precedent (*other than natural conclusion of preceding PE) a Remainder Subj. to Open = group conveyance, of which at least one member is ascertainable w/ possibility of others joining once criteria is met 4) Other Unvested Contingent Interests (options to purchase, rights of rst refusal, leases to commence at some unspecied date in the future) (c) If subject to RAP, is it VALID under RAP? **IF just one scenario that vests too remotely, interest is void** (d) IF NOT VALID, strike entire offending clause ("No interest is good") Examples Pg 328, Note 1 in book...review vi Contingencies that create Common Problems under RAP: Age Contingencies...if more then 21 yrs., likely will fail (EX: "To A for life, then to A's children that reach 25 yrs" > void) Conditions/Events not tied to human life...since it will only be a possibility the event will/will not happen in PP lacks certainty; 1) BIG problem with defeasances -> CP/CS often tied to the use of land - ex: To A as long as the land is used for farming, otherwise to B > void b/c time when land not used as farming uncertain 2) SOLUTION: tie to human life = "To A as long as A uses the land for farming, otherwise to B" -> A serves as VL Persons ID only by title/class...person w/ title can change = lack of certainty (i.e., using 'wife' instead of Leslie) Class Gifts...not considered vested until class closed & ALL members interest are vested -> generally members can't be VL 1) "All or nothing" Rule: if interest of one member vests too remotely, ENTIRE CLASS IS VOID 2) TEST: Create, Kill, Count (1) CREATE...person not alive at the time of conveyance but whose life or death affects vesting of the interest (new member of class) (2) KILL...everyone alive at time of conveyance (i.e., all potential VLs) (3) COUNT 21 yrs...does the created person's interest vest or fail w/ certainty? YES...valid; NO...void The Fantastical Characters: 1) Fertile Octogenarian...a person is CONCLUSIVELY presumed capable of bearing children UNTIL SHE/HE dies 2) Precocious Toddler...child under ve is CONCLUSIVELY presumed capable of having a child 3) Unborn Widow...if vesting tied to TITLE, an unborn child might end up being the widow at the Testators death. 4) Slothful Executor...if leave to "my Dts alive when my estate is distributed", an estate theoretically may not CLOSE in the PP 5) Magic Gravel Pit vii Reform: Backlash against the RAP's remorseless application caused to States ---moving towards---> eliminating RAP in favor of PERPETUAL TRUSTs (i.e. allowing Dead Hand Control) Policy Rationale: soften the harsh consequences of the RAP, while still balancing the goal of alienability & honoring GR's intent 1)
PRO Reform...why should allow perpetual trusts MAIN: Free Choice...SR's should have LIBERTY to do what want w. their $ INALIENABILITY not a problem for trusts CON Reform...no perpetual trust --keep RAP--> in order to free up trust $ INALIENABILITY...need to let $ get back into markets - perpetual trusts ties up $, hurting the markets of future generations - cumbersome & wasteful to keep trusts going forever DEAD HAND CONTROL...ties up $

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- Trusts assets freely marketable...in well drafted trsuts, TEs have power to SELL the CORPUS & invest in other assets

--keep RAP--> in order to free up trust $ MAIN: Free Choice...SR's should have LIBERTY to do what want w. their $ INALIENABILITY not a problem for trusts - Trusts assets freely marketable...in well drafted trsuts, TEs have power to SELL the CORPUS & invest in other assets DEAD HAND CONTROL not a problem... - some future generations NEED another to control $ (ex: minors; special needs; handicapped) - inheritance no more an unfair advantage then inheriting talent - American work ethic engrained even for those receiving trust $ - gets back into market - Am's rich most philanthropic in world DURATION is a problem BUT it can be solved by: allowing freer modication or termination INALIENABILITY...need to let $ get back into markets - perpetual trusts ties up $, hurting the markets of future generations - cumbersome & wasteful to keep trusts going forever DEAD HAND CONTROL...ties up $ - should not allow the present generation to tie up all existing capital for an indenite period of time - widens class gap - rich keep getting richer DURATION...the longer a trust endures, the more changed circumstances there will be - Cannot draft trust that will appropriately deal w. changes forever - TEs must change over time (opening up to ABUSE) - BFs multiple indenite...making trust harder to administrate

SOLUTION: Change TAX BENEFITs...perpetual trusts are not taxed as regular estate distributions are --thus---> Grantors would be less likely to create them if had same tax hit as other estate distribution

2) 3 Concerns of the RAP: (2) Problem of DEAD HAND CONTROL...good public policy to allow each person to dispose of his property as he pleases, and NOT to permit the presert generation to tie up all existing capital for an indenitely long period of time, leaving nothing for the future generations to dispose of a TODAY...this idea is not as shared b/c believed it rests on false assumptions, inlcluding: (i) Future Generations WANT control of the money...there are certain future generations (often the ones trusts are made for) that NEED someone else to control their money (ex: mentally or physically handicapped; minors; bad money managers) (ii) Inheritance of $ confers an UNFAIR ADVANTAGE...its no more unfair than inheriting brains or talent (iii) Will create a LEISURE CLASS...America has an ingrained work ethic that even those that will inherit can't escape (iv) $ wont be SHARED w. the poor...America's rich are some of most philanthropic in the world (3) Problem of DURATION...the longer trusts endure, the more problemsom they become in trying to unanticipated changes in a TODAY...this remains true today; problems include: (i) Unanticipated CHANGES in CIRCUMSTANCes (ii) TRUSTEEs...overtime, they must change, opening the trust up to the greater possibility of abuse w. the wrong Te (iii) MULTIPLICATION of Beneciaries...trusts to decendants get more and more strained as the generations it passes too - the # of beneciaries can multiply relentlessly until the trust becomes unmanagement OR insufcient b Statistically the longer the trust goes on, the more changed circumstances there are going to be to try to draft something that will appropriately predict what will happen with that trust is very unlikely and rediculous c POLICY QUESTIONs: (1) as trusts are able to last in perpetuity, should state laws re modication and termination of trust be changed? i YES, the longer a trust lasts the more changed circumstances you'll encounter; if don't allow modication, those here and now will be punished, NOT the person who created the trust ii MAYBE, but state law is going in the direction of lasting in perpetuity (2) Is allowing PERPETUAL TRUSTs (w. some judicial modications allowed) good public policy? i PRO Carries out the Settlor's Intent Encourages HARD WORK Free Choice...settlor's should have LIBERTY to do what want with money ii CON Need to meet current nancial needs of the next generation No nality Widens class gap Cumbersome Anti-Free Market economy by tying money up Wasteful...doesn't effectively use property (3) Best way to effectuate change: i Change the TAX benets...not a matter of whether the perpetuation period should be indenite or NOT, but a matter of the tax hit the estate takes when it passes between properties right now, no tax hit for estates that are in perpetuity -> if changed that then their use would be changed IRS is a big mover and shaker in this context METHODs of Reform...most states have one or more of the following: 1) Self-Help SAVING CLAUSE = Catch-all Safety-Valve clause IN CASE the drafting Lawyer overlooks any RAP violations ---BY---> bringing any clauses into compliance w. the RAP Ex: (1) Notwithstanding any other provisions in this instrument, any trust created hereunder shall terminate, if it has not previously terminated, 21 years after the death of the survivor of the beneciaries of the trust living at the date this instrument becomes effective. The term beneciaries includes persons originally named as beneciaries in this instrument as well as persons, living at the date this instrument becomes effective, subsequently named as beneciaries by a donee of a power of appointment 57 over the trust assets exercising such power.

Ex: (1) Notwithstanding any other provisions in this instrument, any trust created hereunder shall terminate, if it has not previously terminated, 21 years after the death of the survivor of the beneciaries of the trust living at the date this instrument becomes effective. The term beneciaries includes persons originally named as beneciaries in this instrument as well as persons, living at the date this instrument becomes effective, subsequently named as beneciaries by a donee of a power of appointment over the trust assets exercising such power. 2) Statutory Presumptions to Resolve Particular RAP Problems (i.e., "unborn widow", age contingencies reduced to 21 yrs, etc) 3) Modication Doctrines: Cy pres / Equitable Modication / Equitable Doctrine of Approximation (see above) USE = allows Cts to modify gifts violating the RAP by ---bringing into---> compliance w/ RAP in order to carry out the Tr's INTENT w/in the PP TYPEs: a Cy Pres (aka modication) = permits a court to modify a trust so as to carry out the Tr's intent w/in the perpetuities period - applies ONLY to Charitable Trusts b Chain (private trusts) c Equitable Doctrine of Approximation = authorizes court to vary details of administration of a trust (BOTH CT & PT) 4) (MAJ) "Wait & See" Doctrine = law WAITs & SEEs what ACTUALLY happens, instead of invalidating at creation; - if interest does NOT vest or fail during that wait & see period, then RAP voids the interest - basically, cannot bring suit for at least 21 yrs after conveyance (Rule) Length of Wait & See Period - 2 Approaches: a (1) Common Law = WAITs to see if interest vests or fails w/in the LIVES relevant to vesting of the interest + 21 yrs v. RAP...uses the SAME PP, BUT doesn't speculate over possibility of vesting/failing (wait to see if does) b (2) USRAP: Uniform Statutory RAP (MAJ - 1/2 states) = hybrid of RAP, 'wait & see' doctrine & cy pres - v. Common Law W-&-S...uses a FIXED W-&-S period of 90 years - FL applies USRAP (but just expanded W&S period to 360 yrs) RULE = i (1) ALL interests are VALID if: (i) if certain to vest in the RAP PP or (ii) if not certain, for 90 years after creation (*90 yrs = ave PP) ii (ii) AFTER 90 yrs, any interest NOT VESTED is reformed by the CRT so as to best carry out the SR's intentions Section 3: Reformation [Cy Pres...can reform conveyance as long as w/in 90 yr period] (a) (a) Upon the petition of an interested person, a court shall reform a disposition in the manner that most closely approximates the transferor's manifested plan of distribution & is w/in the 90 yrs allowed by Section 1(a)(2), 1(b) (2), or 1(c)(2)...if:
(1) a nonvested property interest...becomes invalid under Section 1 (2) a class gift is not but might become invalid under Section 1 & the time has arrived when the share of any

class member is to take effect in possession or enjoyment

(3) a nonvested property interest that is not validated by Section 1(a)(1) can vest but not within 90 years after

its creation ADDITIONAL Changes USRAP makes: i Eliminates the Fertile Octogenarian (d) [Possibility of Post-death Child Disregarded] (In determining whether a nonvested property interest or a power of appointment is valid . . . the possibility that a child will be born to an individual after the individual's death is disregarded. ii + Generation Skipping Transfer = taxes transfers to person 2 or more generations removed from SR (i.e., grandkids) WHY...in order to prevent tax exemption for perpetual trusts from enduring longer than the perpetuities period (a) RAP forced trust property to be TAXED at some point b/c didn't allow to last forever ---THUS---> if allow trusts to last forever, had to nd way to tax the trust property RESULT...If both the common law and the 90 year alternatives are met, only the common law perpetuity option is operable for purposes of the Generation Skipping Transfer tax exemption 5) Repeal...abolishment of RAP via statute FL + almost 1/2 STATES have abolished (includes states that have enacted rules in place of the RAP, including the USRAP) Evolution of the Abolition of the Rule a 1950s...dissatisfaction w. the RULE's complexities and "absurd assumptions" leads to variety of reforms: Statutory xes for specic fantasy scenarios Authorizing Courts to Reform Violating Instruments; AND Adoption of Wait-and-See Doctrine b 1986...USRAP provides a wait-and-see period of 90 years & authorizes reform of violating instruments. Tax Reform Act of 1986...allows for creation of a trust funded w. tax-exempt funds, free from transfer taxes, which will endure as long as state perpetuities law permits. States that had previously abolished the RAP (ex: SD) experience advantage in jurisdictional competition for trust funds. c 1995...Delaware becomes 1st state to abolish RAP as applied to interests in trust (TRIGGERs race among states to abolish) trusts were RUSHED to be switched to these states -> really made a big difference with the new GST; perpetual trusts now became the way around the GST

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