I.

INTRODUCTION

The Power to Transmit Property at Death

o The Right to Inherit and the Right to Convey
o The West has put a very high premium on the right to dispose of property at death (including the right to disinherit anyone except spouses)
Hodel v. Irving (pg. 3)
Facts Members of the Sioux Tribe alleged that the Indian Land Consolidation Act, by making fractional interests in land escheat back to the tribe, was a
taking.
HOLDING
This is a taking.
SCOTUS establishes that everyone has a right to dispose of their property at death (not the right to inherit).
This right is one in the bundle of sticks, and cannot be taken, no matter how small the interest in the land is.
This case comes very close to establishing a Constitutional right to devise property at death, but does not go all the way.
After this case, Congress passed the American Indian Probate Reform Act, which replaced state probate law with federal probate law and provided that if a
decedent owned less than a 5% share in land, only the eldest child or grandchild would inherit and it would not be divided further.
Shaw Family Archives v. CMG Worldwide (pg. 10)
Facts Ps argued they were entitled to publicity rights of Marilyn Monroe because of the residuary clause in her will.
HOLDING
Marilyn Monroe could not convey publicity rights in her will because such rights did not exist when she died.
CA tried to reverse this by making the statute creating publicity rights retroactive, but NY law applied because the court determined Monroe was domiciled
in NY when she died.
Like Hodel, this case revolves around the rights of people to dispose of their property, NOT the right of others to inherit.

o The Problem of the Dead Hand

o Restatement (Third) of Property: Wills and Other Donative Transfers (2003)
10.9 The controlling consideration in determining the meaning of a donative document is the donors intention. The donors intention is given efect to
the maximum extent allowed by law.
Rationale = property owners have nearly unrestricted right to dispose of property as they please.
o dead hand control
Decedent exercises power of beneficiary by conditioning the gift to beneficiary upon beneficiary behaving in a certain way
Generally dead hand control is OK
Cant be in violation of constitution or public policy
o Illegal/ Impermissible uses of dead hand control
Absolute restriction on marriage
Requiring beneficiary to practice certain religion
Gifts that encourage/ require divorce
Gifts that direct property to be destroyed
Shapira v. Union National Bank (pg. 28)
Facts Fathers will provided that his sons could not inherit unless they married a Jewish girl with two Jewish parents within 7 years of his death.
HOLDING
Court upholds the will.
Father has the absolute right to dispose of the property in the way he wants
It wasnt unconstitutional because it did not limit the right to marry, only the right to inherit.
However, the court also looked into the restriction itself under a reasonableness test and held that it didnt violate public policy because
it was only a partial restraint on marriage and not a total restraint.
If the restriction were unreasonable, then it might be unconstitutional.
o Posner argues for cy pres approach to allow modification of conditions to testamentary gifts
o Restatement (Second) of Property: Donative Transfers
6.2 a restraint unreasonably limits the transferees opportunity to marry if a marriage permitted by the restraint is not likely to occur.
Today, most courts apply a reasonableness test to restrictions to marry in wills, but some courts will hold the restrictions invalid without consideration of
their reasonableness.
o Incentive Trusts
Conditional gifts like in Shapira are today typically done as incentive trusts
People can leave their property in trust and the benefits can terminate if the beneficiary does or does not do certain things.
This is useful motivation to encourage beneficiaries to be productive members of society
However, it can also backfire and does not account for changed circumstances

Transfer of the Decedent Estate

o Probate and Non-Probate Property
o Probate Property
Property titled in the name of the decedent
passes under will or through intestacy
o Non-Probate Property
Property that passes outside of probate under an instrument other than a will
property that is not titled in the name of the decedent
Examples
Joint tenancy property (both real and personal)
o Joint tenancy with right of survivorship
o Tenancy by the entireties
Life insurance (so long as there is a named beneficiary)
Pension funds/retirement funds
o (payable-on-death POD provisions)
Interests in trusts

o Administration of Probate Estates (Process)

o Decedent dies

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 EVERYONE HAS A WILL
either you execute one OR
the legislature drafted one for you in the intestacy statute
o Personal representative named to be in charge of the process
If theres a will, this person will be named in the will (aka executor)
If theres no will, court will appoint someone according to statutory next-of-kin hierarchy
o Jurisdiction
primary or domiciliary = where decedent domiciled at time of death
ancillary administration = for real estate, where property is located
o Personal representative files petition with probate court
o Probate court reviews the petition (without hearing)
Petition must identify name of decedent, date of death, interested parties, name of personal representative, etc.
o Letters of administration are issued by the court
These say that X was designated as the personal rep. of the estate of Y
Allows personal rep. to go to banks, brokerages, bring/defend lawsuits, etc.
Due Process requirements for letters of administration
Notification of all interested parties
o Heirs/beneficiaries
If there is a will, you have to notify BOTH the people named in the will AND the people that would take if the
will is invalid
o Creditors
Might be difficult for personal representative to identify creditors
Publication in a newspaper of general circulation in the area where the will is being probated
Publication must include statute of limitations to make claims against the estate (from 3-18
months, usually 6-9)
o Duties of personal representative
Personal rep. is a fiduciary
Things the personal representative must do
File the petition
Give interested parties notice
Marshall the assets (this can be very difficult, best place to start is tax returns)
Manage the assets
File decedents final income tax return
File estate tax returns until the estate is closed
Deal with beneficiaries
Carry out the terms of the will/trust or follow intestacy statute
Personal rep. usually has to post a bond
Regular bond = personal representative must go to bondsman for face value of the entire estate (very expensive)
Many wills waive bonds and only minimal bonds are required
Possible liabilities
If the personal representative distributes property to beneficiaries and the decedent/estate has tax liabilities, then the personal
representative must pay the liabilities on the property already distributed
o Two types of probate
Formal/supervised
Personal representative must file accounting with the court periodically and every penny has to be recorded and balanced
Informal/unsupervised
Personal representatives is still required to be able to account to beneficiaries, but formal accountings to the court are no longer
required
Typically only happens when personal rep. is trusted family member etc
o Closing of the estate
Prof usually doesnt file a motion to close the estate but instead just lets it die
No expense to reopen the estate if an asset pops up down the road
o Challenging a will
Usually the same statute of limitations as making a claim against the estate as a creditor
o Probate is expensive
Some jurisdictions calculate fees as a percentage of the value of assets and some (and UPC) take the value of the services rendered

Professional Responsibility
o Duties to Intended Beneficiaries
o In most states lawyer has fiduciary duty to intended beneficiaries
So under tort theory 3rd party beneficiaries can sue for malpractice
Under contract theory there must be privity of contract so 3 rd party beneficiaries can sue under it for malpractice
Simpson v. Calivas (pg. 58)
Facts Son sues fathers lawyer for drafting will incorrectly.
Father wanted to give wife life estate in the house, remainder to the son and all other property to the son right away.
This was accurately reflected in lawyers notes.
The lawyer instead referred to the house as a homestead, and the court gave the wife a life estate in ALL the property and son got nothing until she
died (she was his stepmother).
HOLDING
Lawyer committed malpractice because the term homestead has a legal significance that a layperson might not understand.
Probably would NOT be malpractice to write the wrong name of beneficiary, because the client should catch that when reading will
The son has standing even though there was no privity, because
(1) he was an intended beneficiary and
(2) the injury was foreseeable
Fiduciary duty runs from drafting attorney to an intended beneficiary
The sons rights are derivative of his fathers reasonable expectations
o Malpractice suit goes to general jurisdiction court, NOT probate court
o About 10 states retain the no privity rule and do not allow intended beneficiaries to bring malpractice suits

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 o Conflict of Interest
o Any time a couple walks into your office to do estate planning, there IS a conflict of interest
A v. B (pg. 64)
Facts Law firm represents husband and wife in estate planning and also represents other woman in paternity suit against husband.
Issue Can the law firm disclose confidential facts about one client to another client?
HOLDING
Yes. Although firm owes duty of confidentiality to husband, it also owes duty to disclose information to the wife in the course of estate
planning, and the existence of a child out of marriage is relevant to the estate planning.
Firm has discretion to disclose, but does not have a duty to disclose.

II. INTESTACY: AN ESTATE PLAN BY DEFAULT

A. The Basic Scheme

o Introduction
o Intestacy is common
well over half of the population dies without a will
People dont like to think about dying
People procrastinate
People dont like dealing with lawyers
o Intestacy statutes
Every state has its own intestacy statute
UPC is NOT very widely adopted
Older statutes are NOT as mindful of modern higher divorce rates
o Governing principle = blood relationships
Two exceptions spouses, adopted children
o Partial intestacy
People can die partially intestate if their will fails to dispose of all their property
Policy = legislature tries to carry out what would most likely be the intent of the decedent
o General rules
o If there is a surviving spouse, no children, and parents
Most states = spouse gets everything
Some states = spouse would share with parents
WA: S/S gets all community property and portion of separate: if surviving descendants, if surviving parent. Rest of estate: all to descendants if
any, all to surviving parents if any, all to parents issue if any, all to grandparents if any, all to grandparents issue if any, if no issue of grandparents,
escheats to state.
Once get to issue of grandparents, split along bloodlines (e.g. 1 cousin on moms side gets half, 42 cousins on dads side get other half)
o If there is a surviving spouse and 3 children of the marriage
UPC = spouse gets everything (assumption that spouse will benefit children)
Some states divide between the spouse and the children, regardless of whether or not the children are of the marriage
o If there is no spouse and three sons
UPC and most states = 3 sons share equally
o If there is no spouse, 3 sons, and 6 grandchildren (2 for son #1 and 4 for son #2)
UPC and most states = same as above, 3 sons share equally
o Same as above, but the childless son predeceased decedent
UPC and most states = 2 remaining sons divide equally
o Same as above, but only the son with 4 children was still alive
Half to the remaining son and half to the 2 kids of the dead son
By right of representation or per stripes
o All three sons are dead and only 6 grandchildren are left
Per capita among grandchildren (modern rule)
Each grandchild gets 1/6
English per stripes (traditional rule)
By right of representation, 1/4 each for the two sons of son #1 and 1/8 each for the 4 sons of son #2\
Types of Distribution
English Per Stirpes (by the stocks) right of representation (same thing) (pg 88) System treats each line of descendents equally.

WA: Modern per stirpes Estate is divided equally to the first surviving
generation:

Per capita at each generation UPC approach per capita at each generation. Combines 1&2 above

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 o Survival/simultaneous death
o Statutes tend to have one of two rules
Traditional rule
Survival means bare survival (could be a matter of seconds) Janus
UPC rule---2-104 and 2-702
Survival must be by 120 hours (5 days) WA RULE
If survival is shorter than this, the beneficiary is treated as having predeceased the decedent and the property goes to the next in line
o Drafting Wills Can Trump the Statutory Rules
Most well-drafted wills require beneficiaries to survive decedent by 30-90 days
Janus v. Tarasewicz (pg. 80)
Facts Cyanide in Tylenol tragedy
Husband and wife digested cyanide around the same time and both were rushed to hospital.
Husband pronounced dead after arrival and wife pronounced dead two days later, although she was probably brain dead entire time.
Wife was primary beneficiary on life insurance policy, and husbands mom was contingent beneficiary and the insurance company paid the wifes
estate.
Mom argued that wife did not survive husband.
HOLDING
Wife survived husband.
There was sufficient evidence that the wife survived the husband because her heart beat on its own, and there was minimal brain
activity.
o Hypotheticals involving sufficient evidence of bare survival
Husband and wife drown in boating accident. Wife was a better swimmer and died after a violent struggle, whereas husband passively submitted to
the drowning. Sufficient evidence of survival?
Husband and wife die in plane crash. Wifes brain is intact and theres CO in her bloodstream. Husbands brain is crushed and theres no CO in his
bloodstream.
o Negative Disinheritance
o UPC
allows for negative disinheritance (UPC 2-101) and the barred heir is treated as if he disclaimed his intestate share
o Common law
you cant disinherit someone by providing in your will that you dont want them to get anything unless your will entirely disposes of all your property
If not, remainder passes through intestacy and heir will take under the intestacy statute
o Table of Consanguinity (p93)
o If someone has no surviving spouse, children, or parents, you would consult this chart (very rare)
o Try to find the person with the most common DNA with the deceased
o In drafting a will, you should go through relatives that have an actual relationship with the decedent and then to charity to avoid disputes involving far-removed
relatives

Transfers to Children
o Meaning of Children
Adoptive Children
Historically, adopted children were left out of intestacy statutes
Now, most states define adopted children to be the same as natural children
Four basic approaches
Adopted child inherits only from adoptive parents and their relatives
Adopted child inherits from both adoptive parents and genetic parents and their relatives
Adopted child inherits from adoptive parents and also from genetic parents and their relatives, but only if the child is adopted by a
stepparent (old UPC approach)
2008 UPC key determination = whether there was a parent-child relationship (p101)

Hall v. Vallandingham (pg. 97)

Facts Husband died, wife remarried, and new husband adopted the children. First husbands brother died and the children tried to
inherit the distributive share their father would have received.
HOLDING
o Children cannot inherit from natural fathers brother, because the children were adopted by mothers second husband.
o This would give adopted children double inheritance.
Prof argues this is not a garden variety adoption
Under the old UPC, the children would take here, because they were adopted by their stepparent
Adult adoption
Most intestacy statutes draw no distinction between the adoption of a minor and the adoption of an adult (in NY, you cannot adopt your lover)
This is utilized by people in atypical relationships (not married/ gay couples) to ensure inheritance
Can preempt will challenges by collateral kindred
Diferent from marriage, because you cannot get out of an adoption
Minary v. Citizens Fidelity Bank & Trust Co. (pg. 103)
Facts Woman left trust to her husband and three sons, and then to her then surviving heirs according to the lawsthen in force in
Kentucky.
Last alive son adopted his wife so that she could benefit from the trust as an heir of his mother.
HOLDING
o This is not allowed.
o The purpose of the adoption statute was NOT to allow the wife to inherit through her husband against the testators
intent.
Doris Duke
Doris fathers trusts were to go to Doris children but she didnt have any
At age 75, she adopted a young woman, but then they had a falling out

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 Doris could not get out of the adoption and the woman got $65 million
Adult adoptions can be used as a type of special power of appointment by bringing the adoptee into the class of remainder beneficiaries
Virtual adoption/equitable adoption/adoption by estoppel
Some people do not have the resources/sophistication to go through formal adoption requirements
Through virtual adoption, adoption paperwork is not properly completed but if certain conditions are met, child will be entitled to share of adoptive
parents probate estate.
ONeal v. Wilkes (pg. 109)
Facts Cook took in a girl that no one else wanted and raised her as his own. Never formally adopted her, but referred to her as his
daughter. Administrator of Cooks estate refused to recognize her as his daughter.
HOLDING
o Not an adoption.
o Adoption is a statutory process and it was not satisfied here.
o No one had the legal authority to contract for the adoption.
Dissent We should look to the reality of the relationship through a moral and equitable approach.
This doctrine has NOT been widely accepted, but some states allow it in unusual circumstances
Posthumous children
Children born after the death of the father are given rights to inheritance, with limitations
rebuttable presumption
o if the child is born within 280 days of the death of the husband, the child is treated as being in existence as of the time of
conception and therefore surviving the husband
o Anything more than 280 days burden falls upon the child to prove parentage
Uniform Parentage Act child born within 300 days of death of husband is presumptively the child of the husband

Nonmarital children
At common law could not inherit from either parent
Now, all states permit inheritance from the mother
They should be able to inherit from both parents according to bloodlines
Very problematic because it can be very difficult to prove relation to decedent (DNA might be improving this)
Reproductive technology and new forms of parentage
Hecht v. Superior Court (pg. 117)
Facts Boyfriend devised 15 vials of sperm to his girlfriend. His adult children wanted to destroy the sperm.
HOLDING
o Court awarded the sperm to the girlfriend.
Woodward v. Commissioner of Social Security (pg. 118)
Facts Husband donated sperm when he got sick and then he died. Wife used sperm for artificial insemination two years later and
sought social security benefits for the children. District Court certified questions of whether they were his children to the
Massachusetts Supreme Court.
HOLDING
o In some limited circumstances, posthumously conceived children can enjoy inheritance rights.
o This is a case-by-case determination.
o Key question is whether or not the husband consented to
i. (1) the sperm being used to conceive children posthumously and
ii. (2) supporting such children.
Balance the interests of:
o The children (treated like all other children and not discriminated against due to accident of their birth)
o The state (prompt and accurate administration of benefits)
o The reproductive rights of the decedent
In re Martin B. (pg. 126)
Facts Martin granted a trust, and the trustee could distribute money to Martins issue during his wifes life. James (Martins son)
predeceased Martin, and James wife Nancy was artificially inseminated by James sperm after James death.
Issue Do the children qualify as issue under the terms of the trust?
HOLDING
Yes. Look to grantors (Martins) intent.
Even though he probably didnt contemplate this, he intended to provide for his childrens children.
o Surrogate motherhood and married couples/assisted reproduction and same-sex couples
There is a lot of confusion over the property rights involved in these cases and a lot of work to be done to provide clarity

o Advancements
o Gifts given during lifetime are calculated in to total estate
o Parallel concept with wills (satisfaction)
o Common law
Any lifetime gift was presumed to be an advancement a prepayment of the childs share of the estate
o Many states
Lifetime gift is presumed NOT to be an advancement but is subject to rebuttal evidence that it was in fact intended to be an advancement
o UPC and some states
Requires that the intention to make an advancement be made in writing signed by the grantor or grantee
OTHERWISE THERE IS NO ADVANCEMENT
o Guardianships, Conservatorships, Custodianship, and Trusts
o These are relevant when dealing with minor children or incompetent/incapacitated people
o Guardianships and conservatorships are expensive and time-consuming (must report to the court)
o Guardianships
Generally refers to taking care of the physical person
Also used to have a guardianship of the property
o Conservatorship
Replaced guardianship of the property
Now this refers to taking care of the property of the person
o Custodianship

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 Something like conservatorship person given property to manage on behalf of a minor
o Strategies to avoid guardianships/conservatorships
Create a trust
Power of attorney
o Uniform Transfers to Minors Act
You can create a custodial account for your minor child under this act
However, a trust is probably better because you can condition the use of the funds

Bars to Succession
o Homicide
o Majority Rule
Most states forbid slayers from inheriting from their victims
Most states treat the slayer as having predeceased the decedent
UPC provides that the slayer disclaimed the property (treated as having died immediately before distribution)
o Minority Rules
Some states allow it, reasoning that there are other punishments
Other states have statutes, others rely on judicial decisions
Possible solutions in judicial decisions
o Legal title passes to slayer (court cant legislate)
o Legal title does not pass to slayer (b/c of equity)
o Legal title passes to slayer, but equity holds him to be a constructive trustee for the heirs or next of kin of the decedent
Court doesnt completely ignore intestacy statute if slayer is supposed to take under it
Maintains constant chain of title
o Constructive trust = remedy
Persons name is attached to title of property, but person doesnt have any equitable rights in the property court can force the person to turn it
over to next of kin
In re Estate of Mahoney (pg. 145)
Facts Wife convicted of manslaughter of decedent. There was NO slayer statute that governed.
HOLDING
Court remands the case to determine whether it was voluntary or involuntary manslaughter.
If voluntary, constructive trust should be created.
o Most states do not allow people to opt out of the slayer statutes (if H thinks W is crazy and might kill him, but doesnt want to hold it against her)
o Well-drafted instruments and the UPC also prevent slayers from getting non-probate property
o Chinese system takes into account not only homicide but also other forms of good/bad behavior
o Disclaimer
o Aka renunciation
o Definition = person that is entitled to inherit declines to accept the property
This is generally governed by state law
Generally the person disclaiming is treated as predeceasing
o Person might disclaim for federal tax purposes
If so, must comply with IRS Code 2518 (p153)
Cannot accept benefits and then reject them later
Must make disclaimer in accordance with formalities within 9 months after the interest passes
Drye v. United States ( pg. 155)
Facts Son of intestate mother disclaimed because he owed the IRS backtaxes and wanted the money to go to his daughter.
HOLDING
You cannot disclaim when the IRS comes calling.
o Disclaiming to qualify for Medicaid
This area is in limbo whether you can disclaim or not
Troy v. Hart (pg. 156)
Facts Medicaid recipient appeared to be incapacitated, and his siblings got him to sign a disclaimer without the knowledge of the
power of attorney.
HOLDING
o Court held the disclaimer valid, but said the amount disclaimed had to be reported to the Medicaid authorities and might
be subject to an action by the state to recover the funds.
o Basically have to disclose to Medicaid your wealth or potential wealth so if you disclaim an inheritance that would
disqualify you from Medicaid you still may not qualify b/c Medicaid will take that into account

III. WILLS: CAPACITY AND CONTESTS

A. Mental Capacity
o The Test of Mental Capacity
Requirements to make a will
Requirements are very low
Testator must be an adult (most places 18 y.o.)
Testator must be sound mind:
Must be capable to:
o Know the nature and extent of his property
o Know the natural object of his bounty
Theres a natural category of people that we would expect the testator to want to benefit (spouses, children,
blood relatives)
o Know the disposition that he is making of that property
o Relate these elements to another
o There is NO INTELLIGENCE requirement
These are simply general rules to allow people to express their intent to have a will
o Burdens of proof

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 Majority = presumption of competency (Wilson)
Person challenging will has to rebut the presumption
So once there is prima facie evidence of due execution of will party contesting it has burden of proof
Minority = burden on proponent of will to show testamentary capacity (Washburn)
In re Wrights Estate
T was 69 when died kept junk and old liquor bottles around. Left one house to woman friend, another house to daughter who contested will. Drawer
of will and witnesses said they thought T was of unsound mind, but no medical proof of incapacity and no proof could not conduct own business.
Court probates will. Capacity cannot be destroyed by showing foibles or isolated mental irregularities unless bore directly on
testamentary act
Wilson v. Lane (pg. 161)
Facts
Testator left will that went to 16 blood relatives and one non relative, who was a person who cared for her later in life
Relatives argued that she lacked capacity to make will
o Ofered some proof of dementia (was appointed a guardian for some afairs after she made will)
o Peculiar
o Old
o Strange fear of house flooding
o Maybe had alzheimers
Jury found there was no capacity, but the trial court entered judgment n.o.v.
HOLDING
Will was upheld.
Although there was circumstantial evidence the will was shown duly executed so the burden is on those contesting the will
Here evidence was not enough to deprive her of right to make will
Eccentric habits and absurd beliefs do not establish testamentary incapacity
Dissent This was a decision for the jury to make and there was enough evidence to uphold the jurys decision.
o Professional responsibility
If someone comes in with questionable mental capacity, the lawyer may rely upon their own judgment as to whether the person is competent
If lawyers good faith belief is that person is incompetent, he cant draft the will
Ante-mortem probate
Some statutes permit a person to institute a proceeding of a will during the testators life to remove uncertainty about testamentary capacity and
freedom of undue influence
All beneficiaries to will and testators heirs must be parties to action
However, it also deprives the person of the opportunity to change the will
o Capacity threshold
It takes more capacity to write a deed than to write a will
It takes more capacity to write a will than it does to get married
o Why require mental capacity?
Protection of peoples interests
Assures testators intent is expressed
Protect them from unscrupulous 3rd parties
o Insane Delusions
o Insane delusion
False sense of reality to which person adheres despite all evidence to the contrary
o A person can have sufficient mental capacity generally to execute a will however, if he is sufering from an insane delusion the will may fail for lack of
testamentary capacity
the insane delusion MUST be related to or drive the will in some way
general insane delusions are not enough
HYPO
Woman goes around DC telling people that a man lives on moon and only eats blue cheese
She can do this for years and still write a perfectly valid will
Unless her will gives all or a substantial portion of her property to the man on the moon
o In that case the insane delusion drives the will
o This test is separate from the mental capacity test
Being strange or eccentric is not enough it has to be pretty much crazy
o Causation requirement
If the insane delusion does not afect the disposition, then the will is still valid
Most states require the delusion to have a material efect on the disposition
Some states require only a showing that the delusion might have afected the disposition
o Most common example
False (crazy) belief about a member of the testators family causes them to exclude them from the will
o Diference between insane delusion and a mistake
A simple mistake will NOT invalidate the will

In re Strittmater (pg. 169)

Facts Ladys will gave all her money to a womens organization that she worked with. Her cousins were her only heirs at law and they challenged
the will.
HOLDING
Her will was driven by insane delusions and is therefore invalid.
This decision was motivated by hostility toward womens movement. But prob just a social/ political decision in 47 by an old judge with
views on feminists
o just a relic from the past
Breeden v. Stone (pg. 171)
Breeden left a handwritten will basically leaving everything to Sydeny Stone
Killed himself after writing will and prob being on a coke binge and killing someone a few days before in a hit and run accident
His relative contested the will arguing insane delusions
He was moody
Scared of govt agents threatening him and his dogs safety
Was on a coke binge

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 HOLDING
Will was upheld
Basically his delusions went towards his own safety and the will had nothing to do with that so the will is upheld
Delusions unrelated to will
The will in this case was a holographic will
A will that is written in handwriting of testator and is NOT witnesses in ordinary course of law
Half of states allow these
o Typically rural or southern jurisdictions
In re Honigmans Will (pg. 178)
Facts Couple lived in new York and made their fortune owning deli shops in NYC
Mr honingman had health problems and surgeries etc and became depressed
In depression Husband had insane delusions that wife was cheating on him and excluded her from his will.
HOLDING
Court denied probate of the will. Court placed burden on will proponents to show the insane delusion did not afect the disposition.
o Dead Mans Statutes
o These statutes refuse to allow an interested party testify about oral statements made by the decedent
o Rationale = only person who knows what really happened is dead
o These still exist in a minority of states

Undue Influence
o Definition
o When the will of the person who becomes the testator is coerced into doing that which he or she does not desire to do
o Restatement if the wrongdoer exerted such influence over the donor that it overcame the donors free will and caused the donor to make a donative transfer
that the donor would not otherwise have made
o Undue influence does not require a lack of mental capacity
But it is very common that the testator was vulnerable
Young
Old
Frail
Compromised capacity (ie low IQ)
o Scope
o Only the portions of the will that are afected by the undue influence will be held invalid and the rest of the will will be upheld, if possible
o Burden Shifting
o In most jurisdictions, the person challenging the will must establish a prima facie case of undue influence
o must show that:
There was a confidential relationship
If a person is in a confidential relationship with someone making a will, he should take precautions in order to show that the will was
fair and not the product of undue influence
Defendant received bulk of the estate
Testator was of weakened intellect
o Some jurisdictions allow showing one or more other suspicious circumstances
Restatement provides list of some suspicious circumstances (p185)
o If this is satisfied, the burden shifts to the proponent of the will to establish there was no undue influence
To overcome presumption of undue influence, must show:
Good faith on part of beneficiary (consider who initiated the gift, where executed and in whose presence, consideration for the gift and
who provided it, and secrecy or openness of the gift
Grantors full knowledge and deliberation of consequences of actions, and
Grantors independent consent and action
o Elements
o Evidence to prove undue influence will often be circumstantial and inferential
Restatement in the absence of direct evidence, circumstantial evidence is sufficient to raise a presumption of undue influence if the contestant
proves:
Susceptibility
o donor was susceptible to undue influence
Opportunity
o Alleged wrongdoer had opportunity to exert undue influence
Motive
o Wrongdoer had motive or disposition to exert undue influence
Causation
o There is a result appearing to be the efect of the undue influence
o Property was disposed of in a manner testator would not have otherwise done
Its likely that no neutral witnesses will be able to testify about the alleged influence
Estate of Lakatosh (pg. 182)
o Rose, Old lady lived alone, no visitors etc
o Roger Jacobs began visiting her once or twice a day
Begins helping her with stuf taking her around etc
o After a few months Roger suggests that Rose give Roger power of attorney
o Roger sent her to his counsin a lawyer to sign the power of attorney
o She also made a will giving Roger everything
o HOLDING
Will was invalid.
Court looked to the three elements of the burden shifting test:
(1) there was a confidential relationship;
(2) person enjoying such relationship received bulk of the estate;
(3) decedents intellect was weakened.
Because all three of these were met, the burden shifted to the guy to show that there was no undue influence and he could not do that.
Bequests to Lawyers Rule 1.8(c)

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 o Lawyer shall not solicit any substantial gift from a client, including a testamentary gift, or prepare on behalf of a client an instrument giving the lawyer or a
person related to the lawyer any substantial gift unless the lawyer or other recipient of the gift is related to the client
o Sexual Relationships and Undue Influence
o A sexual relationship used to be viewed as evidence that undue influence was more likely
o More recently, a sexual relationship has been viewed as evidence that the decedent would have wanted the person to benefit (treated as natural object of bounty)
In re Kaufmanns Will (pg. 191)
o Wealthy man had committed relationship with a same-sex partner.
o He executed multiple wills that gave larger and larger portions of his estate to his partner.
o Family challenged the will.
o HOLDING
Undue influence.
The man was vulnerable to his strange sexual preferences.
o This is probably not still good law in New York, but probably would be in lots of jurisdictions.
o Avoiding Undue Influence Charges for Non-Traditional Relationships
Adult adoption
Not available in all states and cannot be undone if the parties have a falling out
Owning property jointly with right of survivorship
However, if the parties have a falling out, the only way the property can be severed is by going to the court and bringing an action for partition
(expensive and problematic)
Revocable inter vivos trust
More flexible can be changed without litigation
You can control your property during your life and then it is disposed of according to the trust at your death
Lipper v. Weslow (pg. 193)
o Will contest
o Sophie Block had 3 kids
o One died and left two children
o Blocks will, written by her lawyer son, left out the dead son and thereby the grandkids leaving her estate entirely to her two living children
o Block resented the grandkids and their mother (daughter-in-law)
Didnt come visit
Didnt like her
Werent nice etc
o HOLDING
No undue influence.
Although there was a confidential relationship and the son benefitted disproportionately, the decedent made her wishes clear and they were
confirmed in statements to uninterested witnesses.
o Prof thinks the court should have taken a closer look at the suspicious circumstances (drafter got more than his intestate share, lived next door with key to house,
bore malice toward his brother, will was executed 22 days before she died, lady was in bad health, witness was a maid probably paid by the drafter).
o The burden should have shifted here, but it didnt.
o In will Block explains why she did not like the kids
Normally, you dont want to have a specific justification for the reasons for excluding someone
If these go into the will, they can be challenged
Prof says that explanation is not a good idea b/c it sets yourself up to be contradicted
If she wanted to do something she had to do something short
I know XXX exist but I am intentionally leaving them out
Or write a memo to the file that person is being intentionally left out
o No contest clauses/in terrorem clauses
o definition
Provision in will that states if a beneficiary under the will sues contesting it the beneficiary loses whatever he was entitled to under the will
o Baited no contest clause
Give the possible challenger a gift that they risk losing if they challenge the will
A no contest clause is useless if the person challenging will gets nothing or has very little to lose
o Most cases will enforce these UNLESS there is probable cause for the challenge
Some states will not enforce these under any circumstances
Prof puts these clauses in almost every will she does

o Avoiding Will Contests

o Contests are often based upon lack of capacity and undue influence in the alternative
o Things you can do to avoid will contests
Get permission to speak with doctors and get medical opinions on capacity
Try to get nurses to act as witnesses to the will, because they are in a special position to testify about capacity
Have the client write a handwritten letter laying out the testamentary plan
Tape a video discussion
Family meeting
Duress
o Definition
o When undue influence becomes overtly coercive
o Restatement a donative transfer is procured by duress if the wrongdoer threatened to perform or did perform a wrongful act that coerced the donor into
making a donative transfer that the donor would not have otherwise made
Latham v. Father Divine (pg. 210)
o Decedent made a will leaving everything to Father Divine.
o Nieces (not her heirs at law) talked to decedent and convinced her to draft a new will, naming them as beneficiaries.
o Before decedent could sign the new will, she fell ill and died
o the nieces alleged that Father Divine killed her to prevent her from signing the new will.
o Lower Court threw out the complaint for failure to state a claim.
o HOLDING
Reversed and remanded. (Ps stated a case for relief)

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 If Father Divine killed the lady to keep her from changing her will, a constructive trust would be imposed for the benefit of the beneficiaries under
the second will.
Duress, fraud, and undue influence also used to prevent person from signing new will
o If this is the case, a constructive trust can be imposed on behalf of the intended beneficiaries under the new will
o A constructive trust can be imposed on an heir who is innocent if other heirs unduly influence a person not to make a will that would benefit someone else and die
intestate instead
Reasoning = they wouldnt have benefitted at all under the will

Fraud
o Definition
o When the testator is deceived by a deliberate misrepresentation AND
o The misrepresentation causes testator to dispose of property in a way he would not have if misrepresentation was not made
o Misrepresentation includes:
o (1) the intent to deceive the testator and
o (2) the purpose of influencing the testamentary disposition
o Two types of fraud
Fraud in the inducement
When the testator is misled about material facts which causes him to sign a will he would not normally sign
Doesnt address the will per se but just important facts
Example an heir promises to convey property to a person that the testator wants the property to go to so that the testator doesnt put that
provision in the will and the heir had no intention of conveying the property
Fraud in the execution
When a person intentionally misrepresents the character or contents of the instrument signed by the testator which does not in fact carry out the
testators intent
Example putting a will in front of a person that is pretty much blind and telling them it is a deed and having them sign it

o Scope
o Similarly to undue influence, only the portion of the will procured by fraud will be invalid and the rest of the will will stand, if possible
o Fraudulently procured inheritance is invalid only if the testator would not have otherwise devised the property if he knew the true facts
o Example
A man defrauds a woman into marrying him even though he was already married and they live happily together for a year
Even though the marriage was a fraud, the woman leaving everything to the husband might not be a result of the fraud, because she might have
done that based upon their intimate relationship, and not necessarily the legal characterization of their relationship
Puckett v. Krida (pg. 209)
o Live-in nurses convince a woman that her relatives were wasting her money and wanted to put her in a nursing home, neither of which was true. The woman
changed her will to benefit the nurses.
Holding Fraud in the inducement.
There is a distinction between fraud and undue influence

Tortious Interference with an Expectancy

Brought in tort, and NOT in probate courts
o You are seeking tort damages from the wrongdoer, NOT challenging the will
A no contest clause would not apply here because this is not a challenge of the will
o A plaintif is expected to exhaust probate remedies first, so long as they have notice and the probate remedies are adequate
A will contest can act as res judicata to foreclose a claim of tortious interference
Rare
o Basically the only time you would use this is if the statute of limitations to challenge the will had run out, but the general statute of limitations for torts had not
Statute of limitations for the tort starts running from the time the plaintif discovered or should have discovered the fraud, undue influence, or
distress
o Elements
o Reasonable expectancy of inheritance
o Intentional interference w/ expectancy through tortuous conduct
fraud, duress, undue influence, but NOT lack of mental incapacity
o Causation
Tortuous conduct caused the interference
o Damages: Not recovered against the estate, recovered against interferer.
Schilling v. Herrera (pg. 215)
o Nurse moves in with decedent
o convinced her to execute a will (probably undue influence).
o Decedent dies and nurse does not notify her brother (heir at law) and puts the will through probate.
o Brother brings an action for tortious interference with an expectancy.
o Lower Court dismissed his complaint.
o HOLDING
Reversed and remanded.
If the nurse did this, then he would be entitled to relief.
b/c fraud was not discovered until after probate had finished (and brother was not notified of death and probate) he wasnt prevented from bringing
suit b/c he hadnt exhausted all remedies
Anna Nicole Smith
o Decedents son was trying to get assets out of the probate stream so that she couldnt get to them
o She brought a tortious interference case and ultimately prevailed

IV. WILLS: FORMALITIES AND FORMS

A. Execution of Wills
o Attested Wills

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o The functions of formalities
Ritual function = makes the testator aware of the severity of executing a will
Evidentiary function = increases the reliability of the proof presented to the court
Protective function = safeguards testator from undue influence, fraud, duress
Channeling function = easier for courts to determine testators wishes if all wishes are recorded in standardized forms
o Basic formalities
In writing
Signature by testator
Attestation by witnesses
Attestation clause
An attestation clause provides that the will was duly executed
These are not required in any state, but it gives rise to a presumption of due execution and its probably malpractice if you dont include one
Wills execution can be upheld even if the witnesses predecease the decedent or cant remember the execution
Affidavit of execution
This is a modern approach that allows the testator and witnesses to swear before a notary public that they signed the will properly
Makes it very difficult to challenge the will on execution grounds
Two step self-proving will
A separate affidavit is appended to the end of the will, and it contains an oath of the witnesses (and often the testator) that the will was
validly executed
One step self-proving will
Testator and witnesses sign only once and the affidavit language is folded into the attestation clause
o Strict Compliance: Writing, Signature, and Attestation:
o Under the traditional rule, for a will to be admitted to probate, it must be in strict compliance with the formal requirements of the applicable Wills Act
Elements
Will must be
(1) in writing;
(2) signed by testator;
(3) signed by at least two witnesses; and
(4) any additional requirements of the jurisdiction
o Formalities in execution serve a purpose and we dont want to enter the slippery slope of whether or not the execution was adequate to convey the testators
intent.
Need to balance the need for a clear rule to avoid litigation with fairness toward people without resources and their right to dispose of their property
as they want
In re Groffman (pg. 228)
Facts Testator acknowledged his signature to the two witnesses separately and neither witness saw the other witness sign.
HOLDING
Will Invalid.
Procedure wins over substance.
The testator did not satisfy the requirements of the Wills Act.
Lawyer here screwed up
Stevens v. Casdorph( pg. 229)
Facts Testator signed a will at the bank, and then the bank manager took it to two tellers to sign as witnesses.
HOLDING
Will Invalid.
Two problems:
o (1) witnesses were not present when testator signed and he didnt acknowledge his signature or publish the will as his and
o (2) the testator was not present when the witnesses signed the will (line of sight rule).
Dissent This approach is too strict and we are supposed to focus on the intent of the testator.
Presence in will execution
Line of Sight Test
Most jurisdictions apply the line of sight test
Requirement that the witnesses sign in the presence of the testator is satisfied only if the testator is capable of seeing the witnesses in
the act of signing (does not actually have to see them sign, only has to be able to see them sign)
Conscious Presence
Some jurisdictions apply the conscious presence test
Witness is in the presence of the testator if the testator, through sight, hearing, or general consciousness of events comprehends that the
witness is in the act of signing
UPC dispenses with presence requirement and provides two options
Signed by two people within a reasonable amount of time after witnessing signing of the will or acknowledgement of the will
Acknowledged to a notary public
The meaning of signature
Signature by mark, with assistance, or by another
Preferable to have a full name signature, but a mark, cross, nickname, or abbreviation will probably be sufficient
Typing up a will and typing the signature in a cursive font can be sufficient (Taylor v. Holt)
Order of signature
Generally, testator should sign before witnesses
If everything happens in one transaction, the order is not critical
Subscription and addition after signature
Subscription = requirement that the testator sign at the end of the will
o This applies in a few states
Addition after signature
o If you handwrite something on a will
If written AFTER the testator signed will is probated and the handwritten addition is inefective because
its an invalidly executed codicil
If written BEFORE the testator signed will might not be probated
Delayed attestation
NY requires witness to sign within 30 days

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 UPC requires reasonable time
Some cases say signature after the testators death is even ok
o The meaning of writing
Will doesnt have to be on paper only need a reasonably permanent record
o Interested witnesses and purging statutes
o Interested witness
witness that stands to benefit from the will
o Traditionally, a will would be invalid if any required witness was an interested witness
Parsons Case
Facts Lawyer got an interested witness to disclaim any interest under the will in an efort not to have the will invalidated.
Holding Invalid. Witness must be disinterested at time of signing will.
o Purging statutes tried to remedy this by purging the benefits of the interested witness instead of throwing out the entire will
Most states have purging statutes that purge only the benefit that the witness would receive under the will that is in excess of what the witness
would have received in intestacy
Estate of Morea (pg. 239)
Facts Son served as witness to a will that he benefitted from.
Holding Will is valid because son actually would have benefitted more under intestacy statute and therefore had nothing to gain from
the will.
o UPC and a minority of states do not require witnesses to be disinterested
Recommended method of executing a will pp. 242-245
o Safeguarding a will
o 3 possibilities as to where to keep a will
Testator keeps it and stores it somewhere
Law firm keeps the will at testators request
File the will with the probate court
o Problems w/ each
Testator could destroy, damage, misplace, scribble on the will or relatives could try to destroy it after death
Law firm has burden of keeping will and periodically reminding testator it is in the firms possession
If the court has the will, it is difficult to change the will quickly
o Multiple originals = horrible idea
o Curing Defects in the Execution of Attested Wills
o Excusing execution defects by ad hoc exception
To avoid harsh results of strict compliance, some courts have occasionally excused or corrected an obvious execution defect
Basically some courts will just correct will if obvious mistake (others wont)
In re Pavlinkos Estate (pg. 246)
Facts Husband and wife did not speak English and mistakenly signed each others wills (mirror image wills). Wife dies and her will is
not probated. Husband dies and they try to probate his will.
Holding Invalid. The court applied the 4 corners rule and held the will was a nullity and total nonsense.
Dissent This is ridiculous. We should apply the 8 corners test and that would show us the clear collective intent of the husband and
wife.

In re Snide (pg. 250)

Facts Husband and wife mistakenly signed each others will.
Holding Will was upheld. Court allowed exception to strict compliance rule.
Dissent Majority misconstrues the case law, which weighs heavily in the direction of invalidating the will.
This case was roundly criticized when it was decided
Which will would you apply for probate?
The will they signed contains incorrect provisions that dont make sense
The will that makes sense is not signed by the decedent
Curative Doctrines: Substantial Compliance and Harmless Error
Substantial Compliance
Rule
o court may deem a defectively executed will as being in accord with the statutory formalities if the defective execution
nonetheless, by clear and convincing evidence, fulfills the purposes of those formalities
o Finding of a formal defect should not lead to automatic invalidity, but to a further inquiry:
Does the noncomplying document express the decedents testamentary intent, and
Does its form sufficiently approximate wills act formality to enable the court to conclude that it serves the
purposes of the wills act
In re Will of Ranney (pg. 253)
o Facts Witnesses signed a two-step self-proving affidavit without having actually signed the will beforehand as the
affidavit said.
o Wife attacked the will for improper execution.
o HOLDING
Court applies the substantial compliance rule and remands to determine whether purposes of the formalities
were fulfilled.
o Prof is bothered by this case because a lawyer and two other people that work in a law office get away with taking an oath
that isnt true
o Prof also personally believes that most jurisdictions would not go this far with the substantial compliance doctrine to
uphold the will
Harmless Error (aka the dispensing power) NO HARMLESS ERROR IN WA
Rule
o court may excuse noncompliance with statutory formalities if there is clear and convincing evidence that the decedent
intended the document to be his will
UPC Harmless Error Rule
o Document is treated as if it had been executed in compliance with the wills statute if the proponent of the document
establishes by clear and convincing evidence that the decedent intended the document or writing to constitute (i) the

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 decedents will, (ii) a partial or complete revocation of the will, (iii) an addition to or alteration of the will, or (iv) a partial
or complete revival of his formerly revoked will or of a formerly revoked portion of the will
In re Estate of Hall (pg. 259)
o Facts Husband already had a will, and then went to make a joint will with his wife.
o They wanted the draft to serve as their joint will until the joint will was finalized
they signed it and it was notarized without witnesses.
o Wife applied the will for probate but the husbands daughter from a previous marriage challenged it.
o HOLDING
Will is valid.
The husband intended the draft joint will to be his will.
It purported to revoke his original will and he ordered his wife to destroy his original will.
o Montana had enacted the UPC Harmless Error Rule.
Comparing substantial compliance and harmless error
Lots of similarity, but a few diferences
Langbein was the architect of both and he came to prefer the harmless error rule because of its focus upon the testators intent
o Notarized Wills
o UPC provides a will is valid if signed by two witnesses OR signed by a notary
Prof is skeptical because lots of times notaries sign things without having actually seen the person sign the document
Prof doesnt know of any states that have adopted this yet
In re Will of Ferree (pg. 266)
Facts Guy wrote out his will on a will form and had it notarized, but not attested to by witnesses.
Holding
Will is invalid.
Having the will notarized did not satisfy the substantial compliance rule.
o A notary can serve as an attesting witness if he intends to sign as a witness rather than as a notary
You would still need another witness to satisfy the attestation requirement

o Holographic Wills NO HOLOGRAPHIC WILLS IN WA

o Definition
A will written in the testators hand but not signed by witnesses
Could take the form of a letter, scribble on pad etc
Slightly over half the states recognized holographic wills
Mostly popular in west and south (rural jurisdictions)
UPC recognizes holographic wills
o Signature
In almost all states allowing holographic wills, the signature can be anywhere on the face of the document
However, if the signature is not at the end, there may be doubt as to whether the decedent intended his name to be a signature
o Often times holographic wills are written in extreme circumstances close to death
Kimmels Estate (pg. 269)
Facts Father writes a letter to his sons that says if anything happens he wants his two sons to take his property (specifically listed pieces of
property).
HOLDING
Valid holographic will.
Court focused upon fathers intent.
Signing it Father was a valid signature, because thats how he signed all his letters.
Factors pointing toward holographic will
Phrase if anything happens followed by specific pieces of property
Told the sons to hold onto the letter because it might help them
Sent the letter to the intended beneficiaries
Factors pointing against holographic will
Doesnt seem to be contemplating death
Leaves out natural object of his bounty
Lack of clarity court was forced to speculate
Conditional Wills
Some wills are written to become operative if death from a particular event occurs
Most cases presume that the language of the condition does not mean that the will is to be probated only if stated event happens but is instead a
statement (inducement) for making the will (ie they are thinking about death)
Eaton v. Brown (pg. 272)
Facts Lady wrote a holographic will stating that if she died on a journey, she wanted everything to go to her adopted son.
She died after returning from the journey.
HOLDING
o SCOTUS upholds will.
o The conditional language was evidence of why she was motivated to make the will, but wasnt intended to limit its
efectiveness.
At the time, the adopted son would not have taken under the intestacy statute, so this might have motivated the Courts decision.
Pre-Printed Will Forms
Holographic will statutes vary in how they treat pre-printed will forms w/ handwriting and whether or not it is a valid holographic will
First-generation statutes entirely written, signed, and dated in the handwriting of the testator
o Traditionally, a will had to be completely handwritten to be a valid holographic will
o Ten states still require a holographic will to be entirely in the handwriting of the testator and two of these require the
same for the date
Second-generation statutes material provisions
o Required only the signature and the material provisions to be in the testators handwriting
o A court could ignore the pre-printed text and uphold the will if looking at only the written portions made sense as a
holographic will
Third-generation material portions and extrinsic evidence
o The court may look to the pre-printed text to give context to the handwritten portions as a holographic will
Estate of Gonzalez (pg. 274)

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 Facts Guy filled out pre-printed form and showed it to 2 witnesses. Witnesses signed a blank form that the guy was going to fill in
later and make it neater.
Holding Court upheld it as a holographic will. The pre-printed text served as evidence of his testamentary intent.
o Formal wills can be amended by holographic codicils
Codicil
A testamentary instrument that amends a prior will
DOES NOT REPLACE IT
o In re Estate of Kuralt (pg. 280)
Facts Man had a formal will
later wrote a letter to his mistress saying he was going to arrange for her to get his property in Montana.
HOLDING
Valid holographic codicil.
NY did not recognize holographic wills, but because the property was located in MT, there was ancillary jurisdiction in MT.
Court looked to his intent and upheld the codicil.

Revocation of Wills
o Revocation by Writing or Physical Act
o A will is ambulatory it can be modified or revoked by the testator during his lifetime
o How to Revoke
All states permit wills to be revoked in one of two ways
1) Subsequent writing executed with testamentary formalities
2) A physical act, such as destroying, obliterating, or burning the will
o Oral declarations of revocation are insufficient in all states
o UPC
Revocation by physical act must be accompanied by intent to revoke
Allows someone other than testator to revoke by a physical act IF performed in the testators conscious presence and by the testators direction
At common law you would have to do it yourself (could not delegate)
o Revocation by Inconsistency
If a subsequent will does not expressly revoke previous one but makes a complete disposition of the property the previous will is revoke by
inconsistency
However, if a subsequent will does not expressly revoke the prior will and does not make a complete disposition of the former will, it is viewed as a
codicil
o Handwriting on a will can give rise to a presumption of revocation
Prof had to get affidavits swearing that the handwritten marks were made BEFORE the testator and the witnesses signed it to probate a will
o Revocation is only presumptive and subject to rebuttal
Revocation must be subject intent
So a tear on a will that was not made to revoke will should not revoke the will
But this is hard to prove
o Revocation by Presumption
If the will is known to be in the possession of the decedent, but cannot be found after her death, there is a presumption of revocation
This presumption can be overcome in certain circumstances (if a disinherited heir had access to the house, if the house burned down, etc.)
Harrison v. Bird (pg. 287)
Facts Decedent asked her attorney to destroy her will and he tore it into pieces in front of his secretary and brought the pieces to her house in an
envelope.
HOLDING
Will was revoked.
The attorney tearing it up was NOT revocation, but the fact that she was known to have the will and it could not be found gave rise to a presumption
of revocation.
Note: this probably would NOT have satisfied the conscious presence rule of the UPC unless the lady was on the phone with the lawyer as he was
tearing it up.
o Probate of Lost Wills
In states without a contrary statute, if the will is lost/destroyed without the consent of the testator or not in compliance with the revocation statute,
the will can be submitted to probate if the contents can be proven
(for example, if there is a copy of the will somewhere)
Thompson v. Royall (pg. 290)
Facts Decedent wanted to revoke her will and codicil but the lawyer suggested she keep them for her reference in case she wanted to make another
will.
Lawyer wrote on the back of will that it was null and void and she signed it.
HOLDING
Will was probated.
She had the intent to revoke the will, but did not do an act of revocation.
The writing of the attorney on the back did not touch any of the language of the will as required by the statute.
If holographic wills were permitted in this jurisdiction, she should have written the note herself and signed it and it would have been revoked by
holographic codicil.
If someone wants to revoke a will by writing cancelled there are two ways to accomplish it
Holographic codicil revocation
Act of revocation if the word cancelled is written across the text of the will
o Partial revocation by physical act
Many states allow partial revocation by physical act but many do not
Reasoning for NOT allowing partial revocation by physical act
Revoking a gift to someone = someone else taking a gift, and making a gift can only be done through a testamentary writing
Opportunity for fraud
o Dependent Relative Revocation and Revival (DRR)
o definition
if the testator purports to revoke his will upon a mistaken assumption of law or fact, the revocation is ineffective if the testator would not have
revoked his will had he known the truth

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 Reasoning = testator lacks true revocatory intent
Example = a testator destroys his will under the belief that a new will is valid, but in fact the new will is invalid
o DRR can be applied to only a portion of a prior will
If a second will revokes an earlier will, but some of the second wills provisions fail, the revocation of the earlier will is presumptively inefective to the
extent necessary to give efect to the dispositive provision in the earlier will that the failed dispositive provision in the later will replaced
Limitations on DRR
Most courts say that DRR can only apply where:
There is an alternative plan of disposition that fails OR
Estate of Ausley (pg. 299)
Facts Lady revoked her will and had her lawyer draft a new will. The new will was not executed because
she wanted minor changes to be made from the draft.
HOLDING
DRR was not applied.
Even though the attorney testified as to the new plan of disposition, the testimony was not
sufficient evidence of alternative plan
Campbell v. French (pg. 299)
Facts Person executed a codicil that read I revoke the legacy to Judy, because Judy is dead and Judy was
alive.
Holding DRR applied.
Where mistake is recited in the terms of the revoking instrument OR
Possibly Clear and convincing evidence
o Limited amount of extrinsic evidence allowed
LaCroix v. Senecal (pg.295)
Facts Lady executed a will and then executed a codicil where she revoked a provision of the will and made minor changes.
The codicil was invalid because one of the witnesses was an interested witness.
HOLDING
Original will was not revoked.
If the testator would have known that the codicil would not have been upheld, she never would have revoked her will.
Estate of Alburn (pg. 300)
Facts Lady executed one will, and then a second will (which revoked the first will) and then destroyed the second will.
HODLING
Second will was not revoked.
There was evidence that the lady destroyed the second will believing that it would revive the first will, but this wasnt allowed by
statute.
The court held she would rather have the second will than the die intestate.
o Revival
o Fact pattern
Person executes will #1 and later executes will #2. Person later revokes will #2.
Does this revive will #1?
o Three approaches
A few states/English common law
Will # 1 never revoked
Will #2 wouldnt revoke will #1 until the testators death, so the destruction of will #2 doesnt even technically revive will #1, as it could
not have been revoked until death.
Majority of states
Will #2 revokes will #1 upon execution, but upon revocation of will #2, will #1 is revived if the testator so intends.
Minority
Will #2 revokes will #1 and will #1 cannot be revived unless re-executed with testamentary formalities or republished by being referred
to in a later duly executed testamentary writing
o UPC 2-509
(a) If a second will wholly revokes a first will and the second will is revoked by a revocatory act, the first will is revived if it is evident from the
circumstances of the revocation or from the testators contemporary or subsequent declarations that the testator intended the first will to take efect
as executed
(b) If a second will partly revokes a first will and the second will is revoked by a revocatory act, the first will is revived unless it is evident that the
testator did NOT intend the revoked part to take efect as executed
(c) If a second will revokes a first will wholly OR in part and the second will is revoked by a third will, the first will is revived to the extent it appears
from the terms of the third will that the testator intended the previous will to take efect
o Revocation by Operation of Law: Change in Family Circumstances
Divorce
Most states have statutes that provide that a divorce revokes any provision in the decedents will for the divorced spouse
In the other states, revocation occurs only if divorce is accompanied by a property settlement
These normally apply only to wills and not to life insurance policies, pensions, or other nonprobate transfers
UPC applies to both probate and nonprobate transfers
Marriage
Pretermitted spouse is entitled to intestate share in most states chapter 7
Birth of Children
Pretermitted child is entitled to a share in the estate in most states chapter 7

COMPONENTS OF A WILL
o Integration of Wills
o Rule
all papers present at the time of execution intended to be part of the will are integrated into the will
o Problems can arise if pages arent properly fastened, there is no internal coherence in the will, fonts are diferent on one page, each page isnt initialed by the
testator
Estate of Rigsby (pg. 308)

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 Facts Two page holographic will and only one page was signed. The pages werent fastened, didnt refer to each other, and conflicted with each
other.
HOLDING
Only the first page was admitted as a holographic will.
The other page could have been a worksheet that was not intended to be a part of the will.
o Republication by Codicil
o Rule
a will is treated as re-executed/republished as of the date of the codicil, even if the codicil does not expressly republish the will, unless inconsistent
with testators intent
o Examples
Suppose a testator revokes a first will by executing a second will, and then executes a codicil to the first will the first will is republished and the
second will is revoked by implication (squeezed out)
If a will is witnessed by interested witnesses but the codicil is witnessed by disinterested witnesses, then the original interested witnesses will not be
purged of their gifts
o In order to be republished, you must already have a validly executed will (diferent from incorporation by reference, where a will can incorporate documents that
have not been validly executed)
A properly executed codicil CANNOT cure improperly executed will
o Incorporation by Reference
o UPC 2-510
A writing in existence when a will is executed may be incorporated by reference if
the language of the will manifests this intent
describes the writing sufficiently to permit its identification
and writing in existence at time will executed
o Example
A will says the testator wants to give a dime to every name in the Manhattan phone book
This manifests an intent to incorporate AND sufficiently describes the writing
o Personal property UPC 2-513
Testator can incorporate a list to dispose of tangible personal property if the list is signed and describes the items and devisees with reasonable
certainty
Diferences between 2-510 and 2-513
2-513 applies ONLY to tangible personal property
2-513 allows lists that are created after execution of the will and can be changed
2-513 has not been adopted very widely
Clark v. Greenhalge (pg. 310)
Facts Woman wrote a memorandum listing property and who should get it, then executed a will incorporating that memorandum.
Then, woman wrote a notebook with more property and more devisees and executed a codicil to the will
So codicil republished the will
P was listed as getting the painting in the notebook.
HOLDING
P gets the painting through BOTH incorporation by reference and republication by codicil.
The will incorporated the notebook by reference to memorandum because they served the same purpose.
The notebook was not in existence at the time the will was executed,
o But it was in existence at the time the codicil was executed and therefore republished the will.
o Acts of Independent Significance
o Rule
if the beneficiary or property designations are identified by acts or events that have a lifetime motive and significance apart from their efect on the
will, the gift will be upheld
o Example
Testator executes a will leaving her nephew her automobile
A few years later, she trades in her old crappy car and buys a Porsche
The nephew gets the Porsche, even though the act of buying a new car increased the value of the gift to the nephew
o The phrasing of the will leaves it within the power of the testator to alter the value of the gifts to the beneficiaries without changing the will
o Reasoning
its unlikely the testator is doing these things to alter the plan of disposition, but instead is doing them for other reasons
o Extrinsic evidence can be admitted to show the intent of the testator in phrases like the contents of my house and whether that would include a safe with stock
certificates inside of it

Contracts Relating to Wills

o Differences Between a Contract and a Will
o No consideration or exchange in a will
o Wills are unilateral
o Conflicts are resolved in the probate division instead of the civil division
Generally
o A party can enter into a contract to make a will or a contract not to revoke a will
o In case of breach, the plaintif must sue the estate under the law of contracts in the civil division
The will is probated and the plaintif must get damages for breach
o These are often seen in separation agreements where the wife gives things up in exchange for a promise that the children will take under the husbands will
Prof thinks this is pretty worthless and borderline malpractice
o Prof doesnt recommend ever entering into a contract to make a will
Keith v. Lulofs
o Facts Husband and wife had mutual wills that named children beneficiaries and promised each other to leave the residue to children.
o Husband dies, wife remarries.
o Wife executes new will leaving everything to (son) including life insurance.
o daughter of husband argues that by creating reciprocal wills, they became an irrevocable contract on death of either party. Court disagrees
o HOLDING: Court says no way.
A will does not become irrevocable simply because it is drafted to mirror anothers contract must be proved by clear and convincing evidence

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 V. CONSTRUCTION OF WILLS

A. Mistaken or Ambiguous Language in Wills

o Traditional Approach: No Extrinsic Evidence, No Reformation
o Two Traditional Rules
Plain meaning or no extrinsic evidence rule
Extrinsic evidence may be admitted to resolve some ambiguities, but the plain meaning of the words of the will may not be disturbed by
evidence that another meaning was intended
No reformation rule
Reformation is an equitable remedy, that if applied to a will, would correct a mistaken term in the will to reflect what the testator
intended the will to say
Instead, courts interpret the words the testator actually used and not the words he intended to use
Latent vs. patent ambiguity
Patent ambiguity appears on the face of the will
Example = in one clause, testator leaves residue of estate to A, while the next clause leaves her entire state to A and B
Extrinsic evidence is NOT admissible
Latent ambiguity manifests itself only when the terms of the will are applied to the testators property or designated beneficiaries
Two types
o If a will clearly describes a person or things and two or more persons or things fit that description
Example = devise to my niece Alicia, and the testator has two nieces named Alicia
o Where the description in the will does not exactly fit any person or thing
Example = devise to Mr. and Mrs. X, presently residing at Y and they dont live there
Extrinsic evidence IS admissible
Courts are blurring the lines between patent and latent ambiguities
o Allowing extrinsic evidence raises risk that well allow judges to re-write wills of dead people
Mahoney v. Grainger (pg. 336)
Facts Decedent wanted to devise her property to her cousins, but lawyer instead devises the property to her heirs at law and her only heir at law
was decedents aunt. Cousins challenged the will.
HOLDING
No extrinsic evidence admitted.
The language of the will was plain and it only has one possible meaning.
o Moving Toward Reformation: Correcting Mistakes Without the Power to Reform Wills
o Recent trend
admitting extrinsic evidence not merely to resolve latent, and more recently patent ambiguities, but also to correct mistaken terms to conform to
actual intent of the testator
Arnheiter v. Arnheiter (pg. 343)
Facts Decedent left her interest in the property at 304 Harrison Avenue to be sold and the proceeds to be given to her nieces via trusts, but the
lady actually had an interest in 317 Harrison Avenue instead.
HOLDING
Court does not insert the proper number, but instead simply deletes the improper number and the property is adequately described by
only the street name.
Estate of Gibbs ( pg. 344)
Facts Decedent messed up the middle initial and street address of his friend, and it accurately described a man the decedent didnt even know.
HOLDING
Court completely ignores the middle initial and street address and gives the property to the friend.
Lesson dont be too specific in your will because it can come back to bite you

o Openly Reforming Wills for Mistake

Erickson v. Erickson (pg. 345)
Facts Guy executes a will two days before his wedding and the will does not expressly acknowledge the wedding will take place. Under the state
statute, that revoked the will.
HOLDING
Extrinsic evidence can be admitted to show testators intent that he did not want the will to be revoked and it was merely scriveners
error not to include an acknowledgment of the wedding.
No discernable policy diference between mistake on the one hand, and undue influence, duress, fraud or lack of mental capacity on the other. If
lawyer had deliberately and fraudulently, rather than innocently but mistakenly misrendered T intent, relief would be available.
o UPC explicitly allows reformation of a will even if its unambiguous on its face if proven by clear and convincing evidence
In Re Estate of Herceg
Clause in will read all the rest, residue and remainder of the property which I may own at the time of my death, real and personal, and wheresoever
the same may be situate ended there. Executrix petitioned to construct will by reading same as previous will
Presumption that T intended to avoid intestacy particularly strong when subject of the gift is residuary estate
Because previous will and two wills prior to that one contained identical residuary clause, fact that it was omitted in error not fatal, will read that
into the new one

DEATH OF BENEFICIARY BEFORE DEATH OF TESTATOR

o Lapse
o Definition
If a devisee does not survive the testator, the devise lapses (it fails) unless the will specifies a contingent beneficiary
well-drafted wills should never allow a lapse!!!!
o Common law rules
If a specific or general devise lapses, the devise falls into the residue
If the residuary devise lapses, the heirs of the testator take by intestacy
No-residue-of-a-residue rule
o If a share of the residue lapses, that share goes to the heirs of the testator rather than to the surviving residuary
beneficiaries

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 o Vast majority of the states have rejected this rule
o Well-drafted wills provide the share of the residuary is to be divided among the other residuary takers
Class Gift - If a class member predeceases the testator, the surviving class members divide the gift
Void Devise - If a beneficiary is dead at the time the will is executed, or the devise is made to a pet or some ineligible taker, the devise is void (treated
as if it lapses)
Estate of Russell (pg. 359)
Facts Lady executed holographic will that left residue of estate to a guy and her dog.
HOLDING
Devise of half of the residue was void because the dog was an ineligible taker.
This half lapsed to decedents heirs at law Quinn and Hembree.
People try to leave things to pets all the time
Honorary trusts cannot be enforced by the dog, so the trustee acts on behalf of the dog on his honor

o Anti-Lapse Statutes
o Definition
Antilapse statutes DO NOT prevent a lapse,
they merely substitute other beneficiaries, usually descendants, for the beneficiary if other requirements are met
o Typical antilapse statute provides that if a devisee is of a specific relationship to the testator and is survived by descendants who survive the testator, the
descendants are substituted for the predeceased devisee
o Antilapse statutes also apply if the devisee was dead when the will was executed or if he does not survive the testator long enough to satisfy the will and is
therefore treated as predeceased
o Theory
For certain predeceased devisees, the testator would prefer a substitute gift to go to the descendants of the devisee rather than the gift lapsing
o Almost all states have some form of antilapse statute
o Limitation
Only applies if devisee bears a particular relationship to testator specified in the statute
Some would be limited to ONLY the descendants of the testator
Some are broader, and apply to the descendants of the testators parents or grandparents
UPC allows substitute gifts if the predeceased devisee is a grandparent or a lineal descendant of a grandparent of the testator
o Result = issue of the devisee share the gift (if they are all the same degree of kinship, they take equally)
o Statutes change the common law and provide default rules that the devise will go to someone else unless the testator intended otherwise
Contrary intent is sometimes hard to determine
Using words of survivorship such as if he survives me or my surviving children is sufficient to express a contrary intent in most
states, but this is NOT sufficient to preempt the antilapse statute under the UPC or the case below
In Georgia, mere words of survivorship are sufficient to prevent the anti-lapse statute from tolling
To be sure that contrary intent is express, a well-drafted will should say if she fails to survive me, then to X
Ruotolo v. Tietjen (pg. 367)
Facts Testator left half of the residue of her estate to the stepdaughter if she survives me and the stepdaughter predeceased the testator. The CT
antilapse statute applied to stepchildren.
HOLDING
Antilapse statute was applied.
These words of survivorship were not sufficient evidence that the will provided for the contingency of the devisee predeceasing the
testator.
This was just boilerplate language and did not really reflect any intent of the testator that the antilapse statute should not apply. Court
reasons that the antilapse statute is remedial and deserves a liberal construction.
This is the minority approach, and most states would have let the devise lapse

o Class Gifts
o Class gifts were treated diferently from individual gifts at common law
If a class member predeceased the testator, the surviving members of the class divided the total gift, including the deceased class members share
o Two basic factors to determine if theres a class gift
Group labels
Dynamic shares that will be diferent depending on the number of class members surviving the testator
o What is a class?
Determined by whether the testator was group-minded whether the testator uses a class label when designating beneficiaries
Examples to Xs children or to my nieces and nephews
If you have a natural class and you describe the class by a group label AND each member individually by name, it could still be a class gift if extrinsic
evidence showed the intent of the testator to treat the class as a group
UPC 13.1 and 13.2
If you describe a class only by a class label, a class gift is created
If you describe a class by using individual names without a class label, the disposition does NOT create a class gift
If you describe a class with BOTH a class label AND individual names or the number of class members, there is a presumption that it is
not a class gift, but this can be rebutted with extrinsic evidence of testators intent

Dawson v. Yucus (pg. 376)

Facts Testator devised her interest in property one-half to her nephew X and one-half to her nephew Y. Y predeceased the testator. X argued it
was a class gift and he should get the entire interest.
HOLDING
No class gift.
The will never used the generic class label as such (relatives, nephews etc), but instead only described each named individual as a
nephew.
Also, the devise did not depend on how many class members survived (it specifically said one-half to each).
The lawyer could have avoided this by specifically providing that if a nephew didnt survive her, then to that nephews issue
o Most states apply their antilapse statutes to class gifts to a single-generation class
Some states provide this by statute, but in other states, courts reason that the average testator would intend the deceased class members share to go
to his descendants rather than to the surviving members of the class
Basically, class gifts dont really exist anymore

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 CHANGES IN PROPERTY AFTER EXECUTION OF WILL
o Ademption by Extinction
o Ademption only applies to specific devises!!
o Types of devises
Specific devise
The disposition of a specific item of the testators property
Examples grandmothers engagement ring, Blackacre
General devise
Where the testator intends to confer a general benefit and not a particular asset
Examples legacy of $100k to A
o If the money isnt there, other property must be sold to satisfy As general legacy
Demonstrative devise
A hybrid between a specific and general devise
o General devise payable from a specific source
Example the sum of $100k to be paid from the proceeds of sale of my Apple stock
o If theres enough Apple stock, it must be sold to pay out the $100k
o If the testator doesnt own sufficient stock, other property must be sold to raise $100k
Residuary devise
Conveys the portion of the testators estate not otherwise efectively devised in the will
Example devise to A all the rest, residue, and remainder of my property and estate
You have to be careful when giving a lot of specific and general devises because this leaves less for the residuary beneficiary, who is often
the most important
o Only specific devises of real and personal property are subject to doctrine of ademption by extinction
Beneficiary doesnt get anything if the property is disposed of before testators death
Basically its treated as if testator revoked the gift
In re Estate of Anton (pg. 381)
Facts Decedent executed a will and made specific devise of half her duplex to her stepdaughter.
Decedent then gave birth-daughter power of attorney and she sold the duplex to pay for nursing home expenses.
HOLDING
No ademption, and stepdaughter gets half of the remaining proceeds from the sale of the duplex.
Decedent didnt the request intent to sell the property so it is not deemed to adeem.
Identity theory vs. intent theory
Identity theory traditional rule (STRICT IDENTITY THEORY IN WA)
If the property wasnt there, the beneficiary didnt get anything
Courts and legislatures have crafted several exceptions to this if the property isnt in the estate by accident or by action of someone
other than the testator
o Condemnation award or insurance proceeds can be paid to the devisee
Example if T died in a plane crash and left the plane to his son, son will be entitled to the insurance
proceeds from the destruction of the plane
o Characterizing the devise as general or demonstrative
Example if T devises 100 shares of X stock, court might say that is a general devise and look to the value of
100 shares at Ts death
Intent theory more modern UPC approach
Codifies the exceptions to the identity theory and some additional exceptions
If the property isnt there, you are entitled to cash if you can show the testator didnt intend ademption
Some criticize this as spawning litigation, but the burden now rests on the party opposing ademption

o Stock Splits
o If testator makes a will devising 100 shares of stock to A, and then the corporation splits its stock and 100 shares becomes 300 shares
Old rule = look at the specific devise of 100 shares
This was mechanical
New rule = look at the economic total
A stock split is a change in form and not substance
Most states now use this approach
Devisee will get all 300 shares unless the testator intended otherwise

o Satisfaction
o When the testator makes a transfer to a devisee after executing the will
o This generally applies to general devises and not specific or residuary devises
Cross reference to advancements in intestate succession
So if a painting is given away after will is executed painting is treated as adeemed by extinction
o Common law
Gift is part of the will (gift is given in satisfaction of devise in the will)
o UPC
Parallel to the rule for advancements
Presumption that there is no satisfaction and intent of satisfaction would have to be shown in a writing
o Example
Testators will gives his son $50k and the residue of her estate to her daughter
After execution of the will, testator gives her son $30k
At common law, son only gets $20k at death
Under the UPC, the son would still get all $50k

o Exoneration of Liens
o Common law doctrine/some states exonerate liens
When a will makes a specific disposition of real or personal property that is subject to a mortgage to secure a note on which the testator is personally
liable, it is presumed, absent contrary language in the will, that the testator wanted the debt, like other debts, to be paid out of the residuary estate

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 Basically, the beneficiary gets the property free of the mortgage
o Modern rule/UPC/majority of states
Mortgage follows the property
o Example
Ts will devises Blackacre to her daughter, A
At Ts death, Blackacre is subject to a mortgage that secures a note on which T was personally liable
Common law/minority of states A takes Blackacre free of the mortgage
Majority/UPC A takes Blackacre subject to the mortgage

o Abatement
o When the estate has insufficient assets to pay debts as well as devises
Some devises must be abated or reduced
Analogous to bankruptcy
o Common law
There was a typical order of abatement
Residuary devises reduced first
General devises reduced second
Specific and demonstrative devises are last to abate and reduced pro rata

VI. WILL SUBSTITUTES:

NONPROBATE TRANSFERS AND PLANNING FOR INCAPACITY

A. An Introduction to Will Substitutes

o Types
Life insurance
Non-probate if it names a beneficiary (beneficiary can be an individual or a trust)
If the policy names the estate or doesnt name anybody, then it is a probate transfer
This is inflexible
Pension Accounts
Required to pay a certain benefit to the surviving spouse
Also inflexible if a child predeceases, there is no way to make the childs portion go the grandchildren
Undesirable to make the estate the beneficiary due to tax consequences
Bank, Brokerage, and Mutual Fund Accounts, Joint Property
If you arrange joint property, you are creating a present interest in the donee
These dont accommodate fine tuning property automatically vests in whoever is named on the property/account
Payable on death accounts depositor maintains explicit lifetime dominion but designates beneficiaries to take upon death
TOD Transfer on Deathtypically with stocks
Revocable Inter Vivos Trusts
Imperfect Will Substitutes
Common law joint tenancy
o Georgia doesnt have tenancy by the entirety.
These are asset-specificdont have to be probated, dont have ability to confer specific personal property (like rings, jewels, etc).

Wills Substitutes and the Wills Act

o Revocable Inter Vivos Trusts
o Requirements
Property
Beneficiaries
Intent
Dont have to have a named trustee
o Three roles
Grantor/settlor/donor
Creates trust and puts it into the control of a trustee
Trustee
Manages the trust with fiduciary duty to one or more beneficiaries
There are duties during grantors life AND upon grantors death
o UTC 603
While a trust is revocable (during the settlors life), the rights of the beneficiaries are subject to the control of,
and the duties of the trustee are owed exclusively to the settlor
Beneficiaries
Hold equitable title and entitlement to the benefits of the trust
o Contrast with testamentary trust
Testamentary trust is created by will and is always irrevocable
o Comparison between trusts and wills
Trust is generally not governed by the law of wills
Trust is not unilateral (trustee must agree to serve as trustee)
Trust can be changed without formalities
o Why would you use a trust?
Avoid an attack on the will
Flexibility can be changed without formalities

Will Substitutes and the Subsidiary Law of Wills

o Introduction
o Restatement 7.2

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 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

o Revocable Trusts IN WA, PRESUMPTION TRUST IS IRREVOCABLE UNLESS PROVIDED OTHERWISE

o The most will-like of all will substitutes

o Courts have applied to revocable trusts subsidiary rules from the law of wills, such as abatement and ademption
Discerning appropriateness of applying other subsidiary rules has been more challenging
The applicability of lapse rules and antilapse statutes has been the most controversial
o Default rules and presumptions that run afoul of express provisions of the trust instrument generally do not get adopted
State Street Bank and Trust Co. v. Reiser (pg. 416)
Facts Decedent set up a revocable trust and placed his stock in multiple corporations into the trust.
Decedent got a loan from the bank and instead of collateral, he told the bank he had controlling interests in the corporations, forgetting that they
were actually subject to the trust.
Decedent died without paying back the loan and the bank wanted to get at the stock to satisfy the debt.
HOLDING
Bank can get at stock.
Trusts cannot be used as mechanism to cheat creditors.
This is the prevailing view.
However, creditors generally dont have access to joint property, life insurance proceeds, and retirement benefits.

o Life Insurance
o Term Insurance -
o Whole Life Insurance -
o Life insurance is a time-honored method of avoiding probate and getting assets into the hands of family members quickly
Cook v. Equitable Life Assurance Society pg. (420)
Decedent designated his first wife as beneficiary on his life insurance policy.
Then divorced and remarried, but never changed designation.
However, he wrote a holographic will that purported to change the designation.
HOLDING
First wife is the beneficiary.
Decedent had plenty of time to properly change the beneficiary according to the terms of the contract.
The insurance company needs certainty as to who to pay so that benefits can be distributed quickly.
This is by far the majority rule.
o UPC takes the opposite approach it says that nonprobate transfers should be modifiable by the terms of the will.

o Pension and Retirement Accounts

o Pension plans are a very important asset for most people today
Egelhoff v. Egelhoff (pg. 426)
Facts Decedent designated his wife as beneficiary under two ERISA accounts and then divorced her.
Decedent died without changing the beneficiary.
Children argued that WAs state law automatically revoked the designation upon divorce.
HOLDING
SCOTUS strikes down WA state law because ERISA preempts it
States cannot make laws that would require administrators to know 50 diferent state laws before paying out benefits.

POUR-OVER WILLS AND REVOCABLE TRUSTS IN MODERN ESTATE PLANNING

o Introduction
o Revocable inter vivos trusts have replaced wills as the central instrument governing property transfer at death today
Inter vivos trust is always revocable
Testamentary is not b/c testamentary trust only goes into efect at death
o Reasons for this
Avoids probate
Allows settlor to consolidate all her property (probate and nonprobate) into one dispositive instrument
o Basic Components of the trust
Provisions that apply during settlors life
Provisions that apply after settlors death
This part is the will substitute
Signature by at least two parties involved (settlor and trustee)
Dont need attestation by witnesses more like a contract

o Pros and Cons of Revocable Inter Vivos Trusts

o Pros
Property management by fiduciary
Relieves burden of financial management from settlor
Also poses inconveniences though (banks might want to see trust instrument)
Keeping title clear
Avoid probate no delays
Plan for incompetency someone is in place to take over if you become incompetent
Avoid ancillary jurisdiction for real property
Choice of law must be a nexus between the state and the property/settlor/trust
Convenience
Privacy trusts are not public documents
Avoiding will contests
o Cons
Uncertainty not large body of law on whether subsidiary law of wills will be applied
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 Creditors cannot benefit from short statute of limitations in probate
o Tax consequences are neither a pro nor a con, because a well drafted will and a well drafted trust can both achieve the same tax objectives

o Pour-Over Wills
o definition
a will that contains an express clause giving some or all of the decedents probate property to the trustee of the decedents inter vivos trust to hold
and distribute pursuant to the terms of the trust
o There used to be a problem under incorporation by reference
The settlor would reference the trust in the will, but would then make changes to the trust afterward the will would not incorporate the changes
that werent yet in existence at the wills execution
Now, every state has provided an exception for revocable trusts so they can be amended after the will is executed and the will incorporates the
changes
Clymer v. Mayo pg. 445
Facts Lady created a revocable inter vivos trust and a pour-over will naming her husband as beneficiary under the trust and naming the trustee of
the trust as beneficiary under her will.
Lady then divorced her husband and died without changing her will.
HOLDING
Husbands interest was revoked by statute.
The statute only applies to wills, but the trust was incorporated by reference into the will.

VII. RESTRICTIONS ON THE POWER OF DISPOSITION:

PROTECTION OF THE SPOUSE AND CHILDREN

A. Right of the Surviving Spouse

o Introduction to Marital Property Systems
o Separate Property
Property acquired by each spouse (including income) is owned individually
Spouse has no rights to this property (before divorce or death)
At death spouse can elect to take share of the others property despite terms of the will
GA is seperate
o Community Property
Property acquired during marriage is community property so each spouse have equal rights to it
Death of one spouse dissolves community
Dead spouse owns one half and has testamentary power over it
living spouse owns other half
Income tax advantage
o Rights of Surviving Spouse to Support
o Although the diferent theories difer on spouses right to share in deceaseds property (community v separate) each jurisdiction agrees that spouses and even
sometimes children have a RIGHT OF SUPPORT from the deceased spouse
o Social Security
Spouse can elect the other spouses benefits after the other spouse dies
A divorced former spouse of the worker has a right to the benefits if the marriage lasted for 10 years or longer
o Employee Pension Plans
ERISA requires that the spouse of an employee have survivorship rights if the employee predeceases the spouse
o Homestead
Surviving spouse often has a right to occupy the family home or be granted sum money from state (UPC recommends $22,500)
o Personal Property Set-Aside
Related to homestead
Right of surviving spouse to receive tangible personal property up to a certain value (regardless of deceased spouse attempts to devise them)
Usually applied to furniture and clothing
o Family Allowance
Probate court can award whatever the jurisdictions set amount is to maintain and support the spouse and children even before the creditors get paid
o Dower and Curtesy
Dower entitles surviving wife to a life estate in 1/3 of her husbands land
Curtesy entitled surviving husband to a life estate in all of the land, but only if children were born of the marriage
Almost ALL jurisdictions have abolished this in favor of elective share
o Elective Share
o Elective Share (aka Forced Share) and Its Rationale
Prevents spouse from being disinherited
In separate property states, statutes allow for the spouse to elect a share of the deceased estate (usually happens if not happy with will)
Usually the share is 1/3 of the estate
o it is more nuanced in lots of states
Once the amount of the elective share has been determined, the surviving spouse is charged with the value of all other interests given her by the will
If those do not meet the elective share requirement, the diference must be made up either by pro rata contributions from all other
beneficiaries (majority/UPC) or from the residuary
Elective share has traditionally been easy to avoid because it only applied to the probate estate
Most states say that if spouse dies but before she can elect spouse share wife dies her estates does NOT have right to elect share and husbands estate
passes to devises
Not considered:
Length of marriage
Surviving spouses wealth
Inconsistencies with divorce law
Whether prop was acquired during marriage
Whether prop was acquired through inheritance
o Marital deduction and the dependency of women (pg 428)

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 Taxes lower in community property states b/c only Hs half of community property taxed at death, where all taxed in separate property/common law
states.
H gets an estate tax marital deduction for 50% of estate for property left in efect outright to W. No limit to amount.
Inter-spousal transfers not taxed as long as at least life estate in property.
QTIP trust (Qualified terminable interest trust): required by marital deduction giving spouse support for life. The QTIP trust is fundamentally at
odds with the partnership theory of marriage.
o Must the surviving spouse accept a life estate?
When spouse does not take under the will, the elective share is charged what she is actually left under the will + pro rata contributions by other
beneficiaries or residuary estate.
UPC: a life estate renounced by spouse is not charged against her elective share.
o In states that allow same-sex marriage, it would be considered the same as a heterosexual marriage
o Avoiding Elective Share
Prenuptial agreement
Give property away
o Community Property hinges on what was earned during the marriage
What if there is co-mingling of community property and non-community property? Two theories:
Pro Rata percentage is community prop
Inception test when was the inception of title on the prop

o Property Subject to the Elective Share

o Elective share statutes originally applied only to the decedents probate estate
o Not many states have resolved the question whether the elective share can be avoided through a revocable trust
Majority of states that have addressed this question have said that trusts CANNOT defeat the elective share
Illusory transfer test
The trust is valid, but the assets are nevertheless included in the probate estate for purposes of calculating the elective share and some of the assets
might have to go to the surviving spouse to satisfy the elective share
Intent to defraud test
If the transfers 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
Present donative intent test
Whether the settlor intended to make a present gift into the trust
Multifactor balancing test
This means that future results will be highly fact-dependent
Augmented Estate/ Statutory schemes
Statutes can attempt to list which assets will and will not be considered in calculating the elective share augmented estate
1969 UPC
Includes 5 categories of property in the augmented estate
o Retained life estate
o Revocable trust
o Joint tenancy with someone other than surviving spouse
o Death bed transfers in excess of gift tax exclusion
o Property given to surviving spouse
UPC has been pretty much ignored and is impossible to implement
1990 UPC
Redesigned the elective share and augmented estate to be closer to a community property system
The longer the marriage lasted, the higher percentage the surviving spouse got of all the marital property

o Must the surviving spouse accept a life estate?

o In most states, if the surviving spouse renounces the life estate and forces the elective share, she is not charged with the value of the life estate

o Waiver
o The right to elect against the will can be waived
o Main requirements
Full disclosure
Full comprehension of what is being waived
o UPC requirements (not adopted by all states)
Voluntary
Not unconscionable when it was drafted
Before execution, challenging party was provided fair and equitable disclosure; waived their right to disclosure; or had adequate knowledge of the
property of the decedent
Prenups
Prenups have to main purposes
What happens in case of divorce
What happens in case of death
Reece v. Elliott pg. 503
Facts Husband and wife signed prenup, and later wife challenged it because the values of the husbands property were not listed on the appendix.
HOLDING
Prenup upheld.
Wife had independent counsel and an adequate opportunity to investigate the value of the property listed.
o Some states require independent counsel or an informed waiver of the right to independent counsel
o Prof recommends executing prenup way before marriage
Removes element of coercion

o Spouse Omitted from Pre-Marital Will

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 o Spouses omitted from a will executed before the marriage are generally treated more generously, because we cannot presume that the decedent intended to omit
the spouse
Generally they get an intestate share instead of being limited to elective share
In re Estate of Prestie pg. 516
Facts Husband and wife divorced amicably.
Husband made will and trust and gave wife life estate in his condo.
They actually remarried shortly before his death.
HOLDING
Wife gets intestate share.
Will was revoked as to her by subsequent marriage.
o Lambeff v. Farmers Co-operative Executors & Trustees Ltd.
Australian system = family based system
American = better
1. If there is some sort of dispute/contention/etc between parent and child, parent's intent is carried out
2. Adult children can provide for themselves, looks out for elderly spouses who may not be able to provide for themselves
Family Maintenence = better
1. Providing for one's blood is the right thing to do
2. More equitable

Rights of Decedents Omitted from the Will

o Protection from Intentional Omission
o In every state except Louisiana, a child or other descendant has no statutory protection against intentional disinheritance by a parent
Many other countries protect intentionally omitted children
o Exceptions:
Legally obligated support: child support, court ordered support, etc
In GA, a minor child is entitled to a years support
Elective share may apply to minor children
o Adult Children no obligation to leave anything to your adult children

o Protection from Unintentional Omission

o Pretermitted child statutes protect a child unintentionally left out of the will by either giving him his intestate share or shares equal to other children that were
provided for
some only protect children born or adopted after execution of will
other protect children alive at time of wills execution
Gray v. Gray pg. 528
Facts Guy had two kids from a previous marriage and left everything to his second wife in his will. Second wife later gave birth to a son.
HOLDING
Pretermitted child statute did not apply because of a convoluted exception under these circumstances.

Rights to Decedents Property:

D Dies Intestate D Does Not Include in Will Born/Married After Execution of Ds Will

Ds Spouse Intestate Share of probate estate -Separate Prop forced share of probate
estate; augmented estate
-WA/Community Prop spouse keeps own
half of community prop
Ds Child Adult Intestate Share of probate estate Child gets nothing, except in Louisiana
Ds Child Minor Intestate Share of probate estate Child gets nothing unless they get an elective
share if included in statute
-Pretermitted Spouse gets intestate share
or 1 year of support or forced share
(whichever is bigger)
Pretermitted child get intestate share
Pretermitted child get intestate share

VIII. TRUSTS: INTRODUCTION AND CREATION

o Trustees have Fiduciary Obligations and can be held Personally Liable

o Trustee holds bare legal title to trust property
equitable title lies with beneficiaries
Fiduciary duties
duty of loyalty, duty of prudence, must account to beneficiaries
o Duties of executors/personal representatives are the same as the duties of trustees

o Institutional vs. Corporate Trustees

o Institutional trustees
More sophisticated, better at investing, but charge fees and dont know the settlor/beneficiaries as well, so arent as attentive to individuals wishes

o Legal Life Estates vs. Trusts

o Legal life estates can cause problems
Life tenant cannot cut the timber and sell it
Life tenant cannot plant sequential crops of wheat (the soil will be less fertile)
If the roof caves in life tenant has to pay for it
Hard to incentivize waste. LT doesnt care if the prop goes to shit, bc after he dies there is no more interest in the land
o Trusts can spell out rules on these issues in great detail so things operate more efficiently

Creation of a Trust
o Intent to Create a Trust
o Introduction

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 Settlor doesnt have to use the word trust or name or refer to a trustee
Example = transfer of property to an individual to hold for the use and benefit of another person manifests an intention to create a
trust
Trusts can be formed by oral representation
When there is a clear intent to form a trust, courts will look to function over form
Jimenez v. Lee pg. 558
Two gifts made to daughter (one from grandmother, one from fathers client) for purpose of her education - $1,500 total.
Father (lawyer) cashed in the gifts and bought closely held stock as custodian for daughter, without keeping an accounting.
HOLDING
Court held oral trust was formed.
o Word trust was not used but it is enough if the transfer of property is made with the intent to vest the beneficial
ownership in a third party
Father violated duties by taking stock as custodian (fewer duties than a trustee), being imprudent by not diversifying, and not keeping a
proper accounting.
Many trust instruments will waive the requirement for a formal accounting, but this was not the case here.

o Precatory Language
o Definition
unclear language that expresses aspirations or recommendations
o Often times, this language is used intentionally to express a desire to give trustees more latitude and flexibility in administering the trust
However, it MIGHT make an unenforceable moral obligation instead of a trust
This is particularly a problem in testamentary trusts
o Example of precatory language that does NOT give rise to a trust
I wish, but do not legally require, that C permit D to live on the land
o Intent of settlor must be found by construing the language of the instrument in light of all the circumstances
This leads to uncertainty and a lot of litigation
o Distinguish trusts from equitable charges
If a settlor gives property subject to the payment of a sum of money to a third person, the testator has created an equitable charge and NOT a trust
(creates a security interest, NOT a fiduciary relationship)

o Gift in trust vs. outright gift

o Outright gift requires delivery
can be actual, constructive, or symbolic delivery
and acceptance
o If donor fails to make delivery, can a gift be characterized as a declaration of trust?
Yes, declaration of trust does not require delivery (settlor is also trustee)
Hebrew University Association v. Nye pg. 563
Facts Lady announced she was giving library to University, issued press release, and told third parties it belonged to the school. Lady died before
she completed cataloging the library and her will left the residue to a charity.
First Holding No trust created, because the lady lacked any intention to create a trust (donative intent is diferent from intention to create a trust).
Remanded.
Second Holding Inter vivos gift with constructive delivery. Delivery was completed constructively and so the gift was completed during life.
Oral declaration Must intend to create trust and take on trust duties
o Necessity of Trust Property
o Introduction
Property can be anything (contingent remainders, leasehold interests, choses in action, royalties, insurance policies, even a single penny)
Unthank v. Rippstein pg. 569
Facts Guy wrote a letter to a lady promising to give her $200/month for 5 years.
Guy died, and lady first tried to probate this as a holographic codicil (rejected)
She then argued it was a trust.
HOLDING
No trust because there was no property in the trust.
Lady argued his estate was the property, but because he was still alive when he wrote the letter, he didnt have an estate.
This was merely a promise to make a gift.
o Necessity of Trust Beneficiaries
o Trusts must have one or more ascertainable beneficiaries
There must be someone the trustee owes duties to and can call on the trustee to account
o This is tied up with the intent requirement
The intent to create a trust should involve the intent to benefit specific people
o Beneficiaries have to be ascertainable
They may be unborn or unascertained when the trust is created
Example = trust created by O (who is childless) for benefit of future children = valid
Clark v. Campbell pg. 579
Facts Guy writes will directing trustees to give away personal property to his friends as trustees select
HOLDING
No valid trust.
Although there was intent and property, there were no ascertainable beneficiaries because friends is not an ascertainable standard.
In re Seawrights Estate pg. 582
Facts Guy gave his dog to lady and directed executor to place $1000 in a bank and distribute 75 cents/day to the lady to care for the dog.
Two issues Was this a valid trust? Did it violate the Rule Against Perpetuities?
HOLDING
Valid trust because even though nobody could enforce it, the trustee agreed to honor her obligations (can be called honorary trust or
not). No violation of the RAP, because the trust property would be exhausted according to the distributions well within the allowed
timed period.
If this was honorary trust that couldnt be enforced, how did this case even come about?
Somebody failed to file an accounting over the estate and a tax collector raised a question about the value of the dog

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 Trusts for Pets
If youre unsure that your jurisdiction will uphold honorary trusts, the safest thing to do is give your pet to someone you trust and leave them X
amount of dollars
Trusts for specific pet generally dont qualify as charitable trusts because charitable trusts may not have private inurement (benefit) (assets cannot
be distributed to particular individuals)
One option = create your own charitable organization to take care of animals and then give your animals to that organization

o Necessity of a Written Instrument

Oral trusts for disposition at death
In re Estate of Fournier pg. 589
Facts Guy gave $400k cash to his neighbors to hold until he died and then give to sister #1, who was also executor of his estate.
Guy died, and sister #1 sought declaratory judgment that guy had created oral trust on her behalf.
HOLDING
o Guy created an oral trust.
o All the elements were present (intent, beneficiary, property, capacity).
Prof thinks that this is a pretty cowardly way to favor a sibling
o Other options
Make gifts during life
Make a written trust during life
Favor the sibling in the will
Secret and semi-secret trusts
Testamentary trusts are supposed to be created by will
Sometimes the wills are not clear on the trust or even if one exists
Distinction between the two
Semi-secret invalid, no extrinsic evidence permitted to demonstrate purpose/beneficiary (trust is invalid because it shows intent
NOT to benefit trustee personally)
o So property passes to heirs
Secret valid, extrinsic evidence permitted to show purpose/beneficiary so that trustee is not unjustly enriched by pocketing the
legacy
o Trust is upheld, but constructive trust is imposed for benefit of intended beneficiaries
Olliffe v. Wells pg. 593
Facts Lady devises her estate to Reverend Wells and says that he should distribute property as he sees fit
So Wells has no beneficiary interest in property
He gives property to his church
Heirs challenge the will.
HOLDING
o Trust is invalid.
o Semi-secret trusts are not valid and extrinsic evidence is not permitted to show the purpose of the trust.
o If the trust would have been totally secret (no allusion to a trust at all), extrinsic evidence would have been allowed and the
trust may have been upheld (this distinction makes no sense).
Prof thinks maybe the real reason this case came out this way was that Wells died shortly after lady did and the mission had burnt
down.
Distinction between secret and semi-secret trust is still recognized in most states, but rejected in others
Restatement = constructive trust should be imposed for BOTH secret and semi-secret trusts

IX. RIGHTS TO DISTRIBUTIONS FROM THE TRUST FUND

A. Rights of the Beneficiary to Distribution

o Introduction
Mandatory trusts vs. discretionary trusts
This label can be somewhat misleading because most trust instruments contain some mandatory provisions and some discretionary provisions
Very common for trustee to have mandatory duty to distribute income while also having discretion to distribute principal
Mandatory
trustee is required to pay all the income to the beneficiaries at some interval
Discretionary
trustee has discretion over distributions of income and principal

Marsman v. Nasca pg. 598

o Sara died
o Her will leaves testamentary trust with Farr (lawyer/drafter) as trustee and Cappy as beneficiary.
o Trustee had mandatory duty to pay Cappy income at least quarterly and also had discretion to distribute principal for Cappys comfortable support and
maintenance (trustee had duty to check up on Cappy and make sure he was comfortable).
o There was an exculpatory clause provided that trustee could not be held personally liable except for willful neglect or default.
o Farr (1) helped Cappy take out a mortgage on his house; (2) required Cappy to make written requests for extra money from trust; (3) executed deal where Cappy
deeded house to Sally (step-daughter) and retained a life estate.
o Cappys second wife brought suit alleging Farr breached his duties.
o HOLDING
Breach of fiduciary duty by Farr.
Cant order Sallys husband to give the house back, so remedy = constructive trust over amount that Cappy should have been paid from the trust to
maintain comfortable support and maintenance.
Court upheld exculpatory clause and held Farr couldnt be held personally liable (put burden on Cappys wife to show bad faith or undue influence by
Farr in drafting the clause).
Exculpatory clauses

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 Prof and UTC/Restatement take the position that the burden should have been on Farr (drafter/trustee) to show the exculpatory clause was fair
and the settlor gave informed consent to the clause
o Also, there was a conflict of interest here, because Farr represented BOTH Cappy and Sally and always made decisions in Sallys favor

o Mandatory Arbitration Clauses

o There is a preference for arbitration as a form of ADR, but should mandatory arbitration clauses be permitted in trust instruments?
One could argue that it deprives beneficiaries of their full rights to enforce the trust
o Law on this issue is thin, but mandatory arbitration clauses have been frowned on in some jurisdictions

Rights of the Beneficiarys Creditors

o Introduction
o In the US, we are particularly protective of the settlors right to control his property, including the right to protect it from the creditors of the beneficiary
This might seem ofensive, but keep in mind you cannot protect your own assets from your own creditors
Three ways to protect trust property from creditors
Increase the level of discretion of the trustee
Spendthrift clauses (preclude beneficiary from alienating his interest in the trust)
Powers of appointment (limit permissible appointees)
o Pure discretionary trusts vs. support trusts (traditional distinction)
Pure discretionary trust
Trustee has broad discretion about making distributions of income and/or principal
Downside = beneficiary cant bring action against trustee (trustee has broad discretion)
Trustee must be ABUSING his discretion and this is a very high standard to meet
Creditors get their rights from debtors, so if the debtor cant get the money, neither can the creditor
However, the creditor might be able to obtain a court order entitling him to distributions before the beneficiary may receive any
Creditor might be able to seize property thats still in the hands of the trustee if the trustee has exercised discretion by marking in his
books that he will distribute to beneficiary
Support trust
Trustee has OBLIGATION to make distribution for support of beneficiary and DISCRETION to make any additional distributions
Beneficiary can make a demand of the trustee
Traditionally, beneficiary could not alienate her interest at all
i.e. Cant assign interest to the Porsche dealer in exchange for a car
However, some creditors (providers of necessaries, child support, alimony) might be able to enforce claims against a support trust
Hybrid trust
Its discretionary support trust (not really a distinct category)
Courts have tended to treat these as pure discretionary trusts
o UTC and Restatement get rid of any distinction between pure discretionary and support trusts
All trusts where trustee has any amount of discretion are treated the same
UTC 504
If the trustee has violated a standard for distribution or abused discretion over distribution, child support and alimony creditors can
force a distribution by the trustee, but only to the amount that the trustee would distribute under the standards of the trust
This is also the law in a lot of states

o Protective Trusts
o If settlor wants the beneficiary to have a mandatory right to distribution, but also wants the asset-protection features of a discretionary trust, might try a
protective trust
o The trustee normally has mandatory duty to distribute to beneficiary, but if judgment creditors of the beneficiary attach to the interest, then the distribution
becomes discretionary
o Prof thinks this is too good to be true, and might not survive when it is more fully litigated

o Spendthrift Trusts PRESUMPTION OF SPENDTRHIFT IN WA

o Beneficiary of a spendthrift trust cannot voluntarily alienate/transfer her interest, nor can her creditors reach her interest in the trust
Beneficiary cannot assign interest in future payments, can only spend the money as it is distributed incrementally
These protect the money only as long as its IN the trust
Once any money hits the pocket of the beneficiary, then the beneficiary can spend it and creditors can attach it [if they can find it]
o Purpose = protect beneficiaries from their own vices and bad decisions
o Spendthrift clauses are enforceable in most jurisdictions
o Trustee has no obligation to give $$ to creditors, etc.
o Exceptions where creditors CAN get to trust property in spendthrift trusts
Tort Creditors
Scheffel v. Krueger pg. 616
o Mother of abused child brought lawsuit against the guy that abused the child and got civil damages.
o D had an interest in an irrevocable spendthrift trust that gave right to distributions of income quarterly, but he could not
invade the principal until he turned 50.
o Mother wanted to claim against the trust principal.
o HOLDING
Court upholds spendthrift provision and holds P cannot claim against the trust.
Court denies making tort creditor exception to spendthrift provision.
P must collect on the judgment incrementally as the income is paid out.
This is probably the majority view NO exception for tort creditors
Child Support and Alimony Creditors
Shelley v. Shelley pg. 618
o 2 ex-wives (each with 2 children) try to satisfy child support claims against trust set up for father that gave him the right
to income, but limited his right to distribution of the principal to himself or his children in case of emergency.
o Wife 2 also tried to satisfy claim for alimony.
o HOLDING

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 Child support can be paid out of the principal of the trust, because the trust itself names guys children as
beneficiaries in times of emergency (father abandoning = emergency).
Wife 2 cannot satisfy claim for alimony out of the principal.
o Although support of children is probably the most important public policy argument to establish an exception to a
spendthrift clause, it was not necessary in this case.
Restatement and UTC make clear that public policy carves out exceptions to spendthrift provisions for:
o Spouse/children with a court order for support or maintenance
o Judgment creditor who has provided services for protection for the beneficiarys interest in the trust
o Claim of the United States (tax collectors)
People that provide necessaries to beneficiaries
This is uncertain
o Language of the spendthrift clause might try to limit exceptions
The spendthrift provisions in some trusts specifically says that the trust property is protected from ex-spouses
This might afect the courts analysis
However, under UTC 503, this provision would be invalid no matter what

o Self-Settled Asset Protection Trusts

o Under traditional law, the settlor cannot shield assets from creditors by placing his own assets in a trust for the settlors own benefit
o Some devices have been developed that attempt to overcome this basic rule
Lots of people have gone to foreign jurisdictions that have amended trust laws to allow people to self-settle assets in trusts designed to protect assets
from creditors
However, this might not be efective in the US
Lawyers are hesitant to advise clients on these, because the lawyer could be convicted of fraud and lose her law license
FTC v. Affordable Media pg. 628
Facts Couple was involved in Ponzi scheme, and put their assets in a trust in the Cook Islands (couple were co-trustees and trust protectors). FTC
brought claim to get money for defrauded investors, and couple claimed it was impossible to get the assets because a duress provision had kicked in
and the trustee would not give them the assets. Court held them in contempt.
Duress Provision When settlor informs trustee he is being sued and needs money, the settlor is removed as a beneficiary and bank
refuses to repatriate the funds.
HOLDING
Impossibility IS a defense to contempt, but here, it was brought about intentionally by the couple.
Also, it wasnt impossible because the couple could have prevented duress provision from taking efect as trust protectors under the
trust

o Trusts for the State-Supported

o A settlor cannot execute a self-settled trust to shield his own assets from Medicaid eligibility or other govt support programs
o However, a third party without support obligations can create a discretionary trust that will not be considered in determining the beneficiarys eligibility for
Medicaid
Rules on this are very tricky
This is a specialty within estate planning very dangerous if youre not familiar with the rules in your jurisdiction
o Federal law on Medicaid has tightened gradually over the last 40 years
In some of these changes, lawyers can be charged with fraud

Modification and Termination of Trusts

o Reformation
Fixing a trust so that it reflects settlors intent; correction of a drafting error.

o Modification
A change in circumstance causes court to change trust so that it reflects what court believes would have been settlors intent

o Introduction
o If the settlor and ALL the beneficiaries consent, an irrevocable trust may be modified or terminated (even if the trust contains a spendthrift
clause)
However, lots of trusts are testamentary, which means the settlor cannot consent to modification or termination
If a trusts purpose is illegal or impossible it will likely be terminated by law
o Modifying a testamentary trust is basically just as difficult as modifying a will
Very difficult, with just a few limited ways to change the trust
Claflin Doctrine
A testator has a right to dispose of his own property with such restrictions and limitations as he sees fit, and his intentions ought to be carried out,
unless they contravene the law or public policy
Modification and termination can ONLY be allowed if it its NOT contrary to material purpose of the settlor

o Deviation and Changed Circumstances

In re Trust of Stuchell pg. 643
Facts Guy created a trust for his family, and upon the death of the last life beneficiary, the trust was to be divided equally between ladys children.
One of her children was mentally retarded and received govt assistance.
Lady wanted to permit the trustee to deviate from the trust by not giving anything to the retarded child b/c it may but him in financial position
where he wouldnt receive govt assistance any more
HOLDING
This is NOT allowed.
The only purpose of this modification is to cheat the state and to enrich the other children.
Deviation is NOT permitted where the only reason is that it would be more advantageous to the beneficiaries.
Deviation from Administrative Directions (aka Equitable Deviation)
Courts have been much more liberal in allowing deviation from administrative directions in the trust rather than distributive provisions

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 Dont change wills because will is only to govern estate for a short amount of time. A trust is only limited by the rule against perpetuities
In re Pulitzer pg. 644
Facts Pulitzers will prohibited the sale of stock of a publishing corporation.
After heavy losses, the trustees petitioned for right to sell the stock.
HOLDING
o Court approved the sale because the trust estate was in jeopardy due to an unanticipated change in circumstances.
More modern approach treats distributive provisions the same as administrative provisions (both can be modified if a change in circumstances
means that continuation of the trust under its terms would defeat or substantially impair the purposes of the trust)
Restatement/UTC
Both adopt more modern approach and treat distributive and administrative provisions as modifiable due to a change in circumstances
In re Riddell pg. 645
Grandparents created a trust for grandchildren.
Father wanted to alter the trust to create a special needs trust for his schizophrenic and bipolar daughter.
HOLDING
Court adopted UTC/Restatement equitable deviation doctrine;
held it would be equitable to create special needs trust that allowed daughter to receive govt assistance while benefitting her
supplementally.
Grandparents could not anticipate this problem, and if they would have, they would have created a special needs trust.
Reformation and Modification to Achieve Tax Objective
Important and recent development
Courts are fairly indulgent to change trusts to accommodate changes in the tax law to permit the trustees to achieve objectives of trust more fully
This is positive tax law is unpredictable, and can be retroactive
Trust Protectors
Settlor can name someone as trustee and someone else or multiple other people as trust protectors
Trust protectors have the right to fire the trustee and appoint a new one without bringing suit against the trustee
This is especially useful if an institutional trustee is being used (more likely to be uncooperative and bureaucratic)
This gives the protector great leverage over the trustee
Requirements of replacing the trustee depend upon the trust instrument
Trust protector can retain general oversight role while not having to micromanage details
Prof thinks this device is quite useful
Lots of law in this area remains to be developed
To what extent is protector a fiduciary subject to oversight? we dont know

o Claflin Doctrine and Material Purpose

Claflin doctrine
There cannot modification or termination where there is a material purpose of the trust that remains to be carried out
Modification or termination can be rejected even if there is no spendthrift or support provision in the trust
In re Estate of Brown pg. 653
Trust had multiple consecutive purposes:
(1) education of children of settlors nephew,
(2) nephew and his wife get support and maintenance for their lifetimes in the style and manner to which they are accustomed,
(3) upon nephew and wifes death remainder to be paid to nephews children.
Education was paid for, and nephew, wife, and children all wanted to terminate the trust.
HOLDING
No termination permitted.
Although the education purpose was satisfied, the purpose of providing support for nephew and wifes lifetimes was NOT satisfied.
o Restatement
If all the beneficiaries of a trust consent, the trust can be modified or terminated even if it would be inconsistent with a material purpose of the trust
if the court determines that the reasons for modification or termination outweigh the material purpose
o UTC
Maintains the material purpose standard trust can only be modified or terminated if all beneficiaries agree AND it would not be inconsistent with
a material purpose of the trust
However, also allows court to make modification without consent of all beneficiaries, if the non-consenting beneficiaries will be adequately protected
o Most inter vivos trusts are revocable and can be modified unilaterally by the settlor during life

o Trustee Removal
Traditional rule
cannot remove trustee except for cause
Even if all beneficiaries agreed, trustee could not be removed
Well-drafted trust
give someone power to remove (beneficiaries OR trust protector)
Statutes
might provide for removal under certain circumstances (such as UTC, etc.)
o UTC 706 allows removal slightly more easily than traditional for cause requirement:
Possible reasons for removal under the UTC
Breach of trust (same as traditional for-cause rule)
Lack of cooperation among co-trustees (not quite for-cause, but pretty high bar)
Unfitness, unwillingness, failure to administer efectively (sounds like for-cause)
Substantial change of circumstances
Requested by all beneficiaries, betters the interests of beneficiaries, suitable replacement trustee is available
This is slightly easier than for cause removal, but still pretty difficult
o Hypothetical
Man fled Germany having lost everything in the Holocaust
Became very successful in NY and had millions when he died
Did a lot of business with a bank that was taken over by Deusche Bank after his death
He named this institution his trustee BEFORE the acquisition
Family members wanted to remove the trustee because of relationship to Nazi regime

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 Trustee had been performing satisfactorily
Prospects for removal?
Under the traditional for cause rule, theyd have no chance
Probably NOT a substantial change of circumstances that militates against their interests under the trust under the UTC
Options
Approach the trustee and ask for resignation as trustee
Take it to the media even if its a losing proposition, the media would pick up on a case like this
Davis v. U.S. Bank National Assn pg. 660
Settlor appointed bank as trustee of the trust.
Trust made grandchild an income beneficiary for life, and at his death, principal distributed to grandchilds children.
Grandchild wanted to switch trustees because the fees were too high and the requested successor trustee was situated closer and knew the familys
situation better.
HOLDING
Court allows removal of trustee under states version of UTC:
o (1) removal was requested by all beneficiaries (grandchild virtually represented his daughter),
o (2) removal served best interests of all beneficiaries (lower fees meant higher distributions),
o (3) removal wasnt inconsistent with a material purpose of trust,
o (4) suitable successor trustee was available and willing to serve.
NOTE
Probably more difficult to meet best interests standard and possibly material purpose if the trustee is an individual that was hand-
picked by the settlor rather than an institution.
NOTE: In most jurisdictions, fiduciary fee schedules are set out in statutes, but most institutions require waivers to these and impose their own
schedules.
Successor Trustees
They are held to their own fiduciary standards
NOT responsible for wrongful behavior of prior trustee unless they violate their own obligation to mitigate it or correct it
Virtual Representation
What if you have all of the beneficiaries agreeing that the trustee should be changed or another modification ought to happen, but you have a
generation-skipping trust thats supposed to vest in the next generation
Its impossible to have all the beneficiaries request removal/modification unborn people are beneficiaries

UTC 304
Unless otherwise represented, a minor, incapacitated, or unborn individual, or a person whose identity or location is unknown and not
reasonably ascertainable, may be represented by and bound by another having a substantially identical interest with respect to the
particular question or dispute, but only to the extent there is no conflict of interest between the representative and the person
represented
This expands virtual representation in two ways
o Allows for representation not only in judicial proceedings, but also in obtaining consent of the beneficiaries without judicial
involvement
o Allows a parent to represent a minor or unborn child, even if the parent does not have a similar personal interest, so long
as there is no conflict of interest with respect to the particular question or dispute

X. TRUST ADMINISTRATION: THE FIDUCIARY OBLIGATION

A. Introduction
o Reason for Fiduciary Obligation
o Trustee lacks direct personal/financial interest in the trust property
Beneficiary is probably unable to directly monitor and oversee everything the trustee does
o Threat of fiduciary litigation is the primary check on the agency costs of trust

o Comparing Fiduciary Obligations of Trustees and Personal Representatives/Executors

o Obligations of trustees are the same as personal representatives
o Private trusts are often designed to go on for long period of time
Obligation of trustees can have a long duration (trusts can last for decades)
Unlike personal reps (administration of estate will take around 2-3 years)
Important to make sure interests of beneficiaries are taken care of over the long term of service of the trustee

o Most jurisdictions have statutory outlines that address fiduciary duties

o These trump trust provisions at some level
cant contract out of the fundamental fiduciary rules
o Can give trustees latitude and cut them some slack,
o CANNOT say they dont have to act like a fiduciary

o Powers of the Trustee

o Powers used to be limited because the trustee was simply a passive holder of property
Now powers must be much broader because the trustee has to invest the property
o Most states have statutes that codify this broadening of trustee powers
o Regardless of the breadth of the jurisdictions powers statute, a well-drafted trust will include a detailed schedule of powers
o Two Main Duties:
Duty of Loyalty
Duty of Prudence
o Subsidiary Duties:
Duty of Impartiality

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 THE DUTY OF LOYALTY
o Definition
Trustee must administer the trust SOLELY in the interests of the beneficiaries
IT IS THE MOST FUNDAMENTAL PRINCIPLE
o Self-Dealing
Occurs when the trust and trustee engage in a transaction
No further inquiry rule
If a fiduciary is self-dealing, there is no further inquiry into good faith or fairness
Only two defenses
o (1) Settlor authorized the transaction in the trust instrument OR
o (2) Beneficiaries consented after full disclosure
The fiduciary is automatically in violation of his duty of loyalty if neither of these defenses are met, regardless of whether the
transaction was fair and in good faith
o A trustee must have UNDIVIDED LOYALTY. Purchasing prop from the estate violates the duty of loyalty (SEE BELOW)
Fiduciary can try to get advance judicial approval of a transaction
Hartman v. Hartle pg. 675
Lady appoints two sons-in-law to serve as executors of her estate and directs them to sell the property and divide the proceeds equally
among her children.
Executors sold the property to one of the ladys sons, who bought it on behalf of his sister (daughter of lady and wife of executor).
This amount was divided equally among the children.
Sister sold it for profit and kept the diference.
Diferent daughter brought suit for violation of fiduciary duty.
HOLDING
o Executor violated the duty of loyalty because he was self-dealing (enriching his own family at the expense of the other
beneficiaries).
o Daughter was ordered to split the profits from the resale of the house among all beneficiaries.
Its possible that there has been a little bit of retreat from the no further inquiry rule
Statutes in most states allow a corporate trustee to deposit the trust assets with its own banking department and to invest the trust
assets in a common trust fund or in a mutual fund that it operates
Trustee can give herself reasonable compensation out of the trust funds

o Trust pursuit rule

o When a trustee self-deals or otherwise breaches the trust, the beneficiaries are entitled to a constructive trust of whatever property comes out of the transaction,
unless a third party is bona fide purchaser without notice of the breach of trust
In re Rothko pg. 679
o Artist appointed 3 executors:
Reis (accountant that set up estate plan and director of consignee gallery);
Stamos (unsuccessful artist); and
Levine (amiable idiot).
o After his death, executors agreed to dispose of about 800 paintings within three weeks:
100 to a company for a flat fee, which included a large interest-free loan; and
700 on consignment to Reis gallery with 50% commission, even though going rate for commission was 10%.
o Artists daughter brought suit under state statute that allowed child to challenge wills that left more than half of the estate to a charity
(Daughter would NOT have standing today, this statue has been repealed).
o Surrogate court found:
Reis had a serious conflict of interest being a director of the gallery;
Stamos was also conflicted because the gallery allowed him to display artwork;
Levine failed to make any efort to make sure things were being done fairly.
o HOLDING
All 3 executors violated the duty of loyalty, but none were found to have directly self-dealt (Reis was a director and NOT a shareholder that would
enjoy direct benefit and Stamos being able to display his work was not a direct benefit from the contract).
Levine was subject to $6 million in fines (only liable for actual value of the paintings, because he wasnt acting in his own interest).
Reis and Stamos were subject to $9 million in fines which included appreciation damages because they were acting in their own self-interest.
Appreciation Damages
Artwork is likely to increase in value acutely at the artists death and then gradually over a long period of time
Where do you cut of appreciation damages?
Court cut of the appreciation damages at the end of the trial
In another situation, appreciation damages might be less appropriate
If the violation isnt to such a big magnitude
If the market is uncertain and could go up or down

o Co-Trustees
o Under traditional law, if there is more than one trustee, the trustees must act as a group with unanimity, unless the trust instrument provides
otherwise
Because co-trustees act jointly, a co-trustee is liable for the wrongful acts of another co-trustee to which she has consented or enabled through
negligent inaction
o Traditional rule of unanimity is on the way out
UTC = majority can act

Duty of Prudence
o Introduction
o Duty of prudence mostly relates to investment decisions made by the trustee
o Classic approach = prudent man rule
o Fiduciary has limited options for investments (must be absolutely protective of principal even if that means lower income)
Many older legal list statutes provided a short list of acceptable investments

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 o Problems with this approach
Hindsight bias (didnt know at the time it would be a bad investment)
Each investment was evaluated in isolation

o UTC/Restatement/UPIA = prudent investor standard (all states)

o Basic principles of prudent investor rule
Trustee shall invest and manage trust assets as a prudent investor would, exercising reasonable care, skill and caution
Investment decisions are to be evaluated not in isolation, but in the context of the trust portfolio was a whole
Trustee shall diversify the investments of the trust, unless the trustee reasonably determines that, because of special circumstances, the purposes of
the trust are better served without diversifying
o Trust instrument can provide for broader latitude than the prudent investor rule

o Diversification
o Diversification is a very important element of the duty of prudence
o Duty to diversify is a LEGAL standard
Lawyers cannot advise as to what to buy when you sell of the majority stock, can only say that it is NOT legally prudent to have all your eggs in one
basket
In re Estate of Janes pg. 702
Testator left his property (which consisted of 71% Kodak stock) in three trusts.
Trustee sold of some of the stock to pay expenses, but not very much.
Price of the stock continued to fall and the trustee continued to hold the stock. Beneficiaries brought suit.
HOLDING
Trustee violated the duty of prudence by not diversifying.
It should have sold the stock within 3 months after the settlor died.
The trust contained too much Kodak stock to meet the standard of diversification.
Liability of the trustee = value of capital lost plus interest.
o Diversification is more difficult to accomplish if trust property contains illiquid assets
If there is one piece of real estate, there is probably more latitude in how quickly the trustee has to diversify, but still probably want to get it on the
market quickly
Special circumstances where diversification might not be required
If there is language in the trust instrument that authorizes the trustee to hold on to particular assets, then the trustee still probably has a duty to
diversify
However, it may justify a slower reallocation of the trust portfolio
If there is language in the trust instrument that ORDERS the trustee to hold on to particular assets, then that changes the analysis
However, if this is clearly a stupid thing to do, the trustee probably has a duty to seek modification of the trust
Wood v. U.S. Bank, N.A. pg. 712
Estate consisted entirely of financial stock and more than 80% was Firstar stock.
Trust authorized the retention of the Firstar stock.
Stock prices plummeted and beneficiary brought suit.
HOLDING
Trustee violated prudent investor rule by not diversifying.
Retention language only negated the prohibition on self-dealing, and didnt negate the duty to diversify.

o Calculating Damages for Imprudent Investment

Two main options
Capital lost plus interest
Value of the trusts property on the date by which it should have been sold of PLUS compound interest through the date of judgment
MINUS the actual value of the property
Interest is determined by statute (usually between 6%-9%)
Total return damages
Fact finder compares the actual performance of the imprudent portfolio against the performance of a hypothetical prudent portfolio and
awards damages in the amount of the diference (perhaps adjusting for taxes, expenses, and distributions)
Usually requires expert testimony

o Prudent Investor Rule Imposes Immediate Duties

o Trustee must immediately make an inventory and assessment of all the assets in the trust
o Then, trustee must devise a plan of which assets will be disposed of, how theyll be disposed of, and what will be achieved by doing this

o Delegation
o Under traditional law, trustees could NOT delegate matters that the trustee could reasonably be required to perform
o General rule now
trustee can delegate anything if the trust instrument doesnt prohibit it, but trustee is still subject to a duty of care, skill, and caution in selecting,
instructing, or monitoring the agent trustee can still be held liable if he delegates to someone dishonest, or doesnt pay attention after delegation
o UPIA trustee has to use reasonable care in delegating a function
o Delegated vs. Directive Trusts
Delegated trusts = responsibilities of trusteeship are divided by the trustee
Directed trusts = trust instrument provides that the trustee must follow the direction of a third party (considerable overlap with idea of trust
protectors)
Trust Protector =

Impartiality and the Principal and Income Problem

o Duty of impartiality
o in investing, managing, and distributing the trust property, the trustee must strike a balance between the beneficiaries, giving due regard to their respective
interests
o This duty is implicated when a trust has two or more beneficiaries (most commonly when there are successive beneficiaries)

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 o Trustee MUST consider any preferences the settlor expressed in the trust instrument or otherwise, and also must consider the sometimes conflicting interests of
the beneficiaries
o Sometimes, the trustee MUST favor one beneficiary over another
Its generally true that if you invest in income-producing investments, the principal is not likely to grow; if you invest in capital-appreciating
investments, the income will be low
o Sometimes the duty to invest wisely, etc is in conflict with the duty of loyalty and impartiality to beneficiaries; two solutions:
Adjustment Power gives trustee the power to reallocate between the income and the principal if the trustee concludes that total return investing
leads to an unfair result under the traditional rules.
Howard v. Howard pg. 726
o Guys trust gave preference to his wife (if she survived him) over the remainder beneficiaries (his children).
o Guy died and his son argued that the trustee should consider the wifes other resources in distributing the trust funds or else some of the benefits would go to her
children (guys stepchildren) instead of the remainder beneficiaries.
o HOLDING
Trustee was not to consider wifes other resources.
Settlor specifically gave preference to his wife over the remainder beneficiaries.
o This case is a good example where the provisions of a trust instrument can provide protection for the trustee (trust expressly preferred wife over children).
o Establishing Priorities
o It is Important to have explicit priorities established in the trust if its a complex/blended family situation
o The probability of conflict is greater, so trustee needs some sort of guidance
o Protection for the trustee AND the trust property
People will start bringing lawsuits that will drain assets of the trust
o These provisions not only instruct the trustee what the testator wanted to achieve, but also prevent beneficiaries from bringing suit unnecessarily

o Principal and Income Problem

o Under traditional fiduciary rules, the particular form of the trusts investment return determines its classification as principal or income
Examples
Income = cash dividends on common stock, interest on bonds
Principal = appreciation in the price of the stock or bond
If the trustee opts to invest in a stock that does not pay a dividend (price will appreciate faster) then the principal beneficiary is advantaged at the
expense of the income beneficiary, and vice versa
The classification between income and principal is pretty much arbitrary
o Modern portfolio theory challenged these arbitrary classifications
Uniform Principal and Income Act
Contains an adjustment power the trustee can reallocate between income and principal if he concludes that total return investing is
leading to unfair results
Unitrust statutes
Idea = statute sets the percentage of the value of the trust principal that must be paid to the income beneficiary each year
o Unitrust provisions can also be included in the trust
o instrument and the settlor can determine the percentage of the trust property to be paid out
This allows trustee to maximize returns regardless of what form the returns take
Can include rolling average values so payments dont jump up and down sharply
In re Matter of Heller pg. 731
Guy set up a trust with his wife as income beneficiary and others as remainder beneficiaries.
Trust provided that wife receive the greater of $40k/year or the total income of the trust each year.
State statute provided an optional unitrust provision.
Trustees converted the trust into a unitrust under the statute, which sharply reduced wifes distributions.
She argued that one of the trustees was also a remainder beneficiary and there was a conflict of interest.
HOLDING
Court upholds use of unitrust provision.
Trustee in question was NOT the only remainder beneficiary, so this was not per se invalid.
Guy probably didnt expect that the income would reach this high of a level and probably would have wanted unitrust provision to apply
in this case.

Subrules Relating to the Trust Property

o Duty to Collect and Protect Trust Property
o Trustee has duty to collect trust property without unnecessary delay
o For a testamentary trust, the trustee should collect the assets from the executor as soon as possible under the circumstances
Trustee also has duty to examine the property tendered by the executor to make sure its what the trustee ought to receive
Trustee has duty to require executor to redress any breach of duty that diminished assets

o Duty to Earmark Trust Property

o Earmarking the property
designating the property as trust property rather than trustees own
o Reasoning if trustee doesnt designate between the two, the trustee might later claim that the most successful investments were his personally and less
successful ones were trust property
o Trustee is only liable for loss that results from failure to earmark, not loss resulting from general economic conditions

o Duty Not to Mingle Trust Funds with Trustees Own Funds

o This is often a result of the failure to earmark
o Breach even if the trustee doesnt use the funds for his own purpose
o Reasoning mingled assets might be reached by trustees personal creditors
o This duty has been partially abrogated in most jurisdictions because corporate fiduciary can hold and invest trust assets in a common trust fund
UTC allows trustees to make joint investment from separate trusts
This allows trustees to take advantage of economies of scale

Duty to Inform and Account

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 o Duty to Inform
o Trustee has duty to inform the beneficiaries of the existence of the trust AND significant developments pertaining to the administration of the
trust
Trustee also has duty to respond to requests by beneficiaries for information reasonably related to their interest in the trust
o UTC 813
Trustee upon request by beneficiary, shall promptly furnish to the beneficiary a copy of the trust instrument
Trustee, within 60 days of accepting trusteeship, shall notify qualified beneficiaries of his acceptance and of his name, address, and phone number
Trustee, within 60 days of creation of irrevocable trust, shall notify qualified beneficiaries of trusts existence, the ID of the settlor(s), the right to
request a copy of the trust instrument, and the right to a trustees report
Trustee shall notify qualified beneficiaries of any change in trustees compensation (in advance)
o Allard v. Pacific National Bank (WA)
Bank received ofer to buy trust property and accepted, deeding property to other bank. Informed beneficiaries over a month later. Court holds bank
breached fiduciary duties
Trustee must inform beneficiaries of all material facts in connection with a non-routine transaction which significantly afects the trust
estate and the interests of the beneficiaries prior to the transaction taking place.
o RCW 11.100.140 requires both written advance notice and appraisal for significant non-routine transactions
Transactions afecting contributed (put in by grantor) real estate that is at least 25% of the total trust assets
Sale of contributed tangible personal property whose value is at least 25% of the total trust assets
Sale of closely held stock representing 25% of greater interest in the corporation
Sale of stock causing trust to lose controlling interest
Fletcher v. Fletcher pg. 739
Lady created a trust that was to be separated into three separate trusts upon her death for her son and his two children.
After the lady died, the son sought access to a schedule of assets that were transferred to one of the other trusts, but the trustees only gave him the
part of the instrument relating to his trust and claimed the lady wanted to keep things private.
HOLDING
Court held that the beneficiary was entitled to see the entire instrument, including the additional schedule of assets.
He was the equitable owner of trust property and trustee had duty to inform him with the entire trust instrument.
Secret wills?
Can a settlor create a secret will by using a revocable trust?
Fletcher implicitly holds NO and that trustee has duty to provide a copy of the trust to beneficiaries AND heirs of the settlor that request it
Secret trusts?
Settlor might want to conceal the existence of a trust from a beneficiary to prevent beneficiary from being lazy
Traditional law = settlor may not completely eliminate the trustees duty to inform
UTC provides that beneficiary can be kept in the dark until age 25, but lots of states allow an older age or even indefinitely if there is a trust
protector to whom information must be given and who has standing to bring a suit

o Duty to Account
o Trustee has a duty to account on a regular basis for his actions as trustee so his performance can be assessed
Liability Safe Harbor
The law protects trustee from liability to the beneficiary for breach of trust if
the facts underlying the claim are fairly disclosed in an accounting filed with the court,
notice of the accounting is served on the beneficiary, and
the beneficiary does not object to the accounting
o Always have a duty to account
Lots of times people want to waive the obligation to account to a court (so expensive and labor-intensive) this does NOT mean theres no obligation
to account to beneficiaries (trustees ALWAYS have this obligation, even to remainder beneficiaries Jacob v. Davis pg. 749)
National Academy of Sciences v. Cambridge Trust Co. pg. 745
Guy created trust with his wife as income beneficiary and NAS as remainder beneficiary on her death.
However, guy conditioned wife receiving income on her staying unmarried.
Wife re-married, but concealed this from the trustee.
Trustee filed annual accountings that accounted for every penny in the trust.
After her death, NAS found wife had been improperly paid and brought suit against the trustee.
HOLDING
Trustee breached duty because it should have investigated whether she was re-married or not.
Even though trustee did formal accountings, its duty was not satisfied, because it did not discover underlying facts material to the trust.
What could the trustee have done?
Look through marriage records (probably nearly impossible)
Requested wifes tax returns to see if she was filing jointly

XI. CHARITABLE TRUSTS

A. Introduction
o Charitable trusts are governed by the same rules as private trusts with a few exceptions:
o Charitable trust must be for the benefit of a charitable purpose
not an ascertainable beneficiary
o Charitable trusts are exempt from Rule Against Perpetuities
more easily modified under cy pres
o State Attorney General, NOT ascertainable beneficiary, is the principal party with standing to enforce a charitable trust

NATURE OF CHARITABLE PURPOSES

Shenandoah Valley National Bank v. Taylor pg. 752
o In guys will, he purported to create a trust with income payable to the children in grades 1-3 of the local elementary school (contained language that the money
was to be used for their education).
o However, the trust had no provisions for termination.
o If a residual bequest lapses, the $ goes to intestacy

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 o Guys relatives challenged the will as in violation of the Rule Against Perpetuities.
o HOLDING
Court held the trust invalid because it violated RAP.
A trust must be a charitable trust to avoid application of RAP, and this was NOT a charitable trust because it was not sufficiently restricted to the
advancement of education or limited to children in need.
Could not apply cy pres because cy pres can only be applied if it is a charitable trust to begin with.
o Today, you might have been able to argue for administrative deviation of this trust
It had all the aspects of a charitable trust, but it wasnt administrable
Instead, just give the money to the school itself
o Requirement of a Charitable Purpose
Requires having some sort of provision that guarantees that these charitable purposes will be met and the money wont be used for
private instrument (benefit of private individuals)
o In the case above, there was no mechanism to ensure that the children would spend the money on education
Defining Charitable Purpose
o examples
Relief of poverty
Advancement of education
Advancement of religion
Promotion of health
Governmental purposes
Any other purpose the accomplishment of which is beneficial to community at large
o Can benefit law professors (furthering education purpose) but cannot benefit lawyers
o Can benefit needy employees (battling poverty) but cannot benefit all employees generally

Modification of Charitable Trusts: Cy Pres

o Reasoning for Modifications
o Modification of charitable trusts has always been considered necessary b/c if there is a trust that can last forever the settlor could not possibly
be able to foresee everything
o Something had to exist to allow modification of charitable trusts

o Cy pres defined
o If a settlors charitable purpose becomes illegal, impossible, or impracticable, the court may direct the application of the trust property to
another charitable purpose that approximates the settlors intention
If its not impossible or impracticable to carry out settlors wishes, cy pres doesnt apply and no modification is allowed
If cy pres applies, you are supposed to modify the trust to come as close as possible to the intent of the settler

In re Neher pg. 761

o Lady left her home in trust to the village where she lived and expressed her desire that it be used as a hospital.
o Village accepted it, but then asked the court to allow it to be used as an administration building because a hospital had just been built nearby.
o HOLDING
Court allowed modification of the trust.
Court reasoned that ladys intent was a general intent to benefit the village, even though she explicitly focused upon the hospital aspect.
o Prof doesnt buy this case because administration building is NOT as close as possible to settlors intent (also thinks village knew the hospital was being built and
planned this all along).

The Buck Trust pg. 765

o Woman lived in very wealthy county and left charitable trust for a foundation that served her county and 4 others.
o She restricted use of the trust to her own county.
o Foundation requested modification after the trust property increased dramatically so it could spend the money in the poorer surrounding counties.
o HOLDING
Court denied this argument and rejected modification.
Inefficiency or inefectiveness is NOT the same as impossibility or impracticability.
Lady had such a broad range of charitable purposes that it would never be impossible to spend it all, even in the limited geographic area.
o Remedy Court took the funds from the foundation and created another foundation exclusively for the ladys county. Court created a panel of trustees to oversee
the new foundation.

The Barnes Foundation

o Chemist got rich and bought a lot of very valuable paintings.
o Guy established a trust and laid down very specific rules for how paintings should be displayed, building should be maintained, etc.
o There has been a lot of cy pres litigation trying to modify the trust to preserve the artwork
Trustees got permission to charge admission to gallery, take pieces on tours to raise money, etc.

Supervision of Charitable Trusts

o Fiduciary duties that apply to a trustee of a private trust also apply to a trustee of a charitable trust
o However, because there are no ascertainable beneficiaries, who will enforce the trust?
o In most states, the state Attorney General is the only person with standing
Smithers v. St. Lukes-Roosevelt Hospital Center pg. 776
o Guy (recovering alcoholic) promised $10 million to hospital to create stand alone rehab center.
o Halfway through the gift, guy got mad and forced hospital to agree to maintain the stand alone building and forbid use of the trust money for anything other than
maintaining the building.
o After guy died, hospital planned to sell the building and move the center into the hospital.
o Wife challenged, AG intervened and found out hospital was misappropriating trust funds, and wife brought suit.
o HOLDING
Wife has standing to enforce terms of the trust.
Wife was uniquely interested in the administration of the trust and the state AG was unable to sufficiently police charitable trusts in all cases.

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 The Bishop Estate in Hawaii
o Princess of Hawaii left huge trust to establish schools (one for boys and one for girls) in Hawaii.
o Trustees were to be appointed by Hawaii Supreme Court.
o Abuses ran rampant along with corruption between trustees and political figures
o State senate refused to confirm Attorney General for second term after she tried to enforce trust
o IRS threatened retroactive tax liability in the amount of over $1 billion, and then the abuses were somewhat curbed however, conflicts still exist today

o Problems with AG being the only person with standing to enforce charitable trusts
o Charitable trust enforcement is not politically rewarding, so no real incentive to police them
o Lack of resources
o This is a huge problem because there are huge taxpayer interests and tax dollars at stake
We dont have an efective way to police this people committing the funds have lost control in most cases
Carl J. Herzog Foundation, Inc. v. University of Bridgeport pg. 776
o Facts School closed its nursing school and added trust funds specifically designated for nursing to general fund. Herzog
Foundation brought suit.
o HOLDING
i. Court held the donor of the gift had no standing to challenge to enforce the terms of the gift.
Only efective way to enforce charitable trusts = IRS threatens to cut of tax exemption (IRS cant spend too much time on this)
Other possible solutions
Trust protectors
o Probably have to be a panel, but its possible
Drafting the instrument to keep someone from the family involved
o More than 20 states, along with the UPC and the Restatement, allow the settlor of a charitable trust to maintain a proceeding to enforce the trust

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