Study wills & trusts Flash Cards
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wills & trusts
wills & trusts
| Powers of appointment |
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general or specific (who it can be exercised in favor of) will must EXPRESSLY exercise a power of appt. EXCEPTION: implication (as if own property) - may be exercised by "blanket exercise" |
| Early termination of trust |
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requirements: - all beneficiaries are sui juris (18+ w/ capacity) consent - there is no further trust purpose * spendthrift clause: trust is indestructible |
| Uniform Prudent Investor Act |
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modern portfolio theory: conduct measured when decision made, NOT retrospectively consider many factors - economic conditions, etc. - role of each investment w/in portfolio - expected total return - needs for liquidity - different interests of beneficiaries etc. trustee may exercise ADJUSTMENT POWER to adjust total return between principal and income (use factors to determine) - distributions to income, receipt to principal - 10% "income" rule for mineral leases, patents, copyrights, royalties, etc. - expenses against income, capital expenditures against principal |
| Self-dealing by fiduciary |
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prohibited: - buy or sell assets to self - borrow trust funds - loan funds to trust - profit from serving as trustee - buy own stock as trust investment * beneficiaries have NO action against BFP! EXCULPATORY CLAUSE: valid EXCEPT for bad faith, gross negligence, fraud |
| Creditors' claims, spendthrift trusts |
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trust beneficiary's interest can be reached by beneficiary's creditors UNLESS trust contains a spendthrift clause MA: spendthrift clauses are valid EXCEPT: - contracts for necessaries - alimony, child support - any interest retained by settlor (revocable trust) - federal tax liens * estoppel applies if beneficiary participates in breach of trust creditors may NOT reach: - interest retained by settlor - interest irrevocably transferred to third parties EXCEPT: fraudulent transfers |
| Purchase money resulting trust |
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A pays for land but title is taken in B's name (A and B unrelated): B holds resulting trust, A may compel reconveyance - evidence admissible (by B) to show gift or loan of purchase price if A and B related: presumptive gift |
| Secret trust |
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testimony admissible to show existence of promise (but NOT later request found after death) NO semi-secret trust (will makes device to trustee for purposes already communicated) because of wills requirement that beneficiaries be named in will, not by oral testimony |
| Constructive trusts, resulting trusts |
| equitable remedy to disgorge unjust enrichment if there is wrongful conduct or unjust enrichment |
| Honorary trusts |
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trustee is on her honor in deciding whether to perform trust for animal valid ONLY if sense that it will be upheld if trustee decides to perform otherwise: resulting trust in favor of residuary beneficiary subject to RAP |
| Charitable trusts |
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- NOT subject to RAP - must be for charitable purpose - must be in favor of reasonably large members of the public - subject to cy pres (decided by state AG) * general charitable intent may be given effect * specific direction that can no longer be achieved: reformed * modification due to changed circumstances ok |
| Uniform Transfers to Minors Act |
| make gifts that aren't distributed until later age |
| Pourover will |
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VALID - even if trust is subject to revocation or amendment and is amended - even if trust is unfunded during life * need not be in existence before or executed concurrently with will: may be created after will is signed |
| Self-declaration of trust |
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settlor=trustee retains trust income for life and power to revoke valid so long as: - settlor is not sole beneficiary - sole beneficiary is not the sole trustee |
| Revocation |
| MA: trusts are irrevocable and unamendable unless power is expressly retained |
| Oral trusts of land |
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NOT valid but ok for personal property |
| Lawful purpose |
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- must not be against public policy or law - partial restraints on marriage are VALID |
| Rule Against Perpetuities |
| no future interest is good unless it must vest, if at all, not later than 21 years after some life in being at creation of the interest |
| Requirements for valid trust |
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settlor (grantor) delivers trust property to trustee for benefit of beneficiaries w/ intent to create a trust for a lawful purpose - settlor must have capacity (age 18+; higher capcity req. to convey title than for wills) - delivery not req. for self-declaration of trust (grantor=trustee); otherwise delivery req. (e.g., for inter vivos trust; promise insuff.) - trust property must be certain and identifiable; legal title must be conveyed * trust does not fail for lack of trustee |
| Trust: definition |
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trustee holds legal title to assets for benefit of beneficiaries who hold equitable title trustee has burdens of ownership beneficiaries have benefits of ownership |
| Sale of real estate w/o court approval |
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administrator appointed by court: YES executor or trustee named in will: NO |
| Estate administration: statute of limitations |
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claims must be filed w/in 1 year of decedent's death EXCEPT: - new assets discovered - claim was covered by insurance - where justice and equity require |
| Tortious interference w/ inheritance rights |
| NOT recognized in MA |
| No-contest "in terrorem" clause |
| valid in MA w/o regard to probable cause |
| Undue influence |
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- existence and exertion of influence - effect is to overpower mind and will of testator - product is a will (or gift) that would not have been made but-for the influence * mere opportunity insuff. * mere susceptibility insuff. * mere fact of unnatural disposition insuff. BUT: opportunity + susceptibility + unnatural disposition together may be suff. FIDUCIARY RELATIONSHIP + benefit: presumption of undue influence (burden to show: made w/ full knowledge and intent OR independent counsel) |
| Testamentary capacity |
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- understand nature of act - know nature and approx. value of property - know natural objects of bounty - understand disposition being made |
| Will contests |
| must have economic interest that would be adversely affect by probate |
| Elective share statute |
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to protect surviving spouse against disinheritance survived by issue: $25,000 of personal property (held in trust, or real property in legal estate) + 1/3 balance survived by kindred but not issue: $25,000 + 1/2 balance survived by spouse alone: $25,000 + 1/2 balance outright (rare) * applies to revocable trusts created after 1/23/84 * applies to all personal property and real property in MA * may NOT be made by predeceased spouse * abatement rules apply * must be claimed w/in 6 months of decedent's death * surviving spouse must not have deserted, etc. |
| Attorney's liability for negligence |
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emerging rule: duty owed to intended beneficiaries of attorney's advice and services old rule: no attorney-client relationship, no privity of contract MA: undecided |
| Effect of express words of disinheritance |
| ok BUT: when will does not make a complete disposition, words of disinheritance are INEFFECTIVE |
| Contract to make a will |
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ok but Statue of Frauds applies alternative: quantum meruit (if not in writing) |
| Mistake or ambiguity in will's terms |
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PLAIN MEANING RULE applies: extrinsic evidence NOT admissible to overturn plain meaning LATENT AMBIGUITY: extrinsic evidence may clarify but NOT change meaning PATENT AMBIGUITY: extrinsic evidence NOT admissible (but ok under modern rule except blanks--never ok) MISTAKE IN INDUCEMENT: absent fraud, no remedy FRAUD IN INDUCEMENT: impose constructive trust in beneficiary's favor |
| Nontestamentary acts: "acts of independent significance" |
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e.g., "car that I own at death" ok EXCEPT: title documents (deeds, etc.) i.e., ok for tangible personal property and cash only |
| Incorporation by reference |
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ok IF: - writing is in existence when will executed - will shows intent to incorporate the writing - will describes the writing suff. to permit identification EXCEPT: existing document that makes gifts of tangible personal property may be altered at any time |
| Specific gift of encumbered property |
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MA: lien is NOT exonerated (general provision to pay debts insuff.) majority: exonerated |
| Ademption by extinction |
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property not in estate EXCEPTION: if sold by guardian or conservator, beneficiary is entitled to proceeds if traceable applies ONLY to specific gifts |
| Abatement |
| gifts to spouse and minor children last, even if residuary gifts |
| Testamentary gifts |
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- specific devise (Blackacre) - demonstrative devise ($10 from stock X) - general legacy ($10) - residuary gift (the rest) - intestate property |
| Omitted child statute |
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omitted child (MA: ALL children) takes intestate share UNLESS omission clearly intentional or child was provided for during T's life ONLY applies to probate |
| Divorce |
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revokes all gifts and fiduciary appointments in favor of spouse ONLY applies to wills (incl. pour-over trusts) |
| Testator marries after will is executed |
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will revoked in entirety unless clearly made in contemplation of marriage NOTE: - does NOT affect non-probate transfers - does NOT apply when will republished by execution of a codicil |
| Rule of convenience: "class closing" |
| class is closed when any class member is entitled to a distribution |
| "Class gift" rule of construction |
| in a gift by will to a class ("children," etc.), if a class member predeceases, surviving class members take |
| Lapse in residuary gift--"surviving residuary beneficiaries" rule |
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if residuary estate devised to 2+ persons and a gift to 1 lapses or fails, then surviving residuary beneficiaries take in proportion to their interests * anti-lapse trumps surviving residuary beneficiaries |
| Anti-lapse statute |
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if beneficiary predeceases, gift lapses UNLESS saved by anti-lapse: applies if beneficiary was a child or other relative by blood or adoption |
| Effect of changes on face of will |
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partial revocations: valid in MA BUT new words must be attested (may apply DRR) |
| Dependent relative revocation |
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revocation may be disregarded when act was conditioned upon mistake of law or fact as to validity of later disposition NOT applicable if it would defeat testator's intent (must be that prior will comes closer to intent that intestacy) |
| Revival of revoked wills |
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common law: NO revival of revoked will MA: NO revival UNLESS will is still in existence and there is evidence that testator intended to revive |
| Later will does not contain revocation language |
| read wills together; earlier will is revoked by implication if wholly inconsistent; otherwise, treat later will as codicil |
| Presumptions of lost wills |
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- if last seen in T's possession or control: revoked by physical act - if last seen in T's possession or control and found mutilated: done by T do NOT apply if last seen in possession of someone adversely affected by contents |
| Proof of Lost Wills Rule |
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- proof of due execution (testimony of attesting witnesses) - cause of will's nonproduction proven - contents proven by secondary evidence (e.g., copy)--oral testimony must be strong, positive, free from doubt |
| Revocation of wills |
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- later testamentary instrument - physical act - operation of law |
| Uniform Execution of Foreign Wills Act |
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will executed in another state is admissible to probate in MA IF executed in accordance w/: - MA law - execution law (of place where executed) - domicile law (of place where testator domiciled at signing or at death) |
| Oral wills |
| ONLY for soldiers on active duty, mariners at sea for personal property |
| Holographic wills |
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NOT recognized - will may be handwritten, but must have 2 witnesses |
| Interested witness |
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does NOT affect validity of will BUT: beneficiary loses legacy (purging statute) UNLESS there were 2 disinterested attesting witnesses (supernumerary rule) |
| Requirements for will execution |
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testator age 18+ signs in presence of 2 witnesses (or acknowledge to witnesses) and witnesses sign in testator's presence - witnesses must be in testator's line of sight ***MA does NOT require: - that T sign at bottom - that witnesses know they are signing a will (publication) - that witnesses sign in each other's presence |
| Codicil |
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same formalities as will execution: testator age 18+ signs in presence of 2 witnesses (or acknowledge to witnesses) and witnesses sign in testator's presence |
| Non-probate property |
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- property passing by right of survivorship - property passing by contract - property held in trust - property over which decedent held a power of appointment |
| Disclaiming an interest (heir or beneficiary) |
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must be: - in writing and signed (if real property, must be notarized and recorded where located) - filed w/ probate court w/in 9 months after decedent's death * NOT allowed to defeat creditors' claims if disclaimant is insolvent |
| Lifetime gifts |
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common law: presumptively advancement MA: NOT an advancement UNLESS declared in contemporaneous writing (NOT later) or acknowledged in writing by donee |
| Uniform Simultaneous Death Act |
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applies to: - intestacy - wills (invokes lapsed gift doctrine, anti-lapse statute) - insurance ***MA did NOT adopt the 120-hour rule |
| Children born out of wedlock |
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NO inheritance from bio father unless: - mother and father marries and father acknowledge - acknowledged - paternity suit - paternity est. in probate proceedings w/in 1yr of decedent's death compare: nonmarital child has FULL inheritance from mother and mother's kin |
| Adopted children |
| no inheritance from natural parents or their kin EXCEPT where adopted by spouse of natural parent |
| Decedent not survived by parents (or spouse or issue) |
| siblings take per capita w/ representation |
| "laughing heirs" statute |
| NOT in MA! |
| Intestate decedent not survived by spouse or issue |
| all to parents or surviving parent |
| Per capital w/ representation |
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per capital at first level, by representation at next level (go to first level of living takers) issue of deceased children take by representation |
| Extra statutory rights of surviving spouse |
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- right to occupy residence for 6 months (NOT right of survivorship, joint tenancy, etc.) - spouse's allowance for necessitities during adjustment period (discretionary) takes priority over debts, admin expenses, and is in addition to amounts passing by will |
| Intestate share of surviving spouse |
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survived by spouse + issue: --spouse: 1/2 --issue: 1/2 survived by spouse + parents/other relatives --spouse: $200,000 + 1/2 balance --parents: 1/2 of balance $200,000 comes first from personal property or real property survived by spouse alone: 100% rare: ***MA allows any relative to be heir |
| Intestate distribution rules apply when |
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- decedent left no will (or not validly executed) - will does not make a complete disposition (partial intestacy) - heir successfully contests the will and it is denied probate - testator marries after will's execution and it is revoked by operation of law - omitted child statutes |
| Non-probate transfers |
| interests that pass by right of survivorship or under terms of a constract |
| Residuary estate |
| estate that remains after debts, taxes, admin expenses paid and specific and general legacies made by will satisfied |
| Probate |
| judicial proceeding where court determines that decedent left a validly executed will (or that decedent died intestate and heirs are determined) and appoints a personal representative (executor if named in will; administrator if appointed) |
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