WILLS & TRUSTSProfessor Gloria J. Banks

Fall 2002

INTRODUCTION TO ESTATE PLANNING

1) INHERITANCE AND ITS LIMITATION

a) Taking Property without Just Compensationi) The right to transfer property at death is a property rightii) The state cannot completely eliminate the power transfer of property at death. Hodel v. Irviniii) If the state completely removes the ability to transfer property at death, it constitutes a taking that requires just

compensation. Hodel.

b) The Constitution itself does not grant the right to transfer or receive property i) The state may limit the power to transfer propertyii) The right to receive property is a creature of statute

c) Restraints on Marriage i) Total restraints on marriage are void as against public policy

(1) Promote marriage(2) Promote reproduction(3) Society benefits from marriages

ii) Partial restraints must be reasonable (1) Limiting the amount of inheritance if child gets married is reasonable (ex. Married daughter gets less;

single daughter gets more; rationale that married daughter does not need more is a reasonable restriction) iii) If a will requires that a beneficiary marry within a certain religion, courts have held that such restriction is

reasonable.

2) THE PROBATE PROCESS

a) Probate v. Non-probatei) Probate requires court proceedings before the beneficiaries are entitled to takeii) In non-probate transfers, the beneficiary is immediately entitled to take without going through probate

b) Functions of Probatei) Transfer Wealthii) Clear Titleiii) Protection from Creditors; paying taxesiv) Fulfilling the testamentary intent of the decedent (*arguably the most important function*)

c) Processi) Offer the will for probateii) Collecting assetsiii) Paying family allowance and setting aside homestead and exempt personal propertyiv) Paying creditors' claims and taxesv) Distributing the assets of the estate upon the probate court entering decree of distribution

d) Terminologyi) Executor: Personal representative named in a willii) Administrator: personal representative appointed by the courtiii) Succession: beneficial entitlement to the property of the decedentiv) Heir: person entitled by statute to the land of the intestate

(1) Expected: takes by inheritance(2) Prospective: may inherit but may be excluded

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(a) Heir presumptive: will inherit if the intestate dies immediately but who will be excluded if other relatives of closer relationship are born

(b) Heir apparent: one who is certain to inherit unless excluded by a valid willv) Ascendant or Ancestor: person related to an intestate or to a claimant to an intestate share in the ascending

lineal linevi) Descendant: person related to an intestate or to a claimant to an intestate share in the descending lineal linevii) Collateral: relative who traces relationship to an intestate through a common ancestor but who is not in his

lineal line of ascent or descentviii) Affinity: relationship by marriageix) Consanguinity: relationship by bloodx) Escheat: property escheats to the state if no relatives of the intestate are entitled to takexi) Devise: clause directing the disposition of real property in a willxii) Devisee: person who is named to take real propertyxiii) Legacy: clause in a will directing the disposition of moneyxiv) Bequest: clause directing the disposition of personal property other than moneyxv) Res or Corpus: property to which the trustee is responsible to administer in a trust

e) Avoiding Probatei) Take title in joint tenancyii) Create an intervivos trustiii) Designate a payable-on-death beneficiary in a life insurance contract or other contractiv) Where the amount is small, states may permit heirs to avoid probatev) PA § 3102 provides that an estate valued at less than $25,000 need not go through probate

f) Probate Procedurei) Opening probate

(1) Determining jurisdiction(2) Notifying creditors by publication in newspaper for a period of time

ii) Supervising the Representative's Actions(1) Court supervision(2) Approval of inventory and appraisal(3) Payment of debts(4) Allowances(5) Options on real estate(6) Borrowing funds(7) Other fees payable (attorneys etc.)

iii) Closing the estate(1) Representative is under a fiduciary duty to the estate until the court grants discharge

3) PROFESSIONAL RESPONSIBILITYa) A lawyer should not prepare a will unless the lawyer is competent to do sob) Lawyers owe fiduciary duties to their clientsc) Lawyers also owe a duty of care to foreseeable third party beneficiaries of willsd) Claims against lawyers may arise out of contract or negligence

INTESTACY: ESTATE PLAN BY DEFAULT

1) DEFINITION AND JURISDICTION

a) Estate plan by default where Decedent dies without a will, the will is invalid, or property is not disposed of by willb) Jurisdiction: generally where the decedent was domiciled at the time of his or her deathc) Entire intestacy or partial intestacy is permissible

2) DETERMINING PROBATE V. NON-PROBATE PROPERTY

a) Probate v. Non-Probate Propertyi) Probate property is any property passing under the decedent’s will or by intestacy.ii) Non-Probate Property passes outside the will or the Intestacy Statute.

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(1) Life insurance policies.(2) Joint tenancies w/ right of survivorship.(3) Payable on Death Contract(4) Transfer on Death property under a trust(5) Intervivos Trusts

i) The instrument creating the non-probate property interest must have been effective before death

b) Cryogenically Preserved Sperm Hecht v. Superior Courti) Sperm is property subject to devise by willii) Donating sperm by will is not void as against public policy

3) DETERMINING WHO IS ENTITLED TO TAKE

a) Requirement of Survivorshipi) A person is not entitled to take unless he or she survives the decedent by a specified instance of time.ii) Under both the UPC § 2-104 and under Pennsylvania § 2104(1), an heir must survive the decedent for 120

hours (five days)

b) Determination of Death (UPC § 1-107)i) Survivorship must be proved by the preponderance of the evidence. Janus v. Tarasewiczii) Lay witnesses—evidence of positive signs of life in one person and not in the otheriii) Medical professionals—must be made in accordance with the usual and customary standards of the medical

practice(1) Cardiopulmonary Standard—heart beat, breathing, etc. (2) Brain death standard (adopted in all states)—total cessation of the entire brain function including the

brain stem. The factors include:(a) No response to intense pain(b) No spontaneous movement or breathing for one hour(c) No blinking, swallowing, and fixed or dilated pupils(d) Flat EEGs taken twice within a 24-hour intervening period(e) Absence of drug intoxication or hypothermia

(3) The upper brain death standard has not been adopted. It is too broad—would include comatose people, mentally incapacitated people, etc.

c) Surviving Spouse is entitled to an intestate share of the decedent’s estate. A universal prerequisite is that the spouse was married at the time of the decedent’s death. (UPC 2-802(a) excludes divorcees or annulled marriages)i) PA § 2102

(1) The surviving spouse is entitled to take the entire estate if no issue or parent survive the decedent(2) If a parent survives but no issue survives, the surviving spouse is entitled to take 30,000 plus one-half of

the balance(3) If issue of both the decedent and the surviving spouse survive, the surviving spouse is entitled to take

30,000 and one-half of the balance(4) If decedent has issue of his own and not of surviving spouse, surviving spouse is entitled to take one-half

of the estateii) UPC § 2-102

(1) The surviving spouse is entitled to take the entire estate if (a) No child or parent survives the decedent OR(b) Children of both decedent and surviving spouse survive the decedent and spouse has no other

children of her own(2) The surviving spouse is entitled to the first 200,000 and three fourths of the balance if

(a) A parent survives the decedent but decedent has no children(3) The surviving spouse is entitled to the first 150,000 and one-half of the balance if

(a) Decedent and spouse have children AND spouse has children of her own(4) The surviving spouse is entitled to take the first 100,000 and one-half of the balance if

(a) Decedent has children of his own

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d) Table of Consanguinity: Others Entitled to Take After Surviving Spousei) Under UPC § 2-103:

(1) If there are children, the children take by representation(a) Children, grand children, great-grand children

(2) If there are no children but both parents survive, parents take equally if both survive or all to the surviving parent

(3) If there are no children or parents, descendants of the parents take by representation(a) Brothers, sisters(b) Nephews nieces(c) Grandnephews and grandnieces(d) Great-grandnephews and great-grandnieces

(4) If there are no children, parents, or descendants of the decedent’s parents, then to the decedent’s grandparents or descendants of grandparents; half to each side(a) Uncles and aunts(b) First cousins(c) First cousins once removed(d) First cousins twice removed(e) First cousins thrice removed

ii) Under Pennsylvania § 2103: (1) Issue of the decedent

(a) Children, grand children, great-grand children(2) Parents of the decedent (3) Brothers and sisters of the decedent or their issue

(a) Nephews nieces(b) Grandnephews and grandnieces(c) Great-grandnephews and great-grandnieces

(4) Grandparents of the decedent(5) Uncles, aunts, and their children and grandchildren(6) Commonwealth of PA (Escheat)

e) Children

i) Whole and Half-blood(1) PA § 2104(3) treats whole and half-blood relatives the same(2) UPC § 2-107 treats whole and half-blood relatives the same

ii) In Gestation (After-born persons or Post-Humous)(1) PA § 2104(4) if a person is begotten before decedent’s death but born thereafter, he shall take as if born

in decedent’s lifetime(2) UPC § 2-108: if a person is in gestation before decedent’s death, he is considered living if he survives

120 hours after birth(3) Common Law:

(a) Presumption that a husband is the father of any child born to his wife(b) There is a rebuttable presumption that a person born within nine months after the decedent’s death,

the person is the decedent’s child and child is entitled to take

iii) Children of Assisted Conception Act § 4(b)(1) Donor of sperm or egg is not considered the parent for post-humous conception of the resulting child(2) An individual who dies before conception or implantation of the sperm/egg is not a parent

iv) Adoption of Children(1) PA § 2108: Inheritance by, from and through an adopted person

(a) Child is considered issue of the adopting parent(b) Shall not be considered child of the natural parent but

(i) Child can inherit from the adopting step-parent who marries the natural parent and can take from both

(ii) Child can take from other natural relatives if natural relatives maintain a familial relationship with the child

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(2) UPC § 2-114: Inheritance by, through, or from an adopted person(a) Adopted child is child of adopting parents, not of birth parents UNLESS

(i) Spouse of the natural parent (Step-parent) adopts the child(ii) Child can inherit from the step-parent and the natural parent

(3) Common Law:(a) Adopted children have the same general rights as natural children(b) Adopted children lose all rights of inheritance from or through their natural parent. Hall

v) Equitable adoption: O’Neal v. Wilkes(1) P was sent by her aunt to live w/ the Cooks who treated her as their own child but they never adopted her.(2) When the Cooks died, P argued she was VIRTUALLY OR EQUITABLY ADOPTED by the Cooks for purposes

of inheritance.(3) HOLDING: Because the aunt did not have legal authority to consent to an adoption of P by the Cooks,

there can be no equitable adoption.(4) DISSENT: “Equity considers that done which ought to be done.” In equity, the court should carry out

the intent of the decedent.

vi) Adult Adoptions at Common Law(1) Adult adoptions are generally permissible(2) Exceptions: Adoption of a lover: sexual relationships are not compatible with the parent-child

relationship

vii) Persons Born out of Wedlock(1) PA § 2107(b): person born out of wedlock is considered the child of his or her mother.

(a) PA § 2107(c): person born out of wedlock is considered the child of the father if identity of the father is determined by any of the following three:(i) Marriage(ii) Clear and convincing evidence that

1. the father openly holds out the child to be his AND receives the child into his home OR2. the father openly holds out the child to be his AND provides support

(iii) Court determination of paternity by clear and convincing evidence

f) Persons Entitled to Take Under Two Linesi) PA § 2104(9): heirs take from the greater of the two lines

4) DETERMINING THE ENTITLEMENT

a) Types of Distributioni) Per Stirpes with Representation (Common Law)

(1) Descendants only get what the predeceased was entitled to get(2) Shares are always determined at the first generational level, even where there are no living takers at that

level.ii) Per Capita with Representation (PA § 2104(1))

(1) Emphasis on the living takers(2) Shares are determined at the first generational level where there is a surviving descendant or predeceased

descendant with surviving issueiii) Per Capita at Each Generational Level (UPC § 2-104)

(1) Shares are determined at the first generational level where there is a surviving descendant or predeceased descendant with surviving issue

(2) Disburse shares among the number of living(3) Remaining shares are combined and distributed amongst the living takers at the next level(4) Process is repeated until there are no more living takers(5) Policy: everyone taking at the same level gets the same share

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5) DETERMINING BARS TO SUCCESSION

a) Murder: Slayer Statutesi) PA § 8801 and § 8802

(1) No slayer shall take or receive any benefit as the result of the death of the decedent(2) Slayer—person who participates as principal or accessory before the fact in the willful and unlawful

killing of any other person. Defined by the Pa. Criminal Code(a) Intentionally, knowingly, recklessly, or negligently killing another(b) May include causing or aiding suicide(c) Conviction for manslaughter may bar inheritance. Mahoney(d) Justifiable killings are excluded (accident, self-defense etc.)

(3) Slayer of decedent is not entitled to take property as a result of the decedent’s death—slayer is treated as if he predeceased the decedent

ii) UPC § 2-803(1) Any individual who feloniously and intentionally kills the decedent forfeits all benefits of inheritance(2) The killer is treated as if he disclaimed all benefits(3) Conviction of a felonious and unlawful killing is conclusive proof that the individual was a killer(4) If no conviction, the challenging party can petition the court for a determination that the individual was a

killeriii) Common Law: In a jurisdiction that does not have a slayer statute, legal title can pass to the slayer but equity

holds him to be constructive trustee for the heirs of the decedentiv) Analysis:

(1) Is the conduct prohibited under the slayer statute(2) What property is affected by the killing(3) Who takes in lieu of the slayer

b) Living Will: PA 5301 et seq.i) PA 5404: (1) Qualified patient who has executed a declaration in writing may direct what (2) life-sustaining

treatment should be provided for him, if he is (3) unconscious or (4) in a terminal conditionii) Must be of sound mind and 18 years of ageiii) Two witnesses requirediv) Qualified patient must sign the declarationv) Can be revoked at any time in any mannervi) Becomes operative when (1) a copy is provided to the attending physician and (2) attending physician

declares the declarant to be incompetent

c) Adultery: PA § 2106: Spouses may be disqualified from inheritance or an elective share if they commit adultery or abandon the decedent spouse

d) Disclaimer: PA 6201 et. seq. and UPC 2-801 et. seq.i) Beneficiary can disclaim any testamentary giftii) Avoid tax liabilityiii) Avoid creditors

e) Forfeiture: PA § 2106i) Spouse forfeits inheritance if ONE YEAR and

(1) Willfully neglects the other spouse OR(2) Willfully and maliciously deserts the other spouse

ii) Parent forfeits inheritance if ONE YEAR and(1) Willfully neglects the child OR(2) Willfully and maliciously deserts the child

f) Transfers to Minors: Uniform Transfer to Minors Act: PA 5301 et seq. & UPC 5-201 et seq.i) Under both PA 5201 and UPC 5-103, a minor is any person under 21 years of ageii) Minors do not have legal capacity to manage property (Pa § 303).iii) Must have guardianship, custodianship, or trusteeship

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g) Advancements i) Common Law: everything was presumed to be an advancement, rebutted only if proven that the transfer was

an inter vivos giftii) UPC § 2-109 and PA § 2109.1 provide that the transfer is an advancement only if

(1) In writing AND(2) Decedent expressly declares or acknowledges that the gift is an advancement

iii) Hotchpot Calculation (1) Add the amount of advancements to the estate; distribute evenly amongst beneficiaries; subtract the

amount of the advancement from each beneficiary(2) If the beneficiary receives more from the advancement than from the share, beneficiary keeps that amount

and the rest is divided equally amongst the remaining beneficiaries

CAPACITY AND WILL CONTESTS

1) MENTAL CAPACITY REQUIREMENT

a) The decedent must be of sound mind at the time of executioni) This requirement protects society, the decedent’s family, and the decedent him/herself.ii) Under Pa. 2501 and UPC 2-501, any person 18 or over and who is of sound mind may make a will.

b) Test for Sound Mind: The decedent must knowi) The nature and extent of his propertyii) The natural objects of his bountyiii) How the property will be distributediv) How these elements relate in planning for the disposition of his property

c) In re Strittmater: Testator was not of sound mind where she devised property to a feminist organization because she hated men. She was also under psychiatric therapy.

d) Insane delusions can operate to invalidate all or part of a willi) Test: An extreme misconception of reality to which the testator adheres against all proof to the contrary. This

is determined by the totality of the circumstances.(1) Delusions are false concepts of reality(2) Insane means that the testator is confronted with fact but continues to adhere to delusions

(a) Minority View: If there is any factual basis for the testator’s delusion, the testator is not insane(b) Majority View: Even if there is a factual basis for the testator’s delusions, the testator is insane if a

reasonable person in the testator’s position could not have drawn the same conclusions(3) There must be a causal connection between the delusion and the provision in the will

e) In re Honigman: Husband, who was otherwise sane, had insane delusion about his wife’s infidelity, and this led him to cut his wife out of the will. Facts that indicated infidelity included (1) anniversary card from wife’s friend; (2) he thought she was sneaking lovers up with a sheet into her bedroom; (3) he thought she was hiding men under her closet; etc.

f) A mistake will not necessarily invalidate a will because a mistake is subject to correction.i) Courts will reform the will allow a will to pass through probate if there is a mistakeii) Courts will usually not allow a will to pass thorough probate if there is an insane delusioniii) Under the UPC, if a testator mistakenly believes a child is dead, the child is still entitled to take

2) UNDUE INFLUENCE

a) All or part of a will may be set aside if it was the result of undue influencei) Rule: mental coercion that destroyed the testator’s free will and forced him to replace his intent with the intent

of another. The elements include: (1) Testator was susceptible to undue influence(2) The influencing party had motive and opportunity(3) The disposition is the result of the influence (causal connection between disposition and influence)(4) The Testator’s intent was replaced with that of another

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ii) Burden of Proof is on the party who challenges the will. Consider the circumstances:(1) Emotional, physical, and mental state of the testator(2) Age(3) Family status(4) Isolation from the outside world

b) Lawyers: Model Rule of Professional Conduct 1.8(c) provides that a lawyer shall not prepare an instrument giving the lawyer or a person related to the lawyer as parent, child, sibling, or spouse any substantial gift from a client, including a testamentary gift, except where the client is related to the donee.i) The comments provide that the transaction must meet the general standards of fairness.ii) Generally, holiday gifts of appreciation are permissible.iii) If the transaction requires preparing a legal instrument, such as a will or conveyance, the client should have

the detached advice that another lawyer can provide. iv) The only exceptions are where the client is a relative of the donee or the gift is not substantial

c) Lipper v. Weslow: No undue influence where there was no proof showing that the testator’s testamentary disposition was substituted with that of her son even though her son was a lawyer, he lived next door, he drafted the entire document, etc.

d) In re Will of Moses: Presumption of undue influence exists where a sexual relationship between an attorney and a client coexists during the attorney-client relationship even though an independent counsel drafted the will

e) In re Kaufmann’s Will: Undue influence is a question of fact where the testator is easily swayed. In this case, testator’s gay partner dominated the relationship. Testator eventually left everything to the gay partner.

f) No-Contest Clauses in Wills: any person who contests will be disinherited. If the contesting party is successful, the clause fails with the rest of the will. Under the UPC, an unsuccessful party can still take if the contest was based on probable cause and the challenger acted in good faith. (UPC § 2-517).

3) FRAUD

a) Fraud is the intentional or willful deception or misrepresentation of material fact by anotheri) Testator must be deceived by the misrepresentationii) Testator must do that which would not have been done but for the misrepresentation Ciii) Challenge to the will must show a connection between the fraud and the testamentary act

b) Types of fraudi) Fraud in the Inducement: Testator executes the will based upon misrepresentation of factsii) Fraud in the Execution: Testator executes the will that is different from that which was intended

c) Remediesi) A general constructive trust will be used to prevent unjust enrichment ii) Cardozo: "a constructive trust is the formula through which the conscience of equity finds expression" iii) Fraud-Rectifying Trust is a constructive trust used to rectify fraud iv) Tortious Interference with Expectancy: another theory that can rectify fraud or undue influence if the plaintiff

proves the interference involved tortious conductv) Latham v. Father Divine: constructive trust will be imposed by the court where the testator was prevented

from executing his will

EXECUTION: FORMS AND FORMALITIES

1) EXECUTION

a) Purpose of Executioni) Ritualistic purposes: a will is a very important event, namely, the deliberate intent to transfer propertyii) Evidentiary requirements are satisfiediii) Due execution safeguards the testatoriv) Due execution assures to the testator that his wishes will be carried out

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b) General Rulesi) PA 2502: a will must be in writing and signed by the testator at the end thereof.

(1) However, words following the signature do not invalidate the preceding portions(2) Mark: If the testator is unable to sign for any reason, a mark will suffice provided that the testator makes

the mark in the presence of two witnesses and who sign their names in the testator’s presence(3) Signed by Another: If the testator cannot sign or mark the will, the testator may expressly direct another to

sign for him or her provided that it is done so in the presence of the testator and he declares before two witnesses that the document is his last will and testament

ii) UPC 2-502 generally requires that a will be in writing and signed by the testator in the conscience presence of two witnesses(1) However, another individual can sign for the testator if that individual is in the testator’s conscious

presence and the testator directs the individual to signiii) UPC 2-503 also has a substantial compliance provision if the formal requirements of execution are not met.

The proponent of a will must prove by clear and convincing that the decedent intended that the disputed document or writing is(1) The decedent’s will(2) Partial or complete revocation f the will(3) An addition to or an alteration of the will or(4) A partial or complete revival of his formerly revoked will or a formerly revoked portion of the will(5) The purpose behind § 2-503 is to serve the purposes of due execution even where formalities are lacking

c) Requirements that Both Witnesses be Presenti) PA 2502 only requires two witnesses if the testator himself does not provide a signature. If the witnesses are

required, they must be present and sign with the testator all at the time of the testator’s act of signing the willii) UPC 2-502 requires that at least two individuals must sign the will within a reasonable time after witnessing

one of the following (1) Signing of the will(2) The testator’s acknowledgement of the signature or(3) The testator’s acknowledgment of the will

iii) Conscious Presence Test (Codified in UPC 2-502(2)): If the testator, through sight, hearing, or generally through consciousness can comprehend that the witness is signing the document, the "presence" requirement is satisfied

iv) Line of Sight Test: If the testator was looking, he could see the act of signingv) In re Groffman: Testator took out an already signed will and had his friends sign. They signed in the dining

room while the testator was in the other room.(1) The witnesses and testator must be present and sign all at the same time (2) The purpose of the witness requirement is too watch the testator sign the will

d) Competency of Witnessesi) PA 2502 only requires two witnesses when the testator himself does not provide a signature. If witnesses are

required, the witnesses must be disinterested.ii) UPC 2-505 provides that

(1) an individual generally competent to be a witness may act as a witness to a will. (2) An interested witness does not invalidate the will

iii) Purging Statutes: An interested witness is only entitled to take the amount he would receive under intestacy (no "extra benefit")

iv) Interested Witnesses at Common Law(1) Witness cannot be interested whatsoever(2) Interested witnesses are considered not competent to witness a will(3) A subsequent disclaimer does not transform an interested witness into a disinterested witness(4) Disclaimer must come before death in order to validate the witness(5) Estate of Parsons: Three witnesses signed the will, two of which were beneficiaries. One filed a

disclaimer of her bequest in the will. The court applied the per se common law witness rule and invalidated the will.

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e) Recommended Method of Executing a Willi) The law of the decedent’s domicile at death determines the disposition of personal property under a will. ii) The law of the state where real property is located determines the disposition of real property under a will.iii) As such, a will should be executed so that it will admitted into probate in all jurisdiction that potentially

govern the disposition of personal and real property under a will.

f) Self-Proving Affidaviti) Where the testator and witnesses, after executing the will, execute an notarized affidavit reciting that the

requirements for due execution have been met.ii) This allows probate even where witnesses may have died or are unable to testify at trialiii) PA 3132.1

g) Self-Proved Willsi) A will that does not contain signatures of witnesses on the will itself but has an attached affidavit referring to

the will and signed by witnesses is a self-proved will that can be admitted to probate.ii) In re Will of Ranney: four page will executed before two witnesses and a notary, acknowledged the will as his

own, and all believed that they met the attestation requirements. The court admitted the will to probate.(1) Not literal compliance, but substantial compliance(2) Attestation occurs during the act of signing(3) Affidavits occur after the act of signing

h) Mistake in Executioni) A court will not reform a will to allow probate when there is a mistake in execution of the will in that one

party mistakenly signs the will of anotherii) In re Pavlinko’s Estate: Testator signed the will of his wife, and wife signed the will of testator. The attorney

and secretary acted as witnesses. Testator and wife did not know much English(1) A will must be signed by its rightful testator by statute(2) Court would have to rewrite the entire will(3) Dissent: testamentary intent should control, especially where there is an individual and proper residuary

clause. Not all of the will at issue was ineffective.

i) Oral Wills:i) Nuncupative willsii) Sometimes called "soldier’s will"iii) Generally impermissible in every jurisdiction including PA

j) Statutory Willsi) Short wills with terminology provided by statuteii) Spaces are provided for beneficiaries etc.iii) Other requirements of execution must be followed

k) Holographic Willsi) Defined: a holographic will is handwritten and signed by the testator. ii) UPC 2-502(b) provides that a will is valid as a holographic will if signed by the testator and the material

portions are in the testator’s handwritingiii) Testamentary provisions of a holographic will, when read, must provide sufficient evidence of testamentary

intent(1) In re Johnson: A fill-in-the-blank, "form" will was completed in T’s handwriting, but when the

handwritten portions were read, the will did not sufficiently indicate testamentary intent.(2) Court did not admit the will to probate(3) The term "estate" alone does not supply the sufficient testamentary intent

iv) Informal letters can be deemed testamentary in character by the circumstances(1) In re Kimmel’s Estate: letter read "if enny thing happens" and upheld as testamentary disposition of

property(2) Signed as "father" sufficient for the signature requirement because testator was known as "father" (i.e.,

nickname)

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2) REVOCATION

a) The Testator must have the capacity to revoke a willb) Methods of Revocation

i) Operation of Lawii) Later will or codicil iii) Physical act of destruction coupled with revocatory intent

c) PA 2505 provides that revocation can occur only by (1) will or codicil; (2) other writing sufficient to satisfy the execution requirements; or (3) by burning tearing, canceling, obliterating or destroying the document with the intent to revoke i) Done by the testator himself orii) By another at the express direction and in the presence of the testatoriii) Revocatory act must touch the text of the will

d) UPC 2-507 is substantially the same as PA, however, the revocatory act need not touch the testamentary provisions on the will itself.

e) Presumptionsi) Partial Revocation is permissible (UPC § 2-507)ii) One revocation is the equivalent of a revocation of all duplicatesiii) Where testator is last known to posses the will at the time of testator’s death and the will is not found, a

rebuttable presumption arises that the will was destroyed by the testator (revoked)(1) The presumption can be rebutted by finding the will(2) Harrison v. Bird: Testator executed a will naming plaintiff as the beneficiary. Testator directed lawyer to

destroy that will and send her the torn pieces. Plaintiff tried to admit a copy of the torn will to probate. The court denied probate, holding that a rebuttable presumption existed, namely, that Testator revoked her will because the pieces were not found. Plaintiff failed to rebut the presumption.

f) Lost or Destroyed Willsi) If a will is (1) lost (2) destroyed without consent of the testator, or (3) destroyed with consent but not in

accordance with the revocation laws, the will can be admitted to probateii) The contents must be proved by clear and convincing evidenceiii) Proof can be in the form of copies with the lawyer, persons having knowledge of the will, persons who have

read the will, or persons who have heard the contents of the will

g) Attempted Revocation by Writing on Paper upon Which Will was Written (Common Law)i) Written words used for revocation by cancellation of a will must be so placed as to physically affect the

written portion of the will and not merely the blank parts of the paper on which the will was writtenii) Thompson v. Royall: Testator typed a will on legal paper, but on the back of the paper, T revoked the will and

signed it. The writing did not touch the typed words. T kept the revoked will. The court held that this attempted "cancellation" was an invalid revocation

h) Dependent Relative Revocationi) Equitable doctrine that disregards a revocation if the court finds that the act of revocation was based on a

mistake of law or fact, and the revocation would not have occurred but for the testator's mistaken belief that another disposition of property was valid. It must be shown that: (1) At time of revocation, the testator intended to make a new testamentary disposition that was ineffective(2) There was an otherwise valid revocation(3) Testator's intent was premised on a mistaken belief as to the validity of the new disposition(4) The invalidation of the revocation would be consistent with the testator's probable intent

ii) There is a presumption against intestacy, and the court will apply DRR to avoid intestacyiii) The usual situation for application of DRR arises when a testator executes one will and thereafter attempts to

revoke it by making a new testamentary disposition that is ineffective for whatever reasoniv) DRR also applies where a testator revokes a later will under the mistaken belief that by doing so, it reinstates

a prior will

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v) Carter v. First United: Will I was found at T's death with Will II, which was captioned as a will but not signed (thus, ineffective) The 1963 will was altered with marks, and T told the lawyer that she wanted to changer Will I but did not intend to revoke Will I. Will I was admitted to probate.(1) Where two wills were found together at the time of decedent's death, the burden shifted to plaintiff to

prove that the testator wanted her property to pass intestate(2) Presumption against intestacy arises in this situation

vi) Estate of Alburn: Will I executed in 1955; Will II executed in 1959. Testator told brother to get rid of Will II, which T had torn up. T thought that by doing so, Will I would be reinstated. The revocation of Will II was invalid.

i) Revivali) PA 2506 provides that if, after the making of any will, the testator shall execute a later will which expressly or

by necessary implication revokes the earlier will, the revocation of the later will shall not revive the earlier will unless (1) the revocation is in writing and declares the intention of the testator to revive the earlier will or (2) after revocation, the earlier will is reexecuted(3) Oral republication is insufficient

ii) UPC 2-509(a) provides that if a subsequent will wholly revoking a previous will is revoked, the previous will remains revoked unless and until it is revived(1) Facts and circumstances indicate revival of the first will(2) Testator's contemporaneous or subsequent declarations indicating an intent to effectuate the first will(3) Example: Will I is revoked by Will II. Testator burns Will II. Will I remains revoked until testator

revives Will I. In PA, testator would have to declare intention to revive Will I in writing or reexecute. In a UPC jurisdiction, testator could simply say to witnesses that he intends to revive Will I, or other circumstances that indicate Will I is revived.

j) Revocation by Operation of Law: Change in Family Circumstancesi) UPC 2-508 provides that changes in circumstances do not revoke any or all parts of a willii) Marriage

(1) At common law, a marriage following the execution of a will has no effect on the will. (Not followed in most states)

(2) PA 2507(3) provides that if the testator marries after making a will, the surviving spouse shall receive an intestate share unless the will gives the surviving spouse a greater share or unless it appear from the will that the will was made in contemplation of marriage to the surviving spouse

iii) Divorce (1) PA 2507(2) provides that if the testator is divorced from the bonds of matrimony after making a will, any

provision in favor of or relating to the divorced spouse shall be ineffective unless the testator intended that the provision survive the divorce

iv) Others(1) Slayer(2) Survivorship Fails(3) Birth/Adoption(4) Spousal Elective Share is Exercised

3) COMPONENTS OF A WILL

a) Integrationi) The pages that constitute a will are those that are present at the time of execution and those that the testator

intends to be part of the willii) Staple and fasten the will together

b) Codicili) Implied restatement or rewriting of the language of a valid will as of the time of republication. Requirements:

(1) Written, dated, and signed(2) Testator had the intent to execute a codicil and(3) The codicil adds to or alters an already existing will

ii) Republication changes the execution date of the will

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c) Holographic codicili) Same requirements andii) Material parts are in testator's handwriting (Johnson)iii) A valid holographic codicil can republish and validate a will that was inoperative because the will was not

signed, dated, or attested

d) Incorporation by Referencei) UPC 2-510 provides that a writing in existence at the time the will is executed may be incorporate by

reference if(1) The language of the will manifests this intent and(2) The will describes the writing sufficiently to permit its identification

(a) If a reasonable person could identify the document, it would be sufficient(b) Factors include

(i) Date(ii) Title of referenced document(iii) The location of the referenced document

ii) UPC 2-503(iii) substantial compliance could apply to the incorporation by reference doctrineiii) UPC 2-513 provides that a testator may refer to a separate document disposing of tangible personal property

other than money(1) The writing must be referred to in the will and

(a) signed by the testator(b) containing a description of the property with reasonable certainty

(2) The document need not exist at the time the will is executediv) A notebook can be incorporated by reference

e) Acts of Independent Significancei) UPC 2-512 provides that a will may dispose of property by reference to acts and events that have independent

significance apart from the effect on dispositionii) Extrinsic evidence is permissible to identify the will beneficiaries and the property that will pass under the

williii) The acts can occur before or after execution of the will or before or after the testator's deathiv) Example: T gives A "the car she is driving at the time of her death." Before she died, T drove a Honda. Right

before T died, she bought a BMW. A gets the BMW, regardless of the increase in value of the gift. The will referred to the "act" of giving the car she drove at the time of her death.

f) Clark v. Greenhalgei) Memorandum with statements about disposition of propertyii) Throughout, testator communicated with nurses about a painting devised to Ginny ("I want Ginny to have it")iii) Held: memorandum was incorporated by referenceiv) Testator's intent controls whether a document will be incorporated by reference when it meets the

requirements of the test

g) Simon v. Grayson: Testator executed a will on March 25 stating that a letter dated March 25 and to be found among his things would be incorporated by reference into his will. (SECRET. . . ssshhhhh!!!) A codicil was executed on Nov. 25. A letter was found, but it was dated July 3, not March 25. The court held that the letter was incorporated by reference because it met the requirements (existed before Nov. 25, the new execution date, and will permitted the letter to be found and identified)

h) Johnson v. Johnson: Testator, a lawyer, had a half-holographic, half-typewritten will that bequeathed $10 to his brother.i) Typewritten will was ineffective but had testamentary characterii) The holographic will was valid, testamentary in character, and added to the will in existenceiii) The execution of the holographic will republished and validated the previous, invalid will

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4) CONTRACTS RELATING TO WILLS

a) Types of Contracts Relating to Willsi) Duplicate wills

(1) Wills that have been prepared in duplicate, meeting all requirements, so each will equals an original instrument and may be separately probated

(2) Revocation of one revokes the otherii) Mutual (Reciprocal) Wills

(1) Separate wills of two or more persons that contain reciprocal provisions(2) Executed individually

iii) Joint wills(1) One will executed by two or more parties as one testamentary instrument

iv) Joint and mutual wills(1) Joint will (one will executed by two or more parties as one instrument)(2) Reciprocal Provisions(3) Devises property in accordance with a contract relating to the will

b) UPC 2-514 and PA 2701 provide that a contract relating to a will may be established only byi) Provisions of a will stating the material provisions of the contractii) An express reference in a will to a contract and extrinsic evidence proving the terms of the contract oriii) A writing signed by the decedent evidencing the contractiv) The execution of a joint will or mutual wills does not create a presumption of a contract relating to wills

c) Contract remedies apply to contracts relating to willsi) Specific performanceii) Damagesiii) Quantum meruitiv) Constructive trusts

d) Contracts that are against public policy are void

e) Analysisi) Did the contract exist

(1) Express provisions in the will and(2) Elements of contract law: Intent and (1) offer; (2) acceptance; (3) consideration

ii) What are the terms of the contractiii) Were the terms breached iv) What are the damages

f) Via v. Putnam: Third party beneficiaries (contract creditors) do not take priority over statutory rights of a pretermitted spousei) H and W had a mutual will stating that the survivor would do nothing to defeat the distribution set forth in

their will (i.e., children get what they get in the will). W dies, and H remarries W2. H dies and W2 gets her share as pretermitted spouse, which decreased the amount of money that the kids received. Kids sued, and argued that H breached the contract by marrying and defeating the distribution.

ii) Court says no: public policy states that H has a right to remarry, and contract creditors take second place to pretermitted spouse.

WILL SUBSTITUTES: NON-PROBATE TRANSFERS

1) GENERALLY: Will substitutes are anything that transfers wealth outside of probate. The issues include:a) Whether the will substitute is a purported testamentary dispositionb) Whether the law of will applies to non-probate transfersc) Whether the will substitute can be affected by the provisions of a will

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2) LIFETIME (INTERVIVOS) GIFT: The Elements:a) Donative Intentb) Actual or Constructive Delivery (constructive delivery means delivery made as nearly perfect and complete as the

type of property and circumstances will permit)c) Acceptance

3) CONTRACTS WITH PAYABLE-ON-DEATH PROVISIONS

a) Life Insurance Policies: i) If a life insurance policy requires written notice of change in beneficiary filed with the insurance company, the

beneficiary of a life insurance policy cannot be changed by a will

b) Nontestamentary Transfers at Death: i) UPC 6-101 provides that written agreements to pay a beneficiary after death are non-testamentary and transfer

outside of probate

c) Purpose of Will Substitutes: i) Will substitutes are designed to transfer property efficiently, economically, and quickly at death

d) Wilhoit: i) Husband dies and left Wife with proceeds of life insurance policy. In the policy, Wife designated Brother as

primary beneficiary. Brother died before wife. Brother left everything to his son, and his son wants the proceeds of the life insurance policy. When Wife died later, she left everything, including the proceeds, to her son (P). (1) Wife cashed in the policy and received the benefits(2) Wife had a separate agreement with the insurance company that differed from the policy terms(3) Agreement between Wife and Brother was an invalid testamentary disposition(4) Once brother died, she could do what she pleased with the proceeds

e) Hillowitz: i) Husband had a partnership agreement stating that the proceeds would pass to his surviving spouse upon his

death(1) A partnership agreement may provide that, upon the death of a partner, his surviving spouse is entitled to

his interest in the partnership(2) Such a contract need not comply with the statute of wills

f) Cooki) Husband had a life insurance policy in favor of Wife #1, whom he divorced. Husband’s will left the policy to

Wife #2 and son. (1) HOLDING: After Husband died, Wife #1 was entitled to the benefits under the policy b/c Husband

didn’t follow the procedure needed to change the beneficiary.(2) RULE: Substantial compliance w/ the requirements of an insurance policy is enough to change the

beneficiary.

4) JOINT TENANCY AND MULTIPLE-PARTY BANK ACCOUNTS

a) Types Includei) Joint Accountsii) Survivor Accountsiii) Payable-on-Death Accountsiv) Agency Accountsv) Savings Account Trusts

b) A joint bank account goes to the remaining tenant through right of survivorship and passes outside the will (Pa. § 6304)

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c) Franklin v. Anna: i) Decedent had a joint bank account w/ Cora b/c he was losing his eyesight. After P began to care for him,

Decedent attempted to change the name on the bank account to replace Cora w/ P, but the bank never changed it before he died.

ii) RULE: A joint bank account goes to the remaining tenant through right of survivorship and passes outside the will.

iii) HOLDING: B/c there was no donative intent to create a joint account w/ Cora, the joint tenancy agreement is not effective.

d) Stock Certificates Held in Joint Tenancy: i) Blanchette v. Blanchette:

(1) Husband’s bought shares of stock which were issued in both of their names w/ rights of survivorship. After they divorced, Wife petitioned to determine her interest in the stock.(a) There was no intent to make a present gift of the stock to Wife(b) Her rights only arose upon the death of Husband and were revocable by him.

e) Joint Tenancies in Landi) Joint tenancy in land is a common method of transferring land upon death and avoiding probate.ii) If one joint tenant dies, the survivor owns the property absolutely.

5) REVOCABLE INTERVIVOS TRUSTS

a) The settlor has the power to revoke, alter, or amend the trust and has the right to trust income during his lifetime (Intervivos)

b) If no interests pass before death, then the trust is testamentary in naturei) If the settlor retains too much power, the trust may be ruled illusory.ii) The trust is not illusory if it creates some interests in some category of beneficiariesiii) Farkas v. Williams: Farkas bought stock certificates as trustee for Williams. Farkas had some control over the

trusts and was entitled to the proceeds of the stock.(1) A settlor/trustee may have some control over the property of a trust and not make the trust testamentary in

character such as to pass outside the will.

c) Revocation of Intervivos Trusti) Pilafas: Revocable only by written instrument delivered to the trusteeii) Revocation must be done in accordance with the terms of the trustiii) Modern Law: Uniform Trust Act § 602(c) provides that if the settlor reserves the right to revoke but does not

provide the particular manner of revocation, any manner sufficiently manifesting the intention of the settlor to revoke will suffice

d) Trust Assets and Third Party creditors i) Settlor's creditors can reach assets of the trust if

(1) Assets were under control of the settlor at the time of his death(2) Such that the settlor could have used the assets during his lifetime

e) Testamentary "Pour-Over" Into an Intervivos Trusti) Generally

(1) Testator creates a trust, transferring probate assets to the trustee(2) The will then devises the residual estate to trustee to hold as trustee under the terms of the trust

ii) UPC 2-511 permits this type of transfer(1) There is no requirement that the trust be executed before or concurrently with the will(2) This permits the trustee to execute the trust instrument after the will(3) The trust can be funded with a res by the devise itself

iii) Clymer v. Mayo: Statute applies to a revocable Intervivos trust wholly funded after the decedent's death

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f) Durable Power of Attorneyi) A durable power of attorney may be used to plan for incapacityii) A power of attorney that gives the agent sweeping power to dispose of the principal's property must be

narrowly construediii) The principal may confer on an agent the authority to amend or revoke trusts without referring to the trusts by

name in the power of attorney

g) Disposition of Decedent's Bodyi) Uniform Anatomical Gifts Act—allows a person to donate his body for research or transplantation

WILLS: INTERPRETATION OF WILLS

1) ADMISSION OF EXTRINSIC EVIDENCE

a) General Analysisi) Determine whether the will is validii) Determine whether the valid will is ambiguousiii) If so, determine the type of ambiguityiv) Finally, determine whether extrinsic evidence can be admitted

b) General Rulesi) Unambiguous: Generally, an unambiguous will is given its plain meaning.ii) Latent Ambiguity: Language of the will is clear on its face but is susceptible to more than one meaning.

(1) Parol evidence is admissible to resolve the ambiguityiii) Patent Ambiguity: Uncertainty appears on the face of the will.

(1) Common Law: Parol evidence is not admissible.(2) Modern Law: Parol evidence is admissible.

iv) Extrinsic Evidence is also admissible to prove fraud, duress, and undue influence.

c) Equivocationi) Extrinsic evidence allowed in cases of equivocation, where description fits two or more external objects

equally well.ii) Ex: Testator leaves his Jeep to his niece Alicia, but he has 2 nieces named Alicia

d) Misdescription i) Mere false description of property or of the intended recipient may be stricken but does not make the whole

instrument invalid.ii) Ex: Testator left Lot 3 in Square 406 to his brother, but he actually owned Lot 6 in Square 403. Court struck

the misdescribed provision and gave brother Lot 6 in Square 403.

e) Mahoney v. Grainger (1933)i) T instructed her attorney to draft her will to leave her property to her cousins.ii) T’s will read that her property goes to her “heirs at law,” which legally only included her aunt.iii) HOLDING: Extrinsic evidence is not admissible to correct a drafter’s mistake when the language of the will

is clear.

f) Fleming v. Morrison (1904)i) Testator executed a sham will leaving property to a hottie to get her into bedii) Testator told his lawyer that the will was a sham.iii) HOLDING: Evidence of a lack of testamentary intent to make a will was let in and the will was struck down

as invalid.

g) Estate of Russell (1968)i) Testator left her estate to her friend, to “Roxy,” and to her niece, her sole heir at law.ii) HOLDING: B/c the will is latently ambiguous, extrinsic evidence is allowed in to find out who Roxy isiii) B/c Roxy is a dog, and one cannot leave property to a dog, the gift to Roxy lapses and goes to Testator’s heir,

her niece.

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h) Erickson v. Erickson (1998)i) Testator’s will provided for D, his 2nd wife, but was executed before they got married.ii) Under state law, a subsequent marriage acts as a revocation of the will if the will provides no contingency for

marriage.iii) HOLDING: Evidence of Testator’s intent and his relationship w/ D prior to marriage is sufficient to show

that the Testator intended the will to provide for the contingency of marriage.iv) RATIONALE: Testator’s lawyer mistakenly led Testator to believe that the bequest to D would be valid if

the will was executed before he married her.

2) DEATH OF BENEFICIARY BEFORE DEATH OF TESTATOR: LAPSE

a) General Rulesi) Lapse: When the beneficiary predeceases the testator, the bequest will lapse. ii) Anti-Lapse Statute: Allows issue of a devisee who predeceases the testator to take in the devisee’s place,

absent contrary evidence of the intent of the testator otherwise (UPC § 2-605).

b) Class Gifti) Definition: Gift of an aggregate sum to a body of persons uncertain in number at time of gift. ii) When one member of the class predeceases the testator, the remaining class members continue to share

equally in the gift. iii) Testator must use words defining the class, such as heirs, nephews, or cousins, and cannot name the

individuals specifically otherwise.

c) Allen v. Talley (1997)i) Testator gave her property under her will to her living siblings.ii) At the time the will was executed, she had 5 living siblings; when she died, only 2 were leftiii) HOLDING: Under the terms of the will, survivorship was a requirement to take and Testators property is

split between her living siblings.

d) Jackson v. Schultz (1959)i) P’s contracted w/ D to sell him Testator’s house but D claims P’s don’t own the houseii) Testator’s will gives all property to stepmother and her heirs (P’s) but stepmother predeceased Testator. iii) HOLDING: The word and can be substituted w/ the word or when it is consistent to carry out Testator’s

intent.

e) Dawson v. Yucas (1968)i) Testator left farm land specifically to Wilson and Burtle, her nephewsii) Burtle predeceased Testator and Wilson claims the farm land was a class gift and he should receive Burtle’s

share.iii) HOLDING: When specific individuals are named, a gift is not a class gift and there is no right of

survivorship for remaining individuals.

f) In re Moss (1899)i) Testator left his property to his wife, then to his niece and to the children of his sisterii) Niece died first, then Testator, and his property passed all to his wife.iii) After his wife died, the property was split equally between the children of his sister as a class.iv) The court treated the gift as a class gift and included the niece as a member of the class.v) Under UPC § 2-605, the result would have been the nieces heirs would have stepped up and taken her share

(niece would have gotten ½ and the children of the sister would have gotten ½).

3) CHANGES IN PROPERTY AFTER EXECUTION OF WILL: SPECIFIC VS. GENERAL DEVISES

a) General vs. Specific Devisesi) General: Confers a general benefit and not a particular benefit.

(1) Ex: I leave Jennifer Lopez a legacy $10,000.(2) If there isn’t $10,000 in the estate, assets are sold off to get the $.

ii) Specific: Confers a particular piece of property.(1) Ex: I leave my red Jeep to George.

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b) Ademption: When specific devises are sold, lost, destroyed by the time of the testator’s death, the gifts are deemed extinct. i) Doctrine applies only to specific, not general, devisesii) Ademption by Satisfaction: Inter vivos transfer of a gift during the testator’s lifetime after executing a will to

the same effect.

c) Wasserman v. Cohen (1993)i) Testator gave a building in trust to P in her will but Testator sold the building prior to her death.ii) HOLDING: The gift was a specific devise and is lost by the doctrine of ademption by extinction

d) Order of Abatement (PA § 3451): Where the estate does not have enough assets to pay off everyone:i) Specific bequest to spouse.ii) Specific bequest to issue.iii) Specific bequest to others.iv) General bequest of $, stock, bonds.v) Residuary bequest.vi) Any other property.

RESTRICTIONS ON THE POWER OF DISPOSITION: PROTECTION OF THE FAMILY

1) ANALYSIS FOR RIGHTS OF THE SURVIVING SPOUSE

a) Determine whether a legal marriage exists between the surviving spouse and the decedentb) Determine the elective share

i) PA 2203 (1/3 share of certain property)ii) UPC 2-202 (depends upon the # of years married)

c) Determine the Value of the Estate: What Property is Subject to Electioni) PA 2203(a)(1)-(6)ii) UPC 2-202 (augmented estate: in other words, pretty much everything)

d) Determine whether the right to elect has been terminatedi) Waiver (i.e., prenuptial agreement: rebutted by showing fraud, undue influence, or misrepresentation) ii) Divorceiii) Surviving spouse fails to survive decedentiv) Failure to elect within 6 months v) Spouse dies after decedent but fails to electvi) Legal impediment to the marriagevii) Forfeiture (slaying; willful neglect (PA Statute))

e) Determine the Process of Electioni) Spouse should elect if it is "in the best interests of the surviving spouse"ii) Surviving spouse elects AND disclaims amount under the williii) Spouse gets paid first

2) RIGHTS OF THE SURVIVING SPOUSE

A) PA § 2202 Elective Sharei) Surviving spouse may elect 1/3 of estate property.ii) Property subject to election:

(1) Property passing from decedent by will or intestacy.(2) Property transferred during life if had use of at death.(3) Property transferred during life to extent that decedent had right to revoke.(4) Property at time of death that had time to transfer completely.(5) Property conveyed w/in one year of death valued at > $3000.

iii) Property not subject to election(1) Property transferred w/ consent of spouse.(2) Proceeds of insurance.(3) Pension and profit sharing.(4) Property passing by decedent’s exercise of power of appointment.

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b) UPC § 2-202 Elective Sharei) Size of share depends on how long the couple was married.

(1) After 15 years of marriage, share becomes 50%.ii) Property subject to elections comes from decedent’s Augmented Estate

(1) All property that is decedent’s net probate estate, decedent’s nonprobate transfers to others, decedent’s nonprobate transfers to surviving spouse, the surviving spouse’s property, and nonprobate transfers to others.

c) Waiver (UPC 2-213 & PA § 2207)i) Surviving spouse’s elective share is subject to waiver.

d) In re Estate of Cross (1996)i) Husband died intestate and left a surviving spouse who was 80 years old, incompetent, and lived in a nursing

home.ii) HOLDING: Court appointed an investigator to determine whether or not to elect against the decedent’s

estate.iii) Investigator determined to elect b/c it was in the surviving spouse’s best interests.

e) In re Estate of Cooper (1993)i) HOLDING: Surviving partners of a homosexual marriage are not recognized as spouses under existing law

and cannot elect to take a surviving spouse’s elective share.

f) Sullivan v. Burkin (1984)i) Husband’s property included an inter vivos trust to which he alone retained the power to direct disposition of

the assets for his benefit, to revoke the trust, and he held a power of appointment over the trust. ii) RULE: If the decedent has enough control over a trust during his lifetime, then the trust will be subject to his

surviving spouse’s elective share.

g) In re Reynolds (1996)i) Testator relinquished almost all her assets into a trust over which she had the right appoint beneficiaries.ii) HOLDING: Within the meaning of the elective share statute, Testator retained enough meaningful control

over the trust to include it in the property subject to a surviving spouse’s elective share.

h) In re Estate of Garbade (1995)i) Wife signed a prenuptial agreement agreeing to nothing upon Husband’s death except a $100K life insurance

policy.ii) HOLDING: Duly executed prenuptial agreement is a binding waiver in respect to a surviving spouse’s

elective share.iii) Party attacking a prenuptial agreement/waiver has the burden of proving it was the product of fraud,

misrepresentation, duress, or undue influence.

i) Pretermitted Spouse (UPC § 2-301 & PA § 2507(3))i) Definition: testator marries after making a will and spouse is omitted from that particular willii) Pretermitted spouse omitted from will receives the share they would get had the decedent died intestateiii) EXCEPTION: Does not apply if will provisions include a clause covering subsequent marriage

j) Estate of Shannon (1990)i) Testator executed a will leaving everything to his daughter and disinherited everyone else.ii) Testator then married but never changed his will before he died.iii) HOLDING: Absent evidence to the contrary (that decedent intended to disinherit spouse), omitted spouse

shall receive a share of decedent’s estate.

3) RIGHTS OF ISSUE OMITTED FROM THE WILL

a) Pretermitted Child Statute (UPC § 2-302) (Purpose: parents, not the state, should care for their children)i) Generally: A parent is free to disinherit a child.ii) Child born after execution of will takes what share they would be entitled to had the decedent died intestate

unless there is a provision for the surviving parent of the child and the surviving parent takes "all or substantially all" under the will

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b) Azcunce v. Estate of Azcunze (1991)i) Testator executed a will providing for his then-born children.ii) Testator had another child, executed a codicil republishing the terms of the original will w/o providing

specifically for the new child, then died.iii) HOLDING: B/c a codicil republishes the terms of the original will, the child is not a pretermitted child and

cannot take under the statute.

c) Espinosa v. Sparber (1993)i) Lawyer was to draft a new codicil providing for an after-born child, but b/c of a dispute between Testator and

Lawyer, the new child was never provided for and the codicil republished the terms of the old will w/o providing for the new child

ii) HOLDING: The estate, stepping into the shoes of the Testator, may maintain a legal malpractice claim against Lawyer for any negligence involved in failing to follow Testator’s intent and provide for the new child.

d) In re Estate of Laura (1997)i) Testator’s will disinherited everyone but one daughter and great-grandchildren born after the execution of the

will sued under the Pretermitted Child Statute.ii) HOLDING: Testator who specifically names heirs in a will in an effort to disinherit them also references their

issue for purposes of disinherited them as well, thus bringing them outside the coverage of the Pretermitted Child Statute.

TRUSTS: CREATION, TYPES, AND CHARACTERISTICS

1) INTRODUCTION

a) Generally: transfer of property from one to another to hold in trust for the benefit of a third party (O to A in trust for the benefit of B)i) Trustee owns the legal interest in the trust resii) Beneficiaries own the equitable interest in the trust res

b) The Settlor: creates the trusti) Created during the settlor's lifetime is an intervivos trustii) Created by will is a testamentary trust

c) The Trusteei) May be a third party, the settlor, or a beneficiaryii) A trust never fails for want of a trustee (court will appoint a trustee)iii) Trustee is held to a high standard of conduct in managing the trust property and must administer the trust

solely in the interest of the beneficiaries(1) Trustee must not use the res for trustee's benefit(2) Trustee must not commingle funds of trust with other funds(3) Trustee must preserve property and make the property productive(4) All doubts are resolved against the trustee in favor of the beneficiary(5) Trustee has personal liability

d) The Beneficiaries: benefits from the trusti) Holds equitable interests including equitable claims on the trust property itselfii) Personal claim against the trustee for breach of trust

2) CREATION OF TRUSTS: THE TEST (1) Intent; (2) Property; (3) Beneficiaries

a) Intent (determined by the factual circumstances)i) Settlor must manifest intent to create a trustii) Settlor need only express intent to convey to another for use or benefit to a third partyiii) No magic words are necessary to create a trust

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iv) The following are not manifestations of intent to create trusts:(1) Precatory Language: creates only a moral obligation is not enforceable at law (e.g., I wish A would do

this for B). Must be directive language (A will hold in trust for B)(2) Equitable Charge: not a trust (e.g., testator devises property to a person provided that the person pay

money to another: O gives Blackacre to A provided that A pay B $400,000).

v) Jimenez v. Lee (1976)(1) Grandmother made gift to D Father of $ to be used for P Daughter’s education.(2) D put the $ in a bank account and then bought stock w/ the $.(3) HOLDING: Grandmother created a trust for the benefit of P and D breached his fiduciary duty as trustee

by mismanaging the funds, not keeping a separate accounting, and not using the $ for educational purposes

vi) Hebrew University Association v. Nye (1961)(1) Ethel expressed her intent to give a library to the Hebrew University(2) She gave the university a memorandum listing most of the important contents of the library and sent some

items to a warehouse for delivery(3) Ethel died and her representative claimed ownership of the library. The University also claimed

ownership of the library(4) RULE: If the donor of property intends to be trustee, she must show an intent to impose trustee duties

upon herself(5) RULE: Constructive delivery of a gift requires delivery as nearly perfect and complete as the type of

property and the circumstances will permit(6) HOLDING: Ethel gave the university a gift under the theory of constructive delivery.

b) Necessity of Trust Propertyi) A trust must have some kind of trust propertyii) Trust property is any transferable interest in property

(1) Licenses(2) Leases(3) Remainders(4) Contingent remainders

iii) Description of trust property must be sufficiently cleariv) A writing that promises to make gifts in the future is not binding as a voluntary trust

(1) Gift is present transfer of property(2) Trust is future transfer property

v) Expectancy cannot be trust propertyvi) A gift, however, can be made of property that is not in existence at the time the gift is made

vii) Unthank v. Rippstein (1964)(1) T wrote a letter to P promising to pay $200 per month (2) HELD: Letter was not a trust because T only bound himself to make gifts in the future

viii) Brainard v. Commissioner (1937)(1) B traded in trust for his children and assumed a fee of $10,000 at the end of the year(2) The trust res was purported to be the income from the stock trading(3) HELD: Trust could not be based on an interest that had not come into existence at the time the trust is

declared and in which no one had a present interest

ix) Speelman v. Pascal(1) O gave A 3% of the profits from a movie not yet in existence(2) HELD: a valid present gift can be made of property that is not in existence at the time the gift is made

c) Necessity of Trust Beneficiariesi) A trust must have one or more beneficiariesii) General Rule: Beneficiaries must be definite and generally ascertainable (factual determination)iii) Exceptions: Public trusts need not have definite and ascertainable beneficiariesiv) A private trust to "friends" as beneficiaries is invalid for lack of definitiveness and ascertainability

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v) Beneficiary can be an animal under an honorary trust so long as the conveyance does not violate the rule against perpetuities

vi) Clark v. Campbell(1) Will of O gave books etc. to "friends" as trustee shall select(2) HELD: A bequest to a trustee to distribute property to a trustee's "friends" is a private trust, not a public

trust(3) HELD: A private trust must have beneficiaries or a class of beneficiaries indicated so that they are

capable of coming into court and claiming the benefit. "Friends" could mean anybody

vii) In re Searight's Estate:(1) O gave to A $1,000 to hold in trust for O's Dog to be used "as long as the dog lived" and at a rate of 75¢

per day(2) HELD: Honorary trust binds the conscience of the trustee and is lawful if the trustee is willing to carry

out the settlor's wishes(3) Held: Conveyance did not violate the rule against perpetuities because the settlor provided a time limit:

the dog would die and the money would run out before the maximum period allowed under the rule

d) Necessity of Written Instruments to Create Trusti) Oral intervivos trust in personal property is enforceableii) General Rule: Where the res of the trust is land, a written instrument is required to make the trust effectiveiii) Exception: An oral intervivos trust in land is enforceable in equity

(1) Constructive trust will be imposed if(a) Oral promise(b) Confidential relationship between the transferee and transferor (factual determination) and(c) Detrimental reliance on the promise

(2) Statute of frauds does not apply to constructive trusts because constructive trusts arise by operation of law

e) Oral Trust for Disposition at Deathi) Alternative I: Property devised in trust not defined in the will but communicated orally outside the will can be

proved by oral evidenceii) Alternative II: Property devised in trust not defined in the will but communicated orally outside the will

cannot be proved by oral evidence(1) Trust is not sufficiently defined by the will to take effect(2) Equitable interest goes by way of resulting trust to the heirs as property of the deceased

iii) Oliffe v. Wells: (1) Testator left residue of her estate to D to distribute in such a manner as in his discretion shall appear best

calculated to carry out the wishes that she had expressed to him or may express to him(2) HELD: semisecret trust created cannot be proven by oral evidence: Resulting trust imposed

f) Failure of Trusti) A trust will fail if its material purpose has been frustrated, the trust lacks beneficiaries, or the trust lacks trust

propertyii) A trust will never fail for lack of a trustee (court will appoint one)iii) Resulting Trust: where a trust fails for want of beneficiary or want of trust res, a resulting trust arises by

operation of law and gives trust property to the settloriv) Constructive Trust: arises by operation of law where trustee must convey property to the wronged party. The

requirements are(1) Confidential relationship(2) Transferee's express or implied promise(3) Property was transferred in reliance on the promise and(4) Transferee was unjustly enriched

3) HONORARY TRUST

a) Gift in which the donor intends to benefit a non-human, non-charitable purposeb) Common Law: honorary trusts not recognized and failed—property reverted back to the settlorc) Modern Law: Trustee may enforce the trust, but may only use the trust res for the designated purpose

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4) DISCRETIONARY TRUSTS

a) Mandatory: trustee must distribute all the incomeb) Discretionary: trustee has the discretion to distribute either the income or the principal or both

i) Trustee can have wide or limited discretion according to the conveyanceii) If the trustee acts in good faith when deciding to distribute trust property, the beneficiary cannot compel

paymentsiii) Trustee has a duty to inquire into the financial resources of the beneficiary in order to recognize his needs

c) Court cannot compel the trustee to exercise discretiond) If the trustee decides to distribute income or principal, the interests vests in the beneficiary and his creditors may

reach it

5) SECRET TRUST

a) Will does not indicate a trustb) Decedent leaves a legacy to the beneficiary on the face of the instrument, without anything indicating intent to

create a trust, a promise to use the legacy for a specific reason would be enforceable by a constructive trust upon the beneficiary

c) Secret Trust is valid

6) SEMI-SECRET TRUST

a) Will indicates the intent to create a trust but does not identify the beneficiaryb) Semi-secret trust fails for lack of beneficiariesc) Minority Rule: extrinsic evidence is admissible to prove the trust

7) CUSTODIAL TRUST: UNIFORM CUSTODIAL TRUST ACT

a) Where the settlor is the beneficiaryb) Beneficiary cannot be the trusteec) Beneficiary instructs the trustee to manage propertyd) Upon the incapacity of a beneficiary, the trustee must

i) Use trust res for the support of the beneficiaryii) Use trust res for the support of the beneficiary's dependents

e) Once the beneficiary dies, the trust terminates that the res is distributed according to the beneficiary's written instructions

8) SPENDTHRIFT TRUSTS

a) Defined (("ST" for short) i) Beneficiary cannot voluntarily alienate his or her interest ii) Interests are protected from creditorsiii) Exception: the duty of a husband to support his former wife overrides the restrictions of the spendthrift

provisioniv) Shelley v. Shelley

(1) O created ST trust for his children by will(2) O split but he owed alimony to former wives and (3) HELD: wives could reach the corpus of the spendthrift trust

9) SUPPORT TRUST

a) Trustee is directed to make distributions as necessary for the education and maintenance of the beneficiaryb) Income and principal expended solely for that purpose

10) CREDITORS RIGHTS REGARDING TRUST PROPERTY

a) Creditors generally cannot reach the assets of a support or spendthrift trustsb) Exceptions: Creditors that can Pierce the Veil of Spendthrift Provisions

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i) Self-settled trust: ST trust cannot be set up by the settlor for the settlor's own benefitii) Child-support and alimony: judgments can be enforced against debtor's interest in ST trustsiii) Furnishing necessary support: Persons who furnish the necessary support can reach the ST trust assetsiv) Tax Lien: US or a state can reach the interest to satisfy tax claims against the ST trust beneficiaryv) Excess over amount needed for support: creditors can reach the amount not needed for support (e.g., A needs

$40,000 per year for support but gets $50,000 per year, creditors can reach the balance: $10,000)vi) Percentage Levy: applicable to wage earners: creditors can reach a percentage of the ST trust assetsvii) Tort Creditors: courts are split as to whether tort creditors can reach the assets of the ST trust

viii) United States v. O'Shaugnessy

(1) A is the beneficiary of 2 identical but separate trusts; have discretion to distribute assets during A's life(2) Trust agreement gives A power of appointment exercisable only by last will and testament(3) IRS assessed A for back taxes and tried to reach the trust assets(4) HELD: IRS cannot reach assets of a discretionary trust before the trustee exercises discretion to distribute

trust income

11) POWER OF APPOINTMENT

a) General: Exercisable in favor of the person granted the power of appointment (donee)b) Specific: Not exercisable in favor of the person granted the power of appointment (donee)c) Powers of Appointment are broader than trustsd) No fiduciary duties arise because holder of the power need not appoint the powere) No fiduciary duty to act

12) MODIFICATION AND TERMINATION OF TRUSTS

a) Settlor Alivei) If settlor and all beneficiaries agree, the trust can be terminated or modifiedii) Trustee cannot object

b) Settlor Deadi) General Rule: trust cannot be terminated or modified if the termination or modification will defeat a material

purpose of the trustii) Exception:

(1) Consent by all beneficiaries(2) No beneficiary must be legally disable and(3) The termination or modification will not frustrate the material purpose of the trust

c) Other Methodsi) Merger: where legal and equitable title merge into one, there is no longer a trustii) Surrender: where no beneficiaries remain or a beneficiary diesiii) Frustration of Material Purposeiv) Natural Terminationv) Trust Purpose Becomes Illegal (i.e., Before prohibition years, O to A in trust for the benefit of B so long as B

uses it in a beer manufacturing capacity. When prohibition hits, the trust purpose has become illegal and thus the trust terminates)

CONSTRUCTION OF TRUSTS: FUTURE INTERESTS

1) DEFINITIONS

a) Present Estatesi) Whole: not subject to any conditions and expire naturally

(1) Fee Simple; Fee Tail; Life Estates; Life Estate pur autre vieii) Defeasible: may be cut off prematurely because of the happening of a condition

(1) Fee Simple Determinable (so long as)(2) Fee Simple Subject to Condition Subsequent (but if)

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b) Future Interestsi) Nonpossessory interest capable of becoming possessory in the future

(1) Reversions(2) Remainders(3) Possibility of Reverter(4) Right of Reentry/Power of Termination(5) Executory Interests

2) CLASSIFICATION OF FUTURE INTEREST

a) Grantor: A future interest in the grantor will always be eitheri) Reversion: Future interest left in the grantor after he conveys an estate of less than a fee simple absoluteii) Possibility of Reverter: Grantor’s interest when he conveys a fee simple determinable. If the some future

event occurs, the estate goes back to Grantoriii) Right of Reentry/Power of Termination: Grantor’s interest when he conveys a fee simple subject to condition

subsequent and retains the power to cut short the estate upon the happening of the condition

b) Grantee: A future interest in the grantee will always be eitheri) Remainders: remainders are either contingent or vested

(1) Contingent(a) Unborn (b) Unascertained or(c) Subject to Condition Precedent

(2) Vested(a) Indefeasibly(b) Subject to Open or Partial Divestment(c) Subject to Divestment

ii) Executory interests: interest other than remainders

3) CONSTRUCTION AND DRAFTING PROBLEMS

a) Preference for Vested Interestsi) Common Law Presumption: If an interest may be classified as vested or contingent, there is a preference to

classify it as vestedii) Survival Requirement: If a person with a future interest in a remainder does not survive to take the interest,

the remainder passes into his estate, absent a requirement of survival by the testatoriii) In re Estate of Gilbert (1992)

(1) D renounced his interest due to religious reasons in a discretionary trust created by his father’s will.(2) HOLDING: D, who had a interest in a contingent remainder, has a property interest that he may

renounce. The property is dispersed as if D predeceased his fatheriv) First National Bank of Bar Harbor v. Anthony (1989)

(1) Testator created an inter vivos trust in favor of his wife, if she should survive him, and then in favor of his 3 kids.

(2) Wife and Son predeceased Testator and the trust was split between Testator’s 2 living children.(3) HOLDING: B/c the trust was an inter vivos trust, Son’s interest vested at the time the trust was created;

b/c there was no requirement of survivorship for the children, Son’s interest is inheritable by his heirs.v) Security Trust Co. v. Irvine (1953)

(1) Testator’s will created a trust for 2 of his sisters, Mary and Martha, during their life.(2) Upon their death, the trust property would be split among all of his brothers and sisters.(3) HOLDING ONE: The membership of Mary and Martha in a separate class as beneficiaries of the trust

during their lives does not prevent them from taking as members of the class of Testator’s siblings.(4) HOLDING TWO: There is a preference for early vesting to be determined at the time of the Testator’s

death, and absent contrary evidence in the terms of the trust that the interest of a remainderman is to divest, the interests of each sibling pass to their respective estates

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b) Class Giftsi) General Rules:

(1) Classes Defined: A gift made to two (2) or more people(2) Absent evidence to the contrary, members of a class are joint tenants with the right of survivorship(3) The term Children does not include grandchildren. The term Issue includes grandchildren and more

remote descendants.(4) General Rule: the identity of heirs entitled to trust assets is determined at the time of the death of the

testator(5) Exception: If the testator devises a trust for the life of one of his heirs, then to the life tenant’s heirs, the

identity of the heirs is determined at the date of death of the life tenant, not the testator

ii) Doctrine of Worthier Title(1) O to A in trust for B’s life, then to O’s heirs.(2) It is presumed that O intended to give himself a reversion, not a remainder in his heirs.(3) Doctrine may be rebutted by evidence. (4) UPC 2-710 abolishes the Doctrine

iii) The Rule in Shelley's Case:(1) O to A in trust, then to A's Heirs(2) Presumption that A gets a remainder in fee simple, not a fee simple in his heirs(3) Abolished in nearly all states because it contravenes the grantor's intent

iv) Class-Closing Rule (Rule of Convenience) (1) Class closes when any member of the class has the right to demand payment of their share(2) Class does not close when members of the class actually demand payment or distribution occurs.

v) All or Nothing Rule(1) Class gifts may be subject to the rule against perpetuities(2) All interest in class gifts must vest during the perpetuities period

vi) Dewire v. Haveles (1989)(1) Testator created a class gift to his grandchildren payable to his grandchildren equally upon the death of

his son and his son’s widow.(2) ISSUE: Whether Testator’s great-granddaughter can step into her father’s shoes and take the gift?(3) RULE: Absent evidence to the contrary, members of a class are joint tenants w/ the right of survivorship.(4) HOLDING: Here, Testator’s will shows the contrary intent to treat all grandchildren equally; therefore,

great-granddaughter may take her father’s share

vii) Minary v. Citizens Fidelity Bank & Trust Co. (1967)(1) Testamentary trust was created in favor of sons and their heirs.(2) The last son to die had adopted his wife to bring her under the terms of the trust, who seeks to take the

rest of the trust assets.(3) HOLDING: Although adult adoption were permitted in the state, Wife will not receive the trust assets

b/c that would bring under the coverage of a pre-existing testamentary trust which would defeat the clear intent of the Testator

viii) Estate of Woodworth (1993)(1) Testator created a trust for the life of Wife; After Wife’s death , the assets would go to Daughter if she

survived Wife, and then Sister’s heirs.(2) Sister died, then her Husband, then Wife(3) RULE ONE: Normally, the identity of heirs entitled to trust assets is determined at the time of the death

of the testator.(4) RULE TWO: If the testator devises a trust for the life of one of his heirs, then to the life tenant’s heirs,

the identity of the heirs is determined at the date of death of the life tenant, not the testator.(5) Here, when the life tenant died, there were no heirs, so the court went back and used the date of the death

of the Testator, and the assets passed into the Husband’s estate.

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ix) Lux v. Lux (1972)(1) Testator’s will left a trust for her grandchildren to share equally and any real property was not to be sold

until the youngest of the grandchildren reached age 21.(2) Testator was survived by 1 son and 5 grandchildren.(3) The youngest was born after the will was executed but before Testator died; Son informed the court of his

intention to have more children.(4) HOLDING: The trust will close when the youngest living member of the class at the time of Testator’s

death turns 21.

DURATION OF TRUSTS: RULE AGAINST PERPETUITIES

1) RULE: No interest is valid unless it is certain to vest, if at all, not later than 21 years after some relevant life in being at the creation of the Interest

2) ANALYSIS

a) Determine the Time the Interest was Createdb) Determine Whether the Rule Applies to the Interest

i) Does not apply to Present Estates (already vested)(1) Reversions (2) Indefeasibly Vested Remainders (3) Alternate Contingent Remainders

ii) Applies to Future Interests(1) Contingent Remainders(2) Vested Remainders subject to open or partial divestment(3) Executory Interests

c) Determine the Event that Must Occur Before the Interest is Vestedd) Determine the Perpetuities Period

i) Common Law: Relevant Life in Being + 21 Years(1) Relevant life in being must be alive at the time the interest is created(2) Relevant life in being must impact the vesting in some way(3) Unborn Widow: cannot be a relevant life in being if not named

ii) Modern Law: UPC § 2-901(a)(1) Does not follow the common law approach (2) Interest must be certain to vest, if at all, in 90 years after the creation of the interest

e) Conclusion: If the interest is not certain to vest, if at all, during the perpetuities period, the interest is void at the time the interest was created

3) PURPOSE OF THE RULE

a) To assure that contingent interests or other interests subject to the rule of perpetuities do not remain contingent forever

CHARITABLE TRUSTS

1) CREATION

a) Intent to create charitable trust must be evidentb) Material purpose of charitable trust must be one of the following:

i) Relief of povertyii) Advancement of educationiii) Advancement of religioniv) Promotion of Healthv) Government or Municipal Purpose orvi) Other purposes that accomplish the end of benefiting the community

c) Beneficiaries need not be definite and ascertainable but must be specified in some wayd) Charitable trust need not comply with the Rule Against Perpetuities e) Mere generosity or benevolence to the beneficiary is not enough

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f) Case law:i) O granted purported educational trust (charitable) to certain children in school would take effect before

Christmas and Easter.ii) Court holds that it was not a charitable trust

2) MODIFICATION

a) A charitable trust can be modified if i) The grantor evidenced a general intent to create a charitable trust and ii) The material purpose of the trust has become

(1) Impossible(2) Impractical(3) Illegal

b) To determine the general and specific purposes of a charitable trust, look to the four corners of the conveyance

c) Under the Cy pres Doctrine, an individual has the power to petition the court to modify the trusti) The trust will not fail ii) Court can modify the trust to achieve another charitable purpose

d) Cy Pres Doctrine cannot be used simply because the trustee thinks another purpose f the trust would be more desirable

e) In re Neheri) Testator gave charitable trust to A to set up hospital in the memory of her late husbandii) General Purpose: memorial for her husband; Specific Purpose: Hospitaliii) Court allowed a memorial hall to be built rather than a hospital, since the city had several hospitals alreadyiv) Court has great discretion

3) SUPERVISION

a) The grantor or donor cannot enforce the restriction in the charitable trust unless the conveyance expressly reserves this right in the donor

b) Otherwise, only the Attorney General of the State, as representative of the public at large, can enforce the provisions of the trust

TRUST ADMINISTRATION: DUTIES, POWERS, AND LIABILITY OF THE TRUSTEE

1) DUTIES OF THE TRUSTEE

a) General Duty of Loyaltyi) Trustee has a duty of undivided loyalty to he beneficiariesi) Must administer the trust solely in the interest of the beneficiariesii) Per se Rule: There shall be no self-dealing whatsoever

(1) Even if self-dealing is in good faith and fair, the Court need not inquire further after self-dealing is shown(2) Automatic violation of the duty of loyalty

iii) Trustee cannot accept employment opportunities that conflict with trustee duties

ii) Hartman v. Hartle:(1) O conveys Blackacre to A in trust.(2) A purchases Blackacre and sells to wife for profit(3) HOLDING: No further inquiry into whether deal was fair or done in good faith: NO SELF DEALING

iii) Rothko(1) 3 trustees disposed of paintings(2) Trustee A knew that B and C were self-dealing

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(3) B was the president where the paintings were sold and got 50% commission (where the normal rate is 10%)

(4) C was an artist that got a deal because of the sale(5) HOLDING: A has affirmative duties to prevent violations of the duty of loyalty; B and C were self-

dealing(6) Trustee held liable for damages to son and daughter of artist

c) Duty not to Delegate Trustee Dutiesi) Trustee is under a duty to the beneficiary not to delegate to others the doing of acts which the trustee can

reasonably be required personally to perforceii) Policy: Trustee is someone settlor trusts; therefore, should not be changediii) Modern Law: Nondelegation abrogated—trustee has a duty to exercise reasonable care, caution, and skill

when selecting agents to carry out trustee duties

iv) Shriners(1) Trustee delegated duties to A and A embezzled $300,000(2) Held: Trustee cannot delegate duties; trustee is personally liable

d) Duty of Impartialityi) Trustee has the duty to deal with the income beneficiary and the remainderperson impartiallyii) Trust res must produce reasonable income for distribution to the income life beneficiaryiii) The principal is ultimately distributed to the remainderpersoniv) Dennis v. RI Hosp. Trust Co.: Trustee has proactive duties including market analysis to determine best

managerial strategy

b) Duty to Inform and Account to Beneficiaryi) Jiminez, supra: duty to account and duty not to commingle fundsii) Nat'l Academy

(1) O to A in trust for wife so long as Wife remained unmarried and gave nothing to family; if so, then to Nat'l Research Academy

(2) Wife remarried and periodically sent brother checks from trust fund(3) Even though they didn't inquire, A told Nat'l Research that Wife was complying with the trust(4) HELD: trustee has a duty to inquire and inform remainderperson about the breach of trust agreement

c) Personal Liability for Violating Trustee Dutiesi) A trustee has personal liability for violating trust duties

2) POWERS OF THE TRUSTEE

a) Spelled out specifically in the conveyanceb) Trustee can exercise only those powers

3) TRUSTEE AND INVESTMENT OF TRUST FUNDS

a) Trustees should diversify investmentsb) Trustees should not invest in second mortgagesc) Trustee should investigate any investmentd) Estate of Collins

i) Testamentary Trust: O to A in trust for O's Daughter at $4000/yearii) A, a lawyer, gave $50k in trust funds to another client as a secured loaniii) HELD: self-dealing, violation of all three rules above

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