Wte Fall 19wte Outline

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WTE Fall 2019 - WTE Outline
Wills Trusts Estates (American University (USA))
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Wills, Trusts, and Estates – Fall 2019

I. Introduction to Estate Planning and the Lawyer’s Roles
Great Britain enacted the Statute of Wills in 1540. Statute of Wills: a law that provided legal recognition
that property could be transferred by will. Only property that is owned by the decedent at death is included
in the probate estate and disposed of by will or in the absence of a will, through intestacy.
A. The Legal System Governing Trusts and Estates

Uniform Law Commission drafted the Uniform Probate Code in 1969. In 2000, they codified the
Uniform Trust Code.
UPC §1-102(b)(2) (“The underlying purposes and policies of this Code are . . . to discover and make
effective the intent of a decedent in distribution of his property . . . ”).
1. Wills
Wills are the traditional method of disposing property. A will is an unilateral written disposition of
property to take effect upon death. The testator is the individual who executes the will.
2. The Emergence of Will Substitutes

Will substitutes are also called “probate avoidance devices.” They include gifts, revocable living
trusts, certain bank and securities accounts, and life insurance policies. They are established while
the donor is still living. The transfer from donor to donee happens outside the probate process, at
the donor’s death.
Will substitutes differ from wills in three ways:
(1) Most will substitutes are asset specific; each deals with a single type of property (life insurance,
bank accounts, mutual funds, etc.)
(2) Avoids probate 1—a financial intermediary ordinarily takes the place of the probate court in
effecting the transfer.
(3) The formal requirements of the Wills Act do not govern will substitutes
3. The Probate Process

Probate is the process by which property from the estate is distributed to the appropriate recipient.
When someone dies without a will, they die intestate.
The probate estate includes: (i) all property that is owned by the decedent at death where the
beneficiary is not already determined by a will substitute; and, (ii) property acquired by the
decedent’s estate at or after the decedent’s death.
The probate process is intended to perform several useful functions. An executor is supposed to: (1)
collect or “marshal” all the decedent’s assets and detail them on a list or “inventory”; (2) manage
those assets during the several months or years it might take to administer the estate; (3) pay all
those to whom the decedent owed debts, including hospital, doctor, and funeral bills and state and
federal tax authorities; and (4) distribute what remains in the estate to the persons named in the
will.
Goals of Probate:
• Proving the will or establishing that the decedent died intestate;
• Gathering the assets and managing them until they are distributed;
• Satisfying and resolving the claims of creditors, including taxing authorities, and
• Transferring ownership of the decedent’s probate property to heirs and devisees free of the
claims of the decedent’s creditors or other potential beneficiaries.
1 Only significant advantage

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B. Testamentary Freedom and Limitation son “Control from the Grave”

Control from the grave arises when the decedent conditions a gift to a beneficiary upon the
beneficiary behaving in a certain way. By conditioning a testamentary gift, the decedent is attempting to
exercise control over the beneficiary after the transferor’s death.
Feinberg v. Feinberg
Facts: Max Feinberg executed a will and created a trust leaving his assets to pour over into the trust;
When wife Erla died any assets remaining in trust would be distributed per “beneficiary restriction
clause”- for the then-living descendants who married w/ Jewish faith or whose spouse converted. Only 1
of 5 met the conditions of the restrictive clause and was entitled to receive from the trust
Issue: Whether the beneficiary restriction clause violated public policy of the state, rendering it void?
Holding: This was not contrary to public policy and therefore was valid. Court emphasized: (1)
decedent’s broad testamentary freedom. Testators were not obligated to make any provision for their
grandchildren (2) provisions created an incentive w/ respect to marriage, not promoting divorce.
Rest. 2d Wills §5.1. Unless contrary to public policy or violative of some rule of law, a provision
in a donative transfer which is designed to prevent the acquisition or retention of an interest in property
in the event of any failure on the part of the transferee to comply with a restraint on personal conduct is
valid.
Rest. (3d) Trusts §29. An intended trust or trust provision is invalid if: (a) its purpose is unlawful or
its performance calls for the commission of a criminal or tortious act; (b) it violates rules relating to
perpetuities; or (c) it is contrary to public policy.
C. The Professional Standards Associated with Estate Planning

1. Introduction
Estate planning attorneys also have to be concerned that a disappointed beneficiary or heir may not
only claim a breach of ethical duties but also (i) challenge a will or other planning document, or (ii)
bring a malpractice claim against the attorney. Unlike disciplinary proceedings or will contests,
these civil actions are designed to compensate individual victims by awarding damages.
More than 10% of all malpractice claims filed against attorneys involve estates, trusts, and probate.
2. The Model Rules of Professional Conduct and ACTEC

a. Counseling
MRPC 1.2. Scope of Representation and Allocation of Authority Between Client and Lawyer.
(a) Subject to paragraphs (c) and (d), a lawyer shall abide by a client’s decisions concerning the
objectives of the representation and [] shall consult with the client as to the means by which they
are to be pursued. . . .(b) A lawyer’s representation of a client, including representation by
appointment, does not constitute an endorsement of the client’s political, economic, social or
moral views or activities.(c) A lawyer may limit the scope of the representation if the limitation
is reasonable under the circumstances and the client gives informed consent.(d) A lawyer shall
not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or
fraudulent, but a lawyer may discuss the legal consequences of any proposed course of conduct
with a client and may counsel or assist a client to make a good faith effort to determine the
validity, scope, meaning or application of the law.
ACTEC Commentary on MRPC 1.2. Lawyers are permitted an encouraged to assist their
client in making informed judgements regarding the method by which the client’s objectives will
be fulfilled.
MRPC 2.1. Advisor.
In representing a client, lawyer shall exercise independent professional judgement and render
candid advice (this can include considerations such as moral, economic, social and political
factors that may be relevant to the client’s situation)
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ACTEC Commentary on MRPC 2.1. When advising, the layer should recognize his or her
own limitations and risks inhering in attempting to assist the client w/ respect to matters
beyond the lawyer’s expertise and may suggest the client consult with an expert in a particular
field.
b. Confidentiality
MRPC 1.6. Confidentiality of Information.
ACTEC Commentary on MRPC 1.6- The lawyer’s duty of confidentiality continues after the
death of the client. A client or personal representative may give consent for the disclosure of
confidential information. A lawyer may represent a husband and wife or parent and child, whose
dispositive plans are not entire the same. The lawyer should discuss with both clients the terms
of representation, including what information will be shared etc. (p. 24–26)
c. Conflict of Interest
MRPC 1.7. Conflicts of Interest: Current Clients
ACTEC Commentary on MRPC 1.7 (p. 26–27)
MRPC 1.8. Conflicts of Interest: Specific Rules
3. Common Situations Raising Ethical Issues for Estate Planners

a. Joint Representation
Joint representation can have its benefits (cost and efficiency) but there may be conflicting
interests.
Some clients may need separate representation. Some examples include:

• Blended family with children from different marriage; both parents might want to obtain
separate lawyers. Additionally, to ensure that the children each receives the inheritance
that their parent wanted them to receive, that parent might want to create an estate plan
separate from the other spouse—would need a separate lawyer.
• Client seeking prenuptial agreement
• Non-marital couples
• Dispute over the ownership of assets of the couple

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b. Third-Party Payment
While payment by a third-party other than the testator is permitted, attorneys should beware of
any potential conflicts.
c. Counseling
Lawyers cannot counsel a client in commissioning crimes or frauds but can advise a client on the
legality of a plan. Must adequately communicate so that clients can make informed decisions.
4. Malpractice
Malpractice is when a plaintiff sues an attorney rather than, or in addition to, contesting the will.
Who can sue?
a. Avoiding Malpractice?
Specific causes of action against estate planning attorneys for malpractice have included: (1)
error in execution; (2) failure to accomplish testator goals or effectuate testator’s intent; (3)
error of law; (4) failure to update an estate plan based on new law or facts; (5) failure to
investigate heirs and assets; (6) failure to advise the testator on the effect of a testator’s intent on
taxes or other beneficiaries; (7) breach of contract to make a will; (8) negligent estate planning
(which caused additional estate tax); (9) errors in drafting; (10) allowing execution when
testator lacked testamentary capacity; (11) delay in implementation of estate; (12) missed
deadlines; (13) limiting representation to discrete issues
b. Privity
Privity is when a third party can sue the attorney.
Hall v. Kalfayan
Facts: Alexandra Turner exhibited signs of dementia. Lawrence Kalfayan was appointed as the
attorney to represent Ms. Turner’s interests recommended Carlyle Hall to serve as conservator.
In a meeting Turner expressed her desire to leave more than 1/2 of her estate to Hall. While
documents were drawn up and in approval process, Turner died before the plan had been
approved by the court. Estate went to Turner’s step-children and adopted siblings. Hall sued for
Kalyayan for malpractice for failing to perform duties in a timely manner.
Issue: Whether an attorney who did not ensure the completion of a new estate plan before the
decedent’s death was liable to one of the intended beneficiaries
Holding: Hall did not establish that Kalfayan had a duty to him, a necessary claim for
professional negligence. Here, Hall was only a potential beneficiary because there was no
testamentary document naming him as an actual beneficiary.

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II. Inheritance and Relationship

American system of inheritance is a status based system, with the behavior based exceptions of homicide,
abandonment, termination of parental rights, and abuse. Status-based terms include: child, issue,
descendant, spouse, and parent. Three types of statutes affect inheritance by family members:
(1) Intestacy Statutes govern who is entitled to inherit from a decedent who dies without a will.
these favor close family members over distant relatives/nonrelatives.
(2) Statutes of wills allow citizens to opt out of the default intestacy rules and draft a will. This
allows specific individuals or organizations to be the recipients of property upon death.
(3) Rules of construction help courts interpret wills and other instruments, and they favor
family over other individuals.
A. Who is a Child?
1. In General
A child is an individual entitled to take by intestate succession from the parent whose relationship
is involved, excluding a person who is only a stepchild, a foster child, a grandchild, or any more
remote descendant. UPC §1-201(5).
A descendant of an individual means all of his descendants of all generations, with the
relationship of parent and child at each generation being determined by the definition of child and
parent. 2 UPC §1-201(9). An issue of an individual means descendant. UPC §1-201(24).
UPC §2-705. Class Gifts Construed to Accord with Intestate Succession; Exceptions-
(b) A class gift [in a governing instrument] that uses a term of relationship to identify the class
members [such as “my children” or “my descendants”] includes [those children or descendants
determined] in accordance with the rules for intestate succession regarding parent-child
relationships.
2. Intestacy—Interpreting Statutes
Defining spouse, children, and descendants in the will is important, especially if we want to include
those whose status might change by later events or who we want to specifically exclude.
UPC refers to the Uniform Parentage Act (UPA) for determinations of paternity based on
presumptions but provides own rules for paternity based on genetic relationship (UPC §2-117),
adoption (§2-118), assisted reproduction (§2-120), or gestational agreement (§2-121).
a. Establishing Maternity
UPA §201. Establishment of a Parent-Child Relationship-MOTHER
(a) The mother-child relationship is established between a woman and a child by:
(1) [giving birth to a child] (unless done so as a surrogate- see (4)
(2) Adjudication of maternity, e.g. in child support case
(3) Adoption
(4) [Adjudication of maternity when another is the gestational parent due to ART
arrangement (surrogacy)]
b. Establishing Paternity
UPA §201. Establishment of a Parent-Child Relationship- FATHER
(b) The father-child relationship is established between a man and a child by:
(1) an unrebutted [or unsuccessfully rebutted] presumption of the man’s
paternity of the child under Section 204
2“Parent” includes any person entitled to take, or who would be entitled to take if the child died without a will, as a parent
under this Code by intestate succession from the child whose relationship is in question and excludes any person who is
only a stepparent, foster parent, or grandparent. UPC §1-201(32).
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(2) an effective acknowledgement of paternity by the m an under [Article] 3, unless

the acknowledgement has been rescinded or successfully challenged;
(3) an adjudication of the man’s paternity, e.g. in child support case
(4) adoption of the child by the man, [or]
(5) the man’s having consented to [ART] by a woman under [Article] 7 which resulted
in the birth of the child.
i. Marital Children and the Marital Presumption
Historically the material presumption was conclusive.
Michael H. v. Gerald D. (1989)- the Court, interpreting CA law, held that a man who was
not the husband of the child’s mother but whose blood tests showed a 98.07% probability of
being the father, was not denied due process rights when he was not allowed to demonstrate
his paternity in an evidentiary hearing. The court held that the State could apply the marital
presumption regardless of whether the husband was the biological father.
UPA §204. Presumption of Paternity-Marital father
(a) A man is presumed to be the father of a child if:
(1)-(3) before the birth of the child, he and the mother of the child are married to
each other and the child is born during the marriage or were married to each other
and the child is born within 300 days after its termination by death, annulment,
declaration of invalidity, divorce, or decree of separation... [(may not apply to
posthumous births via ART)]
(b) a presumption of paternity established under this section may be rebutted only by
adjudication under [Article] 6 [normally via genetic testing].
The presumption applies if marriage was in apparent compliance with law even if attempted
marriage is later declared invalid.
ii. Nonmarital Children
SCOTUS established the constitutional requirement that states provide some statutory
mechanism by which nonmarital children could try to establish paternity and inherit from
their fathers.
Trimble v. Gordon (1977). SCOTUS held unconstitutional an Illinois statute that
prevented a nonmarital child from inheriting from the child’s father unless the child’s
mother and father had later married. Their reasoning included promoting two parent
families and enhancing the orderly disposition of the estate.
Lalli v. Lalli (1978). Applying intermediate scrutiny, SCOTUS upheld a NY statute
allowing a nonmarital child to inherit if paternity was established by adjudication.
If child is NOT born to people already married (or believed to be married) or within 300
days of termination of marriage, the marital presumption does not apply.
UPA §204. Presumption of Paternity- Nonmarital father
(a) A man is presumed to be the father of a child if:...
(1)-(3) [just discussed- applies to marital children]
(4) after the birth of the child, he and the mother of the child married each other in
apparent compliance with law, whether or not the marriage is or could be declared
invalid, AND he voluntarily asserted his paternity of the child [e.g. in a public
record, on the birth certificate or in a support proceeding], or
(5) for the first two years of the child’s live, he resided in the same household with
the child AND openly held out the child as his own.

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(b) a presumption of paternity established under this section may be rebutted only by
adjudication under [Article] 6 [normally via genetic testing].
UPA uses “openly held out the child as his own” while some state use “openly and
notoriously recognized the child as his”
If no presumptions apply, maternity can be established through:
(b) Acknowledgement of Paternity (UPA §201(b)(2))- through the father’s “effective”
acknowledgement that the child is his (can be on a form entitled- “Voluntary
Acknowledgement of Paternity”)
(c) Adjudication of Paternity (UPA §601)-a child, mother or other party can bring an
involuntary paternity action
c. Adopted Children
A legally adopted child falls w/in the definition of a “child” in the intestacy statutes of all states
Adopted children may inherit from and through their adoptive parents and their parents may
inherit from or through them. “Inheriting through” means you do not inherit directly from them
but have to establish a connection with them in order to inherit form someone else. (p.61)
Adoption generally severs ties between the adopted child and the genetic parents, with the
exception of “stepparent adoption.”
UPC §2-118(a). Parent-Child Relationship Between Adoptee and Adoptive Parent(s)
(a) Except as otherwise provided in subsections (b) through (e), a parent-child relationship does
not exist between an adoptee and the adoptee’s genetic parents.
UPC § 2-119(a). Parent-Child Relationship between Adoptee and Genetic Parent(s)
(a) Except as otherwise provided in subsections (b) through (e), a p aren’t-child relationship
does not exist between an adoptee and the adoptee’s genetic parents.
i. Children Adopted by a Stepparent
A stepparent can only adopt a child once the other parent’s rights have been terminated,
either voluntarily or involuntarily. This rule preserves the ability of the child to inherit form
the biological family. Under this exception, the child may inherit from the adopting
stepparent and his family and from both genetic parents and their families.
UPC §2-119(b). Stepchild Adopted by Stepparent
(b) A parent-child relationship exists between an individual who is adopted by the spouse of
either genetic parent and:
(1) the genetic parent whose spouse adopted the individual; and
(2) the other genetic parent, but only for the purpose of the right of the adoptee or a
descendent of the adoptee to inherit form or through the other genetic parent.
Under UPC §2-119(b)(2), the right to inherit belongs to the child, not the other genetic
parent or her relatives. Here inheritance is a one-way street.
ii. Adult Adoption
Adult adoptees can inherit from their adoptive parents; they often may not inherit from
nonparents who leave a class gift in a will or trust to the “children” of the adoptee’s parent or
to their own “descendants.”
In re Brockmire (p.66)- shows the unintended consequences of how someone can become
ineligible to inherit. The court found that the decedent’s granddaughter could not inherit
from him because her mother (the decedent’s daughter) had been adopted by her stepfather
as an adult prior to decedent’s death. The adoption severed the relationship between the

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daughter and the decedent and thus neither the daughter nor the granddaughter was eligible
to inherit from the decedent under the intestacy statute.
iii. Equitable Adoption
Equitable adoption is the rule that allows the child to inherit from the supposed parent
even in the absence of formal adoption procedures, also known as adoption by estoppel.
Wheeling Dollar Savings & Trust v. Singer-The Supreme Court of WV held that for
the doctrine of equitable adoption to be applied, it must be established by “clear, cogent, and
convincing proof.” The “equitably adopted child” in any private property dispute must prove
by clear, cogent and convincing evidence that he has stood from an age of tender years in a
position exactly equivalent to a formally adopted child. The court listed factors that tend to
support the application of equitable adoption in a particular case including: (1) the benefits
of love and affection accruing to the adopting party, (2) the performances of services by the
child, (3) the surrender of ties by the natural parent, (4) the society, companionship and
filial obedience of the child, (5) an invalid or ineffectual adoption proceeding, (6) reliance by
the adopted person upon the existence of his adoptive status, (7) the representation to all the
world that the child is a natural or adopted child and the rearing of the child from an age of
tender years by the adopting parents.
d. Assisted Reproductive Technology (ART) Children
Assisted reproduction is a means of causing pregnancy other than by sex. UPC §2-115.
Different kinds of ART situations include artificial insemination, in-vitro fertilization, surrogacy,
posthumous conception. When a husband’s sperm and a wife’s egg are used during their
lifetime, the resulting child is, pursuant to the marital presumption, marital.
UPC §2-120. Child conceived by Assisted Reproduction Other than Child Born to Gestational
Carrier. (p.70).
i. Surrogacy
The gestational carrier is generally not deemed to be the m other for purposes of inheritance.
UPC §2-121. Rather the woman who intends to be the mother of the child (the woman who
entered into the gestational agreement with the surrogate is the mother for purposes of
inheritance).
ii. Posthumous Conception and Frozen Embryos
A child who is in gestation at the time of the parent’s death and who survives 120 hours after
birth is eligible to inherit from that parent. (UPC §2-104(a)(2))
UPC § 2-120(k). When Posthumously Conceived Child Treated as in Gestation.
(k) If, under this section, an individual is a parent of a child of assisted reproduction who is
conceived after the individual’s death, the child is treated as in gestation at the individual’s
death for purposes of Section 2-104(a)(2) if the child is:
(1) in utero not later than 36 months after the individual’s death, or
(2) born not later than 45 months after the individual’s death.
Astrue v. Capato
Facts: Karen Capato (decedent’s widow) sought benefits for her twins who were the
biological children of Robert Capato (deceased). The twins were born as the result of IVF 18
months after the Robert’s (decedent’s) death. Per FL law, marriage ends upon death of a
spouse, so the twins, conceived after the death of their father would not qualify as “marital
children for benefit purposes.
Holding: Posthumously conceived children are only entitled to benefit if they qualify as a
child under a state intestacy statute or if they satisfy one of the statutory alternatives to that
requirement. The United States Supreme Court upheld the Social Security Administration’s
interpretation of the Social Security Act and denied benefits to the twins.
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e. Foster and Stepchildren

Foster children and stepchildren are generally not included in the term “child” for purposes of
intestacy or construction of wills and trusts.
A foster child is a child who is unrelated to either a husband or a wife but for whom they
provide care, typically as the result of a formal placement by a state social services agency. A
stepchild is a spouse’s child from a previous marriage or relationship who was not legally
adopted by the stepparent.
In some states stepchildren may be eventual takers in intestacy when no other heirs exist, but
they do not take as “children.” UPC §2-103(b) gives a stepchild and the stepchild’s
descendants an intestate share if there are no other blood relatives of the decedent within the
first three degrees of relationship.
3. Interpreting Class Gifts in Wills and Trusts

Class gifts are bequests in a will or trust that refer to the beneficiaries by relationship, e.g., “my
children,” “my grandchildren,” “my descendants.”
a. Class Gifts from Parents
UPC § 2-705(b). Class gifts
A class gift that uses a term of relationship to identify the class members [e.g. my children or
my descendants] includes a child of assisted reproduction, a gestational child, and, except as
otherwise provided in subsections (e) and (f), an adoptee and a child born to parents who are
not married to each other, and their respective descendants if appropriate to the class, in
accordance with the rules for intestate succession regarding parent-child
relationships.
Whether a child is a member of a class gift from a parent turns on the very specific language
used by the parent in his will or trust. If a parent uses a broad term of relationship like
“children” or “descendants” without further information, a nonmarital child will be included in
the class gift. But remember that parents are free to exclude children from their wills. A
posthumous child born to the decedent’s spouse is still considered a child of the marriage. UPC
§2-701.
b. Exception—Class Gifts from Nonparents
Special rules apply if not a parent. Marital children are automatically included in the class, and
nonmarital children and adoptees who were not adopted as minors may have to meet certain
qualifications under the UPC.
UPC §2-705(e). Class Gifts Construed to Accord with Intestate Succession; Exceptions.
(e) [Transferor not Genetic Parent] for a transferor who is not the genetic parent, a
child of a genetic parent is not considered the child of the genetic parent unless the genetic
parent, a relative of the genetic parent, or the spouse or surviving spouse of the genetic parent or
of a relative of the genetic parent functioned as a parent of the child before the child
reached [18] years of age.
UPC §2-115(4). “Functioning like a parent” means that the individual behaved “toward a child
in a manner consistent with being the child’s parent and performing functions that are
customarily performed by a parent, including fulfilling parental responsibilities toward the
child, recognizing or holding out the child as the individual’s child, materially participating in
the child’s upbringing, and residing with the child in the same household as a regular member of
that household.”

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UPC §2-705 adopts a so-called agency approach, in which a child’s parent, a relative, or a
surviving spouse of the parent is the testator’s “agent” in ascertaining whether or not a
nonmarital child should be included in the definition of child.
Example: Bob and Carol met in college and became romantically involved. Carol subsequently
gave birth to a daughter, Shakira. Bob and Carol never married, and Bob had no
contact with Carol or Shakira after Shakira’s birth. While Carol was in college,
Shakira lived with Carol’s parents. After Carol graduated and found a job, Shakira
moved in with Carol and from then on Carol raised Shakira. If Bob were to die
unmarried and intestate, Shakira would be entitled to inherit from him as his “child”
if he acknowledged her as his daughter, he was adjudicated the parent, or she was
able to establish the genetic connection. However, if Bob’s father died and left
property in his will to Bob’s “children,” Shakira would not be entitled to inherit since
no one in Bob’s family ever functioned as a parent of Shakira before she reached 18
years of age.
UPC §2-705(f). Class Gifts Construed to Accord with Intestate Succession; Exceptions.
(f) [Transferor Not Adoptive Parent] for a transferor who is not the adoptive parent, an
adoptee is not considered the child of the adoptive parent unless: (1) the adoption took place
before the adoptee reached [18] years of age; (2) the adoptive parent was the
adoptee’s stepparent or foster parent; or (3) the adoptive parent functioned as a
parent of the adoptee before the adoptee reached [18] years of age.
Example: Gertrude created a testamentary trust that gives income to her daughter, Alice, for
life. At Alice’s death, the property in trust is to go to Alice’s surviving descendants
and, if Alice has no descendants who survive her, to the Red Cross. Alice and her
husband, Bob, have no biological children. Rather than see the trust funds go to
charity, Alice and Bob adopt Bob’s 47-year-old friend, Saul, hoping to make him
their descendant and the recipient of the inheritance. Saul would not inherit under
Gertrude’s trust because he does not meet the requirements of UPC §2-705(f).
If it were Alice who executed a will or a trust containing a devise to her children,
Saul would be included in the class. Under UPC §2-705(b), the general rules of
intestate succession apply here. Alice is the adoptive parent, and Saul would be
Alice’s child for purposes of intestate succession under UPC §2-118. However, he
would not inherit under Gertrude’s trust per UPC §2-705(f).
B. Who is a Parent?
A parent would generally inherit from a deceased child in intestacy. Inheritance typically flows in both
directions, with exceptions.
1. Inheritance by a Parent From or Through a Child Barred in Certain

Circumstances
Normally, if a parent-child relationship is established, parent may inherit via intestacy from or
through child.
UPC § 2-111. Parent Barred from Inheriting in certain Circumstances
(a) A parent is barred from inheriting from or through a child of the parent if:
(1) the parent’s parental rights were terminated, and the parent-child relationship was not
judicially reestablished; or
(2) the child died before reaching [18] years of age and there is clear and convincing evidence
that immediately before the child’s death the parental rights of the parent could have
been terminated under law of this state other than this [code] on the basis of
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nonsupport, abandonment, abuse, neglect, or other actions or inactions of the

parent toward the child.
C. Who is a Spouse?
A surviving spouse is entitled to inherit from the decedent in intestacy and under terms of a valid will
or trust that provides for a spouse. Surviving spouse is also entitled to statutory benefits like elective
share and family allowances.
The court looks at whether the decedent and survivor were legally married, divorce or annulment,
common law marriage, or putative spouse to determine whether someone is a surviving spouse.
While one can include or exclude spouse in will, the spouse is entitled to something regardless per the
“elective share.” As such, you cannot disinherit your spouse unless you mutually agree to it.
1. Legally Married Spouses

A person who was legally married in a sanctioned ceremony to the decedent as of the date of death
meets the definition of a surviving spouse for purpose of inheriting from the decedent in intestacy
and under the terms of a valid will or trust that provide for a spouse.
2. Common Law Spouses

Cohabitants who have not participated in a formal marriage ceremony may be deemed “spouses” if
they meet the certain criteria for a “common law marriage.” Once formed, a common law marriage
is valid for all legal purposes and cam ne dissolved only through a formal divorce. In these states,
couples can enter into a common law marriage by (i) living together; (ii) holding themselves out as
married; and (iii) with the mutual intent to be married
If a common law marriage couple moves to another state, that state may consider them “spouses”
based on the doctrines of full faith and credit and comity. Common Law Marriage States: AL, CO,
DC, GA, ID, IA, KS. MT, NH, OH, OK, PA, RI, SC, TX, UT.
3. Putative Spouses
A putative spouse is a person who cohabitated with the decedent in the good-faith but mistakenly
believed that he was married to the decedent. The strongest evidence of a claimant’s good-faith
belief that he was married to the decedent is proof that they participated in a marriage ceremony.
Unif. Marriage & Divorce Act § 209 [Putative Spouse]
“Any person who has cohabited with another to whom he is not legally married in the good faith
belief that he was married to that person is a putative spouse until knowledge of the fact that he is
not legally married terminates his status and prevents acquisition of further rights. A putative
spouse acquires the rights conferred upon a legal spouse . . . whether or not the marriage is
prohibited or declared invalid. If there is a legal spouse or other putative spouses, rights acquired by
a putative spouse do not supersede the rights of the legal spouse or those acquired by other putative
spouses, but the court shall apportion property . . . among the claimants as appropriate in the
circumstances and in the interests of justice.”
4. Civil Unions and Domestic Partnerships

Some civil union or domestic partnership statutes state explicitly that couples are granted the same
rights as if they were married. However, the UPC and Rest. (3d) Property do not currently provide
for inheritance rights to those who are not “spouses” even if they have entered into a civil union.
5. Cohabitants
Absent an explicit contract, couples who live together without marital status (legal, putative, or
common law and without entering into a civil union or registered domestic partnership) do not have
intestacy rights in each other’s estates.
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III. Intestacy—What Happens to a Decedent’s Property If There

Is No Will?
A. Introduction
If a decedent dies without a will, then the intestacy rules apply to determine who the heirs are and to
what portion of the probate estate they are entitled.
The central goal of intestacy statutes is to approximate the donative intent of decedents dying without a
will. Essentially, the legislature writes the will for you.
1. The Limitations of Intestate Succession—Not All Things to All People

The only persons eligible to take under intestacy are spouses (including domestic partners) and
relatives by blood or adoption; friends and charities do not take. If a decedent has no relatives alive
to inherit, property will revert to the state under “escheat” (UPC §1-201(2)). Any desired deviation
from the statutory intestacy distribution must be accomplished by executing a will.
2. The Intestate Estate

Intestacy laws apply only to probate property, and then only to the extent a will does not effectively
dispose of that property. The descendants are entitled to the portion remaining after suviving
spouse takes statutory amount. Descendants take to exclusion of collateral heirs, like decedent’s
parents, siblings, nieces/nephews, etc.
3. Requirement of Survival
When someone dies intestate, the statute provides a default rule regarding the number of days the
person must survive the decedent. UPC §2-104 requires that anyone taking by intestacy survives
the decedent by at least 120 hours (5 days).
B. Share for Surviving Spouse

Surviving spouses and descendants generally take to the exclusion of more remote heirs, including
parents and siblings. Spouses get some bite out of the “probate estate apple” before anyone else. Share
is “off the top” remainder goes into the “intestate pot” for heirs, for sharing among descendants,
ancestors, and/or distant heirs.
1. Introduction and Share in Non-UPC States

The amount provided for a surviving spouse differs from state to state. Only when the decedent
leaves no surviving descendants or parents does the surviving spouse inherit the entire estate.
2. The UPC Share for Surviving Spouses

In the current version of the UPC, several variables affect the amount the surviving spouse will
receive. The amount that the surviving spouse is entitled to differs, depending on whether the
decedent was survived by parents, descendants who are also issue of the surviving spouse,
descendants who are not also issue of the surviving spouse, and descendants of the surviving spouse
who are not also issue of the decedent. It is irrelevant whether the descendants are minors or adults.
UPC §2-102. Share of Spouse. 3
The intestate share of a decedent’s surviving spouse is:
(1) the entire intestate estate if:
(i) no descendant or parent of the decedent survives the decedent; or
(ii) all of the decedent’s surviving descendants are also descendants of the surviving spouse and
there is no other descendant of the surviving spouse who survives the decedent;
(2) the first $300,000 [+COLA] 4, plus 3/4 of any balance of the intestate estate, if no descendant of
the decedent survives the decedent, but a parent of the decedent survives the decedent;
3 UPC §2-102. Share of Spouse.

4 COLA: Cost of living adjustment
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(3) the first $225,000 [+COLA], plus 1/2 of any balance of the intestate estate, if all of the
decedent’s surviving descendants are also descendants of the surviving spouse and the surviving
spouse has one or more surviving descendants who are not descendants of the decedent;
(4) the first $150,000 [+COLA], plus 1/2 of any balance of the intestate estate, if one or more of the
decedent’s surviving descendants are not descendants of the surviving spouse.
NOTE: if the probate estate is small then the surviving spouse will take the entire estate to the
exclusion of all other heirs. For example, per UPC §2-102(4), if the entire estate is worth $85,000,
the surviving spouse will inherit the entire estate regardless of whether there are surviving children
or grandchildren.
a. Decedent survived by spouse, joint descendants, and spouse’s descendants 5
UPC §2-102(1) gives the surviving spouse of the decedent’s estate where, besides the surviving
spouse, either of the following is the situations: (1) the decedent is not survived by any
descendants or parents; or (2) the only descendants of either the decedent or surviving spouse
that are alive at the decedent’s death are descendants of their relationship.
Blended families: families with some combination of descendants of the decedent spouse,
descendants of the surviving spouse, and/or joint descendants.
b. Decedent survived by spouse and descendants who are not joint descendants6
UPC §2-102(2) deals with the situation where, at death, the decedent is survived by her spouse
and parents but not by any descendants.
It is worth noting that this section applies in all cases where the decedent is survived by a
descendant who is not a descendant of the surviving spouse, regardless whether there are also
joint descendants or descendants of only the surviving spouse or not. In other words, §102(4)
“trumps” all other outcomes under UPC §2-102.
C. Share to Lineal Descendants

After the surviving spouse’s portion has been taken off the top, the distribution is made to the
decedent’s surviving lineal descendants/issues. If decedent dies without a surviving spouse, the
surviving lineal descendants share the entire probate estate. If decedent dies without a surviving spouse
or lineal descendants, then the estate is distributed to “collateral heirs” (ancestors and other heirs). If
there are any descendants of the decedent, they will take everything that is available, and ancestors and
collateral heirs will receive nothing.
UPC §2-103. Share of Heirs Other than Surviving Spouse
(a) Any part of the intestate estate not passing to a decedent’s surviving spouse under Section 2-
102, or the entire intestate estate if there is no surviving spouse, passes in the following order to
the individuals who survive the decedent; (1) to the decedent’s descendants by representation.
D. Share to Ancestors and Collateral Heirs and Escheat to the State

A collateral heir is one who descends from both the ancestors (parents or grandparents) of the decedent
or from only one of the ancestors of the decedent.
The Table of Consanguinity 7 shows the relationships by blood; # along diagonal reflect the degree of
relationship for states where that is criteria; column=parentela; read by going down, up, down, up,
down; if there are heirs in the first parentela, nothing will be available for heirs in the next parentela.
5 See Share of Spouse, Visualized (pg. 102)

6 See Share of Spouse, Visualized (pg. 102, 103)
7 See Table of Consanguinity
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E. The Representation Models

Used when a descendant has died and left surviving descendants to “step up” and represent them in the
distributional scheme, allowing lower generations to take by “representing” parents/grandparents.
There are a few rules common to all the systems:
● If there is a surviving spouse, other heirs are only entitled to a share of the probate estate that
was not reserved for the surviving spouse.
● If there’s at least one descendant, the decedent’s ancestors/remote collateral heirs don’t take.
● If all of the decedent’s children survive the decedent, the representation rules are not necessary
as the children do not need to be represented by others.
○ The children will share the portion of the estate to which they are entitled equally, per
capita.
○ Thus, if the decedent is survived by all of her children (first-generation descendants), the
entire portion of the decedent’s intestate estate not going to the surviving spouse is
divided equally among them.
○ In the example illustrated below, A, B, and C each get one-third of the intestate estate of
the decedent available to the descendants regardless which representation model is the
law of the decedent’s state.
1. Strict Per Stirpes

Strict per stirpes is determined by giving an equal amount to each family stock determined at
“child” generation
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Procedure:
Step 1: Determine the number of shares by dividing the estate into as many equal shares as
there are: (1) living children of the decedent, if any, and (2) deceased children w/
descendants then living who will represent them. This will determine the number of
bloodlines–each bloodline will get an equal amount, no matter how many grandchildren
or greatgrandchildren there are in a given bloodline.
Step 2: Distribute one share to each living member of the highest generation
Step 3: For the children who were not alive but whose bloodlines were entitled to a share
because they have descendants, determine the portion allocated to that bloodline in the
same manner as Step 1 above and distribute the probate property in the same manner as
in Step 2. Repeat this generation by generation, putting each descendant who is
represented at the top of the chart as if it was that person who was the decedent and
whose property was being distributed.
2. Modified Per Stirpes (Per Capita with Representation); the 1969 UPC System
The “modified per stirpes” model of representation distributes the decedent’s property per capita at
the first generation where there are survivors and then by representation for descendants at lower
generations. Shares are not created for a generation if everyone in that generation is dead.
Once the starting generation and primary shares are determined, the lower generations who
represent their parents are locked into the share determined for their parent. If all takers are of the
same generation, they take per capita, receiving equal amounts. If they are of different generations,
they take per stirpes determining bloodlines based on the highest generation with survivors.
Procedure:
Step 1: find the first generation where there are living descendants. At that generation,
determine the number of shares by dividing the estate into as many equal shares as there
are:
(1) Living descendants of the decedent, if any, and
(2) Deceased descendants in the same generation who are represented by their living
descendants
**Do not determine the initial number of shares at a generation where there are
no living descendants, and everyone is merely represented. There must be a living
descendant at a generation to justify the share determination.
Step 2: Distribute one share to each living member of the highest generation.
Step 3: It’s here that the modified per stirpes and the 1969 UPC per stirpes systems diverge.
For the modified per stirpes method, Step Three is the same as Step Three for strict per
stirpes. In other words, for lower generations, it is not necessary to find at least one
living member. For the 1969 UPC per stirpes model, repeat Steps One and Two for each
generation.
In re Estate of Evans
Facts: Donald Evans died intestate. He had no surviving children or issue, and was not married. He
had three brothers, who all died before him–Robert had no children; Stewart was survived by 2 kids
(Mary and Susan); Fred was survived by one child (Ted). Trial court determined that each surviving
relative (Mary, Susan, and Fred) would split Evans’s estate equally- ฀ would go to each.
Issue: whether the strict per stirpes or the modern per stirpes applies to Evans’s estate?
Holding: Nebraska statute followed the modern per stirpes model and when applied leads to the
next generation with living members is Evans’ parents’ grandchildren– Susan, Mary, and Ted– all
taking 1/3 of the estate by representation.
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3. The Current UPC Method—Per Capita at Each Generation

Per capita at each generation is determined by giving each surviving person in a generation an equal
amount. The approach is more concerned with equality among members of a generation than with
equality along bloodlines. About 1/4 of the states follow this model.
The amount one generation gets may differ from one to the next, however, each person living in a
particular generation gets the same as other people within that generation who are entitled to take.
UPC §2-106. Representation [Decedent’s Descendants.]
(b) If, under Section 2103(a)(1), a decedent’s intestate estate or a part thereof passes “by
representation” to the decedent’s descendants, the estate or part thereof is divided into as many
equal shares as there are (i) surviving descendants in the generation nearest to the decedent which
contains one or more surviving descendants and (ii) deceased descendants in the same generation
who left surviving descendants, if any. Each surviving descendant in the nearest generation is
allocated one share. The remaining shares, if any, are combined and then divided in the same
manner among the surviving descendants of the deceased descendants as if the surviving
descendants who were allocated a share and their surviving descendants had predeceased the
decedent.
Procedure:
Step 1: Find the first generation where there are living descendants. Determine the number of
shares by dividing the estate into as many equal shares as there are:
(1) Living children of the decedent, if any, and
(2) Deceased children in the same generation with descendants then living.
*This is identical to the modified per stirpes method. Perform Step 1 at the
highest generation where someone is alive.
Step 2: Distribute one share per capita to each living member of the first generation where there
are living members.
Step 3: Combine the remaining shares, if any, into a pot for sharing by lower generations.
Step 4: Move to the next generation and repeat steps 1-3 until the entire estate is distributed.
F. Reducing the Intestate Share for Advancements

A personal representative must evaluate any inter vivos transfers of cash or other property made by the
decedent to a surviving spouse, child, or other intestate heir, and determine whether the transfer was
intended as a gift, loan, or advance against the inheritance.
1. Is an Inter Vivos Transfer a Gift, an Advancement, or a Loan?

Gift: an absolute and unconditional transfer, which need not be repaid and does not diminish the
donee’s share of her inheritance from the estate. Most favorable to the recipient.
Loan: amount that if not repaid during the decedent’s life, is an asset of the decedent’s estate. Least
favorable to the recipient.
Advancement: Between a gift and a loan. One who receives an advancement is not obligated to
return it to the estate, but it is treated as a prepayment of some or all of the recipient’s inheritance.
It reduces the amount the heir would have otherwise received. The transfer may have been made in
fee simple to the recipient or in the form of a non-probate transfer, such as through a gift of a joint
tenancy interest, or through being named the beneficiary of a life insurance policy.
Determining whether a transfer is presumed to be a gift or an advance is different under the
common law and the UPC. Common law, all transfers are treated as advancements unless evidence
establishes otherwise. Under the UPC, all lifetime transfers to heirs are presumed to be gifts.
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UPC §2-109. Advancements

(a) If an individual dies intestate as to all or a portion of his [or her] estate, property the decedent
gave during the decedent’s lifetime to an individual who, at the decedent’s death, is an heir is
treated as an advancement against the heir’s intestate share only if (i) the decedent declared in a
contemporaneous writing or the heir acknowledged in writing that the gift is an advancement or (ii)
the decedent’s contemporaneous writing or the heir’s written acknowledgment otherwise indicates
that the gift is to be taken into account in computing the division and distribution of the decedent’s
intestate estate.
The evidence necessary to establish a transfer as an advance must be in writing. No oral (parol)
evidence is permitted. If writing is from the decedent, it must have been drafted
contemporaneously with the transfer and must specifically identify the transfer as an advancement
or indicate that it was meant to reduce the amount the heir would otherwise be entitled. If writing is
from recipient, it need not be contemporaneous but it must make a similar acknowledgement.
Evidence to prove that a transfer was intended as a loan is not as restricted. (Unless the Statute of
Frauds applies, p.129)
2. How Do These Transfers Affect the Shares to the Heirs?

Because a gift is an unqualified transfer and doesn’t include an expectation of repayment in any
way, the amount due the recipient heir under UPC §2-102, -103 is not distributed by a finding that
the transfer was a gift.
An advancement being a repayment of some or all of the recipient’s share of the intestate estate is
different. The value of the advancement will be brought into a “hotchpot” calculation to determine if
the recipient share has already been satisfied by the advance or is she is still entitled to more.
Under UPC §2-110, if the transfer was a loan, repayment is required. If the heir who is entitled to
collect on the loan is other than the debtor, the debtor must pay the beneficiary according to the
terms of the loan.
3. Advancements and the “Hotchpot” Calculation

If the inter vivos transfer is determined to be an advancement, a calculation must be made to
determine whether the heir who received the advance has already received the amount to which she
is entitled, or more. This is accomplished through a method known as the “hotchpot.”
[The] hotchpot calculation is a way of securing an equal division among siblings by a notional
increase of the estate by the amounts advanced to one or another child before death, and a
corresponding decrease to their respective entitlement.
Example: if one child has received $100,000 towards a purchase of a home but the other two
children have not, then when the testator dies with an estate worth $1.1 million, the
$100,000 is added back for the purpose of determining each child’s share [so the
“grossed up” estate is $1.2 million and each child is entitled to a third, or $400,000], and
the same amount is deducted from the share of child who received the advancement. As
a result, the child who received the advancement will receive $300,000 and the other
two will receive $400,000 each. Hotchpot calculations are rooted in the equitable
presumption against double portions, that is, in particular circumstances, a parent does
not intend that an inter vivos gift to a child shall be duplicated with an equal entitlement
to inherit from the estate. Therefore, a court, relying on the equitable doctrine of
ademption by advancement, will reduce a child’s inheritance in proportion to the inter
vivos gift.
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IV. Nonprobate Transfers—Passing Property by Will Substitutes

and Gifts
A. Introduction
A will is a highly formalized document, requiring the testator’s signature and witnesses that transfers
property to others at a decedent’s death. Nonprobate instruments, however, are contracts and forms of
property ownership that do not require witnesses and sometimes not even the person’s signature that
transfer property at decedent’s death.
A will is a testamentary act with transfer subject to probate, while a nonprobate instrument is a non-
testamentary act with transfer outside of probate.
Rest. (3d) Don. Trans. §7.1 -Validity of Will Substitutes
An arrangement established by the donor during the donor's life under which the right to possession or
enjoyment of property or a contractual payment shifts outside of probate to the donee at the donor's
death is a non-probate transfer and need not be executed in compliance with the statutory formalities
required for a will.
*The donor's retention of substantial rights for life, such as the right of dominion,
control, possession, or enjoyment of the property or contract, does not transform the
arrangement into a probate transfer.
UPC §6-101. Nonprobate Transfers on Death
A provision for a nonprobate transfer on death in an insurance policy, contract employment, bond,
mortgage, promissory note, certificated or uncertificated security, a count agreement, custodial
agreement, deposit agreement, compensation plan, pension plan, individual retirement plan,
employee benefit plan, trust, conveyance, deed of gift, marital property agreement, or other instrument
of a similar nature is nontestamentary. [Therefore, will formalities and probate process not relevant.]
B. The Different Laws of Wills and Will Substitutes

Requirements for Wills vs. Nonprobate Instruments
Will Act Requirements Nonprobate Requirements
Writing Usually written (required if real estate) but can be oral
Signed by testator Usually signed by person, especially trusts and beneficiary
deeds, but sometimes done over phone or internet
Must be attested to by witnesses or be in Normally no witnesses required though common with
the hand of the testator (holographic) inter vivos trusts
Often notarized Rarely notarized though common with inter vivos trusts
and beneficiary deeds
Often drafted by an attorney and signed Often business’ forms (except trusts). Can often be
at an attorney’s office handled over the phone, fax, or internet
Subject to probate Not subject to probate
C. Why Use Will Substitutes?

1. The Utility of Will Substitutes
Advantages of Probate vs. Nonprobate Instruments
Probate Nonprobate/Will substitutes
◦ There is one central authority ◦ The property of most non-probate instruments passes to
(PR) to handle estate, including beneficiaries far more quickly (usually just need to show death
paying creditors and dealing certificate and file forms)
with tax issues ◦ Nonprobate instruments less likely to be invalidated due to
◦ Clears property of claims of noncompliance with formalities
creditors ◦ Asset protection planning more possible, esp. in some states
◦ Easier to get formal and foreign jurisdictions
monitoring, i.e., PR must notify
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beneficiaries & file reports and ◦ Some nonprobate transferees not liable to creditors of
easier to get judge involved decedent
◦ Proceedings can be controlled ◦ Much easier to change beneficiaries of non-probate
by a judge/judge can help documents
resolve disputes ◦ Where ancillary probate might be required, esp. with real
estate and mineral interests in other jurisdictions
◦ Privacy of nonprobate documents
Neutral/Other things to consider:
◦ Cost of will drafting & probate vs. cost of drafting trust is more or less the same
◦ Everything in one document with a will (or living trust), so that a sophisticated plan is easier to
create
◦ Trusts (but not other non-probate instruments) may be confusing to layperson and add
complication during life, including how to (re)title property
◦ Irrevocable transfers are just that; they are forever despite changes in life circumstances
(though there are ways to mitigate this via decanting, trust protectors,
terms of trust, etc.)
◦ May need probate for some property anyway (and to pourover probate estate if a living trust
was created), unless what is left is just personal property and can be collected by affidavit only &
distributed without opening probate
◦ Joint or transferred ownership subjects property to other owner’s creditors & his malfeasance &
may require his concurrence to transact – especially of concern with one’s house.
2. Probate Avoidance
Property subject to will substitutes normally bypasses the probate estate, however, there are
situations that might result in the property being included in the decedent’s probate estate. For
example- (i) the naming of the estate as the beneficiary in a designation form; (ii) the severance of a
joint tenancy by the inter vivos actions of one of the tenants; (iii) the murder of the owner or joint
tenant by the beneficiary or other joint tenant; (iv) a divorce between the beneficiary and the owner
or one joint tenant and the other tenant; or (v) the simultaneous death of the owner and designated
beneficiary or joint tenant.
a. Benefits of Avoiding Probate
1). A decedent can be more certain about the validity of a will substitute
The rules for will substitutes are less formalistic than the strict formalities required for a will
(drafting, amending, revoking). Failure to meet those strict requirements can invalidate a will,
resulting in an individual essentially dying intestate.
2). It may be easier and less costly to transfer out-of-state realty
If a decedent owns real property in another state, ancillary probate proceedings will be required
there, adding time and cost to the process. Owning out-of-state realty in a revocable trust or a
joint tenancy with right of survivorship avoids this problem, since the real estate passes outside
probate.
3). For high profile folks, since a will is a public document, will substitutes are
more private
Trusts, contracts, and beneficiary designation forms are not available to the public, but wills are.
(Ex. Michael Jackson)
4). Some statutory protections and restrictions apply to wills only
5). Depending on the nonprobate instrument used, transferees may not be liable to
the decedent’s creditors
UPC §6-102 states that nonprobate transferees are liable to the decedent’s creditors only (i) if
the probate estate is not sufficient to pay all the claims; and (ii) if there is no exemption under
state law. Generally, the transferees of a revocable living trust or a payable (or transfer) on death
account will need to contribute if the estate is insufficient while most states protect other
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nonprobate transferees, such as beneficiaries of life insurance and retirement plans, and joint
tenants, especially in real property.
b. Myths About the Utility of Will Substitutes
1). Trusts are less expensive than wills
Attorney’s fees for preparing a revocable trust agreement and the other documents needed to do
a ‘‘complete’’ plan (including a will to capture property that might fall through the cracks of even
the most well-crafted estate plan) are frequently greater than the fee for preparing a traditional
will
2). Probating a will is expensive
The cost and time associated with probating most estates is not significant, especially (i) for
smaller and simple estates; (ii) in states with simplified informal procedures (filings that are
handled exclusively by the personal representative without much involvement or oversight by a
judge); and (iii) for estates where no one is contesting the will.
3). Estate taxes can be reduced if probate is avoided
Most assets owned at death are subject to estate tax regardless of whether they are probated or
not. Often the delay and red tape customarily associated with probate is the result of the tax laws
and tax filing requirements, which cannot be eliminated through revocable trusts or other
probate avoidance instruments.
c. Advantages to Going Through Probate
1). Claims of creditors are addressed and resolved during probate
Because the decedent’s debts must be paid before the property of the estate is distributed to the
beneficiaries, property that passes through a probated estate is distributed to heirs and devisees
free of the claims of unsecured creditors if the statutory directives are followed.
2). Proceedings are controlled by a judge
Judge may help resolve disputes among beneficiaries or between the beneficiaries and the
personal representative.
3). In most cases, the PR is required to prepare an accounting and report of her
activities
d. Other Matters to Consider
1). Documents used to avoid probate may be confusing to an unsophisticated
person
2). Some planning devices are forever
For example, inter vivos gifts to individuals and to irrevocable trusts generally cannot be
amended or revoked. Clients can get frustrated by their inability to make changes as their
family’s circumstances evolve. By contrast, a will, being an ambulatory document, is subject to
change until the testator dies.
3). Even if one carefully plans to avoid probate, it is difficult to avoid it completely
If the decedent owns any property at his death that was not titled in the name of a trust or dealt
with by another will substitute, probate may be required. This is especially likely for items such
as jewelry, art, furs, computers, and home entertainment centers that do not have registration
documentation and therefore are more difficult to title in the name of a trust.
D. Determining Which Property is Probated and Which is Not

Probate property: All property which the decedent had an interest at death and for which a will
substitute does not transfer title to the property (property in which the decedent had ownership rights).
It also includes: (i) property controlled by a will substitute that names the estate as the beneficiary; (ii)
property subject to a will substitute that fails; (iii) property acquired by the probate estate after the
decedent’s death (i.e. proceeds from a wrongful death suit).
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The UPC uses the term “governing instrument” as an all-inclusive label to refer to wills and will
substitutes.
UPC §1-201. General Definitions.
(18) ‘‘Governing instrument’’ means a deed, will, trust, insurance or annuity policy, account with POD
designation, security registered in beneficiary form (TOD), pension, profit-sharing, retirement, or
similar benefit plan, instrument creating or exercising a power of appointment or a power of attorney,
or a dispositive, appointive, or nominative instrument of any similar type.
1. Trusts
Trust: legal relationship that separates legal ownership from beneficial ownership. The transferor
(“settlor”) transfers title to the property (known as the “res,” “principal,” or “corpus” when in the
trust) to the trustee to hold for the benefit of the present and future beneficiaries.
Legal ownership- the property is titled in the name of the trustee
Beneficial ownership- the present and future interests are held by the beneficiaries
Trusts are created for many reasons including: (i) the desire to avoid probate; (ii) to minimize
taxes; (iii) to have a professional trustee (like a bank) manage the property for a beneficiary who is
young or unsophisticated with investment strategies and money management; (iv) to appoint
someone to decide how to distribute property in the future based on a set of criteria the settlor
establishes in its terms; (v) or to protect the property from the claims of the creditors of the settlor
or beneficiary.
Types of trusts:
1). Irrevocable: cannot be revoked or modified
2). Revocable: can be revoked or amended
3). Inter vivos: created during lifetime
4). Testamentary: created in the will and funded with property of the state
2. Joint Tenancies with Rights of Survivorship and Tenancies by the Entirety
Joint tenancy: A type of common ownership in which, assuming no previous severance, on the
death of one of the joint tenants, title passes by property law exclusively to the surviving joint tenant
or tenants. Probably the most commonly used device that avoids probate because it is easily
understood and inexpensive to create
Ownership is distinguished by the coexistence of the four unities: unity of interest, unity of title,
unity of time, and unity of possession.
A joint tenancy can be destroyed by one of the tenants conveying his interest to a third party, by
creditors of one of the tenants obtaining a judgment and levying the interest, by a court granting
partition, and, if the joint tenancy was between spouses, by divorce. If the tenancy is defeated,
the result is that the owners hold title as tenants in common.
Tenancy in common: By contrast, a tenancy in common does not have a survivorship element and
the interest of a co-tenant is probate property.
Tenancy by the entirety: These are reserved for married people with the property treated as being
owned by the marriage. One tenant cannot unilaterally convey his interest in the property to a third
party nor can courts order partition on the motion of only one tenant.
Most spouses and people registered as domestic partners or parties in a civil union own bank
accounts, brokerage accounts, and their homes and other real estate either as joint tenants with
rights of survivorship or as tenants by the entirety. When real property is involved, the joint
tenancy must be in writing to comply with the statute of frauds.
About half the states recognize tenancy by the entirety, often limited to real property.
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Example: Howard and Sally hold title to their house as tenants by the entirety. If Howard
wishes to sell or give away his half interest in the house, he needs Sally’s
agreement and signature on the deed. Likewise, if a creditor gets a judgment
against Howard individually, the house may not be levied upon and foreclosed to
satisfy the judgment.
Divorce terminates a tenancy by the entirety, converting ownership into a tenancy in common.
Tenancy in common vs. Join Tenancy (and Tenancy by the entirety)
• Rights during life
• Rights at death
• TIC tenant’s share = probate
• JTWROS and tenancy by the entirety  tenant’s share = non-probate
3. Life Insurance
Life insurance: Anyone who has an insurable interest in a person may take out a policy on that
person’s life. Normally, the insured buys the policy on her own life, but a family member or a trust
whose beneficiaries are family members may also buy a policy on someone’s life.
The governing instrument that transmits the proceeds on the death of the insured is the insurance
company’s beneficiary designation form completed by the owner of the policy. The owner of the
policy decides who the beneficiaries are. So long as the beneficiary is not the decedent’s estate, the
proceeds of a life insurance policy are not probated.
First will substitute recognized by American courts as legitimate for avoiding probate.
Example: When Emily died, she owned a life insurance policy on her life. She had
completed a beneficiary designation form for the policy, directing that on her
death the insurance company should pay the proceeds of the policy to her
husband, Roger, if he survived her, and if not, to her estate. If Roger survives
Emily’s death, the proceeds will pass to him directly and will not be added to her
probate estate. If Roger does not survive her, the insurance company will pay the
proceeds to her estate, and the money will be included in the probate estate.
4. Annuities and Retirement Accounts

The individual designates the beneficiary on a form provided by the investment company or
retirement plan administrator. Much of the law associated with retirement plans in the workplace is
preempted by federal law, the Employee Retirement Income Security Act (ERISA). If the covered
employee is married, ERISA restricts the employee’s selection of beneficiary—basically limiting the
choice to the person’s spouse unless the spouse signs a fully informed waiver of that right
Examples include: 401(k), 403(b), Keogh, pension, profit-sharing, self-employed plans (SEP),
and individual retirement accounts (IRA).
So long as the beneficiary is not the individual’s estate, the annuity or retirement proceeds will
escape probate.
5. Contracts of Deposit with Financial Institutions

Checking and savings accounts and certificates of deposit between a depositor and a financial
institution can be set up in several different ways. Some avoid probate and others do not.
There are few formal requirements involved in the execution of the form. Although UPC §6-204
provides a form for use by banks, most banks create their own instead.
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Many ways bank accounts are held

Probate Nonprobate
• Single party account • Single party account with POD
• Tenancy in common (rare) designation
• Agency/convenience account • Joint tenancy with rights of
survivorship
a. Single-Party Accounts
If a deposit account is owned by an individual and does not included a POD beneficiary
designation, the balance on the account passes as probate property. UPC §6-212(c).
POD designations are generally used with single-party accounts.
b. Multiple-Party Accounts—Joint Tenancy with Rights of Survivorship
Multiple-party account: ‘‘an account payable on request to one or more of two or more
parties, whether or not a right of survivorship is mentioned.” UPC §6-201(5)
A bank may permit four different types of multiple-party accounts:
1). Tenancy in common
Rare, if one exists the share of the account owned by the decedent is probate property,
assuming no payable-on-death provision
2). A true joint tenancy (most common multiple-party accts)
Provides each person named on the account with the right to make withdrawals while
both (or all) are alive and then provides that at the death of one joint tenant, the other
joint tenant(s) becomes the owner(s) of the entire account. Spouses, parents and
children, and domestic partners often maintain joint tenancy accounts for savings and to
pay household expenses.
If an account is established as a joint account, for example, ‘‘John and Mary, as joint
tenants’’ or ‘‘John and Mary, jointly,’’ most (if not all) states presume it to be a joint
tenancy with right of survivorship, not a tenancy in common.
Example: When they created their bank account, Katie and Stan signed a signature
card indicating their intent that the account be a joint bank account with
right of survivorship. If Katie dies first, the account will not be included in
Katie’s probate estate, and Stan will become the sole owner of the
account. When Stan dies later, and if the account still exists and is titled in
his name alone, the account will be included in his probate estate.
3). An account with a pay-on-death designation
4). An account that provides lifetime rights for the party added to the acct but does not
provide after-death rights (“convenience account”)
c. Payable-on-Death (POD) Beneficiary Designation
Owner of account designates who should receive payment from the acct upon owner’s death.
UPC §6-212(b)(2). The beneficiary stated on the POD designation form is not a party to the
account and cannot withdraw funds during the life of the owner. UPC §6-211(c).
POD converts what would otherwise have been a probate asset of the owner into a
nonprobate one/does not go through probate.
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d. Convenience Accounts
A ‘‘depositor’’ (primary account holder) can create such an account for the purpose of permitting
a ‘‘convenience depositor’’ access to the funds in the account, both to make deposits and to
withdraw funds. The convenience depositor is essentially a fiduciary, having neither an
ownership interest in the account nor rights to the balance in the account upon the death of the
depositor, which distinguishes it from a joint account or a POD account. The intent of the
account owner is to allow the other person to have access to the account while the original owner
is alive, but not to transfer the account balance to the other person at the owner’s death. The
designation of the account as a ‘‘convenience account’’ does not transform a probate asset into a
nonprobate.
Examples of advantages: (i) if the depositor is disabled and needs someone else to have access to
the account to withdraw money on her behalf, such as for paying bills; (ii) an elderly parent who
wants a child or a caretaker to have access to an account; (iii) a businesses, where certain
employees need to be able to pay bills and otherwise to have access to the account (i.e. a
foreman on a construction job site might need to pay for supplies)
Estate of Helen Butta
Facts: Decedent and her great nephew opened up a bank account, of which all of the deposits
were made by decedent. Nephew withdrew for his benefit. Statements and checks mailed to
decedent’s home, and reported all interest earned on her tax returns. When she died, her will
was admitted to probate; the residuary state bequeathed to a revocable trust executed the same
day. The bank could not produce the original signature card of the account, but instead a
redacted card summary that showed that both decedent and nephew under a “J” account type,
along with electronic signatures.
Holding: JTWROS account, not a convenience account
Reasoning: that the acct would be payable to the survivor of them upon the death of the other
AND bank rep advised them that this was a survivorship account (bc at the time the bank would
not have opened an acct in 2 names otherwise). The “J” indicates it was a joint acct with
survivorship rights. There’s no indication that the account was opened for the convenience of
the decedent and she did not know that her nephew was using the account for his own benefit;
the statements and cancelled checks were sent to her home. No evidence that the decedent was
incompetent or under any undue influence.
UPC §6-212’s comments state that the drafters of the UPC intend “to permit a court to
implement the intention of parties to a joint account…if it finds that the account was opened
solely for the convenience of a party who supplied all funds reflected by the account and
intended no present gift or death benefit for the other party.” So the court in Butta and the
comments are consistent in seeking donor’s intent.
*Notice that during life, access is the same for JTWROS and Convenience accounts. At death,
very different results.
6. Security Accounts
Security account: is an account held at a brokerage company that may include securities (stocks and
bonds), cash, and interest and dividends earned on securities in the account. UPC §6-301(5) (like
one someone might have with Charles Schwab or e*trade). Security accounts may also be held by
two or more people jointly, with right of survivorship.
Transfer-on-death (TOD) beneficiary designations are to security accounts what POD beneficiary
designations are to contracts of deposit with financial institutions. While TOD is the term usually
used regarding security accounts, the UPC recognizes that the term POD may also be used (UPC
§6-305, cmt).
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A security account held by an individual without a TOD designation will be probate property when
the account owner dies.
7. Transfer-on-Death Deeds for Real Estate

An owner of real property can use a TOD deed to name the beneficiary who will succeed to
ownership at the owner’s death. Like other POD/TOD situations, the execution of a TOD deed
creates no current interest in the beneficiary and is not a completed gift for property or tax
purposes. The owner must record the deed in order for the deed to be given effect.
The ability to transfer assets using a TOD designation also can be useful for transferring real estate
and avoiding probate in states that have authorized transfer-on-death deeds or TOD deeds
(“beneficiary deeds”).
The owner can revoke the designation at any time by recording a new TOD deed, recording a
revocation of the deed, or disposing of the property. If the owner records the deed and does not
revoke it, the beneficiary will obtain title to the property at the owner’s death without going through
probate.
Property subject to a TOD deed remains subject to the creditors of the property owner, and the
beneficiary takes the property subject to any claims, mortgages, or liens.
E. Gifting—Not Exactly a Will Substitute

A gift is a gratuitous transfer. Making gifts is not a will substitute in the strict sense of the term because
the donor does not hold the property throughout life, nor is the property transferred to another as a
result of the owner’s death. Gifting causes the subject property to bypass the probate estate and
unsuccessful gifting means the property is still owned by the decedent and is likely to be included in the
probate estate. If a person gives away her property prior to incurring debt, later creditors of the donor
typically do not have the right to attach the property in the hands of the transferee.
The main distinction between a gift and other transactions that transfer property from one person to
another (sales, compensation for services, loans, bailments, etc.) is that a gift is a gratuitous transfer
while others all have a quid pro quo element to them. If there is a completed gift, the property that was
the subject of the gift in the probate estate.
1. Methods of Gifting
Two ways to give a gift: (1) in fee simple; (2) gifts into trusts. Gifts in fee simple mean that the donor
has vien the property outright. The donee acquires all the ownership rights and the donor no longer
has any. Gifts into trusts means that the donor has transferred the property using a trust. With some
gifts in trust, the settlor retains no interest while in others, the settlor does.
Example: Several years ago, Donna transferred shares of Microsoft stock to two different
trusts. The first trust is revocable and provides Donna with income for life, with
the remainder to her children. The second trust is irrevocable and provides her
son Edgar with income for life, with the remainder to Edgar’s children. Both
trusts will avoid probate. The first trust is not effective against the claims of
future creditors of Donna and it will be included in her taxable estate at her
death; the second one is immune to the claims of Donna’s future creditors and
will not be included in her taxable estate because she gifted away all the interests
she had in the property several years ago. 8
8Note the tax consequences—for the revocable trust, the creditors can attach to property while for the irrevocable trust,
they cannot.
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2. Was the Gift Successfully Made?

If a person did not successfully make a gift the probated estate includes the subject property and is
distributed pursuant to the terms in the decedent’s will or, if no will, the intestacy statute. If the gift
is successful, then either normal property law or the provisions in the trust dictate the beneficiary.
If an issue is raised regarding the success of a gift, the donee has the burden of establishing every
element of a valid gift by clear and convincing evidence: (i) and intention on the part of the donor to
transfer the property; (ii) a delivery by the donor (could try to show “constructive delivery” i.e. a key
or a note); and (iii) an acceptance by the donee. This burden can be especially difficult to meet if the
donor retained possession of the item.
F. Developing a Comprehensive Estate Plan Incorporating Will Substitutes

After identifying the client’s goals, the next step is to analyze any existing governing instruments – a
will, and all will substitutes –to determine if the beneficiaries designated fit within the client’s present
plans for the estate. For example, the primary, secondary, or contingent beneficiaries need to be
changed because the client or a family member has gotten married, divorced, been born or died, or the
client or a family has had a significant increase or decrease in wealth, or had some other major life-
altering event occur. Or the client may want certain beneficiaries to only receive property under certain
circumstances.
1. Selecting the Beneficiaries

Individual beneficiaries- if a client wishes to have the asset pass directly to a specific person, that
person can be named as the beneficiary.
Custodians- if a client has minor children, he/she may want to designate a custodian under the
state’s Uniform Gifts to Minors Act or Uniform Transfers to Minors Act, as the beneficiary for the
minor children.
Client’s estate-if the client does not have a revocable trust, the easiest (and best) method, of
ensuring that the client’s estate plan is coordinated is to designate the client’s estate (or executor or
personal representative) as the beneficiary of each asset requiring a beneficiary designation.
All the assets will then be paid to the client’s executor to be distributed in accordance with the
client’s will. Some adverse consequences include (i) subjecting the nonprobate property to the
claims of creditors when they might otherwise be exempt; (ii) converting nonprobate property
into probate property, and (iii) exposing some property to taxation that might otherwise not be
taxed, such as life insurance proceeds.
Revocable trust- the trustee of the client’s revocable trust is the preferred beneficiary in most
situations. With the trustee as beneficiary, the trust agreement can coordinate all the asset
dispositions, including those to charities, the surviving spouse, or others that would have adverse
income tax consequences if done correctly.
2. What if the Beneficiary Predeceases the Decedent?

The beneficiary of a joint tenancy is the survivor. The beneficiary of a trust is whoever is specified in
the trust instrument, often the remainderman. With probate property, to inherit the ehir or devisee
must survive the decedent. If she does not, her right to inherit “lapses” or terminates.
For an exception, See antilapse, later on.
G. Which Controls? The Will or the Will Substitute?

UPC §6-213(b) states: “A right of survivorship arising from the express terms of the account, Section
6-212, or a POD designation, may not be altered by will.”
A general testamentary statement in a will does not constitute substantial compliance—avoiding
uncertainty on the part of the insurers that could lead to the delay of payment on the life insurance
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policies applies as much to the specific testamentary bequest as to the general testamentary bequests as
to general testamentary statements.
Lincoln Life and Annuity Co. of N.Y. v. Caswell
Facts: Aetna Life Ins. Co issued a life ins. policy to Martha Hubbard (insured). The policy detailed how
to change the beneficiary through signed request, and Aetna’s written acceptance, which she followed to
change the beneficiary designation 2x before. The last time, Hubbard’s son, Robert Jr. was named
primary beneficiary and def. Bennie Caswell as contingent beneficiary. Robert Jr. predeceased the
insured, making Caswell the sole beneficiary of the policy BUT 15yrs after Hubbard filed the ben. desig.
policy, she executed last will and testament, specifically referring to the policy, and “devises and
bequeaths” portions of that policy to various individuals and charities not designated as beneficiaries
per the policy.
Issue: Whether a will of a decedent or the prior beneficiary designation made in accordance with the
terms of the policy governs.
Court also considered- whether the insured’s specific testamentary disposition of the policy in her will
can be deemed to constitute “substantial compliance” with the policy’s requirements = Court said NO
Holding: The testamentary disposition of the policy proceeds does not constitute “substantial
compliance” with the policy, and therefore cannot be given effect over the policy’s beneficiary
designation. (Caswell gets payment). Unless the will is one of the prescribed methods to amend the
form, the designation form controls.
H. Does Divorce Revoke a Beneficiary Designation to Spouse?

What happens when a couple gets divorced and the owner of a policy did not change the named
beneficiary? Is the ex-spouse still permitted to take the property?
The answer will depend on two factors: (1) did the parties enter into a property settlement disavowing
rights to other’s property? And (2) has the state adopted a statute that revokes all revocable governing
instruments upon divorce? (UPC §2-804) 9
In re Estate of Johnson
Facts: Johnson and Christensen married in ‘00. In ‘01, Johnson purchased a life ins. policy naming
Christensen the primary and his mother the contingent beneficiary. His mother died in ‘06, he divorced
in ‘08, and he died in ‘10. No surviving children or parents, but at least one sibling. The ins. policy
provided that: “if there is no designated beneficiary living at the death of the insured, the insurer will
pay the proceeds to the owner’s estate.”
Issue: Whether divorce terminates a named beneficiary’s right to proceeds of an insurance policy?
Christensen claimed that because the policy requires a written modification, the UPC here is in conflict
with the policy and that she was not removed as the beneficiary.
Holding: Divorce terminates a named beneficiary’s right to proceeds of an insurance policy
The court rejected Christensen’s argument for three reasons:
1). [UPC §2–804(b)] was enacted to give effect to the presumptive intent of insured decedents,
namely that a person would not want his former spouse to remain a beneficiary of his life ins.
policy.
2). As a beneficiary to a life ins. policy, Christensen had no vested rights in Johnson’s ins. policy.
3). The policy contains no express language exempting former spouses from automatic
revocation of beneficiary status upon divorce, as the law requires.
*Court also commented that divorce decree separated rights to insurance.
In DC divorce does not revoke the status of the beneficiary designation. MD property settlement
agreements trump beneficiary designation agreements.
9 See Revocation on Divorce.

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NOTE: for this class, treat Johnson as black letter law. If there is a divorce, the ins. company and the
court should award the proceeds to the contingent beneficiary.
V. Will Validity
A. Legal Requirements for the Testator
To enter into a will, a testator must have the requisite capacity and intent, without undue influence.
1) Capacity: (a) that the testator be age 18 or older, and (b) have testamentary capacity (be of “sound
mind”) UPC §2-501.
To have testamentary capacity, the testator: (i) must understand she is making a will;
(ii) must know the extend and character of her property, and (iii) must know the natural
object of her bounty (i.e. her close relatives)
2) Testamentary intent: i.e., intent that the document is a final representation of his/her present plan
to convey property at death
To have testamentary intent means that the decedent intended the actual document she signed
to be a will and to become operative on her death. A strong but rebuttable presumption of
testamentary intent exists if the will has language such as “This is my last will and testament”
Courts also look for “exordium clauses,” which are clauses normally at the beginning of a will
that states, “I, Joan Jones, revoke any prior wills and codicils made by me and declare this to be
my last will and testament.”
3) Free from undue influence, duress, or fraud
B. Formalities Required in the Will

The statutory formalities include: (1) will is in writing; (2) it’s signed; (3) it was witnessed or is
holographic. Sometimes state require “publication.” Will formalities serve four functions:
1). The evidentiary function: they assure permanent reliable evidence of testator’s intent to
present to a court if needed
2). The channeling function: they assure that the testator’s intent is expressed in a way
understood by those who need to interpret it (i.e. courts w/out administrative hurdles)
3). The ritual (cautionary) function: assure that the testator’s intent to dispose of property is
serious, that testator understands this is a will and that the document is final and not a draft
4). The Protective function: assure that the testator is protected from her own lack of capacity,
that testator’s intent is not the product of undue influence, fraud etc. and that signatures are not
the products of forgery or perjury.
For example, requirement that testator execute and sign the will serves the evidentiary function by
authenticating the document, the cautionary function by signifying finality, and the protective function
by deterring forgery and channeling to probate the will pursuant to established procedures.
UPC §2-502(a). Execution; Witnessed or Notarized Wills
Except as otherwise provided . . ., a will must be: (1) in writing; (2) signed by the testator or in the
testator’s name by some other individual in the testator’s conscious presence and by the testator’s
direction; and (3) either:
(A) signed by at least two individuals, each of whom signed within a reasonable time
after the individual witnessed either the signing of the will as described in paragraph (2)
or the testator’s acknowledgment of that signature or acknowledgment of the will; or
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(B) 10 [added in 2008] acknowledged by the testator before a notary public or other
individual authorized by law to take acknowledgments.
UPC §2-502(c). Extrinsic Evidence

“Intent that a document constitute the testator’s will can be established by extrinsic evidence, including,
for holographic wills, portions of the document that are not in the testator’s handwriting.”
1. The Writing Requirement
If the will appears to be regular on its face, the court presumes that the will is valid. Relatively low
burden is on the party presenting the will to the court to prove that the will is written. The burden
shifts to the opponent to prove otherwise.
States generally require that a will be in writing, but a few states recognize oral wills. If oral wills are
allowed, they generally must be executed while in fear of imminent death, often on the battlefield, in
order to be valid.
Courts prefer paper writings, but the writing requirement has been broadly construed to include a
“medium that allows the markings to be detected.”
Examples: Nevada authorized an electronic version of a will to meet the writing requirement. The
statute says that entire will can be electronic, while other cases allow just the signature to
be electronic. Some problems with electronic documents include: corroborating
handwriting and signature, and we don’t know the circumstances of writing it.
In re Estate of Javier Castro: will written on Samsung Galaxy tablet with stylus pen
was probated [and found valid] in Ohio. Few courts have gone this far.
Taylor v. Holt (Tenn. Ct. App. 2003), the Court probated a will that was signed by the
testator with his computer generated signature, though it appears the document was
then printed out and the witnesses signed a hard copy.
2. The Signature Requirement

All state statutes and the UPC require that the testator sign the will. The testator’s act of writing
his/her name, with the intent to adopt the document as her own, constitutes a valid signature. The
signature provides evidence of finality and serves to distinguish the final will from a preliminary
draft, an incomplete document, or simply notes about how the will might take shape in the future.
Serves functions of evidentiary (permanent record of T’s intent), ritual (not inadvertent), protective
(protected from lack of capacity).
The testator’s handwritten signature/name in freestanding form at the end of the document
unquestionably satisfies the signature requirement, however, problems can arise depending on
where and how the testator signed.
a. Where to Sign?
Best to have signature at end in the block for testator’s signature! Best practice: have them
initial bottom of each page. UPC §2-502(a)(2), by its silence on the matter, does not require
that the testator’s signature be at the end of the will.
b. How to Sign?
Best to have testator sign her complete, legal name (and also identifies nicknames) without the
assistance of others and does so in the place for it at the end of the will.
10NOTE: $2-502(a)(3)(B), notarization in lieu of witness to validate a will DOES NOT APPLY TO THE EXAM. For this
class, you need witnesses for a will to be valid. Additionally, even some of the states that have adopted the UPC have not
adopted 3(B) yet.
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If the signature is incomplete, electronic, or not the testator’s full name (e.g., a nickname,
initials, or a mark), courts look at whether the marking was intended 11 to be a signature.
c. Who Can Sign?
If testator is physically incapable of signing, even with the help of someone else guiding his
hand, the UPC allows someone else to sign at the testator’s direction. UPC §2-502(a)(2)
provides certain safeguards against fraud by requiring that the other person sign “in the
testator’s name by some other individual in the testator’s conscious presence and
by the testator’s direction…” The person must be “within the range of the testator’s senses
such as hearing: the signing need not have occurred within the testator’s line of sight.”
Importance of creating a record in these situations.
3. Publication
Most states no longer require publication. In those that do, strict compliance is necessary. Despite
the fact that publication is no longer required in many states, estate planning attorneys routinely
have the testator recite particular “magic” words like “this is my last will” to the witnesses during the
signing ceremony as a matter of good form. This recitation is helpful if the witnesses are later called
to testify in a will contest as to the testator’s capacity and intent to make a will.
In re Estate of Griffith (Miss. 2010), the witnesses who signed the will identified their signatures
on the will but testified that they were not informed of what they were signing and that the testator
did not identify the document as a will when they signed it. The court ruled that witnesses must
have some knowledge that the document they are witnessing is a will.
4. The Witness Requirement

A will must be “witnessed,” meaning it must be signed by two or three people [depending on
jurisdiction] other than the testator to be valid. UPC §2-502(a)(3)(A). Most states/UPC require 2.
Witness checklist: Witnesses familiar with testator are better; Non beneficiaries are better;
Health care providers may be problematic; Youthful, healthy traceable witnesses are best;
Traceable= get SSN, driver’s license, address, phone #, etc.
a. Who May Be a Witness
Under UPC § 2-505, (a) an individual who’s generally competent may act as a witness, and (b),
a witness who is an interested witness does not by itself invalidate the will or any provision of it.
b. Where Must the Testator and Witnesses Be?
The requirement in UPC §2-502(a)(3)(A) that two individuals “witness” the will means they
must either observe the testator sign the will, or the testator must acknowledge to them that it is
either his signature or his will.
i. Must the Testator Sign or Acknowledge in the Witnesses’ Presence?

Kirkeby v. Covenant House
Facts: Margaret Kirkeby (testator) executed a will, 7yrs later she drafted a handwritten
codicil that included a specific bequest of their home, including acres of land, to two
neighbors in exchange for them helping care for Margaret and Orrin until their deaths. This
codicil was not properly executed. Margaret edited her will and gave her neighbor
handwritten notes and an instruction to type them up. She signed the new will which
changed the named charitable beneficiary and implemented the bequest that was set out in
the previous codicil. She had the neighbor bring the signature page to a notary, but didn’t
11Both the comments to UPC §2-502 and Rest. §3.1, cmt. j, note that the testator may sign her name or may make a
cross or a mark, like an “X” or use a term of relationship like “Dad,” “Mom,” or “Auntie.” These suffice if “done with the
intent of adopting the document as the testator’s will.”
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attach the will. The notary did not know she was notarizing a will. Margaret then had the
neighbor add a witness line on the second page.
Issue: Whether the testator must be in the presence of the witnesses when he signs or
acknowledges the will
Holding: The Ct. of appeals held testator's acknowledgment of her signature on 1992 will to
two witnesses during telephone conversations did not satisfy statutory requirement of
acknowledgment “in the presence” of witnesses.
ii. Must the Witnesses Sign in the Testator’s Presence?
In some states, the witnesses must sign in the presence of the testator. This has led to a
number of cases interpreting the word “presence.” At first, presence was defined as being in
the “line of sight” of the testator when signing. This is still the standard in some states.
Under the UPC [§2-502(a)(3)], the witness must be in the testator’s presence when the
testator signs or acknowledges the will, but the testator need not be in the witness’s presence
when the witness signs it.
iii. When Must the Witnesses Sign?
UPC §2-502(a)(3) requires that the witnesses sign “within a reasonable time” after
witnessing either the signing of the will or the testator’s acknowledgement.
In re Estate of Peters
Facts: Peters was in the hospital for treatment of a stroke and a will was prepared for him by
his sister in law, who had prepared an identical will for her sister. Peters was disabled due to
the stroke but had no mental impairment. His sister in law, her husband, and her sister all
witnessed Peters sign the will but none of these individuals signed the will as witnesses. At
the time of Peters’ death, the will was still not signed by the witnesses.
Issue: Whether a witness’s formal signatory function mandates that witnesses sign a will
before it is executed.
Holding: Yes. It is unreasonable to construe the statute as placing no time limit on the
requirement of obtaining two witnesses’ signatures. By implication, the statute requires that
the signatures of witnesses be affixed to a will within a reasonable period of time from the
execution of the will.
iv. Interested Witnesses
Under the common law, if one or both witnesses were also beneficiaries of the will, then the
entire will was void for failing to have the required number of witnesses. The law evolved to
only invalidate the bequest to the interested witnesses.
Some states have purging statutes. There are two types: (1) entire portion going to interest
witness is purged; and (2) amount above intestate share going to interested witness is
purged. Newer purging statutes create a rebuttable presumption that the gift to an interested
witness was the product of undue influence—witness can rebut presumption to preserve gift.
The UPC has abandoned the “interested witness” rule. UPC §2-505(b). The reasoning is
that most interested witness cases actually involve innocent family members who are pulled
in by a testator because there is no one else there. Therefore, the interested witness rule is
not that effective in deterring intentional undue influence, while often invalidating perfectly
legitimate bequests to interested witnesses.
c. The Self-Proved Will
To begin the probate process, the proponent must “prove” the will before it can be admitted to
probate. Old practice used to be having testimony of witness, either in court or by affidavit.
States began to authorize “self-proving affidavits” that could be prepared at the time the testator
executes the will. In many states, the affidavit is a separate document, signed and notarized
immediately after the testator and witnesses sign the will.
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UPC §2-504 (Self-proved will) combines the attestation and affidavit. (p. 201) 12
The notary could be a second witness, so the will could be validated. However, the notary could
not then also act to notarize the self-proving affidavit.
Once having attested under oath before the notary that they were witnesses “to the testator’s
signing, and that to the best of [their] knowledge the testator is eighteen years of age or older, of
sound mind, and under no constraint or undue influence,” the witnesses do not have to do so
again in court, so the will “proves itself.”
UPC §3-406. Formal Testacy Proceedings; Contested Cases.
In a contested case in which the proper execution of a will is at issue, the following rules apply:
(1) If the will is self-proved pursuant to Section 2-504, the will satisfies the requirements for
execution without the testimony of any attesting witness, upon filing the will and the
acknowledgment and affidavits annexed or attached to it, unless there is evidence of fraud or
forgery affecting the acknowledgment or affidavit.
(2) If the will is notarized pursuant to Section 2-502(a)(3)(B), but not self-proved, there is a
rebuttable presumption that the will satisfies the requirements for execution upon filing the
will.
(3) If the will is witnessed pursuant to Section 2-502(a)(3)(A), but not notarized or self-proved,
the testimony of at least one of the attesting witnesses is required to establish proper
execution if the witness is within this state, competent, and able to testify. Proper execution
may be established by other evidence, including an affidavit of an attesting witness. An
attestation clause that is signed by the attesting witnesses raises a rebuttable presumption
that the events recited in the clause occurred.
UPC §3-407. Formal Testacy Proceedings; Burdens in Contested Cases.
Proponents: burden of establishing prima facie proof of due execution.
Contestants: burden of establishing lack of testamentary capacity or intent, undue influence, fraud,
duress, mistake or revocation.
d. The Notarized Will
Under UPC §2-502(a)(3)(B), a will can be valid if the testator acknowledges the will before a
notary, even if there are not two witnesses to the will. Unlike the self-proved will, this rule
substitutes the notary for the other witnesses and actually validates the will itself (but does not
make it self-proving). Normally, notarization alone, without two witnesses, would not validate a
will.
e. Putting the Formalities into Practice
Once an attorney has interviewed the client and has successfully drafted her will, the next step is
to have the client come to the office to execute the will (and any other documents included in the
estate plan, like durable powers of attorney, living wills, and trusts).
This part of the job is one of the points at which the attorney is vulnerable to malpractice claims
if the will execution is not carefully conducted.
C. Holographic Wills
State statutes have traditionally required two witnesses to validate a will. However, about 1/2 the states
recognize an exception to this rule if a will or a material portion of the will is written in the testator’s
handwriting, then the will may be validated without any witnesses as a holographic will.
12 See UPC §2-504. Self-Proved Will.

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Rest (3d) of Property: Wills & Other Donative Transfers §3.2, cmt. a notes that the statutory
approaches to validating holographic wills can be divided into three “generations”: first, second, and
third.
1). First-generation statutes required that the will is entirely written, dated, and signed by the
hand of the testator in order to be a valid holograph.
2). Second-generation statutes required that the signature and the material provisions be in
the handwriting of the testator in order to be valid.
3). Third-generation statutes, of which UPC §2-502(b) is an example, only require that the
signature and the material portions of the document be in the handwriting of the testator in
order to be a valid holograph.
The “material portion” of a dispositive provision consists of the words identifying the property and the
devisee.” Rest (3d) of Prop.: Wills & Other Don. Trans. §3.2. The words of gifting, such as “I give
. . . ,” are not required to validate a holographic will in states that have adopted the material portions
language.
UPC §2-502(b). Holographic Wills
A will that does not comply with subsection (a) is valid as a holographic will, whether or not witnessed,
if the signature and material portions of the document are in the testator’s handwriting.
In re Estate of Edward Frank Muder
Facts: Edward Muder died in March 1984, in Sept. 1986, his surviving spouse, Retha submitted a
purported will dated Jan. 1984 to the probate court; the purported will was on a preprinted will form
that included “stike outs” by Edward. The state had a “second-generation statute.”
Issue: Whether a purported will is a valid holographic will?
Holding: A testator who uses a preprinted form, and in his own handwriting fills in the blanks by
designating his beneficiaries and apportioning his estate among them and signs it, has created a valid
holographic will. Here, there is no need to ignore the preprinted words when the testator clearly did not
and the statute does not require us to do so. (Court looked at testamentary intent (writing itself and
extrinsic evidence)).
“Surplusage theory”- the theory that the statutory words wholly or entirely were satisfied when the
material provisions of the will were wholly or entirely in the testator’s handwriting, and other written or
printed material could accordingly be disregarded as surplusage. The theory disregards the printed
material and looks to see if what was left made sense and could be considered a valid will.
In re Estate of Charles Kuralt
Facts: Charles Kuralt and Elizabeth Shannon were in a relationship that was kept secret from Kuralt’s
wife (NY). He executed a holographic will which stated that in the event of his death, he bequeathed to
Patricia Elizabeth Shannon all his interest in land, buildings, furnishing and personal belongings on
property in Mont. But also executed a formal will on NYC, naming his wife Petie beneficiary of that will
and didn’t mention any of the real property owned in Mont. He deeded his interest in the Mont. land, to
Shannon, the 2nd transaction for the rest was prevented because Kuralt became ill. At hospital, he
wrote a letter to Shannon that he’d “have a lawyer visit the hospital to be sure you inherit the rest of the
place in MT” and sent 2 checks to her.
Issue: Whether the letter expressing the decedent’s testamentary intent to make a specific bequest
enforceable as a holographic codicil to the decedent’s formal will?
Holding: Yes, if the facts adequately demonstrate that the decedent intended the letter to effect a
transfer of specific property, but not all his property, upon his death, the letter is testamentary and may
be enforced as a holographic codicil to the decedent’s will.
The court looked at extrinsic evidence (i.e. the fact that the word “inherit” was underlined reflected an
intention to make a posthumous disposition of the property)
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NOTE: “primary probate matter”= NY; “ancillary probate matter (real property)”= Mont. Where
property is, unless property passes outside of probate
Preprinted wills
One of the goals of recent probate reform has been to simplify the process and allow people to make
their own wills. A problem with preprinted will forms, which were designed to achieve this goal, is that
people may have bene encouraged to draft their own wills only to have those wills later invalidated
because of the technical rules of will validity.
D. Dispensing with Formalities

1. Substantial Compliance
Another exception to the strict requirements of will formalities (in addition to holographic wills)
that is the doctrine of “substantial compliance.”
Substantial compliance: A court considers the level of compliance with statutory formalities and
determines whether compliance was “close enough: to make validating the will appropriate.”
Courts began to try to bridge the gap between will substitutes and wills by recognizing that wills that
clearly indicate the testator’s intent but which might not strictly comply with all the formalities
should be validated in order to effectuate the testator’s intent. That courts should not interpret wills
statutes in a way that is “intent-defeating.” (Professor John Langbein–encouraging the adoption of
the intent-furthering doctrine of substantial compliance).
Majority of states require a two-step process of validation: (1) Are the formalities met?, and (2) what
was the testator’s intent?. If Step 1e is not met in those states, then the court may not proceed to
Step 2. BUT SEE In re Snide.
In re Snide
Facts: Harvey Snide (decedent) and wife, Rose, intended to execute mutual wills at same exec.
ceremony. By mistake, they each executed the will intended for the other. There are no other issues
concerning the formalities. Other than the names of the donors and beneficiaries on the wills, the
wills were identical. When Harvey died, Rose offered the will, drafted for her but bearing Harvey’s
signature, for probate. Their children signed waivers and consented to probate of the will, but the
guardian ad litem (objector) representing the interests of the minor child objected to probate
because the minor child would inherit a portion of the estate through the intestacy laws if the will
was void, but nothing under the will.
Holding: Not only did the two instruments constitute reciprocal elements of a unified testamentary
plan, they both were executed with statutory formality, including the same attesting witnesses, at a
contemporaneous execution ceremony. There is absolutely no danger of fraud, and the refusal to
read these wills together would serve merely to unnecessarily expand formalism, without any
corresponding benefit. On these narrow facts we decline this unjust course. This is a case of a
genuine mistake.
Rule: if testators of mutual wills mistakenly sign each other’s will, if the wills are executed with
statutory formality and contain identical reciprocal testamentary schemes, the wills may be read
together to enforce probate proceedings.
2. Excusing Harmless Error

To facilitate the broad use of intent-furthering doctrines, the drafters of the UPC adopted the
harmless error rule in §2-503.
Harmless error rule: focuses on the intent of the decedent; if the decedent intended the document to
be a will, then the document can be given effect as a will, but only if the proponent can establish
intent by clear and convincing evidence.
UPC §2-503. Harmless Error.
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Although a document or writing added upon a document was not executed in compliance with
Section 2-502, the document or writing is treated as if it had been executed in compliance with that
section if the proponent of the document or writing establishes by clear and convincing evidence
that the decedent intended the document or writing to constitute (i) the decedent’s will, (ii) a partial
or complete revocation of the will, (iii) an addition to or an alteration of the will, or (iv) a partial or
complete revival of his [or her] formerly revoked will or of a formerly revoked portion of the will.
This provision gives courts statutory authority to excuse a formality if a “defect in execution was
harmless in relation to the purpose of the statutory formalities.” Rest (3d) of Property: Wills
& Other Donative Transfers §3.3, cmt. b.
UPC §2-503 has only been adopted in whole in a few states, but substantial compliance and the
harmless error rule are clearly where courts and states are moving—albeit slowly.
In re Estate of Wiltfong
Facts: Wiltfong had a domestic partner for 20yrs; they lived together and shared finances. On the
Proponent’s birthday the decedent gave him a b-day card that said if anything should happen to
him, that everything he owned should go to the proponent and singed the card. Decedent died. The
letter was contested by the decedent’s sister having the letter admitted to probate because under
intestacy the nephews would have inherited the estate.
Issue: Whether harmless error statute applies?
Holding: Here the court held that it was (i) not a holographic will; (ii) kind of errors that are
harmless in CO are drafting mistakes that frustrate the testator’s intent; standard of proof is clear
and convincing evidence; on remand trial court should consider if these were drafting errors
Reasoning: Statute (§15-11-502) requires for a will (1) in writing; (2) has testator’s signature; (3)
have signatures of at least two witnesses. These require strict adherence.
* Harmless error that do not frustrate the testator’s intent should not invalidate the will.
E. Choice of Law
States generally recognize the validity of wills executed in other states, as long as the will was executed
in conformity with the laws of the state or the country where it was initially executed. Primary probate
location is where decedent was domiciled. Other locations where probate proceedings occur after this
are called “ancillary probate matters.”
UPC §2-506. Choice of Law as to Execution.
A written will is valid if executed in compliance with Section 2-502 or 2-503 or if its execution complies
with the law at the time of execution of the place where the will is executed, or of the law of the place
where at the time of execution or at the time of death the testator is domiciled, has a place of abode, or
is a national.
F. Ethical Issues in Will Drafting

Ethical concerns in drafting wills for clients may include whether a lawyer (i) can name herself as the
executor or “personal representative”; (ii) can name herself as a beneficiary in a client’s will; (iii) can
include a clause limiting her liability in a will; (iv) can represent multiple parties, such as a husband and
a wife, or testator and beneficiary; and (v) has a duty to contact a client about changes in the law that
affect the client’s estate plan
1. Conflicts of Interest
a. Drafting Attorneys as Fiduciaries
Given the potential conflicts, drafting attorneys should avoid naming themselves as executors.
For example, a drafting attorney serving as a personal representative is arguably a conflict of
interest because it will generate fees not only for acting as the attorney for the decedent, but also
for acting as the personal representative. It may affect the lawyer’s ability to exercise
independent judgement when making decisions.
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Per ABA Comm. on Ethics & Prof’l Responsibility, Formal Op. 02-426, at 7, a lawyer may serve
as a fiduciary under a will or trust that the lawyer is preparing for the client, so long as the
lawyer discusses with the client information that is necessary to enable the client to make an
informed decision and so long as it will not materially limit hi independent professional
judgement in advising the client. Lawyer must obtain informed consent in writing.
See also ACTEC Commentary on MRPC 1.7 (as long as its client’s suggestion and not the
lawyer’s, it is permissible).
b. Exculpatory Clauses
Exculpatory clause: a clause that exonerates a fiduciary from liability for certain acts or
omissions affecting the fiduciary estate; its prohibited if it exonerates the lawyer who drafter;
okay if it exonerates the executor. Often used when a client wishes to appoint an individual
nonprofessional or family member as a fiduciary.
c. Drafting Attorney as Beneficiary
An estate planning attorney should avoid naming himself or his family members as beneficiaries
of a will he is drafting for an unrelated client. Courts often view this as raising a presumption of
undue influence. ACTEC Commentary on MRPC 1.8 (p. 234)
2. Duty to Produce and Keep the Will

Lawyers should make sure the will they draft that has been executed will be safeguarded. Some
options include: (1) the client can keep it (fireproof, waterproof, findable location); (2) some
jurisdictions will safekeep the document/will for the client’s life for $5; (3) the attorney can keep it
(must follow MRPC 1.15).
*always document- “at the end of our meeting, you did this, I did this, you asked me to do this,
you told me you would put the document in this location_____”etc, this way there is
documentation of what happened and where documents are and which ones are where.
UPC §2-515. Deposit of Will with Court in Testator’s Lifetime
A will may be deposited by the testator or the testator’s agent with any court for safekeeping, under
rules of the court. The will must be sealed and kept confidential. During the testator’s lifetime, a
deposited will must be delivered only to the testator or to a person authorized in writing signed by
the testator to receive the will. . . .
UPC §2-516. Duty of Custodian of Will; Liability
After the death of a testator and on request of an interested person, a person having custody of a will
of the testator shall deliver it with reasonable promptness to a person able to secure its probate
and if none is known, to an appropriate court. A person who willfully fails to deliver a will is liable to
any person aggrieved for any damages that may be sustained by the failure. A person who willfully
refuses or fails to deliver a will after being ordered by the court in a proceeding brought for the
purpose of compelling delivery is subject to penalty for contempt of court.
ACTEC Commentary on MRPC 1.15 (p. 236)
ACTEC Commentary on MRPC 1.4 (p. 237)
3. Drafting Software, Mistakes, and the Unauthorized Practice of Law

Don’t use drafting software because they’re not always correct.
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VI. Interpreting the Will

Courts are often faced with interpreting the instrument and its terms based on what is most consistent
with the testator’s intent. Courts will start with the language in the document and then may consider
extrinsic evidence if the language is ambiguous.
A. What Constitutes the Will?

Because several different pieces of paper might arguable constitute the testator’s will, determining what
constitutes the testator’s will may be difficult.
1. Integration
Integration is the process of recognizing various pages as a single will. The document being
probated must consist of the pages that were present at the execution ceremony and that the
testator intended to constitute the will. Words, sentences, paragraphs, or pages that are
subsequently added should not be given effect, unless they were intended to be part of the will and
were executed with the required formalities. If pages are fastened together, there’s an inference that
the testator intended them all to be part of 1 document. The testator doesn’t need to sign every page.
Best practice: There are many things a lawyer can do at the time the will is drafted and executed to
lessen the likelihood that someone might contest the validity of the will on integration grounds. For
example, the attorney can draft the will with the pages and lines numbered, use one font type and
size, and carry sentences from one page to the next so it is clear they were drafted at the same time.
At the end of the execution ceremony, the document can be stapled, with the testator and witnesses
initialing and dating each page.
2. Incorporation by Reference
Incorporation by Reference is a process where 1 document is made part of another simply by
referring to it. The doctrine permits the court to include an additional document as part of the
testator’s will if (i) the testator intends it to be included; (ii) the document is in existence at the
time the will is executed; and (iii) it is sufficiently described so it can be readily identified.
If the doctrine applies, the incorporated document, as it existed on the day the will was executed, is
deemed to be part of the will (as if the document were typed into the will or attached as an exhibit).
UPC §2-510. Incorporation by Reference
A (i) writing (ii) in existence when a will is executed may be incorporated by reference (iii) if the
language of the will manifests this intent and (iv) describes the writing sufficiently to permit its
identification.
Example: Sylvia executed a will providing that her rare coin collection be distributed to the
persons identified in a letter to be found in her safe deposit box. Sylvia executed
her will on August 1, 2016. After her death, her personal representative opened
her safe deposit box, and it contained a letter dated July 3, 2016. The letter
provided that each of the 50 coins in the collection be given to a different person
and named each of the 50 recipients. Assuming it can be established that there
were no additions or deletions to the letter after July 3, 2016, the letter must be
filed in court and the personal representative must distribute each coin to each
recipient named in the letter: the letter was in existence as of the date the will was
executed, the will specifically referenced the letter, and it is clear that the testator
intended to incorporate the letter into the will. If the letter were dated September
1, 2016, instead, the letter could not be incorporated by reference, because it was
not in existence when Sylvia executed her will.
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3. Republication by Codicil
A codicil is a subsequent instrument that partially revokes a prior will by changing individual
bequests, adding bequests, or adding new beneficiaries. It’s an amendment with the same
formalities as a will. The will is treated as having been executed on the date the codicil is finalized.
Example: Jane executed a will in 2013. In 2014, she drafted a list of people whom she wanted to get
her IBM stock and put that list in her safe deposit box. In 2016, Jane executed a codicil
that specifically references the list and states that the list is in her safe deposit box. The
republication of the will by codicil in 2016 makes the 2014 list a preexisting document,
and Jane’s specific reference to it will allow a court to incorporate it by reference.
Example: Sylvia executed a will providing that her rare coin collection be distributed to the persons
identified in a letter to be found in her safe deposit box. Sylvia executed her will on
August 1, 2015. After her death, her personal representative opened her safe deposit box,
and it contained a letter dated September 1, 2015. The letter provided that each of the 50
coins in the collection be given to a different person, and it named each of the 50
recipients. The letter cannot be incorporated by reference because it was not in existence
when Sylvia executed her will. Now assume that Sylvia had validly executed a codicil with
all the required formalities on March 15, 2016. The codicil left her car to her sister and
did not otherwise change the will. Since the August 1, 2015 will is now deemed to date
from March 15, 2016, and since the will is deemed to be republished in its entirety as of
that date, the letter dated September 1, 2015, meets the “in existence” requirement.
4. Events of Independent Significance

Events [acts or facts] of independent significance allow the probate court to look to events or acts
outside the four corners of the will to determine which property goes to which beneficiaries. They
are objective events that occur in the outside world irrespective of the testator’s plan of disposition.
Typical events include: birth, death, adoption of a child, acquiring or disposing of property, etc.
UPC §2-512. Events of Independent Significance.
A will may be dispose of property by reference to acts and events that have significance apart from
their effect upon the dispositions made by the will, whether they occur before or after the execution
of the will or before or after the testator’s death. The execution or revocation of another individual’s
will is such an event.
Examples include: “the stocks in my brokerage account,” “the house in which I am living at the
time of my death,” or “the persons employed by me at my death.” BUT NOT: “the property in the
drawer next to my bed,” because it’s too tied to the testator’s actions.
Example: Nina’s will says, “I give the car that I own at my death to my friend, Carlos. I give
all the jewelry I own at my death to my sister, Carmela, if she survives me but, if
not, then to my brother Bill.” Nina’s decision whether to retain her car or buy a
new one has significance completely separate from her wish that Carlos inherit a
car. Similarly, Nina will make decisions about whether to buy, sell, or give away
pieces of jewelry for reasons other than her testamentary wish that Carmela or
Bill gets them. Finally, whether Carmela or Bill inherits the jewelry depends on
Carmela’s survival or death, an event that Nina has no control over and that has
significance apart from its effect upon the dispositions made by Nina’s will.
Example: Allison’s will states “I give the residue of my estate to the Family Trust created
under the will of my sister, Serena.” Although the trust created by Serena’s will
reflects Serena’s testamentary intent, it is independent of Allison’s testamentary
intent and therefore Allison’s direction can be given effect as an event of
independent significance.
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5. Memorandum at Death
In states that have adopted a statute like UPC §2-513, a testator may draft a memorandum after
executing the will that leaves tangible personal property 13 to certain people. This enables a testator
to make changes to his estate plan after executing without formally executing a new instrument.
Under UPC §2-513, the memorandum will be read with the will and implemented by the court.
UPC §2-513. Separate Writing Identifying Devise of Certain Types of Tangible Personal Property.
Whether or not the provisions relating to holographic wills apply, a will may refer to a written
statement or list to dispose of items of tangible personal property not otherwise specifically
disposed of by the will, other than money [unless will says the memo overrides]. To be admissible
under this section as evidence of the intended disposition, the writing must be signed by the testator
and must describe the items and the devisees with reasonable certainty. The writing may be referred
to as one to be in existence at the time of the testator's death; it may be prepared before or after the
execution of the will; it may be altered by the testator after its preparation; and it may be a writing
that has no significance apart from its effect on the dispositions made by the will.
For the memo to be enforceable, the testator must comply with certain requirements or mini-
formalities: (i) while witnesses are not required, the memorandum must be in writing, (ii) the
testator must sign it, (iii) and the items of tangible personal property must be described “with
reasonable certainty.”
“A document referring to ‘all my tangible personal property other than money’ or to ‘all my
tangible personal property located in my office’ or using similar catch-all language would
normally be sufficient,” even though each particular item has not been specifically described.
Unless the testator specifies otherwise, the will itself takes precedence over an external
memorandum when there’s a conflict.
Some wills include a clause that clarifies that the separate writing will take priority over other
dispositive provisions in the will itself: “I might leave a written statement or list disposing of items
of tangible personal property. If I do, then my written statement or list is to be given effect to the
extent authorized by law and is to take precedence over any contrary devise or devises of the same
item or items of property in this will.”
6. Pour-Over Wills
A pour-over will is a provision in a will that transfers or “pours over” some of the estate, usually the
residue, into the trust.
UPC §2-511 allows for testamentary additions to trusts, after the will is drafted, as often as the
testator/settlor wishes without having to re-execute the will. The terms of the trust remain private,
which would not be true with the doctrine of incorporation by reference.
B. Interpreting the Meaning of a Will Using Extrinsic Evidence

The general rule is that the court must give expression to the testator’s intent, starting with the plain
meaning of the words in the document using extrinsic evidence.
1. The Plain Meaning Rule

This is essentially as a starting point for the court; if the court cannot divine the testator’s intent
from the plain, common meaning of the terms of the will, it has to look outside the four corners of
the will, with extrinsic evidence.
13Note that a testator can use a memorandum only for tangible personal property and not for intangible property (e.g.,
stocks) or real property (e.g., a house).
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2. Modern Approaches
The Restatement abandons the plain meaning and allows all relevant evidence, whether direct or
circumstantial, to be considered to determine the testator’s intent, including the test of the donative
document and relevant extrinsic evidence.
Rest. (3d) of Property: Wills & Other Donative Trans. § 10.2, cmt d, e, f, & g
(d) surrounding circumstances- extrinsic evidence of the circumstances surrounding the execution
of the donative document
Example: evidence of the donor’s occupation, property at the time of the document’s
execution, relationships with family members and with other persons
(e) surrounding circumstances- skill of the drafter- whether the drafter of the document was a
layperson (usually the donor) or a person experienced in the use of legal or other specialize
terminology (i.e. the donor’s lawyer)
(f) direct evidence of intention- direct evidence relevant to the donor’s intention includes
documents and testimony evidencing the donor’s intention
Example: the donor’s own declaration of intention (written or oral), content of the drafting
agent’s files, written or oral statements made to the donor by the drafting agent
or another concerning the contents or effect of the document, to the extent that
the donor acquiesced, silently or expressly, in the other person’s statement
(g) extrinsic evidence- time to which evidence relates- post-execution events can sometimes be
relevant in determining the donor’s intent. Post-execution statements of the donor, for example, can
relate to the donor’s intention at the time of execution
3. Resolving Ambiguities
Patent ambiguity: A provision that has an ambiguity that is one that appears on the face of the will
itself. Extrinsic evidence was not allowed.
Example: “I leave all my property as follows: one-fourth to Alice, one-fourth to Carl.” Here,
the court would not fix the mistake, the remaining one-fourth would go by
intestacy.
Latent ambiguity: A provision that is not apparent upon reading the will but rather becomes
apparent when the provisions are applied. Extrinsic evidence was allowed.
Example: “I leave $10,000 to John Smith.” It turns out the testator knew two John Smiths,
his brother and his brother’s son (John B. Smith and John S. Smith).
Example: Tony’s will says, “I give my property to my children.” Tony raised two genetic
children and another child who is his unadopted stepchild. When Tony met with
his lawyer, Tony told the lawyer that he had three children. Tony has always held
all three out at his children and told them (and other family members) that the
three children would inherit equally. When Tony used the word “children” in the
document, he was using it to mean the three children. The court should interpret
the word as Tony intended it. The court might find the phrase is ambiguous,
given the extrinsic evidence of Tony’s personal situation. First, the court would
try to figure out what Tony meant. It would not apply the rule of construction
(the legal meaning of the word children) until it had considered evidence of who
Tony meant to include in the word “children.”
Estate of Hinz
Facts: Esther and her husband had two children. Lester died and was survived by his wife. The
daughter died, survived by her two children (respondents). EJ Hinz left a will and named her son as
the sole “heir” and executor. Her window maintained that sole heir should mean beneficiary.
Respondents argued that the will is ambiguous, and her will must be distributed according to
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intestate succession. Trial court found “heir” could mean beneficiary, surviving child, or person
entitled to take property by intestate succession under probate code.
Issue: Whether the word “heir” as it was used in the will, is ambiguous.
Holding: The word “heir” as it is used in the will is not ambiguous and is not reasonably susceptible
to the construction “surviving child” because after the daughter’s death there was no reason to
designate the son as the “sole surviving child.” The meaning is only susceptible to only one
construction, “beneficiary.” Having already identified Lester as her “son,” decedent had no reason to
further identify him as her “child.” There was no reason for her to take any action to designate
Lester as her “sole surviving child.” The court stated “our job is to determine the decedent’s
intention as expressed in the instrument, not to reform the will to account for unanticipated events,
such as Lester’s subsequent marriage.”
4. Mistake—Reformation of Wills
Historically, extrinsic evidence was not allowed to correct mistake. Now, the Rest. and the UPC have
adopted the view that reformation for mistake should be allowed.
UPC §2-805. Reformation to Correct a Mistake
The court may reform the terms of a governing instrument, even if unambiguous, to conform to the
terms to the transferor’s intention if it is proved by clear and convincing evidence to support a
finding that “the terms of the governing instrument were affected by a mistake of fact or law,” before
allowing reformation.
Wills may not be denied probate based on a mistake of fact or law inducing the execution of the will
unless the mistake goes to the underlying testamentary intent or unless fraud or undue influence
cause the testator to execute the will.
Erickson v. Erickson (Conn. 1998) the court held that extrinsic evidence should be allowed if the
evidence could establish by clear and convincing evidence that there was a “scrivener’s error” that
caused the testator to fail to clearly state that his new will, made several days prior to his marriage,
should not be revoked. Remanded for consideration of extrinsic evidence, possibility of reformation.
C. Interpreting the Meaning of a Will Using the Rules of Construction

Courts generally construe an ambiguous phrase or term first before applying a rule of construction.
After the court determines the meaning of the words, it applies any appropriate rules of construction.
Rules of construction: either statutes or judicial doctrines that assist the court in giving meaning where
the testator’s intent is not clear or when circumstances change over time and the testator’s will did not
anticipate those changes. They are essentially default rules that are based on legislative and judicial
choices about the normative preferences of most testators. Some rules of construction apply only to
wills and others apply to a broader range of instruments, including the will substitutes.
Constructional preferences: (i) family members over non-family members; (ii) close family
members over more distant ones; (iii) a preference to not disinherit a line of descent; (iv) descendants
of a predeceased beneficiary who is a family member take a bequest rather than let the bequest lapse to
others; and (v) a preference for favorable tax results; (vi) honor interpretations that are in accord with
the transferor’s contractual obligations; (vii) honor interpretations that are in accord with public policy
other than plausible constructions.
Example: David leaves property to Bill Robinson. Both David’s son and brother are named
Bill Robinson. Both have predeceased David and left descendants. The court first
has to figure out to which Bill Robinson David was referring, considering
whatever extrinsic evidence will help the court. Once that is determined, the
court will apply the statutory antilapse rule to give the bequest to the descendants
of the appropriate Bill Robinson.
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Since rules of construction apply only if the testator has not provided adequate instruction, if the
testator’s intent is clear, then the court must follow the testator’s expressed intent.
Example: Jeremy’s will provides, “I leave my house to my sister Jillian, and my personal
representative shall pay off the mortgage prior to conveying the house to Jill.”
The court must follow Jeremy’s specific intent as expressed in the will. Assume
the will provided instead, “I leave my house to my sister, Jillian.” There is no
indication of whether Jeremy intends his personal representative to pay off the
mortgage prior to giving the house to Jillian. A rule of construction that covers
this situation, UPC §2-607, provides the default rule that the house pass to
Jillian with the mortgage obligation attached to it.
1. Classification of Devises
Classification matters because certain rules of construction, like ademption, apply only to specific
devises, while others apply to all devises. Classification is also important in abatement.
Devises in a will can be classified into four categories: (1) specific devises, (2) general devises, (3)
demonstrative devises, and (4) residuary devises.
(1) A specific devise is a gift of a particular asset, specifically identified in the will, e.g., “my Volvo”
(2) A general devise is a gift of money or value. The devise is a gift of that value, and if the estate
does not contain cash when the testator dies, the beneficiary can receive property worth that
amount or the personal representative can sell assets and distribute cash. (A gift of a certain
amount of money is sometimes also called a “pecuniary” bequest). E.g., “$100”
(3) A demonstrative devise is a gift of money or value payable from a specified source, but if that
source is insufficient, then from other assets. E.g., “$100 from my bank account at Citi Bank. If
no account exists, or if it has less than that, the devise will be made from other assets.”
(4) The residue is everything else. Any property in the probate estate not distributed as a specific,
general, or demonstrative devise is considered the residue.
Classification is most significant: Failure of testamentary provisions (§2-604); Ademption by
extinction (§2-606); (Non)exoneration (§2-607); Abatement (§2-902)
2. Rules of Construction Applicable Only to Wills

a. What Happens When a Devise Fails?
There are times when a devise fails for one reason or another e.g., when the intended beneficiary
predeceased the testator or when a devise is revoked or was the subject of undue influence. The
question then is what happens to the failed devise. The UPC provides that a failed specific or
general devise “falls into” and is distributed with the residue.
UPC §2-604. Failure of Testamentary Provision
(a) Except as provided in Section 2-603, a devise, other than a residuary devise [so a
specific, general or pecuniary devise], that fails for any reason becomes a part of the
residue.
(b) Except as provided in Section 2-603, if the residue is devised to two or more persons, the
share of a residuary devisee that fails for any reason passes to the other residuary devisee,
or to other residuary devisees in proportion to the interest of each in the remaining part of the
residue.
A residuary devise that fails is distributed ratably to the other residuary beneficiaries or,
if none, via intestacy. By passing a failed residuary bequest to other residuary
beneficiaries first, UPC §2-604(b) provides a “residue of the residue” rule. This is the
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opposite of the common law but which is now the law in many states, by statute or
judicial decision.
b. Lapse and Antilapse—What Happens to a Bequest When the Beneficiary

Predeceases the Testator?
i. The General Rule—Lapse
Lapse: when a bequest to an individual fails because the person dies before the testator.
Inheritances can only be given to the living. The traditional common law rule is that if the B
is dead, his/her gift lapses or fails.
However, if the gift is a class gift, traditional common law rule is to give the gift
proportionately to remaining members of class
If no alternate taker is named and if the antilapse rules do not apply, the gift fails and passes
pursuant to UPC §2-604.
ii. The Exception to the General Rule—Antilapse
States began to view a lapse as a harsh and unintended result in certain circumstances. New
assumption is that if the bequest were to a family member, the testator would prefer that the
descendants of the intended beneficiary take the bequest instead of letting the gift lapse and
go to other beneficiaries (basically meaning “to my relative, but if my relative predeceases
me, to my relative’s descendants.”)
Antilapse: reverses the common law of lapse and class gifts but only in certain
circumstances. Creates a “substitute gift” but only if testator did not provide for an
alternative gift/taker.
Requirements must be met in order for the antilapse rule of UPC §2-603 to apply:
(1) The intended beneficiary (B) must predecease the testator
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(2) B was a “protected devisee” [“chosen few”] – a family member by blood within the first
three parentela or a stepchild [different in other states]
(3) B left living descendants.
(4) T did not express a contrary intention, such as providing that:
• The devise is to lapse if B predeceased T;

• Gift would go to an alternate taker;
• B must survive T or survive for a specified period (and not to descendants).
• Words of survivorship to be read narrowly to allow antilapse to apply.
Note: Gives to descendants of B (not into estate of B)
If all of these requirements are met, a substitute gift is created in favor of the surviving
descendants of the intended beneficiary, with the amount each descendant receives determined
by the rules of representation. But, if the antilapse provisions of UPC §2-603 do not apply, the
gift will lapse. Lapsed gifts pass according to UPC §2-604.
Example: Gilbert’s will devised “$10,000 to my sister, Susannah” and devised “the rest,
residue, and remainder of my estate to Georgetown University.” Susannah
predeceased Gilbert, leaving a child, Naomi. Under the common law, the $10,000
bequest to Susannah would lapse and be added to the residue for Georgetown.
However, under the antilapse rule of UPC §2-603(b)(1), Susannah’s $10,000
devise goes to Naomi as a substitute gift, not to Georgetown. The default rule of
UPC §2-603 overrides the default rule of UPC §2-604. If Susannah were not a
family member or died without a descendant, the gift would lapse and pass
according to UPC §2-604 (to Georgetown).
iii. Class Gifts
Class gift: a gift made to a group of people identified as a group by the testator and typically
with each member of the group bearing the same relationship to the testator (“my children,”
“my employees,” “my cousins”). The class members divide the property that is the subject of
the gift, for example, a sum of money, a piece of real property, or shares of stock in a family
business. If a class member predeceases the testator, the remaining members of the class
divide the gift.
However, if the class gift is made to a group covered by the antilapse statute, there are two
possibilities.
1). If the gift is to “issue” or a similar group that contains several generations, there is no
substitute gift. This is because the class is phrased so that it automatically substitutes a
member of the younger generation if an ancestor predeceases.
Example: Leila executes a will that leaves a $15,000 devise to “my issue.” At her death,
Leila had a son, Benito, and a granddaughter, Alexis, the child of Leila’s deceased
daughter, Antonia. Benito receives $7,500 and Alexis receives $7,500.
2). If the class gift is not a “multi-generational” gift, then the antilapse statute creates a
substitute gift so that each surviving member of the class takes a share and the descendants
of the deceased class member take her share.
Example: Kate executes a will that leaves a $15,000 devise to “my siblings.” At her death
in 2013, Kate’s brother, Alberto, was alive but her sister, Martha, predeceased her,
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leaving two sons, Nestor and Hector. Alberto would receive $7,500 and Nestor and
Hector would share $7,500.
If the deceased class member has no descendants, the antilapse conditions are not
satisfied, and the remaining class members benefit from her share pursuant to the
common law. In the example above, Alberto would receive $15,000 if Martha had died
without descendants.
If the testator makes individual gifts to named individuals, the result is less likely to be a
class gift.
iv. Contrary Intent and Words of Survivorship
The antilapse rules can be “drafted around” by the inclusion of a clear statement of the
testator’s contrary intent that they not apply. (UPC §2-601). A testator can trump the
application of the antilapse rules by clearly expressing a preference in a will for who should
receive the property in the event that the intended beneficiary dies first. The alternate
beneficiary is generally referred to as a “taker in default.”
Testator can avoid antilapse rules by naming an alternate beneficiary or by expressing the
intention that he does not want the rules to apply (example 2)
Example 1: Donato’s will provides, “I leave Carolyn $100,000, but if she predeceases me, it
shall go to Ahmed.”
Example 2: Donato could say, “I leave Carolyn $100,000, but if she predeceases me, the
devise shall lapse and pass under the residuary clause.”
“In the absence of persuasive evidence of a contrary intent, however, the antilapse statute,
being remedial in nature, and tending to preserve equality among different lines of
succession, should be given the widest possible chance to operate and should be defeated
only by a finding of intention that directly contradicts the substitute gift created by the
statute. Mere words of survivorship—by themselves—do not directly contradict the statutory
substitute gift to the descendants of a deceased devisee.” UPC 2-603(b)(3) -- Comment
From a drafting point of view, the document must clearly state the testator’s preference in
this regard. If survivorship is intended to defeat antilapse, the testator should say something
like, “to my surviving children and not to the descendants of a deceased child.”
Estate of Tolman v. Jennings
Note 4: §2-603 is applicable only when a devisee of a will predeceases the testator. Most
states limit the antilapse statute to wills, but UPC §2-706 creates a rule of construction
applicable when the beneficiary of a life insurance policy, a retirement plan, or a transfer-on-
death account predeceases the decedent.
c. Ademption by Extinction and Nonademption

Problems arise when devised property (“my 1956 Mercedes”) is not in the testator’s estate on his
death? When the will is silent, the question for the court is whether to ignore the bequest and let
it “adeem” (fail) or to substitute other property and give that property to the beneficiary.
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Ademption by extinction: only applies to specific devises! Because one can only give away what
one owns, if decedent wrote a will when she owned certain property but did not own it at death,
it “adeems” (fails) and the B does not get anything unless the D left an alternative devise (which
would be rare)
There are two theories of ademption by extinction: (1) identity theory, and (2) intent theory
(1) Identity: says that a specific devise is adeemed (rendered ineffective and fails) if the property
is not owned by the testator at death. Approach used by majority of states.
Courts do not consider the testator’s intent; the only thing that matters is that the
property is no longer owned at death and cannot be identified.
Results= sometimes harsh, where it was reasonably clear that the testator did not intend
to revoke the devise even if the specific property identified in the will was no longer
owned by the testator.
(2) Intent: considers what the testator would have preferred to happen; recognizes that in
certain situations, the property that was the subject of the gift has merely changed its form,
therefore the “new form” should be substituted for the “old form” in that the testator likely
disposed of the old property and substituted the new property for reasons that are independent
of a change in testamentary plan.
Pwrpt slide (13/39 class 10)- The UPC reverses the common law (identity theory) in very limited
situations – generally only when there is a mere change in form to something other than cash
(per intent theory). Rule applies if: Change in ownership in one business to another not as the
result of T’s action; Change from property to a chose in action, such as a note or balance due
payable, insurance proceeds payable, condemnation award payable; Property acquired as a
replacement for the devised property; A cash devise in lieu of the property where doing so would
be consistent with a manifested plan of distribution of testator; Rule does not apply if will states
contrary intent, i.e., that if any property devised is not owned at death, no other property shall
be substituted for it.
The UPC has adopted an “intent theory” of ademption by extinction. UPC §2-606 provides
guidance to courts as to how they should handle various “change in form” scenarios.
(a)(1)-(3) cover situations where the specifically devised property was disposed of and a
balance is owed to the testator at his death. These subsections give the beneficiary the
right to collect the balance due in lieu of the property
(a)(4) and (a)(5) apply where it appears the property that was the subject of the gift
was replaced with other property either as the result of a foreclosure or by the testator
herself.
(a)(6)14 applies when the testator manifested a plan of distribution at the time she
executed the will and letting the gift adeem would frustrate that plan.
It is worth noting that even in states that have adopted the UPC, ademption (failure of the gift) is
still the outcome in the majority of situations because the nonademption rule only covers these
few situations.
Example: Gretchen’s will devised “my 1984 Ford” to her friend, Xavier. After Gretchen executed
her will, she sold her 1984 Ford and bought a 1988 Buick; later, she sold the 1988 Buick and
bought a 1993 Chrysler. She still owned the 1993 Chrysler when she died. Under UPC §2-
606(a)(5), the court would give the 1993 Chrysler to Xavier. Note that if, in the example above,
14 NOTE: DOES NOT APPLY FOR FINAL EXAM.

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Gretchen had used the proceeds from the sale of her Ford to buy IBM stock, which she owned at
death, subsection (a)(5) does not give the court the authority to give Xavier the IBM stock in lieu
of the Ford; the replacement property must be of the same character.
Example: Tyler devised his personal residence at Ivy Street, LA to his daughter Tisha. Assume
he did not own the house on Ivy Street at the time of his death because it was sold for $400,000
a year earlier. Tisha would not receive the $400,000 cash proceeds in lieu of the house since
cash is not of the same character as real property. However, if Tyler received $100,000 cash and
a $300,000 promissory note from the buyer, Tisha would receive the promissory note under
UPC §2-606(a)(1) as a replacement for the house. She would not receive the $100,000 cash as
cash is generally not considered a replacement, unless Tisha can establish that Tyler did not
intend her bequest to be adeemed under UPC §2-606(a)(6). The same result would be reached,
under §2-606(a)(2) and (a)(3) if the house had been taken by condemnation and there were an
unpaid condemnation award or if it had been destroyed by fire and there were unpaid insurance
proceeds.
Subsection 2-606(b) addresses the problem that may result when someone acting on behalf
of an incapacitated testator inadvertently (or perhaps on purpose) changes the testator’s plan for
his property without the testator’s knowledge or ability to consent.
Example: Claire’s will gives her house to her daughter, her stock account to her son, and the
residue of her estate to her descendants (currently her two children). The specific bequests have
approximately the same value. After Claire develops dementia, her son is appointed as her
conservator (a person who will handle her financial matters—we will discuss conservators in
Chapter 13). He moves her to a memory care facility and sells her house. Without a statute like
§2-606(b), the son would receive the stock account and half the residue and the daughter would
receive only half the residue. Under §2-606(b) the daughter will receive an amount equal to the
net sales price of the house as a substitute gift for the bequest of the house.
d. Accessions
UPC §2-605 addresses questions that arise in connection with specific and general bequests of
securities.
If a will contains a bequest of shares of stock in a specific company, the shares may not be in the
estate because another company purchased the shares and the estate instead owns shares in the
acquiring company.
Section 2-605. Increase in Securities; Accessions.
(a) If a testator executes a will that devises securities and the testator then owned securities that
meet the description in the will, the devise includes additional securities owned by the testator
at death to the extent the additional securities were acquired by the testator after the will was
executed as a result of the testator’s ownership of the described securities and are securities of
any of the following types:
(1) securities of the same organization acquired by reason of action initiated by the
organization or any successor, related, or acquiring organization, excluding any acquired
by exercise of purchase options;
(2) securities of another organization acquired as a result of a merger, consolidation,
reorganization, or other distribution by the organization or any successor, related, or
acquiring organization; or
(3) securities of the same organization acquired as a result of a plan of reinvestment.
(b) Distributions in cash before death with respect to a described security are not part of the
devise.
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The statute provides for a substitute gift of the shares of stock that replaced the specifically
identified shares. Alternatively, the testator may own a different number of shares of stock than
the number originally devised.
To the extent the additional stock shares owned by the shareholders are the result of “stock
splits” or stock dividends, the statute gives the beneficiary the increased number of shares. A
stock split/ reverse stock split is a process by which shares of corporate stock are effectively
merged to form a smaller number of proportionally more valuable shares.
Example: Jonah’s will provides that his friend Charlie is to receive all of Jonah’s WorldCom
stock. However, Jonah does not own any WorldCom stock at his death because Verizon bought
out WorldCom. Jonah exchanged his WorldCom stock for that of Verizon. States that employ
the “identity” theory strictly would deny Charlie any stock. Under UPC §2-605, Charlie would
get the Verizon stock.
The Court of Appeals decision illustrates the “softer” intent approach in which the court reaches
for a way to give the beneficiary something instead of applying the harsher “identity” theory,
which results in the failure of the gift and the beneficiary’s receiving nothing.
In re Estate of Magnus
Facts: Dorothy Magnus died with a will. She bequeathed all of the shares of the capital stock of
Heileman Brewing Company to Donald and Gerald Sweeney in equal shares and to their
survivor. Upon the death of the survivor, the stock shall be distributed to Saint Mary’s College.
Heiliman approved a reverse stock split and paid each remaining shareholder 40.75$ for each
share held. The new ownership made funds available at various banks so that former
shareholders can present their certificates and receive the cash payments. Magnus tendered
17,549 shares for 715,121.75$. After she passed away, the P.R. found an additional 6,749 shares
in a safe deposit box and surrendered the certificates, receiving proceeds of $275,021.75
Issue: Whether the bequest regarding the stocks was fully adeemed and failed under the Minn
statute.
Holding: The lower court erred in holding the devise of the found stock certificates adeemed
under Minn. law. Remanded to order the funds acquired distributed under the terms of Art. 3 of
the testator’s will
e. Ademption by Satisfaction and Nonademption
Ademption by satisfaction: doctrine applied when courts have to ask whether a lifetime transfer
from the testator to a beneficiary was meant to be in lieu of a bequest in the will or whether it
was meant to be in addition to the bequest.
Gift is the default (reversal of common law)
Note that it is often the residuary beneficiary who argues to the court that the bequest should be
adeemed by satisfaction, given the likelihood that the residue would be increased by UPC §2-
604 if the general bequest were reduced or eliminated.
UPC §2-609. Ademption by Satisfaction.
(a) Property a testator gave in his [or her] lifetime to a person is treated as a satisfaction of a
devise in whole or in part, only if (i) the will provides for deduction of the gift, (ii) the testator
declared in a contemporaneous writing that the gift is in satisfaction of the devise or that
its value is to be deducted from the value of the devise, or (iii) the devisee acknowledged in
writing that the gift is in satisfaction of the devise or that its value is to be deducted from the
value of the devise.(b) For purposes of partial satisfaction, property given during lifetime is
valued as of the time the devisee came into possession or enjoyment of the property or at the
testator’s death, whichever occurs first.(c) If the devisee fails to survive the testator, the gift is
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treated as a full or partial satisfaction of the devise, as appropriate, in applying Sections 2-603
and 2-604, unless the testator’s contemporaneous writing provides otherwise
Example: If the testator wants to be clear about whether or not such lifetime transfers should be
deducted from a beneficiary’s eventual inheritance, a will might include one of the following
provisions: “All transfers I have made, or may subsequently make, to any of my children in
excess of the annual Internal Revenue Code gift tax exclusion then in effect shall be in full or
partial satisfaction of any legacies or other benefit given them by my will.” or “All transfers I
have made, or may subsequently make, to any of my children shall be in addition to, and not in
satisfaction of, any legacies or other benefit given them by my will.”
f. Exoneration and Nonexoneration
Common law: if a will is silent about payment of mortgage prior to distributing property to the
beneficiary, the personal representative should pay off the mortgage prior to distribution.
The UPC reverses the common law and provides that if the will is silent, the devised property is
distributed with the mortgage attached.
UPC §2-607. Nonexoneration.
A specific devise passes subject to any mortgage interest existing at the date of death, without
right of exoneration, regardless of a general directive in the will to pay debts.
For exoneration to occur under the UPC, the testator must give the personal representative a
specific instruction to pay the particular debt: for example: “I direct my personal representative
to pay the mortgage on my personal residence before transferring title to the beneficiary named
above.”
A general directive to “pay all [my] [just] [legal] [valid] debts” does not include mortgages and
other secured debt. Secured debt is a lien on the property and goes with the property.
The Garn–St Germain Depository Institutions Act of 1982 (12 USC Section 1701j-3(d)) prohibits
a lender from exercising the "due on sale" clause in the case of the death of a joint tenant, the
transfer to a relative resulting from the death of a borrower, or a transfer where the spouse or
children of the borrower become an owner of the property. (SLIDE 22/39 (class 10))
g. Abatement and Nonabatement
Abatement: doctrine that helps the probate court decide which bequests have to be reduced (or
eliminated altogether) and in what order to pay the debts and expenses of the estate. Happens
when the estate is not solvent (more debts than assets).
The testator can specify the order of abatement in her will by including a provision that
explicitly states the testator’s preference, such as “I direct that the gifts made in this will abate in
the following order [specify order].”
If the testator does not specify a preference for the order, UPC §3-902’s order of abatement:
-Property not disposed of by the will (i.e., the intestate estate if there is no will as there
are no specific, general or residuary gifts)
-Residuary devises (typically the biggest pot of money)
-General devises, incl. monetary (pecuniary)
-Specific devises
Per UPC §3-902 (b) If the will expresses an order of abatement, or if the testamentary plan or
the express or implied purpose of the devise would be defeated by the order of abatement stated
in subsection (a), the shares of the distributees abate as may be found necessary to give effect to
the intention of the testator.
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Order in other states may be: Devises to nonrelatives abate before devises to relatives in each
category; proportional abatement; personal property before real property; gifts to spouses abate
last
Example: Viviana’s will provides that Shirley is to receive her diamond ring valued at $10,000,
Trevor is to receive a general pecuniary devise of $10,000, and Ursula is to receive the residue.
At Viviana’s death, her estate includes only $10,000 and the diamond ring. Trevor will receive
the $10,000 bequest, Shirley will receive the diamond ring, and Ursula will receive nothing
since the residuary devise abates before the general and the specific devises.
Best practice: tell your clients what this looks like when it plays out if abatement applies, i.e. if
there is not enough left.
h. Apportionment
Who pays the taxes?
Typically, if a testator failed to specify from what source taxes were to be paid, the default rule
was that they would be paid from the residuary estate. The default rules yield to direct
statements of intent in the will.
Most form books give the attorney the option of directing that (i) estate taxes be deducted from
the residue; or (ii) each gift, either limited to those stated in the will or all gifts including
nonprobate transfers, must contribute its pro rata share.
If it says taxes will be apportioned, that means each recipient of assets will pay their pro rata
share of the taxes
Section 3-9a-103. Apportionment By Will Or Other Dispositive Instrument.
(a) Except as otherwise provided in subsection (c), the following rules apply: (1) To the extent
that a provision of a decedent’s will expressly and unambiguously directs the apportionment of
an estate tax, the tax must be apportioned accordingly.
(2) Any portion of an estate tax not apportioned pursuant to paragraph (1) must be apportioned
in accordance with any provision of a revocable trust of which the decedent was the settlor
which expressly and unambiguously directs the apportionment of an estate tax. If conflicting
apportionment provisions appear in two or more revocable trust instruments, the provision in
the most recently dated instrument prevails.
Section 3-9a-104. Statutory Apportionment Of Estate Taxes.
To the extent that apportionment of an estate tax is not controlled by an instrument described in
Section 3-9A-103 and except as otherwise provided in Sections 3-9A-106 and 3-9A-107, the
following rules apply:
1) Subject to paragraphs (2), (3), and (4), the estate tax is apportioned ratably to each person
that has an interest in the apportionable estate.
Example: Michael Jackson’s will I direct that all federal estate taxes and state inheritance or
succession taxes payable upon or resulting from or by reason of my death (herein "Death
Taxes") attributable to property which is part of the trust estate of the MICHAEL JACKSON
FAMILY TRUST, including property which passes to said trust from my probate estate shall be
paid by the Trustee of said trust in accordance of terms. Death Taxes attributable to property
passing outside this Will, other than property constituting the trust estate of the trust mentioned
in the preceding sentence, shall be charged against the taker of said property.
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In re Estate of Kuralt
Facts: Shannon brought action because she didn’t want to pay taxes on the land in Montana.
Will said that the residual estate would pay the tax. Kuralt’s daughters were the representatives
of the estate; they appealed the rule that the estate had to pay the taxes.
Issue: Whether the court correctly applied NY law to the Kuralt codicil when it ordered that the
taxes on the property should be imposed on the residual estate.
Holding: The court correctly concluded that Shannon satisfied the burden of proving that
Kuralt’s will directs, clearly and unambiguously, against statutory apportionment, and that all
estate taxes are to be paid by the residual estate (including Mont. Property). Case showed
importance of including a tax clause.
3. Simultaneous Death: A Rule of Construction Applicable to Both Wills and Will
Substitutes
The determination of who, between the decedent and a beneficiary, is deemed to be the survivor
when the deaths of both occur close in time, is essential to deciding whether a gift under a will
lapses and whether a beneficiary under a will substitute has met a requirement of survival.
a. Determining Death
Hospitals determine whether someone has died every day, and issue death certificates, which
constitutes evidence that death has occurred and at what time.
However, when someone is kept alive through medical intervention or has disappeared, rules of
construction are needed to determine when death occurred. UPC §1-107 provides guidance for
both wills and will substitutes.
UPC §1-107. Evidence of Death or Status.
1. Death occurs when an individual [is determined to be dead under the Uniform Determination
of Death Act] [has sustained either (i) irreversible cessation of circulatory and
respiratory functions or (ii) irreversible cessation of all functions of the entire
brain, including the brain stem.]
2. A certified or authenticated copy of a death certificate purporting to be issued by an official
or agency of the place where the death purportedly occurred is prima facie evidence of the fact,
place, date, and time of death and the identity of the decedent. . . .
5. An individual whose death is not established under the preceding paragraphs who is absent
for a continuous period of 5 years, during which he [or she] has not been heard from,
and whose absence is not satisfactorily explained after diligent search or inquiry, is
presumed to be dead. His [or her] death is presumed to have occurred at the end of the
period unless there is sufficient evidence for determining that death occurred earlier.
b. Requirement of Survival
The governing instrument can define what “survive” means.
Example: a will might say, “I give my car to Geneva, if she is living on the 30th day after the day
of my death.” If Geneva dies a week after the testator, she has not met the requirement of
survival provided in the will. In that case, the gift either lapses or the antilapse rule makes a
substitute gift to her descendants.
In effect, all wills (and other governing instruments that require survival) are read to include a
condition that the beneficiary survive the decedent by the specified time period. These statutes
usually require clear and convincing evidence of survival in order to establish that the
beneficiary met the required condition.
In the absence of any contrary provision in the testator’s will, UPC §2-702 adopts a 120-hour
rule.
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Policy- the survival rule prevents the bequest or devise from being probated in the testator’s
estate and then again immediately in the beneficiary’s estate, incurring additional probate fees
and perhaps taxes.
A testator who wants to override the 120-hour rule must specify the alternate period required
for survival. It is common to use a period of 30, 60, or 90 days. The following is an example of
such a provision:
For purposes of this will, if any beneficiary in fact survives me but it is not established
by clear and convincing evidence that such beneficiary has survived me by at least 30
days, he/she shall be deemed to have predeceased me.
UPC §2-702(b) also applies to will substitutes. Absent any language providing for a different
survival period, a named beneficiary of the decedent’s life insurance policy must survive the
decedent by 120 hours in order to receive the proceeds of the life insurance policy. Similarly,
beneficiaries under a will substitute, like an inter vivos trust, must survive the grantor by 120
hours in order to take their interest under the trust, if the trust requires “survival.”
Note: that the same survival rule applies in intestacy under UPC §2-104. If a decedent dies
intestate and it cannot be proved by clear and convincing evidence that the heir did not survive
the decedent by 120 hours, the heir is treated as having predeceased the decedent for purposes
of intestate succession, homestead allowance, and exempt property. UPC §2-104. Of course,
since there is no will when intestacy is involved, there cannot be an explicit override of the 120
hours by the decedent.
c. Simultaneous Death
If two decedents are co-owners of property and it is not established by clear and convincing
evidence that one survived the other by 120 hours, UPC §2-702 provides that one-half of the
property passes as if one had survived by 120 hours and one-half as if the other had survived by
120 hours.
The property passes as if it is a tenancy in common and, being probate property, is controlled by
the terms of each person’s will or by intestacy.
Example: Tai Shan and Ling Ling owned a beach house in Malibu as joint tenants with right of
survivorship. Tai Shan and Ling Ling’s wills provided that all of their assets should pass to the
other but in the event that the other did not survive, then to their undergraduate colleges. Tai
Shan graduated from Stanford while Ling Ling graduated from the UCBerkeley. If Tai Shan and
Ling Ling were killed as a result of being on the same plane that crashed in the Pacific, one-half
of the house in Malibu would pass to Tai Shan’s alternate beneficiary, Stanford, and the other
half would pass to Ling Ling’s alternate beneficiary, Berkeley.
D. Disclaimers and “Deemed Death”

Disclaimer: a useful tool that allows an individual to say “I dont want this, dont give it to me.” Often for
tax purposes. A intended beneficiary who disclaims is treated as though they have died.
Tax reasons – primarily to avoid double taxation, to fully utilize the unified credit, to transfer
income tax impact to lower income family members (esp. re: IRAs and to stretch them, etc.)
Non-tax reasons – primarily to avoid creditors though sometimes to rearrange an estate plan
(though doing so when disclaimant is about to file or has filed for bankruptcy may not work if
the property goes into a trust for the disclaimant (In re Castellano, 2014))
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There are federal and state components for a valid disclaimer (need to meet both).
UPC §2-1105. Power to Disclaim; General Requirements; When Irrevocable

(a) A person may disclaim, in whole or part, any interest in or power over property, including a power of
appointment. A person may disclaim the interest or power even if its creator imposed a spendthrift
provision or similar restriction on transfer or a restriction or limitation on the right to disclaim
(c) To be effective, a disclaimer must be in a writing or other record, declare the disclaimer, describe
the interest or power disclaimed, be signed by the person making the disclaimer, and be
delivered or filed in the manner provided in Section 2-1112. . . . (often delivered to P.R., w/in 9 months
or reasonable amount of time)
(d) A partial disclaimer may be expressed as a fraction, percentage, monetary amount, term of years,
limitation of a power, or any other interest or estate in the property. . . .
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(f) A disclaimer made under this Part is not a transfer, assignment, or release.
UPC §2-1106. Disclaimer Of Interest In Property

(b) . . . the following rules apply to a disclaimer of an interest in property:
(2) The disclaimed interest passes according to any provision in the instrument creating the
interest providing for the disposition of the interest, should it be disclaimed, or of disclaimed
interests in general.
Example: I give the engraved gold pocket watch and chain which I inherited from our
grandfather to my brother, Jerome Green, if he survives me. If he does not survive me or
if he disclaims the watch, to my cousin, Walter Pickett Clayton.”
(3) If the instrument does not contain a provision described in paragraph (2), ... the disclaimed
interest passes as if the disclaimant had died immediately before the time of distribution
[including the possible application of the lapse and antilapse rules].
UPC §2-1113. When Disclaimer Barred or Limited

(b) A disclaimer of an interest in property is barred if any of the following events occur before the
disclaimer becomes effective:
(1) the disclaimant accepts the interest sought to be disclaimed; (2) the disclaimant
voluntarily assigns, conveys, encumbers, pledges, or transfers the interest sought
to be disclaimed or contracts to do so; . . .
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VII. Revoking the Will and Will Contests

Smart drafters all put revocation clauses in wills as a CYA measure.
Codicils are wills, but they only address a portion of previous documents.
A. Revocation by Subsequent Instrument or by Physical Act

1. General
Generally, a testator may affirmatively revoke her will in one of three general ways:
(1) by documentary means [subsequent instrument], either explicitly or implicitly; or
(2) through a physical act.
(3) presumption in case of missing will
Generally, there are two ways a will can be revoked by law:
(1) divorce
(2) murder
To have a valid revocation, whether by subsequent document (express or implied by inconsistency)
or by physical act, it must be established that the testator:
(i) had the capacity to revoke;
(ii) had the intent 15 to revoke; and
(iii)revoked in a legally effective manner.
2. Revocation by Subsequent Instrument

UPC §2-507. Revocation by Writing or by Act.
(a) A will or any art thereof is revoked:
(1) by executing a subsequent will that revokes the previous will or part expressly or by
inconsistency.
Express Revocation: express revocation clause in the will. Clearest articulation of intent and leaves
no room for a challenge by a will contestant on this basis.
E.g., “I revoke any prior wills and codicils made by me”
Implied Revocation 16: executing a subsequent will that is inconsistent with the first, either in whole
or in part. Less preferable because the intent to revoke depends on presumptions rather than a clear
expression by the testator. If the new will disposes of all of the testator’s property, the previous will
is presumed to be revoked in its entirety; if the new will or codicil only disposes of a particular asset,
the previous will is presumed to be revoked only as to that asset. Under the UPC, these
presumptions can only be rebutted by clear and convincing evidence.
Cash Devises
Under the common law, cash bequests under codicils were presumed to be cumulative rather than
substitutional. The UPC does not establish a presumption one way or another, so a court must
interpret the testator’s intent. The court may consider extrinsic evidence in divining the testator’s
intent.
3. Revocation by Physical Act

A will may also be revoked by physical acts performed by the testator, or another individual in the
testator’s conscious presence and at the testator’s direction. “Conscious presence” requires in
person presence, and does not include over the phone.
15 Extrinsic evidence is generally needed to resolve questions about intent.

16 See Implied Revocation by Subsequent Inconsistent Will or Codicil [LINK]
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Whether the will is effectively revoked depends on whether the testator undertook the act with the
intent to revoke; accidental acts do not have the requisite intent.
Complete revocation may be accomplished by doing something to the document, such as burning it,
tearing it up, throwing it away, or writing “revoked” across it or across the testator’s signature. A
testator may also decide to revoke only a part of the will. She may do this by “canceling” a provision,
i.e., by lining through a provision of the will or writing: “I revoke this gift.”
See UPC §2-507. Revocation by Writing or by Act.
(a) A will or any part thereof is revoked: [. . .]
(2) by performing a revocatory act on the will, if the testator performed the act with the
intent and for the purpose of revoking the will or part or if another individual performed
the act in the testator’s conscious presence and by the testator’s direction. For purposes
of this paragraph, “revocatory act on the will” includes burning, tearing, cancelling,
obliterating, or destroying the will or any part of it. A burning, tearing, or cancelling is a
“revocatory act on the will,” whether or not the burn, tear, or cancellation touched any of
the words on the will.
Per UPC §2-604, the revocation of an individual request will result in that bequest falling into the
residue unless the testator specifically names a new beneficiary.
Per UPC §2-503, the harmless error rule also applies to:
(ii) a partial or complete revocation of the will,
(iii) an addition to or an alteration of the will, or
(iv) a partial or complete revival of his [or her] formerly revoked will or of a formerly revoked
portion of the will.
4. Presumptions with Regard to Revocatory Acts

a. Mutilated Will
If the will is found with revocatory marks, the law creates a rebuttable presumption that the
testator intended to revoke the will. The presumption can be rebutted by evidence that
establishes that the testator did not mutilate the will with the intent to revoke it.
b. Lost Will
If the will is missing and was last in the possession of the testator, the common law creates a
presumption that the testator destroyed the will with the intent to revoke it. Extrinsic evidence
can be used to overcome the presumption.
In re Estate of Beauregard
Facts: Decedent died five weeks after his will was executed. The beneficiary of his will only
produced a copy, and not the original will, to the court. Judge applied the evidentiary
presumption that without the original, the decedent must’ve destroyed the will. Affirmed.
When a will is traced to the testator’s possession or to where he had ready access to it
and the original cannot be located after his death, there are three plausible explanations
for the will’s absence: (1) the testator destroyed it with the intent to revoke it; (2) the will
was accidentally destroyed or lost; or (3) the will was wrongfully destroyed or suppressed
by someone who was dissatisfied with its terms.
B. Revocation by Changed Circumstances

If the person dies with a will or will substitute that gives property to a former spouse or fails to give
property to a new spouse, the law may provide default rules that revise the instrument based on the new
circumstances. The testator can override these rules, but they assume the testator did not anticipate
these changes. In addition, the law revokes gifts to someone who killed the testator (donative intent &
deterrence)
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1. Revocation by Marriage—Omitted Spouse

Most states and the UPC no longer revoke a testator’s pre-existing will upon a subsequent marriage.
Rather, UPC §§2-201 and 2-301 provide the spouse with either the right to elect a share of the
marital property portion of the decedent’s augmented estate or an amount equal to what she would
have received had the decedent died intestate.
2. Revocation on Divorce
In most states, statutes revoke bequests to a former spouse and any nomination of the former
spouse as a fiduciary. Some statutes, including the UPC, go further, and also prevent family
members of the former spouse from receiving property. The former spouse and her family members
are deemed to have disclaimed the property or have predeceased the decedent and are precluded
from taking or serving as a fiduciary. This partial revocation occurs by statute without the testator
having to take any affirmative action. UPC §2-804 revokes such bequests to stepchildren.
UPC §2-804. Revocation of Probate and Nonprobate Transfers by Divorce; No Revocation by
Other Changes of Circumstances.
(b) [Revocation upon Divorce.] Except as provided by the express terms of a governing instrument,
a court order, or a contract relating to the division of the marital estate made between the
divorced individuals before or after the marriage, divorce, or annulment, the divorce or
annulment of a marriage:
(1) revokes any revocable (i) disposition or appointment of property made by a divorced
individual to his [or her] former spouse in a governing instrument [i.e., probate and
nonprobate] and any disposition or appointment created by law or in a governing
instrument to a relative of the divorced individual’s former spouse, (ii) provision in a
governing instrument conferring a general or nongeneral power of appointment on the
divorced individual’s former spouse or on a relative of the divorced individual’s former
spouse, and (iii) nomination in a governing instrument, nominating a divorced
individual’s former spouse or a relative of the divorced individual’s former spouse to
serve in any fiduciary or representative capacity, including a personal representative,
executor, trustee, conservator, agent, or guardian; and
(2) severs the interests of the former spouses in property held by them at the time of the
divorce or annulment as joint tenants with the right of survivorship [or as community
property with the right of survivorship], transforming the interests of the former spouses
into equal tenancies in common.
(d) [Effect of Revocation.] Provisions of a governing instrument are given effect as if the
former spouse and relatives of the former spouse disclaimed [i.e., deemed to have
been predeceased] all provisions revoked by this section or, in the case of a revoked
nomination in a fiduciary or representative capacity, as if the former spouse and relatives of the
former spouse died immediately before the divorce or annulment.
a. Will Substitutes
While a number of states do not extend the same revocation option to will substitutes, UPC §2-
804(b) does. It extends the revocation-upon-divorce doctrine to any governing instrument, i.e.,
a will or will substitute, and converts interests in jointly held property with rights of
survivorship to tenancies in common.
b. ERISA Preempts State Law
Rules imposed by state probate statutes cannot alter beneficiary rights under retirement plans
governed by the Employee Retirement Income Security Act (ERISA). The federal statutes
preempt state statutes in that regard. 401ks need to be addressed.
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3. Revocation Due to Homicide

UPC §2-803. 17 Effect of Homicide on Intestate Succession, Wills, Trusts, Joint Assets, Life
Insurance, and Beneficiary Designations.
(b) [Forfeiture of Statutory Benefits.] An individual who feloniously and intentionally
kills the decedent forfeits all benefits under this Article with respect to the decedent's estate,
including an intestate share, an elective share, an omitted spouse's or child's share, a homestead
allowance, exempt property, and a family allowance. If the decedent died intestate, the
decedent's intestate estate passes as if the killer disclaimed his [or her] intestate share.
(e) [Effect of Revocation.] Provisions of a governing instrument are given effect as if the killer
disclaimed all provisions revoked by this section or, in the case of a revoked nomination in a
fiduciary or representative capacity, as if the killer predeceased the decedent.
(f) [Wrongful Acquisition of Property.] A wrongful acquisition of property or interest by a
killer not covered by this section must be treated in accordance with the principle that a killer
cannot profit from his [or her] wrong.
(g) [Felonious and Intentional Killing; How Determined.] After all right to appeal has been
exhausted, a judgment of conviction establishing criminal accountability for the felonious and
intentional killing of the decedent conclusively establishes the convicted individual as the
decedent's killer for purposes of this section. In the absence of a conviction, the court, upon the
petition of an interested person, must determine whether, under the preponderance of evidence
standard, the individual would be found criminally accountable for the felonious and intentional
killing of the decedent. If the court determines that, under that standard, the individual would
be found criminally accountable for the felonious and intentional killing of the decedent, the
determination conclusively establishes that individual as the decedent's killer for purposes of
this section
Although the UPC prevents the killer from taking, the fact that it treats the killer as having
disclaimed his interest means that the killer’s descendants may take the property, either under the
document or the antilapse rules.
UPC §2-803 revokes a bequest if the killing was “felonious and intentional.” Other statutes may
use different language, but they typically apply only to killings that could be prosecuted as felonies
and that involve the element of intent. The revocation statute is a civil law, so application of the
statute does not require a criminal conviction, and the evidentiary standard is lower than that
required under criminal law. Even if the killer is not convicted, or if the conviction is not final, an
interested person (someone who will take if the killer does not) can petition the probate court to
conduct a separate proceeding to determine whether under the civil standard—a preponderance of
the evidence standard—the killer would be found criminally accountable for the killing.
Will Substitutes
While “no consensus exists [among the states] about the applicability of so-called ‘slayer statutes’ to
inter vivos trusts or other will substitutes,” UPC §2-803 applies both to wills and will substitutes.
4. Revocation Due to Abuse

Some states have adopted statutes that bar inheritance by someone who abused the decedent, for
example, an adult child who abuses an elderly parent. These states include California, Pennsylvania,
Illinois, Oregon, Maryland, and Michigan.
17Similar Revocation rule re: revocable transfers like (b) in UPC §2-804 with regard to governing instrument. Different
as follows.
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C. The Impact of Revocation

Generally, a will that is validly revoked cannot be probated. If the testator does not have an earlier will,
the testator is treated as having died intestate. If the testator had executed an earlier will or wills, a
prior will may be probated if one of the doctrines discussed below applies.
If the testator fails to provide an alternate taker, the default rules of UPC §2-604 and most states will
determine who receives the revoked bequest. Specific bequests, like the car to Sally above, generally
would “fall into” the residuary estate and be distributed to the residuary beneficiaries. If there are no
residuary beneficiaries, the revoked bequest is distributed according to the rules of intestacy.
Antilapse applies with homicide but not with divorce!
1. What Happens to a Previously Revoked Will When the Revoking Will Is Itself
Revoked?
The doctrine of “revival” applies when a testator creates a first will, properly revokes it, creates a
second will, and then properly revokes the second will.
UPC §2-509. Revival of Revoked Will.
(a) If a subsequent will that wholly revoked a previous will is thereafter revoked BY A
REVOCATORY ACT under Section 2-507(a)(2), the previous will remains revoked
unless it is revived. The previous will is revived if it is evident from the circumstances of the
revocation of the subsequent will or from the testator's contemporary or subsequent
declarations that the testator intended the previous will to take effect as executed.
(b) If a subsequent will that partly revoked a previous will is thereafter revoked BY A
REVOCATORY ACT under Section 2-507(a)(2), a revoked part of the previous will
is revived unless it is evident from the circumstances of the revocation of the subsequent will
or from the testator's contemporary or subsequent declarations that the testator did not intend
the revoked part to take effect as executed.
(c) If a subsequent will that revoked a previous will in whole or in part is thereafter
revoked BY ANOTHER LATER WILL, the previous will remains revoked in whole
or in part, unless it or its revoked part is revived. The previous will or its revoked part is
revived to the extent it appears from the terms of the later will that the testator intended the
previous will to take effect.
Example: Angel executed a will in 2010 leaving all his property to his children. In 2015,
Angel wrote a new will leaving all his property to his new wife, explicitly stating in
the will that he was revoking all prior wills. In 2016, Angel tore up the 2015 will.
UPC §2-509(a) presumes that the destruction of the 2015 will was not intended
to revive the 2010 will. Angel dies intestate.
The presumptions supplied by UPC §2-509(a)-(b) can be rebutted with extrinsic evidence that
the testator intended otherwise. For example, in the above example, the presumption can be
rebutted with evidence that when Angel tore up his 2015 will, he told his friend that he intended
to revive the 2010 will. The burden of persuasion is on the proponent of the position contrary to
the presumption.
However, UPC §2-509(c), which covers revocation of Will #2 by a completely new Will #3,
does not provide for the broad admissibility of evidence of the circumstances surrounding
revocation. It limits the evidence of the testator’s intent to revive the prior will to the terms of
the third will itself.
Revival is not always an option; some states do not permit revival under any circumstances,
even if it can be shown that the testator intended to revive a prior will.
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2. What Happens When a Revocation of a Prior Will and Execution of a New Will
Are Interrelated?
When the testator creates a valid will, revokes it wholly or in part, and then attempts to execute a
will that is later invalid, the doctrine of “dependent relative revocation” or “conditional revocation”
is applied. In an increasing number of states, the statutory rule of harmless error under UPC §2-
503.
a. Dependent Relative Revocation
The court seeks to do the same thing in both revival and DRR cases—to decide whether it can
actually probate the first will or whether it must find that the testator died intestate. But the two
factual contexts trigger different conceptual theories to justify this same result.
The question resolved by DRR is what happens if the testator’s first choice cannot be
accomplished because the later will is actually invalid. Would the testator’s second choice be to
die with the previous will revoked, or not revoked?
DRR involves a facts and circumstances analysis on a case-by-case basis. The kind of evidence
that courts use to determine the testator’s intent as to conditional revocation include:
(i) the nexus between the revocation of the old will (or a part of it) and the attempted
execution of a new will (or a part of it) in terms of how close in time the two events were;
and,
(ii) the degree of similarity between the terms of the two wills (or provisions).
The closer in time revocation and execution are, and the more similar the terms of the two
documents, the more likely it is that a court will find that it is appropriate to apply DRR.
A Traditional Application of DRR
Kirkeby v. Covenant House
Facts: (1) the July 1992 will and June 1992 codicil to the 1989 will were both invalid because they were not
properly executed; but (2) Margaret did not die intestate because of dependent relative revocation, so the
1989 will remained valid.
Holding: Dependent relative revocation applies because the decedent intended her estate to pass under a
will and would not have made the marks on the 1989 will if she had realized that 1992 will was not valid.
Reasoning: The essential dispositions of these two wills are the same.
b. Harmless Error
In those states that have adopted UPC §2-503, it might help a court if a second will or
subsequent bequest is invalid. In those states, the court might not have to reach for the doctrine
of dependent relative revocation to resolve the situation.
D. Will Contests
Most common grounds for contests:
(1) Improper execution (affects entire will)
(2) Lack of testamentary capacity (affects entire will)
(3) Lack of testamentary intent (affects entire will)
(4) Undue influence (may affect all or only part of will)
(5) Mistake (may affect all or only part of will)
(6) Fraud (may affect all or only part of will)
The goal of drafting should be to avoid will contests. The procedure for bringing a will contest
requires a formal testacy proceeding. The contestant must be an “interested party”, 18 and he has to
bring a proceeding within three years of death. Most will contests end in settlements.
18An interested party, meaning heirs, devisees, children, spouses, creditors, beneficiaries, and any others having a
property rights in or claim against a trust estate or the estate of a decedent, ward, or protected person.
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UPC §3-407. Formal Testacy Proceedings; Burdens in Contested Cases.

[Intestacy] In contested cases, petitioners who seek to establish intestacyhave the burden of
establishing prima facie proof of death, venue, and heirship [and that there is no will].
[Testacy] Proponents of a will have the burden of establishing prima facie proof of due execution
in all cases, and, if they are also petitioners, prima facie proof of death and venue. Contestants of a
will have the burden of establishing lack of testamentary intent or capacity, undue influence, fraud,
duress, mistake or revocation. Parties have the ultimate burden of persuasion as to matters with
respect to which they have the initial burden of proof.
UPC §3-406. Formal Testacy Proceedings; Contested Cases.
In a contested case in which the proper execution of a will is at issue, the following rules apply:
(1) If the will is self-proved pursuant to Section 2-504, the will satisfies the requirements for
execution without the testimony of any attesting witness, upon filing the will and the
acknowledgment and affidavits annexed or attached to it, unless there is evidence of fraud or
forgery affecting the acknowledgment or affidavit.
(2) If the will is notarized pursuant to Section 2-502(a)(3)(B), but not self-proved, there is a
rebuttable presumption that the will satisfies the requirements for execution upon filing the will.
(3) If the will is witnessed pursuant to Section 2-502(a)(3)(A), but not notarized or self-proved, the
testimony of at least one of the attesting witnesses is required to establish proper execution if
the witness is within this state, competent, and able to testify. Proper execution may be
established by other evidence, including an affidavit of an attesting witness. An attestation
clause that is signed by the attesting witnesses raises a rebuttable presumption that the events
recited in the clause occurred.
2. Improper Execution
Proponent of will has burden of presenting a properly executed document. If the will appears to be
regular on its face, i.e., if it’s in writing and all the requisite signatures of the testator and the
witnesses exist, then it’s presumed to be properly executed.
Burden shifts to the contestant to establish that the requisite legal requirements and formalities
were not satisfied.
3. Testamentary Capacity—General Capacity and Insane Delusion

UPC §2-501. Who May Make a Will.
“An individual 18 or more years of age who is of sound mind may make a will.”
a. General Capacity
Invalidates the entire will.
“Sound Mind”—the legal standard to have general capacity: the testator must have enough
information about [POPI]
(i) the property he owns and wishes to give away;
(ii) who the natural objects of his bounty are;
(iii) the fact that he is engaged in a plan to dispose of his property on his death; and,
(iv) the interrelationship of the previous three
The testator’s understanding of (i)-(iii) must exist at the moment of execution. The will is valid
so long as the person executed it in a lucid interval, in lucid moments, in which the person meets
the standard for mental capacity.
Questions to Ask when Meeting Client Suspected of Dementia, etc.
• What is the day, month, season, year?
• What is your name, address, date of birth, age, and phone number?
• Are you married? If so, what is your spouse’s name, DOB, age, and phone number?
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• How many children do you have? Wat are their names/ages? Where do they live? To
whom are they married? What are the names of their children?
• How many siblings do you have? Wat are their names/ages? Where do they live? To
whom are they married? What are the names of their children?
Plusses and minuses to videotaping; very conscious attention to detail of ceremony, including
questioning testator in a manner to establish sound mind
b. Insane Delusion
A testator may meet the test for general mental capacity, but a contestant may base a challenge
on a specific delusion allegedly held by the testator.
The contestant must show that the delusion had no basis in reality and that there was a
connection between the delusion and the testator’s bequests in the will.
Breeden v. Stone
Facts: Decedent killed himself two days after getting in a highly publicized hit-and-run accident
that killed two people. Before he killed himself, decedent executed a holographic will that gave
everything to Sydney Stone. Decedent’s family challenged this and alleged that decedent was
suffering from insane delusions, but the court held that decedent had a sound mind at the time
of execution.
Holding: An insane delusion is “a persistent belief in that which has no existence in fact, and
which is adhered to against all evidence.”
Reasoning: insanity does not make one incompetent to contract unless the subject matter of the
contract is so connected with an insane delusion as to render the afflicted party incapable of
understanding the nature and effect of the agreement or of acting rationally in the transaction.
4. Lack of Testamentary Intent

One of the legal requirements for a valid will is that the testator has the proper testamentary intent,
in that he holds the document to be his will. See Kuralt.
5. Undue Influence
Undue influence requires the contestant to prove the following elements: (i) the existence and
exertion of an influence; (ii) the effective operation of that influence so as to subvert or overpower
the testator’s mind at the time of the execution of the will; and (iii) the execution of a will which the
maker would not have executed but for such influence.
Estate of Sharis
Facts: grandson moved in with grandparents to drive them to doctors’ appointments and elsewhere,
but otherwise didn’t take care of them financially. Grandson ended up taking control over their
checking accounts. Decedent’s will ultimately favored grandson.
Holding: grandson unduly influenced decedent into signing the will.
Reasoning: A claim of undue influence is comprised of four elements:
(1) an unnatural disposition has been made
(2) by a person susceptible to undue influence to the advantage of someone
(3) with an opportunity to exercise undue influence and
(4) who in fact has used that opportunity to procure the contested disposition through
improper means.
While the burden of proof ordinarily rests with the party contesting the will, a “fiduciary who
benefits in a transaction with the person for whom he is a fiduciary bears the burden of establishing
that the transaction did not violate his obligations.” Decedent never met with the independent
counsel, the will was essentially made in secret, in that only the grandson was aware that the
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decedent had made a will, and the decedent was advanced in age, unfamiliar with wills, and only
had a seventh grade education.
6. [Mistake,] Fraud[,] and Duress

These are rare.
Fraud: A donative transfer is produced by fraud if the wrongdoer knowingly or recklessly made a
false representation to the donor about a material fact that was intended to and did lead the donor
to make a donative transfer that the donor would not otherwise have made.
Duress: a donative transfer like a bequest has been procured by duress if someone threatens to or
actually does something that coerces the testator into making the bequest. Such an act must be
wrongful, i.e., it must be something that the wrongdoer has no right to do.
7. Tortious Interference with an Expectancy

Claims can be less rigid than a will contest, and they give Πs the opportunity to recover for the loss
of the expectancy of inheritance or gift if the defendant’s tortious act deprives plaintiff of an
expected inheritance, benefit under a will, at=death benefit, or inter vivos gift. Not all states have
recognized this tort.
E. Preventing Challenges—In Terrorem or “No-Contest” Clauses

No context clauses essentially cause a beneficiary to forfeit her bequest if she brings a challenge to the
will. From a practical perspective, the testator should provide the beneficiary with something valuable
in order for such a clause to be effective; a beneficiary who has nothing to lose will go ahead and bring
the contest despite the clause.
Many state courts construe these clauses narrowly, since they have the effect of “closing the courthouse
door” to potential beneficiaries. UPC §2-517 [Penalty for Clause Contest] reflects this concern
about accessing the courts: “a provision in a will purporting to penalize an interested person for
contesting the will or instituting other proceedings relating to the estate is unenforceable if probable
cause exists for instituting proceedings.”
A number of courts have narrowed the applicability of no-contest clauses by finding that the challenge
does not come within the ambit of a “contest.”
F. Alternative Dispute Resolution in Probate

Mediation is the process through which an impartial third party facilitates voluntary decision making by
the parties themselves. While arbitration also involves a third party, the role of that third party is to
make a decision that binds the parties. Mediation in particular has become a popular way to resolve
disputes.
1. The Benefits
The benefits include privacy and a reduction in the financial and emotional costs of litigation. The
degree of privacy and confidentiality depends on the agreement of the participants and in some
states on state law, including state evidentiary rules. The promise of privacy provides an additional
benefit in that participants in a mediation may be willing to speak more freely, air grievances more
openly, and generate solutions more creatively. In addition to potential positive emotional benefits,
participants may avoid some of the emotional costs of litigation.
2. The Challenges
The effect of grief on the participants may suggest delaying the mediation until the participants have
progressed through some stages of the grieving process, but a long delay can result in increasingly
entrenched positions and can make mediation more difficult. Family members may also have
different levels of power within the family, and issues of age-related disabilities or domestic abuse
can affect the participants in a mediation, raising competency issues. Family members may have
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different levels of financial or legal sophistication. In some situations, the interests of minor
children may be at stake. An adult participant may be able to represent those interests, but in some
situations minor children may need separate representation.
3. Are Mediation or Arbitration Clauses Enforceable?

A growing number of states have adopted statutes specifically regulating the enforcement of
mediation or arbitration clauses in trust documents and wills.
An agreement to arbitrate is enforceable as a contract, and parties to a dispute can agree to submit
to arbitration. A question that remains unsettled in most states is whether a settlor or testator can
bind a beneficiary to arbitrate a dispute that arises in connection with the trust or will, a document
that the beneficiary has not signed.
A lawyer may be used to waiting for mediation until later in the litigation process, and using
mediation early in the process has several advantages. Parties may be less polarized and more
willing to listen to each other before their views have become entrenched during litigation.
G. Contracts Concerning Wills

Disappointed beneficiaries may bring various claims based on an alleged agreement by the decedent to
dispose of property in a certain way. The beneficiaries may claim that the decedent (i) promised
specifically to leave them property, often in exchange for services or as part of a prenuptial agreement;
or (ii) promised not to revoke a will, typically brought when a couple has executed mutual wills that
have reciprocal provisions, and the decedent has changed the will.
UPC §2-514. Contracts Concerning Succession.
A contract to make a will or devise, or not to revoke a will or devise, or to die intestate . . . , may be
established only by (i) provisions of a will stating material provisions of the contract; (ii) an express
reference in a will to a contract and extrinsic evidence proving the terms of the contract; or (iii) a
writing signed by the decedent evidencing the contract, The execution of a joint will or mutual wills
does not create a presumption of a contract not to revoke the will or wills.
1. Contract to Make a Will

While disappointed beneficiaries may be able to use a prior will to support their claims, they may
also claim the existence of an oral contract that induced them to change their behavior in the
expectation of an inheritance. Where state law requires a writing, courts have been hostile to finding
the existence of an enforceable contract.
2. Contracts Not to Revoke Wills

Example: Example: Ralph and Rhonda marry late in life, and they want to provide for each other,
but ultimately they want their combined property to be divided into four equal shares:
one for each of Ralph’s two sons and one for each of Rhonda’s two daughters. They
execute wills leaving a life estate to the surviving spouse, with the remainder to the four
children; they also sign a contract, drafted by their lawyer, in which they each agree not
to revoke the will after the first spouse dies. After Rhonda dies, Ralph executes a new
will, leaving his estate to his sons. He is in breach of his contract with Rhonda, and her
daughters can sue the executor of Ralph’s estate.
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VIII. Creation of Trusts

A. Introduction
1. What is a Trust?
A trust is a fiduciary relationship between several
players:
Settlor creates the trust; trustee, manages
the trust; and the beneficiary benefits from
the trust.
Trust law establishes mandatory and default
rules. Mandatory rules apply to all trusts and
cannot be changed by the settlor. They are quite
limited and serve to safeguard the interests of the
beneficiaries.
Trusts are incredibly flexible estate planning tools, but once a trust becomes irrevocable, the trust
can be difficult to change.
Estate planning lawyers use trusts for a variety of purposes—protecting assets from a spendthrift
family member, managing assets for a minor child or a beneficiary unsophisticated with financial
matters, holds assets that provides estate tax benefits, or setting aside assets for a child that will not
cause the loss of government benefits.
2. Terminology for Trusts

a. Settlor
The settlor is the person who creates the trusts. Settlors transfer legal property to the trustee to
hold for the benefit of the beneficiaries. The settlor can be also referred as “trustor” and
“grantor.”
b. Trustee
Trustees hold legal title to the property. They manage the property for the beneficiaries and have
strict duties to protect beneficiaries. Their fiduciary responsibilities include the duty not to self-
deal and duties connected with the management and investment of the trust property.
The trustee can be an individual or a corporation, and trusts can have more than one trustee.
c. Trust Protector
A trust protector is a person authorized by the settlor to exercise one or more powers of the
trust. Their powers supersede those of the trustee to the extent of those specified powers.
d. Beneficiary
A beneficiary is a person with beneficial or equitable title to the trust property. Their interest can
be present or future.
e. Qualified Beneficiary
The Uniform Trust Code [UTC] uses the concept of a qualified beneficiary to limit the class of
beneficiaries to whom certain notices must be given or consents received. This is due to the
difficulty of identifying beneficiaries whose interests are remote and contingent, and because
beneficiaries are not likely to have much interest in the day-to-day affairs of trusts.
UTC §103. Definitions
(13) “Qualified beneficiary” means a beneficiary who, on the date the beneficiary’s
qualification is determined: (a) is a distributee or permissible distributee of trust income
or principal; (B) would be a distributee or permissible distributee if the interests of the
distributees described in subparagraph (A) terminated on that date; (C) would be a
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distributee or permissible distributee of trust income or principal of the trust terminated

on that date.
f. Corpus
Corpus or res of a trust is the property held and managed by the trustee. This can also be
referred to as the trust estate. There is no minimum amount to fund a trust.
g. Inter Vivos and Testamentary Trusts
Trusts can be created during the settlor’s lifetime (inter vivos trusts) or upon the settlor’s death
through her will (testamentary trusts).
i. Inter Vivos Trust
Settlor created it while they are still alive.
ii. Testamentary Trust
Settlor can create one or more trusts in her will. In a testamentary trust, the will directs the
personal representative to distribute the residuary to the trustee in the will. The will has
embedded in it, the terms of the trust.
h. Revocable and Irrevocable Trusts
A trust can be either revocable, if the settlor retains the power to modify or amend the terms of
the trust or revoke it, or irrevocable, if the settlor cannot modify, amend, or revoke the trust.
i. Revocable Trust
The UTC reverses the common law rule that a trust is presumed to be irrevocable unless the
settlor reserves, in the terms of the trust, the right to revoke it. As such, the default rule
under the UTC is that all trusts created after its enactment are revocable unless the terms of
the trust expressly provide that it is irrevocable.
Revocable trusts hold the settlor’s assets during his life, distributes to him whatever income
or corpus he needs or requests, and then at his death, distributes the remaining assets to
beneficiaries named in the trust instrument.
A settlor can create a revocable trust by transferring the property to another individual or
corporation as trustee or by declaring that he holds the property as a trustee and no longer
in his individual property. When a settlor of a revocable trust becomes incapacitated, the
successor will assume the duties of managing the assets for the settlor.
ii. Irrevocable Trust
Irrevocable trusts are typically used for tax planning, and lawyers are usually involved when
a property owner creates an irrevocable trust.
Irrevocable trusts arise in one of several ways:
(i) all testamentary trusts are irrevocable;
(ii) a settlor may create an inter vivos irrevocable trust; and
(iii) revocable living trusts become irrevocable when the settlor dies.
Irrevocable trusts, whether inter vivos or testamentary, are frequently created in lieu of
giving the property outright to the donee. This is preferred when the donee is either too
young or too inexperienced to manage the property or because the settlor is interested in
having someone else (the trustee) make decisions about the needs of the donee at a later
time.
i. Charitable Trusts
Trusts with a charitable purpose or has a charity as the beneficiary.
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j. Private Express Trusts

Trusts that are created intentionally by the owner of property for private beneficiaries.
k. Trust Agreement/Declaration of Trust
These are two types of trust instruments that are used to create inter vivos trusts.
If the settlor is going to be the original trustee, the settlor declares himself trustee using a
“Declaration of Trust.” He declares that he ow holds the property as a trustee and not in his
individual capacity. If another person is going to be the trustee, the settlor transfers the property
pursuant to a “Trust Agreement.”
l. Constructive Trusts
Constructive trusts are equitable remedies created by a court for the limited purpose of getting
property to the correct (in the view of the court) owner. It is technically not a trust, it is a remedy
that prevents unjust enrichment.
The division of title—legal title to one person and equitable title to another—allows the court to
transfer title as required by law to the legal owner but direct that the legal owner holds the
property subject to a constructive trust, with the duty to transfer the property to the rightful
owner.
The UTC does not apply.
m. Resulting Trusts
Resulting trusts are equitable remedies that are put in place when an express trust makes an
incomplete disposition of the property in the trust, or the trust fails because it no longer has a
valid purpose. The property in trust either returns to the settlor or is distributed through the
settlor’s estate.
The UTC does not discuss resulting trusts.
n. Merger
When a trustee and the trust’s only beneficiary are the same person, the legal and equitable
interests merge and the trust terminates. Merger will occur even though not all of the trust’s
purposes have been accomplished.
An example of a trust to which the doctrine of merger would apply is a trust of which the settlor
is sole trustee, sole beneficiary for life, and with the remainder payable to the settlor’s probate
estate.
B. Creation—Elements of a Trust
In determining whether a trust exists, courts focus on what the settlor intended when the settlor
transferred property to someone else. Elements of a trust:
● The trust must be established for a valid, legal purpose.
● The settlor must be competent when creating the trust.
● The trust must have a trustee.
● The settlor must have intended to create a trust.
● The trust must be funded, i.e., must have some corpus (property or res).
● The settlor must identify an ascertainable beneficiary. (UTC modifies this requirement).
A few states require the terms of a trust to be in writing. If there is real property in the trust, most states
require a writing. A trust will not fail for lack of a trustee because a court will appoint a trustee for the
trust.
Each of the other requirements must be met before a trust will be created.
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1. Valid, Legal Purpose

A trust must have a valid purpose—a reason the trustee holds and manages the property.
If the purpose is accomplished and a valid purpose no longer exists for the trust, the trust
terminates. At that point, the trustee will distribute the trust assets as directed by the terms of the
trust, or if the terms do not state where the assets should go, the trust will become a resulting trust
and revert to the settlor or the settlor’s estate.
Purpose of trust can’t be against public policy. A decision that a trust term is invalid cuts against the
deference usually paid to the settlor’s ability to do what he wants with his property. Courts rarely
use public policy to invalidate a trust provision.
● Can’t encourage to commit crimes
● Can’t restrict religious freedom
● Can’t really interfere with family relationships by encouraging divorce, discouraging
marriage, encouraging neglect of parental duties, etc.
2. Competent Settlor
Because a testamentary trust is created in a will, the standard of capacity required to create a
testamentary trust is the same as the standard to execute a will. 19
For an irrevocable inter vivos trust, the level of capacity required is the standard to make a
gratuitous transfer: the settlor must not only have the understanding required for wills but also
understand the effect that creating a trust has on her future financial security and ability to support
any dependents. The law imposes this requirement because a decision to part with property during
life affects the settlor’s ability to care for herself and any dependents. Thus, the standard is higher
than the standard to execute a will or create a testamentary trust.
For revocable trusts, the question of what standard to use is complicated by the fact that a revocable
trust serves both lifetime and testamentary functions.
3. Trustee
A trustee holds title to the property interests held in trust. A trust must have a trustee, but a trust
will not fail for lack of a trustee because a court will appoint a trustee if necessary.
Usually, the trust instrument names a trustee and successor trustees in case the named trustee
cannot or will not serve, dies, resigns, or is removed. The trust instrument may appoint more than
one trustee to serve as co-trustees at the same time.
A trust created without a written document usually involves the transfer of property by the settlor to
the trustee.
a. Choosing a Trustee
In deciding who should be the trustee, the settlor must consider possible conflicts of interest
and family dynamics. A trustee must act impartially with respect to all beneficiaries, which can
be complicated especially if a trustee is also a beneficiary to the trust.
A family member is often an ideal trustee because she knows the needs of the beneficiaries
firsthand.
Banks with trust departments and trust companies serve as trustees, providing a variety of
services, including accounting and investment management, in addition to managing
19“Sound Mind”—the legal standard to have general capacity: the testator must have enough information about [POPI]: (i)
the property he owns and wishes to give away; (ii) who the natural objects of his bounty are; (iii) the fact that he is
engaged in a plan to dispose of his property on his death; and, (iv) the interrelationship of the previous three.
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distributions for beneficiaries. Referred to as corporate trustees, a bank or trust company may
be appropriate for a large trust.
Each corporate trustee has minimum asset requirements before it will agree to accept a
position as trustee. Banks and trust companies are regulated by state law.
b. Acceptance
No formal acceptance of the position is required, so if the person named in the trust doc takes
control of the property, they’re likely deemed to have accepted responsibilities as trustee.
In drafting trust instruments, lawyers typically provide for the signatures of the settlor (to
signify intent) and the trustee (to signify acceptance), but the intent and acceptance can be
established other ways. The terms of the trust may provide for a method of acceptance by the
trustee, but it may not be exclusive and even if it is, substantial compliance is sufficient.
To encourage protection of trust property, without imposing the responsibility to act as a
trustee, a person designated as trustee can act to protect the property without that action being
considered an acceptance. If the person takes actions with respect to the property, the person
must send a refusal of the trusteeship to the settlor, or if the settlor is dead or incapacitated, to a
beneficiary. A person can be held to be the trustee by “indicating” acceptance.
c. Resignation of a Trustee
Usually, the trust instrument gives a trustee the right to resign, identifies the procedures
involved, and names a successor trustee. If the trust instrument is silent on trustee resignation,
then the trustee must look to common law or statutes.
• Under the common law, a trustee had to get court approval to resign.
• UTC permits the trustee to resign after 30 days notice to the qualified beneficiaries, the
settlor, and any co-trustees; alternatively, can get court approval for resignation
After a trustee resigns, the successor trustee named in the trust instrument will become the
trustee. The trust instrument may, instead of naming a successor, direct the beneficiaries to
appoint a successor. If the trust instrument neither names a successor nor provides a way to
name a successor, the court will appoint a successor.
While a trustee can resign from the position, the trustee remains liable for any acts or omissions
that occurred while he was acting as trustee.
4. Intent to Create a Trust

The creation of a trust requires a manifestation of intent. When a court decides whether the settlor
intended to create a trust, the court may consider various forms of evidence in addition to written
evidence, and can consider any admissible extrinsic evidence, such as documents or testimony of
witnesses. A court may not consider bare assumptions—undisclosed intent, therefore, is not
relevant.
A Trust Agreement or a Declaration of Trust is usually sufficient to establish intent to create the
trust, although the trust may fail for some other reason or questions may arise as to the property
that constitutes the trust. Without such lawyer-created documents, the intent of the property owner
may not be clear and they may have intended something else; the property owner may have
intended:
● to retain ownership and transfer the property at death using a testamentary transfer,
● to make an outright gift with explanatory or precatory language,
● to make a promise to make a gift in the future, or to create a power of appointment over the
property.
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a. Inter Vivos Gift in Trust or Ownership Retained?

A court may be asked to decide whether the owner of property transferred the property in trust
during life or retained ownership and intended for the transfer to occur at death. The question
often arises in connection with a declaration of trust, because in that situation the owner is
“transferring” the property to herself as trustee, and confusion over her motive is possible.
Palozie v. Palozie
Facts: Decedent kept trust documents in a secret place, and wished to retain total control of the
property during her lifetime for her own benefit, not as a trustee.
Holding: Trust instrument is ambiguous with respect to whether Sophie intended to create a
trust and to impose upon herself the enforceable duties of a trustee. Decedent had not
manifested an intent to create a trust.
Reasoning: Settlors must unequivocally manifest an intent to impose upon herself enforceable
duties of a trust nature. If what’s done falls short of showing the complete establishment of a
fiduciary relationship, the proof fails to show more than a promise without consideration.
b. Gift in Trust or Outright Gift with Explanatory or Precatory Language?
If the property owner makes a gift to someone and expresses the “hope” or “desire” that the
recipient use the property in a particular way, perhaps for the benefit of someone else, the
property owner may be merely explaining the reason for the gift or recommending how the gift
should be used. Qualifying language in a will or instrument is referred to as “precatory”
language; this language is generally construed not to create a trust but instead to create at most
an ethical obligation.
Unless the owner intended to create a trust, precatory language may create a moral obligation,
but it does not create a legal obligation with respect to the use of the property. Unfortunately,
language does not always clearly convey the intent of the property owner.
Rules of construction- words used in the instrument are to be taken in their ordinary and
grammatical sense unless a clear intention to use them in another sense can be ascertained; in
cases of uncertainty, the testator’s intention is to be ascertained from the words of the
instrument, taking into view the circumstances under which it was made, exclusive of his oral
declarations.
In re Estate of Bolinger
Holding: The precatory language did not establish a trust and simply gave Hal/Marian
discretion to use the property given to them outright.
Reasoning: Weighing the effect of precatory expressions, the courts consider the entire
document and the circumstances of the donor, his family, and other interested parties. The main
question in considering precatory language is whether the testator meant to advise or influence
the discretion of the devisee, or control or direct the disposition intended.
c. Transfer into Trust or a Promise to Make a Gift in the Future?

A gift requires intent and delivery of property. Courts are reluctant to abrogate the requirement
of delivery by finding a declaration of trust any time an inter vivos gift fails due to lack of
delivery. Delivery can be constructive or symbolic, and sometimes a court will refuse to find a
trust but use constructive or symbolic delivery to fix the problem.
5. Corpus (Property or Res)

A trust must have corpus—property the settlor transfers for management in the trust—to be valid.
Until the settlor transfers property to the trust, even if there’s a signed instrument, the trust doesn’t
exist.
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The lack of corpus is rarely an issue for a testamentary trust, unless no property remains at death to
transfer into the trust, but with an inter vivos trust a settlor sometimes forgets to transfer property
into the trust, and then the trust does not exist.
Any interest in property 20 can be considered trust corpus. A mere expectancy, 21 however, is not a
property right. The transfer of an expectancy will not serve to create a valid trust.
Property held in trust that can be titled (such as real estate, bank and securities accounts, vehicles,
patents, and copyrights) should be retitled in the name of the trustee because the trustee has legal
ownership of the property.
Tangible items such as personal property like furniture and jewelry can be scheduled to show that
they have been transferred to the trust. Schedules attached to trusts identifying these items as being
transferred should be sufficient to establish that tangibles are now property of the trust. Where a
settlor transfers property into a trust and names himself a trustee, schedules help determine
whether a trust is established.
6. A Beneficiary
Without someone with the legal authority to force the trustee’s compliance, the trust fails. Still, a
trust without a beneficiary may exist if i) the court is willing to find an honorary trust; (ii) under the
UTC, the trust is an animal trust or a trust for a purpose; or (iii) the trust qualifies as a charitable
trust.
a. Identifiable Person or Class
Under the common law, a beneficiary either has to be an identifiable person or a class of
identifiable people so that the court knows who has the authority to enforce the trust. Under the
common law, “friends” is not an identifiable class because a court cannot determine that or,
therefore, who has rights in trust.
Clark v. Campbell
Facts: Deceased’s will gives various items of personal property to his trustees to give to his
“friends,” but does not explicitly name either.
Holding: The court concluded that the testator had attempted to create a trust but the trust
failed for want of identifiable beneficiaries. Because the trust failed, the property is to be
disposed as part of the residue.
b. Honorary Trusts
A court will sometimes find an “honorary trust” when the owner of property attempts to transfer
the property to a devisee in trust for a noncharitable purpose and without an identifiable
beneficiary. An honorary trust must be established by a court; a settlor of an improper trust
cannot be assured that an honorary trust will be created.
The intended trust cannot be enforced if the trustee chooses not to carry out those terms; they
may hold the property for the takers of the would-be settlor’s estate. The person the settlor
intended to make the trustee is the trustee for the benefit of the persons who take the settlor’s
estate, but can also carry out the settlor’s wishes if the person chooses to do so.
Example: Carmela wants to create a trust for her pet llama. Her will gives $20,000 to Rob,
as trustee, to care for the llama, and the will then gives the residue of her estate to
her children, Alex and Brendan. When Carmela dies, she is survived by Rob, Alex,
Brendan, and the llama. A court can declare the attempted trust invalid due to a
20 Generally, not life insurance or retirement plans though. Both already avoid probate, but have tax issues that are
complicated if they run through a revocable living trust.
21 A settlor, for example, can transfer to the trustee the right to receive income under a contract, but an expectancy is
possibility or hope that the person will receive the property. An expectancy does not give the person an enforceable right.
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lack of a human beneficiary, and the $20,000 will be distributed with the residue
of her estate to Alex and Brendan. Alternatively, the court can create an honorary
trust. Rob will be the trustee, and he can choose to honor Carmela’s wishes and
use the money to care for the llama, or he can distribute the money to Alex and
Brendan. Rob has the authority to use the money for the llama, and Alex and
Brendan will receive any money left when the llama dies.
c. Trust for a Purpose
Under the common law, beneficiaries of a private trust must be sufficiently specific so that the
court knows who can enforce the trust. A charitable trust, by contrast, need not have an
identifiable beneficiary.
The UTC now permits the creation of a “trust for a noncharitable purpose” without an
ascertainable beneficiary. UTC §409 provides that the trust cannot last longer than the state’s
Rule Against Perpetuities (and a state that has abolished its Rule Against Perpetuities would
need no restriction on duration). UTC §409(2) provides for enforcement of the trust by a
person designated by the settlor or, if the trust document does not designate someone, then a
person appointed by the court.
d. Trust for a Specific Animal
Most states have adopted either UPC §2-907(b), providing for pet trusts, or UTC §408,
providing for animal trusts (trusts that can include animals that might not be considered pets,
such as farm animals).
UTC §408. Trust for Care of an Animal.
(a) A trust may be created to provide for the care of an animal alive during the settlor’s
lifetime. The trust terminates upon the death of the animal or, if the trust was created to
provide for the care of more than one animal alive during the settlor’s lifetime, upon the
death of the last surviving animal.
(b) A trust authorized by this section may be enforced by a person appointed in the terms of
the trust or, if no person is so appointed, by a person appointed by the court. A person
having an interest in the welfare of the animal may request the court to appoint a person
to enforce the trust or to remove a person appointed.
(c) Property of a trust authorized by this section may be applied only to its intended use,
except to the extent the court determines that the value of the trust property exceeds the
amount required for the intended use. Except as otherwise provided in the terms of the
trust, property not required for the intended use must be distributed to the settlor, if
then living, otherwise to the settlor’s successors in interest.
7. Formalities—Written Trusts vs. Oral Trusts and Secret Trusts

The elements of a trust do not include a requirement of a writing, a signature by the settlor, or
signatures by witnesses. Nonetheless, a lawyer typically drafts a trust instrument with places for the
settlor to sign (to help indicate intent to create a trust) and for the trustee to sign (to indicate
acceptance of the trusteeship). Notarization is often included.
a. Oral Trusts of Personalty
Common law and UTC permit oral trusts. UTC §407 requires a high standard of proof—clear
and convincing evidence—to establish an oral trust. This standard of proof is higher than the
standard in effect in some states. Lawyers do not recommend using an oral trust, given the
difficulty of proving its existence.
b. Oral Trusts of Real Property
Because of the statute of frauds, a trust of land, in most states, must be stated in a writing that is
signed by either the settlor or the trustee. Where a property owner attempts to transfer land to a
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trust but not in writing, the trust is not void, but it is unenforceable against the transferee
(trustee).
The transferee now has legal title to the property, and if she is allowed to keep the property for
herself and not subject to the trust, the transferee will be unjustly enriched. Voluntary trusts,
partial performance, and constructive trusts have developed to address this problem.
i. Voluntary Trust
The transferee can carry out the terms of the trust voluntarily. The transferee cannot be held
in breach because the lack of writing provides them with a defense, and the trust is still
unenforceable against the transferee.
ii. Partial Performance
Partial performance can consist of the transferee taking action with respect to the trust
property (e.g., collecting rents and paying them to a beneficiary) for some period of time and
then deciding to stop carrying out the trust. Alternatively, the doctrine of partial
performance applies if the beneficiary has acted in reliance on the trust (e.g., by making
improvements to land held in the trust) and the transferee has permitted that reliance.
iii. Constructive or Resulting Trust
The transferee holds the property under a constructive trust for the intended beneficiaries if
(i) the transferee used fraud, undue influence, or duress to cause the property owner to
transfer the property; or (ii) at the time of the transfer, the transferee was in a “confidential
relation” to the property owner. A determination of who is in a “confidential relation” to the
property owner may also be difficult.
Gregory v. Bowlsby
Facts: Father requested children deed him real estate left by his dead wife so he could
use the real estate for farming. He verbally agreed that he would hold the land and that
the proceeds would go to the children of his first wife. Kids transferred deed without
legal advice for consideration of $1. Kids relied on fraudulent statements made by the
dad.
Holding: A trust with respect to land cannot be established without a writing based on
the Statute of Frauds; however, a constructive trust was established because father made
statements that the kids relied on with fraudulent intent.
If neither of these conditions applies, a court may find that the transferee holds the property
as a resulting trust (i.e., the trust fails and the property returns to the settlor) or as a
constructive trust for the benefit of the property owner, unless the property owner is dead or
incapacitated, in which case the transferee will hold the property for the intended
beneficiaries.
The court in Clark, where the settlor failed to name a beneficiary, chooses a resulting
trust as the equitable remedy.
c. Oral Trusts to Be Given Effect at Death—Secret and Semi-Secret Trusts
For testamentary trusts, references to oral instructions cannot be given effect because the
instructions do not comply with the formalities required for a will. Gives rise to secret and semi-
secret trusts.
Secret trust is a trust in which property is left to a person under a will on the understanding that
they will hold the property as trustee for the benefit of beneficiaries who are not named in the
will. Under Oliffe v. Wells (Mass. 1881), a secret trust will be enforced and the person
named to take the property will, as trustee, only acquire legal title to the property and will hold it
for the beneficiaries of the trust.
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Semi-secret trusts refer to a trust in which beneficiaries are not designated. The instrument
indicates who is to serve as a trustee but fails to identify either the beneficiary or the terms of the
trust, or both. Treated as a resulting trust; goes to the settlor themselves or the estate of the
settlor. A trustee of a semi-secret trust is identified as a trustee and thus has only legal title. If
the trust fails, the person named in the will as trustee is not unjustly enriched. Under Oliffe, a
semi-secret trust will not be enforced. The trustee will hold the property as a resulting trust, and
the property will be distributed through the estate of the person who attempted to create the
trust—generally to the residuary takers under the will or to the decedent’s heirs.
Pickelner v. Adler
Facts: Shirley executed a will and her friend/attorney drafted the will and made himself the sole
devisee. The instructions to the provision were verbal and Shirley did not reduce them to
writing. Evidence showed that Shirley intended for the attorney to receive only legal title to her
property and hold it in some type of trust.
Holding: The semi-secret trust will not be enforced. It lacks essential terms, like failing to
identify beneficiaries.
Reasoning: Since an express testamentary trust was attempted, but failed, the trust terms
cannot be proved using parol evidence. The will did not have a residuary clause either. Pickelner
held all devised property under the remedy of a resulting trust for the benefit of Shirley’s heirs at
law. That is, her heirs at law take under her will.
8. Exculpatory (Exoneration) Clauses

An exculpatory clause, sometimes also known as an exoneration clause, is a clause included in a
trust document to excuse the trustee from liability for ordinary negligence although generally not
from bad faith or willful neglect. Courts will usually give effect to an exoneration clause and limit a
trustee’s liability to a situation involving bad faith.
Clients need to know about exoneration clauses; drafting attorneys needs to be able to prove client
was aware of that. Wallace has clients initial exoneration clauses.
9. Mandatory Rules
UTC §105(b) lists its mandatory rules. These mandatory rules include the requirements for
creating a trust, the trustee’s duty to act in good faith and in the interests of the beneficiaries, the
power of a court to take actions with respect to the trust that are necessary in the interests of justice,
limitations on the settlor’s ability to exculpate the trustee, the trustee’s general obligation to keep
beneficiaries informed about the trust, and specific requirements about notice to beneficiaries.
C. Revocable Trusts
Given their role as a will substitute, revocable trusts are governed by some rules from wills law.
Revocable trusts can be changed anytime so long as the settlor has capacity. You can do simple
amendments to these types of trusts.
1. Typical Structure
A settlor creates a revocable trust during life, and the settlor retains control over the property, often
serving as the trustee. The trust typically provides that a successor trustee can step in if the settlor
becomes incapacitated. Thus, revocable trusts can be used to plan for the possibility of incapacity as
a more effective—but more expensive—alternative to a durable power of attorney. When the settlor
dies, the trust becomes irrevocable.
A revocable trust has three parts, the terms for management and disposition of the trust:
(i) during the lifetime of the settlor while she is not incapacitated
(ii) during the lifetime of the settlor while she is incapacitated
(iii) after the settlor’s death
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2. Funding the Trust

When a settlor creates a revocable trust, the settlor should fund the trust with something, even if
most of the assets will be transferred later.
An estate planning lawyer will almost always pair a revocable trust with a “pour-over will.” A pour-
over will is a will that distributes the residue of the probate estate to the trustee of the revocable
trust, to be held in the trust. It “pours” those assets into the revocable trust. The trust is an event of
independent significance with respect to the will, so any property transferred to the trust can be
distributed by it.
If a revocable trust remains unfunded at the settlor’s death (no assets at all), then the trust does not
exist. If the trust does not exist at the settlor’s death, the doctrine of incorporation by reference
might be used to incorporate the written trust instrument into the will. However, only the document
in existence at the time the will is executed can be incorporated by reference.
3. Purpose and Advantages

a. Lifetime Purpose—Planning for Incapacity
A revocable trust provides a means to manage property if the settlor becomes incapacitated. If a
person has done no advance planning and begins to lose mental capacity, a family member or
other person may need to file a conservatorship over the property, so that someone else—a
court-appointed conservator—can manage the property for the incapacitated person.
An advantage of a revocable trust is that a trustee can manage the person’s property and no
conservatorship will be needed. The person can choose the successor trustee and can provide
guidance in the terms of the trust as to how the determination of incapacity is to be made and
how the property should be managed and used thereafter.
b. After-Death Purposes—Avoiding Probate
Although all will substitutes avoid probate, a revocable trust is the only one that can provide a
comprehensive plan for the disposition of a person’s assets, operating at death much like a will.
Benefits include: (1) potentially lower cost 22 (2) privacy 23 (3) difficult to invalidate a trust 24 (4)
Avoids delays (5) avoids ancillary probate (6) avoids the elective share.
4. Disadvantages—Statute of Limitations for Creditors

Probate may provide greater creditor protection than using a revocable trust, because the probate
process includes a short statute of limitations for claims against the decedent’s estate.
5. Misconception—Taxes
Revocable trusts have no income or transfer tax benefits. Promotional material discussing revocable
trusts is sometimes misleading in this respect. A revocable trust will be taxed for income tax
purposes with the rest of the settlor’s income, and the assets held in a revocable trust will be
included in the settlor’s gross estate for estate tax purposes.
6. Rules for Revocable Trusts that Differ from Those Applicable to Other Trusts
a. Capacity
Capacity under the UTC is the same standard for will execution. Inter vivos trusts are subject to
higher contract standard.
22 Transferring property through probate may cost more than transferring property using a revocable trust, depending on
the type of property and the state rules on probate. The concerns over the cost of probate must be balanced with the
greater cost at the front end: drafting a revocable trust typically costs more than preparing a will.
23 Unlike wills, trusts are not filed with the court. The recipients of the trust will be kept private.
24 It is much more difficult to invalidate a revocable trust than a will because the trust is an ongoing relationship, and the
transactions involved in a trust continue from the time the settlor establishes the trust until the settlor dies.
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b. Duty to Beneficiaries
While the settlor is alive, the trustee owes fiduciary duties only to the settlor/beneficiary. For
other trusts, the trustee owes fiduciary duties to all beneficiaries, not merely current ones.
c. Rules that Apply to Wills
In some states, certain rules that apply to wills also apply to revocable trusts, but not to any
other type of trust. The UPC takes this approach by applying a number of provisions relating to
probate transfers to nonprobate transfers, including revocable trusts.
d. Joint Revocable Trusts
A joint revocable trust is one in which two settlors contribute property to a single trust. The two
settlors may contribute the same amount of property or different amounts of property, and they
may contribute property they hold as community property or as separate property. The settlors
may both serve as trustees, or one may serve or neither may serve. The trust remains completely
revocable as long as both settlors are alive, but when the first settlor dies, half the trust usually
becomes irrevocable.
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IX. Fiduciary Duties

A. Introduction
Fiduciary duties govern the behavior of the trustee and ensure that the trustee is accountable to the
beneficiary. These duties also apply to personal representatives of decedents’ estates. Fiduciary duties
apply to trust protectors as well, although the law as it applies to trust protectors has not been fully
resolved.
The extent of a trustee’s powers and fiduciary duties depends on the trust instrument, statutory law,
and the common law. Trusts must create enforceable duties. A settlor may not negate the
responsibilities of a trustee that the trustee would no longer be acting in a fiduciary capacity—if so, the
beneficiary would have no enforceable interest.
Fiduciary duties are built on a three-legged stool
2. Duty of obedience to terms and purposes of trust, statutory and common law
3. Duties of loyalty and impartiality
4. Duty of prudence [duty of care]
Settlor can draft around the default rules, but the settlor may not abrogate them all because that would
make the trust illusory.
B. Duty of Obedience
A trustee must carry out the terms of the trust as the settlor directs in the trust instrument and based on
the trustee’s knowledge of the settlor’s intent. The trustee must also comply with the law.
UTC §801. Duty to Administer Trust.
Upon acceptance of a trusteeship, the trustee shall administer the trust [1] in good faith, in accordance
with [2] its terms and purposes and [3] the interests of the beneficiaries, and [4] in accordance with this
[Code].
C. Duty of Loyalty
This duty means that the trustee must not put his own interests above those of the beneficiaries.
1. Conflicts of Interests—Transactions for the Trustee’s “Personal Account” (Self-

Dealing)
The trustee cannot enter into a transaction on behalf of the trust with himself in his individual
capacity. If a trustee enters into a transaction involving the trustee’s personal account, the
transaction is voidable by the beneficiaries. The beneficiary can void a transaction without proof of
fraud on the part of the trustee or harm to the trust.
Hosey v. Burgess
Facts: Hosey was simultaneously trustee of the Watkins trust and the remainder beneficiary under
the testamentary trust established in the Watkins will
Holding: Albeit innocent and unintentional, Hosey engaged in self-dealing.
Reasoning: Acting as the trustee and the remainder beneficiary put Hosey in breach of her fiduciary
duty and in breach of an explicitly defined duty to pay proceeds from the trust property to Burgess.
2. Conflicts of Interests—Transactions Involving Personal or Business

Relationships
Because these indirect conflicts may result in harm to the beneficiaries, UTC §802(c) treats them
as “presumed to be affected by a conflict between personal and fiduciary interests.” Thus, the law
treats them as presumptively voidable, not absolutely voidable. If the trustee can show that the
transaction was fair to the beneficiaries, the beneficiaries will not be able to void the transaction.
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3. Exceptions to the Duty of Loyalty—UTC § 802(b)

Given the complexity of trust holdings, trustees increasingly need to engage in transactions that
benefit the trust but involve conflicts of interest.
a. Terms of the Trust
Settlor can authorize the trustee to engage in conflict of interest transactions with the trust. The
terms must permit the trustee to buy property/borrow money from the trust.
If a family business will be part of the corpus and a family member active in the business will be
trustee, the settlor may want to authorize the trustee to buy shares of stock from the trust, to
vote shares in favor of herself or one of her immediate family members, and to engage in
transactions between the trust and the family business.
b. Court Approval
A trustee can prospectively seek court approval to purchase property from a trust or to engage in
some other transaction that breaches the duty of loyalty. UTC §802(b)(2). Court approval not
only protects the trustee but also protects the beneficiaries because a court will only authorize a
transaction if it is fair and in the interests of the beneficiaries.
Although a trustee can seek court approval of a sale to himself, if the beneficiaries oppose the
sale, the court may be reluctant to authorize the sale.
c. Consent of the Beneficiaries
The beneficiaries can agree to a divided-loyalty transaction. UTC §802(b)(4). For the trustee
to be protected, all beneficiaries of the trust must consent. If only some beneficiaries consent,
then those beneficiaries cannot sue the trustee for breach of the duty of loyalty, but any
beneficiaries who did not consent may still do so.
d. Trustee Compensation
Trustees may be compensated even though it is clearly self-dealing. If the terms of the trust do
not explicitly authorize it, the common law and statutes permit it. Compensation must be
reasonable; excessive compensation is a breach of the duty of loyalty.
e. Proprietary Mutual Funds
UTC §802(f) authorizes a corporate trustee to invest in proprietary mutual funds, or funds the
corporation manages. If the trustee is complying with the prudent investor rule, they are
presumed not to be engaged in a conflict.
f. Advances by Trustee
Under UTC §802(h)(5), a trustee can advance her own funds and be repaid, without interest,
if the advance will protect the trust
g. Voting Stock
If a trust owns corporate stock, the trustee will need to vote the stock in the best interests of the
beneficiaries. UTC §802(g). Thus, if the trustee owns stock in the same company in the
trustee’s individual capacity, the trustee must be careful to vote the trust’s stock in a manner
that benefits the beneficiaries, regardless of how the trustee votes his individually owned stock.
If the trust is the sole owner of the company, the trustee must vote the stock to elect directors
who will manage the company in the best interests of the beneficiaries.
D. Duty to Inform and Report

1. Common Law Duty
For a beneficiary to enforce her interests in the trust, the beneficiary must have information about
the trust, including its assets, transactions engaged by the trustee, and income earned by the trust.
Trustees must respond to requests from beneficiaries. The duty is reactive—the beneficiary has to
know to ask.
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Most trustees provide annual accountings to the beneficiaries of the trusts they manage. Statutes of
limitation begin to run once the beneficiaries have information about the trust.
The duties the trustee owes to the beneficiaries depends on the category of beneficiary: permissible
distributee, qualified beneficiary, or beneficiary.
• Permissible distributees are qualified beneficiaries and beneficiaries. All qualified
beneficiaries are beneficiaries.
• Qualified beneficiaries simply are those with the right to income or principal now or in the
future. They can be beneficiaries currently receiving or eligible to receive distributions
(permissible distributees), beneficiaries who would step into that status if the interests of the
permissible distributees ended, or beneficiaries who would be eligible to receive
distributions if the trust terminated.
2. Expanded Duties Under the UTC

UTC §813. Duty to Inform and Report.
Although the UTC imposes a duty to provide annual reports to certain beneficiaries, sometimes a
settlor may prefer that a beneficiary not know too much about a trust. Even then, the beneficiary
must have information about the trust so that they can enforce it.
3. To Whom to Report?
The UTC provides for representation of minor and unborn children by a parent and representation
by a person who has an interest “substantially identical to” the interest of the person being
represented. The representation provisions apply only if the person representing another
beneficiary does not have a conflict of interest that would affect the representation.
UTC requires the trustee to inform beneficiaries of (1) creation of an irrevocable trust, (2)
trustee accepting the positions, (3) any change in the trustee’s compensation. Trustee
has a duty to give advance notice to the trust beneficiaries where the trustee proposes to sell a
significant portion of the trust assets unless the value of the assets are readily ascertainable.
E. Duty of Impartiality
The duty of impartiality means that the trustee must manage the trust in a way that keeps the interests
of all current beneficiaries and future beneficiaries in mind before making investment decisions or
making distributions to any one beneficiary.
The duty of impartiality is not, however, a duty to treat all beneficiaries in the same way; the trustee
must act in accordance with the terms of the trust. As the Comment to UTC §803 provides: “[T]he
trustee must treat the beneficiaries equitably in light of the purposes and terms of the trust. A settlor
who prefers that the trustee, when making decisions, generally favor the interests of one beneficiary
over those of others should provide appropriate guidance in the terms of the trust.”
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F. Duty of Care or Prudence

1. Managing the Property
The rules relating to the management of trust property address the trustee’s duty to pay proper
attention to the trust and to treat the property of the trust in a way that protects the property for the
beneficiaries. All these duties are subject to a reasonableness standard, and a cost-benefit analysis
belongs in a decision about what is reasonable.
UTC §809. Control and Protection of Trust Property.
A trustee shall take reasonable steps to take control and protect trust[/estate] property.
UTC §811. Enforcement and Defense of Claims.
A trustee shall take reasonable steps to enforce claims of the trust and defend claims against the
trust.
UTC §812. Collecting Trust Property.
A trustee shall take reasonable steps to compel a former trustee or other person to deliver trust
property to the trustee, and to redress a breach of trust known to the trustee to have been
comitted by a former trustee.
The trustee also is under a duty to keep the property separate from the trustee’s own property, aka
the duty not to commingle. The duty to label trust property as belonging to the trustee in a fiducairy
capacity is the duty to earmark.
UTC §810. Recordkeeping and Identification of Trust Property.
(a) A trustee shall keep adequate records of the administration of the trust.
(b) A trustee shall keep trust property separate from the trustee’s own property.
(c) Except as otherwise provided in subsection (d), a trustee shall cause the trust property to
be designated so that the interest of the trust, to the extent feasible, appears in records
maintained by a party other than a trustee or beneficiary.
(d) If the trustee maintains records clearly indicating the respective interests, a trustee may
invest as a whole the property of two or more separate trusts.
Fiduciary also has duty to provide such info to qualified beneficiaries.
2. Investing the Property

a. Types of Investments
Trust accounting allocates receipts and expenses to either the income account or the principal
account. The allocations will affect the shares of the income beneficiary and the remainder
beneficiary. The Uniform Principal and Income Act is the statutory source of these rules.
The trustee wants all investments to generate revenue. If the revenue is considered income, then
the income beneficiary gets a distribution. If the revenue is classified as principal, then the
remainder beneficiary will get more when the trust terminates.
Principal Income
- Capital gains; any appreciation on an asset - Any receipts currently generated

- Can be in the value of stocks, bonds, - Less associated expenses including taxes
businesses, and real estate - Not including capital gains
- Regardless of realized or unrealized - Interest on bonds and on
- If a stock is sold, that’s principal for trust savings/checking accounts
accounting purposes - Dividends paid by corporations
- even though it’s a capital gain and - Annual net profits from a business
therefore income for income tax - Rents from real estate
purposes.
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Generally, investments that generate a lot of income (like bonds) tend to appreciate slowly (thus
benefiting the present interest holders) while fast appreciating investments (like aggressive
investment in stocks) often do not generate much income (thus benefiting the remainder
beneficiaries).
b. The Prudent Investor Standard
For most trusts, the trustee will invest the assets with two goals: to produce income for the
income beneficiaries and to increase the value of the trust property for the remainder
beneficiaries.
Unif. Prud. Inv. Act §2. A trustee shall invest and manage trust assets as a prudent investor
would, by considering the purposes, terms, distribution requirements, and other circumstances
of the trust. In satisfying this standard, the trustee shall exercise reasonable care, skill, and
caution. The prudent investor must spread risk of loss by diversifying the trust. He has a duty to
minimize cost and to delegate.
The UPIA, which codifies the prudent investor rule, is based in the Modern Portfolio Theory.
Under that, assets are not looked at individually like in common law. Trustee is not liable for the
1 out of 100 that fails if the other 99 are successful. Key Considerations about trustee’s
investments (1) trustee’s investigations and decision-making process in determining the trust’s
acceptable level of compensated risk, and (2) How that level is achieved through the
combination of trust investments.
In re Trust Created by Inman
Facts: Trustee wanted to purchase a parcel of land from the trust. The trust instrument
permitted the trustee to retain non-diversified assets if they would be in the best interests of the
beneficiaries. Parcel of land had sentimental value to trustee, as well as to beneficiaries.
Holding: There’s no absolute duty to diversify the trust assets that would compel the approval of
the proposed sale.
Reasoning: Trustees are supposed to weigh an asset’s special relationship or special values, if
any, to the purposes of the trust or to one or more beneficiaries. Trustee’s purported sentimental
value is shared by the beneficiaries.
G. Allocation of Principal and Income

Drafting: Trust instrument needs a provision authorizing trustee to allocate (or account for) Principal
and Income differently than normal accounting rules. This is a first step in establishing how much can
be distributed to respective beneficiaries.
Uniform Principal and Income Act. Trustees power to act and adjust. Helps trustees better act toward
benefiting their beneficiaries. E.g., if a surviving spouse lives off income, trustee must act in her best
interest at generating income from trust.
UPIA 103(a). In allocating receipts and disbursements to or between principal and income, and
with respect to any matter within the scope of [Articles] 2 and 3, a fiduciary:
(1) shall administer a trust or estate in accordance with the terms of the trust or the will,
even if there is a different provision in this [Act];
(2) may administer a trust or estate by the exercise of a discretionary power of
administration given to the fiduciary by the terms of the trust or the will, even if the
exercise of the power produces a result different from a result required or permitted by
this [Act];
UPIA 103(b). In exercising the power to adjust ... a fiduciary shall administer a trust or estate
impartially, based on what is fair and reasonable to all of the beneficiaries, except to the extent that
the terms of the trust or the will clearly manifest an intention that the fiduciary shall or may favor
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one or more of the beneficiaries. A determination in accordance with this [Act] is presumed to be
fair and reasonable to all of the beneficiaries.
UPIA 104(a). A trustee may adjust [receipts and disbursements] between principal and income to
the extent the trustee considers necessary if the trustee (i) invests and manages trust assets as a
prudent investor, (ii) the terms of the trust describe the amount that may or must be distributed to a
beneficiary by referring to the trust’s income, and (iii) the trustee determines, after applying the
rules in Section 103(a), that the trustee is unable to comply with Section 103(b).
UPIA 104(b). In deciding whether and to what extent to exercise the power conferred by
subsection (a), a trustee shall consider all factors relevant to the trust and its beneficiaries, including
the following factors to the extent they are relevant:
(1) the nature, purpose, and expected duration of the trust;
(2) the intent of the settlor;
(3) the identity and circumstances of the beneficiaries;
(4) the needs for liquidity, regularity of income, and preservation and appreciation of
capital;
(5) the assets held in the trust; the extent to which they consist of financial assets, interests
in closely held enterprises, [etc.]
(6) the [normal allocation rules];
(7) ...the terms of the trust ...;
(8) the actual and anticipated effect of economic conditions on principal and income and
effects of inflation and deflation; and
(9) the anticipated tax consequences of an adjustment.
H. Remedies for Breach of Trust

The beneficiaries of a trust have standing to sue the trustee for failure to comply with one or more
fiduciary duties—a breach of trust. The trustee will be liable to the beneficiaries for any loss to the value
of trust assets caused by the breach and also for any profit the trustee obtained.
UTC §1001. Remedies for Breach of Trust.
(a) A violation by a trustee of a duty the trustee owes to a beneficiary is a breach of trust.
(b) To remedy a breach of trust that has occurred or may occur, the court may:
(1) compel the trustee to perform the trustee’s duties;
(2) enjoin the trustee from committing a breach of trust;
(3) compel the trustee to redress a breach of trust by paying money, restoring property, or
other means;
(4) order a trustee to account;
(5) appoint a special fiduciary to take possession of the trust property and administer the
trust;
(6) suspend the trustee;
(7) remove the trustee as provided in Section 706;
(8) reduce or deny compensation to the trustee;
(9) subject to Section 1012, void an act of the trustee, impose a lien or a constructive trust on
trust property, or trace trust property wrongfully disposed of and recover the property or
its proceeds; or
(10) order any other appropriate relief.
Uzyel v. Kadisha
Facts: The trustee purchased shares of stock from the trust and argued that a prudent trustee would
have needed to sell the stock to diversify the holdings in the trust. Trustee sold stock solely for his own
benefit and without regard to the interests of the beneficiaries.
Holding: Trustee breached his duty of loyalty.
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Reasoning: The remedy for a breach of trust should be adapted “to fit the nature and gravity of the
breach and the consequences to the beneficiaries and trustee.” The goals of the remedy are not only to
compensate the beneficiaries for their loss, but also to deter the trustee in question and other trustees
from committing similar acts. The court awarded “appreciation damages” for the breach based, in
general, on the amount the stock appreciated from the date of sale to the date of trial.
I. Removal of Trustees
The most important basis for removal is breach of trust. The more serious the breach, the more likely
the court will be to remove the trustee. A pattern of smaller breaches may also result in removal. A court
may consider removing a trustee if co-trustees cannot or will not cooperate in managing the trust.
UTC § 706. Removal of Trustee: Trustee can be removed if there is a material breach of trust;
infighting among co-trustees impairs its administration; the trust has underperformed persistently
and substantially relative to comparable trusts; or changed circumstances make change of trustee in
the beneficiaries’ best interests.
Removal must be in the best interests of the beneficiaries and not inconsistent with a material purpose
of the trust. Courts should consider several factors when determining whether a current trustee or a
proposed successor trustee best serves the interests of the beneficiaries:
• personalization of service;
• cost of administration;
• convenience to the beneficiaries;
• efficiency of service;
• personal knowledge of trusts’ and beneficiaries’ financial situations;
• location of trustee as it affects trust income tax;
• experience;
• qualifications;
• personal relationship with beneficiaries;
• settlor’s intent as expressed in the trust document;
• and any other material circumstances.
J. Trust Protectors and Powers to Direct

The term trust protector is typically used when someone other than the trustee is given broad,
discretionary powers over the trust, while a power to direct is typically a power to direct the trustee’s
actions with respect to a specific duty.
1. Trust Protectors
A settlor can give a trust protector one or many powers, e.g.,
(i) to remove the trustee and appoint a new trustee;
(ii) to make, direct, or veto investment decisions;
(iii) to allocate sale proceeds between income and principal;
(iv) to change the situs of the trust; and
(v) to terminate the trust under specified conditions.
A settlor might also give a trust protector, rather than the trustee, the power to rearrange beneficial
interests in keeping with the settlor’s general intent.
2. Power to Direct
UTC §808 permits the settlor to give powers to direct to a person (a corporation or individual) who
is not a trustee. The terms “trust protector” and “power to direct” have overlapping meanings and
are often not used precisely in practice. The person holding the power is a fiduciary. Trustee must
follow direction unless: manifestly contrary to terms of trust, or serious breach of fiduciary duty.
The powers enumerated above also extend here and are powers to direct.
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X. Rights of Beneficiaries and Creditors in Trust Property;

Modification and Termination of Trusts
A. Distribution Provisions—Rights of Beneficiaries
A trust beneficiary’s rights and a trustee’s duties depend on the terms of the trust established by the
settlor. The trust instrument typically provides directions to a trustee concerning distributions of
income and principal to the beneficiaries. In making these distributions, the trustee is bound by a
reasonableness or good-faith standard.
A beneficiary’s interest in a trust may be a present interest or a future interest, may be contingent on
the happening of an event, may be limited to income or principal, may be subject to revocation, and
may be subject to a power of appointment held by another person.
1. Overview of Distribution Provisions

a. Mandatory Provisions
Require a distribution without discretion toward amount or timing.
Example: “Trustee shall distribute life income to Margaret and corpus to Louis after
Margaret’s death.”
b. Discretionary Provisions
Allow for the trustee to decide on distribution amount and timing.
Example: “The trustee may distribute what they see fit to each of my children to assist in
the child’s health and education.”
The more discretion the terms of the trust give the trustee, and the less ascertainable the
standard, the less likely the beneficiary will be successful in forcing the trustee to make a
particular distribution. By contrast, the more precise and ascertainable the standard delineated
in the trust, the greater the likelihood that the beneficiary can convince a court that the standard
applies to her situation and require the trustee to make a distribution, even if the court will not
dictate the amount of the distribution.
Ascertainable vs. Nonascertainable Standards
Tax law uses these terms to identify when a trustee has a level of discretion so great that the
apparent restriction in the standards is illusory, with the result that the power to distribute
or appoint will be treated as a general power of appointment for tax purposes. An
ascertainable standard, such as for HEMS, limits the trustee or powerholder’s discretion.
The standard is an objective one that a beneficiary can ask a court to enforce.
By contrast, a nonascertainable standard, like happiness, gives the trustee or powerholder
nearly unlimited discretion. For that reason, tax law treats the trustee or powerholder of a
nonascertainable standard as being equivalent to the owner of the property. Besides tax law,
the significance of a standard being ascertainable or nonascertainable goes to the extent of
the trustee’s discretion and the degree to which a court will review the trustee’s exercise of
the discretion, as we discuss later.
c. Spray or Sprinkle Provisions
Spray and Sprinkle are sometimes used interchangeably, but spray usually means the trustee
can give to a group of beneficiaries while sprinkle means they can give to just one beneficiary.
2. Interpreting Discretionary Standards of Distribution

Standards frequently used by a settlor to give guidance to the trustee, beneficiaries, and court: may,
shall, HEMS [health, education, maintenance, support], emergency, hardship, comfort, happiness,
welfare, best interests, for any purpose, in trustee’s absolute/sole/unfettered discretion.
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Courts may be called upon to interpret the trust language and in doing so will consider factors such
as the words used, the relationships between the settlor and the beneficiaries, and the settlor’s
intent with respect to the terms of the trust.
Remember: Trustee must act with prudence and care, has a duty of loyalty and impartiality to the
trustee, and may only work to benefit the beneficiary. When it comes to accessing the discretion a
Trustee uses in making distributions, a court will only intervene in a trustee’s actions/inactions to
prevent misinterpretation or abuse of discretion. Typically, because abuse of discretion is hard to
describe, the courts rely on generic “reasonableness” or “good faith” standards, or sometimes both.
Bottom line: Once the trustee has done its due diligence and acted accordingly, it is rare for a
court to second-guess and mandate or reverse the trustee’s action because the
trustee will not have acted in bad faith, unreasonably, arbitrarily, or capriciously.
Failure to act at all would be cause for court action.
a. Judicial Review of Trustee’s Exercise of Discretion—Reasonableness and Good
Faith
When a court reviews a trustee’s action or inaction, the court will intervene only to prevent
misinterpretation or abuse of the discretion; it will not impose its own view of how a trustee
should exercise discretion.
Courts often use “reasonableness” as the standard, while the UTC incorporates a “good-faith”
standard. The standards are often interpreted to mean the same thing, but they could be applied
differently, and we might imagine a trustee acting in good faith but not exercising reasonable
judgment. A court may apply either standard, or both, as it thinks best to protect the
beneficiaries. A court may also focus on whether the trustee committed fraud or acted in bad
faith.
b. Support and Maintenance
If the standard is limited to “support and maintenance,” courts view this as an ascertainable
standard. The court will start by looking at the beneficiary’s basic needs, but “support and
maintenance” goes beyond adequate food and housing. Typically, this will refer to the
beneficiary’s accustomed standard of living. Give them what is necessary for them to carry on
living how they have been. It means more than the bare essentials.
Courts typically look to the amount of property the settlor placed in the trust, the relationship
between the settlor and the beneficiary, and the settlor’s intent as expressed in the document.
Unless there is a reason to find otherwise, the terms will usually be interpreted to imply the
beneficiary’s accustomed standard of living.
c. Education
Typically seen as a reference to tuition for college, technical school, or graduate-level education.
Things normally included are room & board, books, fees, etc.; things that are not included are
typically the cost of a private high school, study abroad programs, music lessons, sport
instruction, etc. – things that are not seen as necessary in the furtherance of the education of the
beneficiary.
d. Emergency
Usually defined as a “sudden or unexpected happening that calls for immediate action.” No
concrete definition, but is one of those “you know it when you see it” standards.
e. Welfare, Best Interest, Happiness
Considered nonascertainable by the court and is left to the discretion of the trustee. May make
no distributions or may make distributions for any purpose. RE happiness, the trustee’s
judgment should be exercised generously and without relatively objective limitation.
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f. Beneficiary’s Other Assets

Default is that trustee should consider the beneficiary’s other resources (if settlor wants to
provide for “support and maintenance” of grandchild, but grandchild wins lotto, then trustee
should consider that when giving a distribution).
g. Duty to Inquire
The trustee has an affirmative duty to make a reasonable attempt to ascertain the beneficiary’s
needs and, under the rule of construction, other resources that may be appropriately and
reasonably available for purposes relevant to the discretionary power. Trustees are entitled to
discovery of beneficiary’s financial statements and may require beneficiary to disclose other
sources of income. In fact, it may be an abuse of discretion not to inquire into financial
circumstances of all discretionary distributees before making payments to one.
A trustee typically can rely on representations made by a beneficiary as to other available assets,
but the trustee can also request the beneficiary to provide readily available information about
other financial resources, especially if the trustee believes the beneficiary’s representations are
inaccurate.
O’Riley v. U.S. Bank, N.A.
Facts: the settlor’s children sued the trustee for breach of the duty of impartiality. The trustee
was authorized to make distributions of income to the settlor’s widow and two children. The
children argued that the trustee had not exercised that duty reasonably because the trustee had
made distributions primarily to the settlor’s widow.
Holding: the trustee did not breach their duty of impartiality
Reasoning: Under the terms of the trust, income distributions to the children were specifically
limited to any income left over after distributions were made to the widow. While the children
beneficiaries argued that the trustee did not seek their financial info before making payments to
the widow. The trust instrument did not require that, and the widow was the preferred
beneficiary.
3. When the Trustee Is a Beneficiary
The trustee must act in the interests of all the beneficiaries (duty of loyalty) and must treat all
beneficiaries equitably (duty of impartiality).
Mesler v. Holly
Facts: Settlor established two inter vivos trusts: Florida trust for himself for life, and for his wife—he
and his wife were co-trustees; and the Massachusetts trust, under which the settlor’s grandchildren
were the beneficiaries. FL trust went to wife after settlor’s death, remainder to the MA trust.
Holding: The allegations that a trustee is the sole lifetime beneficiary, is not giving accounts to the
remaindermen, and not confining her invasions to reasonable limits, give rise to an inference of
abuse of discretion and require the trustee to respond.
Reasoning: (1) there is no requirement for trustees to post a bond for faithful performance of their
duties (2) either trustee may withdraw funds from any bank account in the name of the trust and (3)
there is no specific requirement in the trust instrument to give inventory.
B. Rights of Creditors and Planning to Protect the Assets in a Trust

1. General
Creditors typically have many sources from which to satisfy a claim, such as checking accounts,
wages, stocks and securities, insurance, and certainly a trust in which a debtor has an interest as a
settlor or beneficiary.
Creditors frequently do not, however, attempt to attach an interest of a settlor or beneficiary
because it is difficult. A creditor essentially “steps into the shoes” of the debtor and can garnish only
what the debtor owns. If the debtor owns property in fee simple, a creditor can take possession of
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the property itself. If the debtor owns less than a fee simple interest—for example, an income
interest—a creditor may only attach the income interest.
With the exception of a settlor of a revocable trust, beneficiaries are not deemed to be the outright
owners of trust assets, and because the rights of beneficiaries differ, depending on whether the trust
contains mandatory or discretionary distribution clauses, so too do the rights of their creditors.
Regardless of the existence of a trust, however, creditors are free to pursue a beneficiary’s other
assets.
a. Who are the likely creditors?
If your client is not vulnerable, then normal estate planning techniques are probably adequate
for settlor but maybe not the other beneficiaries. Concern is for property in the trust for
settlor/beneficiaries
b. Non-trust Ways to Protect Assets
Besides using a trust, there are other ethical avenues to reduce the risk of clients losing their
income and property to the claims of future creditors. Tenancy by the entirety—where marriage
owns the home, accounts, etc.—creditors cannot attach to what’s owed in that way unless the
claim of the creditors is owned by both in the marriage. Additionally, some other assets are
protected from the claims of creditors of the owner because of bankruptcy or state law. Likely
assets include retirement plans, IRAs, 529 plans, principal residences, and life insurance.
c. Important variables to consider with creditors and trusts
• Settlor or non-settlor beneficiary
• Revocable or irrevocable trust
• Present vs. future creditors (with a judgment)
• Property distributed or still in trust
• Mandatory or discretionary distributions
• Spendthrift clause
• Super creditor?
• Attaching vs. compelling distributions
2. Creditors of a Beneficiary Who Is Not the Settlor 25

a. Mandatory Distributions
Absent a spendthrift clause covering such distributions, a creditor can get a court order
attaching present or future mandatory distributions to or for the benefit of the beneficiary. The
trustee would pay the creditor directly.
b. Discretionary Distributions
In contrast to mandatory distributions, the beneficiary’s interests in distributions that are
subject to the trustee’s exercise of discretionary powers are difficult for a creditor to reach.
Under UTC §504(b), a creditor is in a worse position than a beneficiary, because a creditor
cannot seek judicial redress for an abuse of the trustee’s discretion. The creditor is left to go after
distributions in the hands of the beneficiary once the trustee actually makes the distributions.
Unless the creditor is monitoring the situation closely, many distributions will go unnoticed and
not be seized.
Certain creditors are preferred in the law--If an individual is in arrears in paying child or
spousal support, UTC §504(c) says a court can order the trustee to make a distribution from
the trust to the spouse, former spouse, or children even if the trustee’s power is discretionary, if
25 See Summary re: Non-Settlor Beneficiary’s Debts

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it can be shown that the trustee “has not complied with a standard of distribution or has abused
a discretion.”
UTC §504. Discretionary Trusts; Effect of Standard.
(a) In this section, “child” includes any person for whom an order or judgment for child
support has been entered in this or another State.
(b) Except as otherwise provided in subsection (c), whether or not a trust contains a
spendthrift provision, a creditor of a beneficiary may not compel a distribution that is
subject to the trustee’s discretion, even if:
(1) the discretion is expressed in the form of a standard of distribution; or
(2) the trustee has abused the discretion.
(c) To the extent a trustee has not complied with a standard of distribution or has abused a
discretion:
(1) a distribution may be ordered by the court to satisfy a judgment or court order
against the beneficiary for support or maintenance of the beneficiary’s child,
spouse, or former spouse; and
(2) the court shall direct the trustee to pay to the child, spouse, or former spouse
such amount as is equitable under the circumstances but not more than the
amount the trustee would have been required to distribute to or for the benefit of
the beneficiary had the trustee complied with the standard or not abused the
discretion.
c. Spendthrift Clauses
A spendthrift provision is a provision in a trust or a will that protects a beneficiary from
assigning away his or her inheritance, and it also protects against a creditor attaching the
beneficiary’s inheritance. They prevent both voluntary and involuntary alienation of trust
interest by the beneficiary.
An effective spendthrift clause adopts a two-pronged approach: it precludes a beneficiary from
assigning or selling her interest in a trust, and it prevents a creditor of the beneficiary from
attaching the beneficiary’s interest. The result is that the creditor must wait until after the
payment is made and then attempt to collect from the beneficiary.
While spendthrift clauses generally affect both mandatory and discretionary distributions, UTC
§506 allows a creditor to reach a mandatory distribution if it has not been made “within a
reasonable time after the designated distribution date.”
Example: “No beneficiary shall have any right to anticipate, sell, assign, mortgage, pledge, or
otherwise dispose of or encumber all or any part of any trust estate established for his or her
benefit under this agreement. No part of such trust estate, including income, shall be liable for
the debts or obligations of any beneficiary or be subject to attachment, garnishment, execution,
creditor’s bill, or other legal or equitable process.”
Non-Settlor Beneficiary of an Irrevocable Trust
Present & Future Creditors of Non-Settlor Beneficiary
No Spendthrift Creditor can get a court to issue a writ of attachment or
Clause garnishment respecting present & future distributions, whether
mandatory or discretionary, to or for benefit of beneficiary to the
extent not otherwise exempt.
With Spendthrift Creditor cannot get a court to issue a writ of attachment or
Clause garnishment respecting present & future distributions, whether
mandatory (unless overdue) or discretionary. Creditor will have to
wait until distribution and then have sheriff serve levy on
beneficiary
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d. Exceptions to Spendthrift Protection—“Super Creditors”

Some creditors’ claims do not arise voluntarily after a period of evaluation of the debtor’s
creditworthiness. For this reason, the common law of numerous states has created exceptions to
the spendthrift rule for these creditors. A child trying to enforce a court order for child support
makes a sympathetic plaintiff, as does a former spouse trying to enforce an order for alimony.
UTC §503. Exceptions to Spendthrift Provision.
(b) A spendthrift provision is unenforceable against [the following super/exception
creditors]:
(1) a beneficiary’s child, spouse, or former spouse who has a judgment or court order
against the beneficiary for support or maintenance;
(2) a judgment creditor who has provided services for the protection of a
beneficiary’s interest in the trust; and
(3) a claim of this State or the United States to the extent a statute of this State or
federal law so provides.
(c) A claimant against which a spendthrift provision cannot be enforced may obtain from a
court an order [writ] attaching present or future distributions to or for the benefit of the
beneficiary [but, compared to 504, may not compel a distribution]. The court may limit
the award to such relief as is appropriate under the circumstances.
Shelley v. Shelley
Facts:
Holding: Beneficiary’s interest in the income of the Shelley Trust is subject to the claims of
alimony and child support. It can only reach that much of the income which the trial court
deems is reasonable.
Reasoning: Makes a policy argument for paying child support. Majority of the cases suggest that
a spendthrift provision will not bar a claim for alimony. Cannot access the corpus until
beneficiary realizes the interest in it. Children are named in the trust so their claim is not
derivative through their father. Court construes the “unusual and extraordinary expenses” to
include the children.
A tort judgment creditor also seems like a sympathetic creditor, but the law disagrees.
Duvall v. McGee [dissent]
Just as it is sound public policy to permit the attachment of a spendthrift trust for alimony, child
support, and taxes, it is also as sound to permit invasion to make victims of tortious conduct
whole. A tortfeasor may be liable not only for compensatory damages, but also punitive
damages, which we allow in order to “punish the wrongdoer and to deter such conduct by the
wrongdoer and others in the future.”
3. Creditors of a Beneficiary Who Is Also a Settlor 26
Generally, one cannot use a trust to shield one’s assets from one’s creditors.
UTC §505. Creditor’s Claim Against Settlor.
(a) Whether or not [aka even if] the terms of a trust contain a spendthrift provision, the following
rules apply:
(1) During the lifetime of the settlor, the property of a revocable trust is subject to claims of
the settlor’s creditors.
(2) With respect to an irrevocable trust, a creditor or assignee of the settlor may reach the
maximum amount that can be distributed to or for the settlor’s benefit. ... (“the rule
against self-settled spendthrift trusts”)
26 See Summary re: Settlor’s Debts

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(3) After the death of a settlor..., the property of a trust that was revocable at the settlor’s
death is subject to claims of the settlor’s creditors, [etc.] ... to the extent the settlor’s
probate estate is inadequate to satisfy those claims, costs, [and] expenses.
a. Revocable Trusts
Creditors of Settlor/Beneficiary of Creditors of Non-Settlor Beneficiary of
Revocable Trust Revocable Trust
Present Creditors can attach property of No rights until distributed—mere
Creditors revocable trust during settlor’s life and expectancy (or interest too contingent)
from estate
Future Creditors can attach property of No rights until distributed—mere
Creditors revocable trust during settlor’s life and expectancy (or interest too contingent)
from estate
b. Irrevocable Trusts
Creditors of Settlor of an Irrevocable Trust
Present Creditors can attach property of trust either per UTC §505, Uniform Fraudulent
Creditors Conveyance Act, or Uniform Fraudulent Transfer Act whether settlor is a
beneficiary or not
Future If settlor is not a beneficiary and If settlor is a beneficiary, creditors may reach
Creditors has not retained any control or the maximum amount that the trustee could
interest, settlor doesn’t own pay the settlor/beneficiary. UTC §505. [For
anything and his creditors have example, if the trustee has discretion to
nothing to attach. BUT – It is a distribute the entire income and principal to
preference in bankruptcy, so the settlor, the effect of this subsection is to
subject to 90-day or one-year place the settlor’s creditors in the same
avoidance. position as if the trust had not been created.]
c. Asset Protection Trusts—Foreign and Domestic

Some states allow asset protection trusts in favor of a beneficiary who is the settlor if (1) the
trust is irrevocable, (2) the trust interest is discretionary, and (3) trust was not created to
defraud creditors. Trusts must be created in one of these states though.
C. Modification and Termination of Trusts

1. Revocable Trusts
While a revocable living trust provides maximum control and flexibility in settlor over property, it is
for that reason that it does not accomplish any tax or asset protection goals.
UTC §602. Revocation or Amendment of Revocable Trust.
(a) Unless the terms of a trust expressly provide that the trust is irrevocable, the settlor may revoke
or amend the trust. This subsection does not apply to a trust created under an instrument
executed before [the effective date of this [Code]]. . . .
(c) The settlor may revoke or amend a revocable trust:
(1) by substantial compliance with a method provided in the terms of the trust; or
(2) if the terms of the trust do not provide a method or the method provided in the terms is
not expressly made exclusive, by:
(A) a later will or codicil that expressly refers to the trust or specifically devises
property that would otherwise have passed according to the terms of the trust; or
(B) any other method manifesting clear and convincing evidence of the settlor’s
intent.
A settlor normally revokes a trust by giving written notice to the trustee and giving back title to the
property. Exact compliance with the method prescribed in the trust instrument is not required. An
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act that demonstrates the settlor’s intent may constitute revocation—must be proved by clear and
convincing evidence if it’s an act other than those provided in the trust’s terms.
2. Irrevocable Trusts
a. Making Modification Unnecessary
There are some measures that can be taken to make modification unnecessary. The settlor may
want to consider including some of the following to their trust. Provisions that:
• Give the trustee a range of discretion—absolute or unlimited
• Define spouse to include only the person the settlor/beneficiary is currently married so
that divorce will terminate any interest for that person
• Give the beneficiaries the power to replace the trustee with a different, independent one
• Give the trustee the power to loan to beneficiary
• Give the trustee power to change nondispositive provisions of the trust
• Give trust protector power to change dispositive or nondispositive provisions
• Give certain individuals power of appointment
b. Termination According to the Terms of the Trust
A trust will usually terminate pursuant to its terms or when the corpus is gone. See also UTC
§410. Modification or Termination of Trust; Proceedings for Approval or Disapproval.
(a) In addition to the methods of termination prescribed by Sections 411 through 414, a
trust terminates to the extent the trust is revoked or expires pursuant to its terms, no
purpose of the trust remains to be achieved, or the purposes of the trust have become
unlawful, contrary to public policy, or impossible to achieve.
c. Modification or Termination with Settlor’s Consent
The common law and the UTC provide that if the settlor and all the beneficiaries agree, they can
modify (or terminate) an irrevocable trust without going to court to get approval. Because the
settlor is included in the decision to modify, modification can occur even if the modifications are
inconsistent with a material purpose of the trust.
Common law views spendthrift provisions as a material purpose, thus precluding modification
by beneficiaries. UTC reverses this presumption, and under UTC §411(c), modification will be
denied only if the court determines that the settlor intended that the spendthrift clause be
considered a material purpose of the particular trust or that the modification would affect other
material purposes of that trust.
d. Modification or Termination Without Settlor’s Consent (Usually After Settlor’s
Death)
i. Material Purpose Doctrine
Without the settlor alive or consenting, a court will only permit modification or termination
if it’s consistent with the settlor’s material purpose, i.e., helpful with carrying out the
purposes of the trust. Consider circumstance where a trust may be terminated where an
income beneficiary transferred her interest to the remainder beneficiaries. The trust
termination makes sense and is consistent where the testator allowed this, as there would be
no need to keep the trust and it makes sense to disburse property to the remaindermen.
ii. Modification or Termination by Consent of the Beneficiaries
If no material purpose of the trust would be frustrated by its termination or modification,
the court will order modification if the beneficiaries agree to a modification and if all of the
beneficiaries consent. Even if all beneficiaries do not agree, a court may authorize
modification or termination under certain conditions. See:
UTC §411. Modification or Termination of Noncharitable Irrevocable Trust by Consent.
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(b) A noncharitable irrevocable trust may be terminated upon consent of all of the
beneficiaries if the court concludes that continuance of the trust is not necessary
to achieve any material purpose of the trust. A noncharitable irrevocable trust
may be modified upon consent of all of the beneficiaries if the court concludes
that modification is not inconsistent with a material purpose of the trust.
[(c) A spendthrift provision in the terms of the trust is not presumed to constitute a
material purpose of the trust.] . . .
(e) If not all of the beneficiaries consent to a proposed modification or termination of
the trust under subsection (a) or (b), the modification or termination may be
approved by the court if the court is satisfied that:(1) if all of the beneficiaries had
consented, the trust could have been modified or terminated under this section;
and(2) the interests of a beneficiary who does not consent will be adequately
protected.
A child might need to be represented in order to give consent. In the absence of a conflict of
interest, a parent can represent minor and unborn children, a conservator or guardian can
represent the person he is appointed to protect, and a person with a “substantially identical
interest” in the question or dispute can represent a beneficiary. These representation rules
apply to modification and termination. If no other representation is possible, a court can
appoint a representative.
iii. Modification or Termination Due to Changed Circumstances—Equitable
Deviation
The doctrine of equitable deviation allows a court to modify a provision or terminate the
trust to give effect to the primary intent the settlor had in creating the trust. A court can
modify a provision not only due to changed circumstances, but also due to unanticipated
circumstances—something the settlor did not know about when the settlor created the trust.
In re Riddell
Facts: Trustee sought to modify special needs trust because, on distribution, the funds would
either be seized by the state to pay medical bills or the beneficiary would mismanage the
funds due to her mental illness/poor judgment.
Holding: Remand to reconsider equitable deviation due to changed circumstances and the
settlors’ intent that the beneficiaries receive both medical care and general support from the
trust’s funds.
Reasoning: Two prong approach to equitable deviation to make changes in the manner in
which a trust is carried out. (1) circumstances not anticipated by the settlor, and (2)
modification/deviation will further the purposes of the trust.
Modification through equitable deviation is more common with administrative terms
addressing the operation of the trust than with dispositive terms addressing distributions.
With dispositive terms, it will be modified under the guidance of the UTC and the
Restatement where the modification furthers the intent of the settlor.
UTC §412. Modification or Termination Because of Unanticipated Circumstances or
Inability to Administer Trust Effectively.
(a) The court may modify the administrative or dispositive terms of a trust or
terminate the trust if, because of circumstances not anticipated by the settlor,
modification or termination will further the purposes of the trust. To the extent
practicable, the modification must be made in accordance with the settlor’s
probable intention.
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(b) The court may modify the administrative terms of a trust if continuation of the
trust on its existing terms would be impracticable or wasteful or impair the trust’s
administration.
(c) Upon termination of a trust under this section, the trustee shall distribute the
trust property in a manner consistent with the purposes of the trust. [Emphasis
added by authors.]
iv. Modification (Reformation) to Fix a Mistake

Common law and UTC allow reformation of inter vivos documents and testamentary trusts
based on a mistake of law or fact. The mistake may be either one of inducement, when the
settlor was mistaken as to a fact or the law, or one of expression, when the language in the
document fails to carry out the settlor’s intent. If a trust provision resulted from a mistake,
then extrinsic evidence can be used to show the mistake. Clear and convincing evidence is
needed to establish mistake.
v. Statutory Provisions that Correspond with Best Practices
UTC §414. Modification or Termination of Uneconomic Trust.
(a) After notice to the qualified beneficiaries, the trustee of a trust consisting of trust
property having a total value less than [$50,000] may terminate the trust if the
trustee concludes that the value of the trust property is insufficient to justify the
cost of administration.
(b) The court may modify or terminate a trust or remove the trustee and appoint a
different trustee if it determines that the value of the trust property is insufficient
to justify the cost of administration.
(c) Upon termination of a trust under this section, the trustee shall distribute the
trust property in a manner consistent with the purposes of the trust.
(d) This section does not apply to an easement for conservation or preservation.
UTC §416. Modification to Achieve Settlor’s Tax Objectives.
To achieve the settlor’s tax objectives, the court may modify the terms of a trust in a manner
that is not contrary to the settlor’s probable intention. The court may provide that the
modification has retroactive effect.
For example, a trust that is meant to qualify for the unlimited marital deduction may
include a minor provision that is in violation of the Internal Revenue Code section
authorizing the deduction.
UTC §417. Combination and Division of Trusts.
After notice to the qualified beneficiaries, a trustee may combine two or more trusts into a
single trust or divide a trust into two or more separate trusts, if the result does not impair
rights of any beneficiary or adversely affect achievement of the purposes of the trust.
A trustee might decide to combine two trusts to save administrative costs. A trustee
might want to divide a trust for tax reasons or for management reasons, in order to keep
shares for beneficiaries separate.
3. Decanting Statutes
Decanting means pouring assets from one trust to another, removing unwanted provisions and
adding more useful provisions. If the trustee has the power to distribute trust property for the
benefit of one more beneficiaries, the trustee can also exercise the power by distributing the
property to a new trust.
The basic concept of decanting is that if a trustee has discretionary power over distributions, the
trustee can exercise that power to modify provisions in the trust, to the extent of the power the
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trustee has. If the discretion is limited, for example, the distributive power is subject to an
ascertainable standard, most statutes limit changes to administrative ones. If the trustee has broad
discretion, for example, a “best interests” or “welfare” standard, the new trust can have new
dispositive provisions.
If the trust does not address decanting directly, a decanting statute can provide the authority, and
some states have already enacted decanting statutes.
Examples of decanting: remove (but not add) beneficiaries or create a SNT; remove and replace
trustees; create a spendthrift provision; correct mistakes or ambiguities; restrict distributions, e.g.
for substance abuse; divide a trust into separate trusts for different beneficiaries or combine
separate trusts; change investment powers; change situs 27 of administration.
27 The place which, for purposes of taxation, a property belongs.

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XI. Powers of Appointment

*Not responsible for specifics of Uniform Powers of Appointment Act; only six jurisdictions have adopted.
State law governs*
A. What is a Power of Appointment?

1. Definition
It’s another way to build flexibility into a trust. You give someone a power of appointment over trust
assets to someone other than the trustee so that the third party has the power to distribute the
property among a designated group of beneficiaries as circumstances dictate.
A person can also create a power of appointment over property that is not subject to a trust. While
powers of appointment are most common in trusts, testators can, for example, create them in a will,
property owners can do so in property transferred by gift, and divorcing couples can do so in marital
separation agreements.
2. General Terminology
There is special language that applies to powers of appointment that specifies the parameters of the
power. See General Terminology: Powers of Appointment. Most importantly, though, are the
differences between the types of powers of appointment:
Nongeneral power of appointment [NGPOA]: Default if (i) testamentary and (ii) appointees do
not include powerholder or his estate. It’s a power that cannot be exercised in favor of the
powerholder, the powerholder’s estate, the powerholder’s creditors, or creditors of the
powerholder’s estate. A nongeneral power can be broad, or it can be narrow. Sometimes called a
“special power” or a “limited power.”
One might think of a powerholder of an NGPOA as a conduit or intermediary between the donor
and the objects or appointees. The powerholder does not take title to the property but may pass
it along as she sees fit. The appointment “relates back” to and completes the transfer envisioned
by the donor in the trust
General power of appointment [GPOA]: treated as the equivalent of ownership. A power to

appoint in favor of the powerholder, the powerholder’s estate, the powerholder’s creditors, or
the creditors of the powerholder’s estate. GPOA can be broad or can be limited to those one or
more of those four categories.
The powerholder of a GPOA, on the other hand, while not the owner under state proper ty law is
treated as the owner of the property for two purposes –his/her creditors may pursue the trust
property and the exercise of the power in favor of another has transfer tax consequences to the
powerholder. Similarly, the augmented estate of the donee includes a presently exercisable
GPOA.
Presently exercisable POA: can be exercised at the relevant time in question, during life with an
inter vivos document.
Testamentary POA: one that must be exercised, if at all, by the donee at death, by will
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3. Distinguishing Between a Power of Appointment and Fiduciary Power

A powerholder can choose to exercise the power or not and choose to exercise it arbitrarily, as long
as the property subject to the power is given to a permissible appointee. The trustee and
powerholder can be the same person; there wouldn’t be anyone to enforce the power of
appointment, though.
Trustee—a fiduciary Powerholder of POA—not a fiduciary

Holds title to property in trust as a fiduciary Unless powerholder is trustee, which happens
but does not have beneficial interest but not frequently (and can cause confusion
about role being played), does not hold title to
property –only has power to appoint it.
Must make distributions consistent with Exercise is totally discretionary and arbitrary
standards set forth in trust. Rest. 3d (Trusts) within scope of power except limited to
§50 calls this the “fiduciary distributive power.” permissible appointees. Up to powerholder to
Beneficiaries may sue if trustee does not make decide whether to exercise or to release the
distributions required by standards. Caveat- power, when to do so and to whom. No
IRS considers Trustee’s distributive power a standards involved so permissible appointees
POA & if can appoint to self, then a GPOA, may not sue if powerholder does not appoint.
unless HEMS
Trust must have ascertainable beneficiaries Class of permissible appointees need not be
specified so it is possible to have “friends” as
permissible appointees.
Subject to fiduciary duties Not subject to fiduciary duties and standards.
Duties held by trustee Normally given to someone other than trustee,
such as primary beneficiary. Sometimes held by
settlor or trustee,
Exercised during trusteeship Subject to the donor's directions, maybe
exercised (or not) by powerholder inter vivos or
in will. Common grant is “Income to surviving
spouse, remainder among my children as
surviving spouse appoints in her will.”
If distributions not made, other beneficiaries If not exercised, goes to takers in default. If no
will benefit. There are no takers in default taker in default, reverts back to donor’s estate
though or per anti-lapse rules.
B. Creating a Power of Appointment

As with the creation of a trust, the creation of a power of appointment requires that the donor of the
power manifest the intention to create the power. No special words are necessary, and the donor need
not use the words “power of appointment.” Sometimes disagreements arise about donor intent
[appointment or full ownership]. One condition frequently imposed is that the powerholder make
specific reference to the trust and to the power of appointment when exercising it (a “specific reference”
clause).
For drafting purposes, it’s best to have a clear expression of: intent to create a POA [rather than
something else]; whether it’s a GPOA/NGPOA; whether it’s presently exercisable, or testamentary, or
both; what property is subject to power; who (i) the donee/powerholder, (ii) the permissible appointees,
and (iii) the takers in default; and, how POA is to be exercised [specific reference or not?].
Example: General Power of Appointment
I (i) grant (ii) my husband a (iii) testamentary (iv) general power to appoint (v)
all or any portion of the principal and undistributed income remaining in the
Survivor’s Trust at his death (vi) among one or more persons or entities,
including the creditors of my husband’s estate. The power of appointment
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granted under this trust (vii) may be exercised by a will or living trust (viii)
specifically referring to the power of appointment. To the extent my husband has
not exercised this power over all the property in the Survivor’s Trust, (ix) the
property not appointed shall pass to my descendants per stirpes.
C. Exercising a Power of Appointment

1. Overview
“Specific-exercise clause” means a clause in an instrument that specifically refers to and exercises a
particular power of appointment. Could be a non-exercise clause too! Gold standard.
In writing, powerholders should:
(1) unambiguously express intent to exercise (or not to exercise) power,
(2) identify the trust and the specific provision that granted the power,
(3) clearly state to whom the appointment is made (making sure they are permissible
appointees),
(4) provide what happens if appointee predeceases exercise, and
(5) whether any conditions apply.
Examples: “Pursuant to the general power of appointment granted to me by the Barry Kane
Trust dated May 2, 2016, I appoint the property of the trust to my children per
stirpes. If I am not survived by any descendants, I appoint the property to my
heirs.”
“I hereby do not exercise the power of appointment conferred on me by my

father’s trust” or “I hereby do not exercise any power of appointment I may
have.”
“Blanket-exercise clause” means a clause in an instrument that exercises a power of appointment

and is not a specific-exercise clause. The term includes a clause that expressly uses the words “any
power” in exercising any power of appointment the powerholder has. It is not clear that a blanket-
exercise clause manifests an intent to exercise any particular POA the powerholder may have. So, if
there is a requirement of specific reference imposed by the donor, case will turn on facts and
circumstances.
Risky—if it can be shown that the powerholder had knowledge of and intended to exercise the
power, a blanket-exercise clause usually will be sufficient to exercise the power, even if there is a
specific reference required. But may result in unintended exercise.
Example: “I hereby exercise any power of appointment I may have and appoint such
property to my son, Alfred.”
“Blending clause” purports to blend the appointive property with the powerholder’s own property in
a common disposition.
Less risky—generally, a blended exercise clause will be sufficient to exercise the power if it is to a
permissible. May result in unintended exercise.
Examples: “All the residue of my estate, including the property over which I have a power of
appointment under my mother’s will, I devise as follows ...” is a blending clause
with a specific exercise.
“All the residue of my estate, including any property over which I may have a
power of appointment, I devise as follows ...” is a blending clause with a blanket
exercise.
“Residuary clause” is one that makes no mention of any POA.
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Very risky. Manifesnts intent to exercise POA only in limited situations. Espeically risky—and
unlikely—if specific reference required. On the other hand, least likely to result in unintended
consequences.
Example: “I leave all the rest and residue of my property to Howard and Sally, per stirpes.”
2. Different Ways to Exercise a Power of Appointment

A carefully drafted specific-exercise clause will make the likelihood of a successful challenge by
someone else remote.
All too frequently, powerholders do not use a specific-exercise clause, do not follow the directions of
the donor, or do not make clear their intent to exercise the power. The most common problems arise
when the powerholder uses a residuary clause, because then it is not clear whether the powerholder
intended to exercise the power or not. Some residuary clauses are blended with a blanket-exercise
clause or a specific-exercise clause. Others are “pure” residuary clauses, with no mention of a power
of appointment at all.
a. Residuary Blending Clause with Blanket Exercise—Does It Satisfy a Specific
Reference Requirement?
Motes/Henes Trust Bank of Bentonville v. Motes
Facts: Decedent’s will contained a residuary clause which gave the remainder and residue of her
estate “together with property to which I may have a power of appointment at the time of my
death” to the trustee, to be held in trust.”
Holding: Evidence of intent is strong and the court allowed a more liberal construction of the
specific reference requirement. It seems clear that the testator’s intent at the time of execution
was to include any after-acquired property.
Reasoning: Where the evidence of intent is powerful, the question of compliance should be
examined in a light which favors fulfillment of both the donor’s desire for assurance and the
donee’s intent. Where, however, evidence of the donee’s intent is weak, a liberal construction of
the condition of specific reference may well defeat the limitations of both donor and donee.
b. Can a Powerholder Exercise the Power by a “Pure” Residuary Clause?
Clause in a powerholder’s will: “I give the residue of my estate to my descendants, by
representation.” Doesn’t contain a blanket-exercise clause or reference to a power. Can it still
indicate the testator’s intent to exercise the power?
The majority of states follow the rule that a general or “pure” residuary clause like the one above
does not exercise a power of appointment held by the testator, regardless of whether the donor
required a specific reference. If the general residuary clause is not treated as a valid exercise, the
takers in default receive the property that was subject to the power.
Under the UPAA and restatement, pure residuary clause doesn’t exercise a power without more.
The exceptions include if the power is a general power or if the donor did not provide for a taker
in default. The policy behind these provisions is to limit the exercise to stipulations in which
permitting the residuary clause to exercise the power is likely to accord with the donor’s intent.
A minority of jurisdictions, however, take an even more expansive approach when there is no
specific reference requirement, finding additional circumstances in which a pure residuary
clause is deemed to exercise a power of appointment. See, e.g., Will of Block.
Facts: Decedent’s will established a trust for the benefit of her son her son’s two sons.
The will gave her son a limited power to appoint any trust principal remaining at his
death between his two son’s. The decedents’ grandsons’ half-brother was not a permitted
appointee. The son executed a will that did not to refer to his power of appointment
under his mother’s will, and divided his estate in trust between his three sons. Following
the decedent’s son’s death, the trustees (plaintiffs) brought an action to determine
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whether the son had validly exercised his power of appointment when he disposed of his
estate, even though he had not referred to the power of appointment in his will or trust,
and had exercised the power in partial violation of the limitation on the power of
appointment in his mother’s will.
Holding: A person’s disposition of their estate by will may act as an exercise of a power of
appointment, unless the will was not intended to be an exercise of the power of
appointment.
Reasoning: Court ruled that (1) there was insufficient evidence to overcome the strong
presumption in favor of the residuary clause exercising the power, and (2) all the
property subject to the power should be deemed appointed to their subtrusts equally, not
just 70% to the appointive property. Note that the identity of permissible appointees and
of takers in default in this case were the same people.
c. What is Required for Substantial Compliance?

When a donor imposes formal requirements on how a powerholder should exercise a power, the
question courts—and legislatures—face is how precisely the powerholder must comply.
The Restatement says that an attempted exercise should be effective if evidence shows that: (i)
the powerholder intended to exercise the power; and (ii) the way in which the powerholder
exercised the power did not impair the donor’s reason for imposing a requirement on the
manner of exercise. If the reason for the requirement is to avoid inadvertent exercise, then
substantial compliance should be sufficient.
In re Estate of Carter
Facts: powerholder devised the property subject to the power to permissible appointees. She
neither referenced the power nor her husband’s will that granted the power and required a
specific reference in her own will. She devised the property subject to the power in a typical
specific devise and did not use words like “power” or “appoint.” The personal representative
asked a court to construe her will and instruct on how to proceed. Court concluded that despite
her failure to characterize the devise as an exercise of her limited POA, her intent was clear and
should be given effect.
Holding: The exercise of the limited POA was valid.
Reasoning: Because powerholder’s will specifically described property that was subject to the
power and gave it to beneficiaries within the class permitted by the power, and because of the
other facts and circumstances surrounding her execution of the will, it was clearly her intent to
exercise her power of appointment.
3. Exercise in Further Trust
GPOA may be exercised to appoint the property in fee simple as well as subject to further trust or a
new POA. Since the powerholder of a GPOA could appoint herself and use the property to establish
a trust, the law permits the powerholder of a GPOA to accomplish this by skipping a step and not
having to appoint the property herself. The powerholder, therefore, can simply direct that power to
put the property in a new trust without having to take possession of the property first.
A powerholder with a NGPOA may be able to appoint in further trust only if the grant of the power
so provides, depending on state law.
4. Problems with Appointees

a. Exercise in Favor of Impermissible Appointees
Typically, if exercise is in favor of impermissible appointees, then the exercise is invalid.
Wrongly appointed property goes to the takers in default rather than to permissible appointees.
But see Will of Block (treating exercise as favor of permissible appointees where the
permissible appointees and takers in default were the same people).
BMO Harris Bank N.A. v. Towers
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Facts: Parents set up two trusts for their son, for his lifetime, naming the Bank as the trustee.
Under the terms of the Mary trust, the son could appoint assets to/in further trust for his
spouse, his mother’s descendants, or the spouses of such descendants. Under the terms of the
Martin Sr. trust, the son could appoint assets to/in further trust for his spouse, his lineal
descendants and their spouses, or any charity. Under the Mary Trust and the dad’s will, If the
POA were not exercised, then distributions would be made to the son’s descendants at the time
of his death. Son established an RLT that, and in his will appointed all the property in the two
trusts to his RLT. Upon the son’s death, the trustee would pay, from the original trust, all debts,
expenses, etc; additionally, to distribute cash or any property held by the trust to the son’s own
probate estate.
Holding: We hold that: (1) As the trust donee, Martin Jr.’s exercise of his limited testamentary
powers of appointment in favor of himself was ineffective and therefore void because he was not
a permissible appointee; (2) as the trustee, the Bank acted within its fiduciary duties by filing a
petition seeking instruction from the court regarding the proper distribution of the trusts
-we affirm the judgment of the circuit court
Reasoning: The plain language controlling the powers of appointment for both the [parents’]
trusts establishes that the son. could not exercise the powers of appointment in favor of himself
because he was not within the class of permissible beneficiaries designated by his parents.
b. Predeceased Appointees
Just as a beneficiary of a will must survive the testator to take under a will, an appointee must
survive the powerholder to take appointed property.
UPC §2-603(b)(5) applies the UPC’s antilapse rule to powers of appointment, and a number
of states have adopted similar statutes. The question of applying antilapse statutes to powers of
appointment is tricky because doing so may mean that the property will be distributed to
persons who were not named by the donor as permissible appointees. A donor can provide that
the antilapse statute will not apply, but should do so specifically.
c. Selective Allocation
The doctrine of selective allocation may fix, at least partially, a problem created by an ineffective
exercise of a power. A powerholder’s residuary clause may combine property subject to a power
and the powerholder’s own property. If the powerholder’s beneficiaries are not all permissible
appointees, the doctrine of selective allocation will distribute the property in the way that best
carries out the powerholder’s intent.
D. Release, Failure to Exercise, and an Express Statement of Nonexercise

If the powerholder does not wish to exercise the power, she can release it, not exercise it, or expressly
indicate her decision not to exercise it. Collectively, can be refereed to as a “lapse” of the power. Upon
release, the takers in default, if any, whose interests were contingent, will now have vested remainder
interest.
1. Who Gets the Property?

a. Takers in Default Stated
If the original grant of power provides for takers in default, they will receive the property if the
power lapses. The takers in default are determined at the time set for distribution, so if the
takers are a class, the determination of that class will be made at the time of distribution.
b. No Takers in Default Stated
NGPOA: the property will be distributed to the permissible appointees, if those permissible
appointees are a defined and limited class. If the class is so broad that specific members cannot
be determined, then the property will be distributed to the donor ’s estate as a reversionary
interest
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GPOA, and the powerholder fails to exercise it, the property will be distributed to the
powerholder’s estate, unless the terms of the grant of the power provide otherwise. If the
powerholder releases the power or expressly refrains from exercising it, then the property is
distributed to the donor or donor’s estate, as a revisionary interest.
2. Contract to Exercise a Power

The holder of a power of appointment that can be exercised currently can enter into a contract to
exercise the power on behalf of a permissible appointee, so long as the contract “does not confer a
benefit on an impermissible appointee.”
The holder of a testamentary power cannot enter into a contract to exercise the power in the future.
The traditional rule is that even if a permissible appointee enters into a contract with the
powerholder to exercise the power, and the powerholder fails to exercise the power as required by
the contract, the contract will not be enforced against the property. Instead, the person contracting
will have a claim of restitution based on the unjust enrichment of the powerholder. If the
powerholder has no assets, the person contracting is out of luck.
If the person hoping to get the property subject to a testamentary power is named as a taker in
default, then having the powerholder release the power may be better than entering into a contract
to exercise the power.
E. Rights of Creditors and Taxes

1. Creditors
Under the common law, the holder of a GPOA has traditionally been treated as not owning the
property until he exercises the power, so the creditors cannot reach the appointive property until
the powerholder appoints it to himself. UTC §505(b) changes this rule and instead provides that
creditors of the powerholder of a GPOA can reach property subject to the power in much of the
same manner as against the settlor of a revocable trust. The restatement allows creditors to reach a
powerholder of a GPOA only after the powerholder’s other property has been used to satisfy the
claim.
One thing the uniform laws and the Restatement agree on is that the creditors of a holder of a
nongeneral power of appointment have no rights against the property subject to the power. The law
basically views the powerholder as no more than an agent of the donor and a conduit through whom
the property passes to a select group of appointees. The powerholder has no rights in or quasi-
ownership of the property that a creditor can attach.
2. Taxable Transfer
The IRC includes in GPOA a power that property law calls a trustee power/duty, which causes
confusion. Both GPOAs and fiduciary powers that allow distribution to oneself or one’s creditors are
GPOAs for tax purposes. GPOA is treated like ownership, therefore there are gift and estate tax
consequences to donor when passed and to powerholder when exercised, lapsed, or released.
A lifetime exercise or release of a general power in favor of someone other than the powerholder is
considered a taxable gift. And if a person holds a general power at death, the property is included in
the person’s estate for tax purposes, whether he exercises the power or not.
NGPOA not subject to gift or estate tax for powerholder. One level of tax for NGPOA.
For tax purposes, the IRC considers HEMS as ascertainable while “welfare and best interests” are
nonascertainable standards. Under UTC §814(b)(1), unless the terms of the trust expressly state
otherwise, GPOA granted to a trustee other than the settlor are to be exercised “only in accordance
with an ascertainable standard. . . . ” This provision produces the “correct” tax result in the vast
majority of situations.
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XII. Protecting the Family

A. Introduction
When a decedent chooses not to leave property to family members or forgets to do so, there are three
major protections for the family in this situation:
(a) the community property form of ownership between spouses
(b) surviving spouse to take an “elective share” if the decedent did not leave the spouse a
sufficient share of the marital property or if such a share would be preferable to the
result in intestacy.
(c) the protection against accidental disinheritance when the decedent executed a will before
marriage or omitted a child
B. Differing Protections Under Community Property and Common

1. Community Property
In community property states 28, property is held by marital partners either as community property
or separate property.
Community property is property accumulated by either spouse from earnings or other work during
the marriage. Unless the spouses agree otherwise, all property acquired during the marriage is
jointly owned in a manner similar to tenancies in common (but which exists exclusively between
spouses). Community property is distributed at divorce either equally or by a system of equitable
factors, e.g., needs and contributions of each spouse. Surviving spouse is entitled to retain her one-
half 29 of all community property.
Property that was acquired before the marriage, or that either spouse receives as a gift or an
inheritance during the marriage, is considered separate property and remains under the ownership
and control of that individual spouse.
2. Common Law 30/Separate Property

Title vests int he person who earns or otherwise acquires the property in his name. The spouse with
title has sole ownership and control during marriage. The non-title holder has no rights unless the
spouses acquire and title the property jointly.
At divorce, property is distributed based on equitable distribution of all assets acquired during the
marriage. Upon the death of a spouse, in a common law state, the spouse who has title to any
property titles solely in that spouse’s name can determine where it will go by writing a will or using
nonprobate transfers. Surviving spouse has a right to take an elective share of the decedent’s
property.
3. Division at Death for Migrating Couples

Courts have traditionally done the following to classify property the couple has acquired in each
state they own property:
(a) for real property, the law of the state in which the property is located controls its
classification; and
(b) for personal property, the law of the marital domicile at the time the property is acquired
controls its classification.
28 Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, and Washington. Wisconsin is a variation
community property state.
29 With exceptions. Spouse can receive more/less than ½ of community property if: (1) the couple migrated between
community property and separate property states throughout the marriage; or (2) the spouses have agreed otherwise in a
marital agreement.
30 Wallace calls this Separate Property!
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Moving doesn’t affect the classification of property interests. Several community property states
have developed doctrines that recognize rights in the surviving spouse to property acquired in a
common law state under the principle of “quasi-community property.”
Quasi-community property is generally defined as marital property acquired while domiciled in a
common law state that would have been characterized as community property if the married couple
had been domiciled in a community property state. In effect, the property becomes community
property to which the surviving spouse has equal rights. The impact of quasi-community property
doctrines can be waived if both spouses sign a written agreement to that effect.
C. Protection for the Surviving Spouse—The Elective Share

Elective share allows surviving spouse to take part of decedent’s property regardless of the amount to
which he is entitled per decedent’s will or by intestacy. Elective share applies to testate & intestate
property. Depending on amount in the probate estate and nonprobate transfers, the elective share may
be more or less than what the surviving spouse would receive per will or intestacy since it’s based on the
augmented estate. 31
This is one of the few instances where the will does not control the disposition of all of decedent’s
property. Freedom of testation is overruled by public policy—that being the only person you can’t
disinherit is your spouse.
The elective share only applies to spouses and those threated as spouses under state law. Surviving
spouse has a right to elect into/out of elective share. All jurisdictions are different, but most have an
elective share statute that can be contracted around.
Decedent left a will Decedent did not leave will
Greater of amount per will or elective share, Greater of intestate share or elective share, unless
unless otherwise agreed to in pre-nup otherwise agreed to in pre-nup
1. Non-UPC Approaches to the Elective Share

Elective share provisions are typically justified based on either a dependency/support or an
economic partnership theory. The first theory justifies the elective share as “a means of continuing
the decedent’s duty of support beyond the grave.” The second theory views marriage as a
partnership to which both spouses contribute, entitling both spouses to share in the assets.
Traditional approach: Md. Code Ann., Est. & Trusts §3-203. Right to Elective Share.
(a) “Net estate” defined.—In this section, “net estate” means the property of the decedent
passing by testate succession, without a deduction for State or federal estate or
inheritance taxes, and reduced by:
(1) Funeral and administration expenses;
(2) Family allowances; and
(3) Enforceable claims and debts against the estate.
(b) In general.—Instead of property left to the surviving spouse by will, the surviving spouse
may elect to take a one-third share of the net estate if there is also a surviving issue, or a
one-half share of the net estate if there is no surviving issue.
(c) Limitation.—The surviving spouse who makes this election may not take more than a
one-half share of the net estate.
Karsenty v. Schoukroun
Facts: Decedent made an inter vivos transfer of his property into a revocable trust during his life.
The trust was for his daughter from a prior marriage, and that trust was named as the beneficiary
31 Augmented estate: the estate to which the elective share applies, including both probate and nonprobate assets.
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for two IRA accounts. The court considers whether this transfer constitutes a violation of the
surviving spouse’s right to an elective share of his net estate under the Maryland code reproduced
above.
Holding: If an inter vivos transfer was complete and bona fide or done in good faith, the court must
respect the estate planning arrangements of the decedent and may not invalidate a transaction.
However, if the transfer is a sham, the court shall invalidate the underlying transaction as to the
surviving spouse. Retained control to change the beneficiary is not by itself a sufficient justification
for invalidating an inter vivos trust.
Reasoning: The court listed various considerations to guide courts in determining the decedent’s
good faith, including the nature of the control retained by the decedent, the decedent’s motives, the
extent to which the surviving spouse was deprived of property, and the reasonableness of the inter
vivos transfer as part of the decedent’s estate plan.
D. UPC Approach to Elective Share

Remember: the elective share rules apply whether the decedent died testate or intestate. Consequently,
the surviving spouse can make a decision on whether to take: (i) the elective share (UPC §2-202); (ii) if
the decedent died testate, the share to which she is entitled pursuant to the will; (iii) if the decedent
died with what would be classified as a premarital will per UPC §2-301, the share to which she is
entitled under that section; or (iv) if the decedent died intestate, the share pursuant to the intestacy
provisions under UPC §2-102. Share of Spouse. [LINK]
Steps to determine the elective share 32:
Step One: Determine the augmented estate. UPC §§2-203 to 2-207.
Step Two: Identify the percentage of the augmented estate to which the spouse is entitled,
based on the length of the marriage. UPC §2-203. 33
Step Three: Multiply the augmented estate in Step One by the percentage in Step Two to
calculate the “marital property portion.”
Step Four: Multiply the marital property portion by 50% to determine the elective share
amount to which the surviving spouse is entitled. UPC §2-202. 34
Step Five: Determine the sources from which the elective share is satisfied. UPC §2-209.
Step Six: Make the election. UPC §2-211.
E. Prenuptial and Other Marital Agreements

Prenuptial agreements allow a spouse to waive the right to inherit from the other spouse. Other
enforceable waivers can also be entered into during the marriage or even in separation agreements.
With a carefully drafted and complete prenuptial agreement, the parties agree in advance how to divide
their property upon a divorce or at death, regardless of when, how, and from what source their property
was acquired.
Most times, clients come ready to know what assets to put in prenups. Simply being unconscionable is
usually not enough to overcome the contract, and courts will normally accept the “deal” so long as it
complies with state law.
1. When is a Waiver Valid?

States have adopted varying approaches to determine whether a waiver is valid.
In re Estate of Hollett
32 From my understanding, we need not have to calculate it on the exam. I just wanted to list the steps in case we needed
to list the steps as this was in the assigned reading, but the steps themselves weren’t.
33 This is a sliding scale—(3% if less than a year, to 100% if 15+ years).
34 Therefore, 50% x (0% to 100%) – surviving spouse’s share is really 0%-50%.
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Facts: husband presented fiance with a prenup just two days before wedding. He was significantly
wealthy and had been working on the prenup for a while. Hired a new attorney for the fiance
without much experience. Family flew in for the wedding, etc.
Holding: Prenup is invalid because it was the product of duress.
Reasoning: A prenuptial agreement is presumed valid unless the party seeking the invalidation of
the agreement proves that: (1) the agreement was obtained through fraud, duress or mistake, or
through misrepresentation or nondisclosure of a material fact; (2) the agreement is unconscionable;
or (3) the facts and circumstances have so changed since the agreement was executed as to make the
agreement unenforceable. To establish duress, a party must ordinarily “show that it involuntarily
accepted the other party’s terms, that the coercive circumstances were the result of the other party’s
acts, that the other party exerted pressure wrongfully, and that under the circumstances the party
had no alternative but to accept the terms set out by the other party.”
2. The UPC Response
UPC §2-213. Waiver of Right to Elect and of Other Rights.
(a) The right of election of a surviving spouse and the rights of the surviving spouse to homestead
allowance, exempt property, and family allowance, or any of them, may be waived, wholly or
partially, before or after marriage, by a written contract, agreement, or waiver signed by the
surviving spouse.
(b) A surviving spouse’s waiver is not enforceable if the surviving spouse proves that:
(1) [the surviving spouse] did not execute the waiver voluntarily; or
(2) the waiver was unconscionable when it was executed and, before execution of the waiver,
he [or she]:
(A) was not provided a fair and reasonable disclosure of the property or financial
obligations of the decedent;
(B) did not voluntarily and expressly waive, in writing, any right to disclosure of the
property or financial obligations of the decedent beyond the disclosure provided;
and
(C) did not have, or reasonably could not have had, an adequate knowledge of the
property or financial obligations of the decedent.
(c) An issue of unconscionability of a waiver is for decision by the court as a matter of law.
(d) Unless it provides to the contrary, a waiver of “all rights,” or equivalent language, in the
property or estate of a present or prospective spouse or a complete property settlement entered
into after or in anticipation of separation or divorce is a waiver of all rights of elective share,
homestead allowance, exempt property, and family allowance by each spouse in the property of
the other and a renunciation by each of all benefits that would otherwise pass to him [or her]
from the other by intestate succession or by virtue of any will executed before the waiver or
property settlement.
Best practices in drafting a prenup:
• Both parties have independent representation
• Safest if parties pay for their own attorneys
• To avoid perception of unconscionability, the agreement should be negotiated well before
the wedding
• Adequate consideration and full disclosure of financial position given by the richer person
F. Protections for an Omitted Spouse and Child

When the will is written before the marriage, we act as if the decedent died without a will; intestacy for
the omitted spouse and child. Do not forget UPC §2-102. Share of Spouse. [LINK]
1. The Omitted Spouse

Presumption that decedent would’ve wanted to change a premaritial will to cover the new spouse is
rebutted when: (i) the parties entered into a premarital or marital agreement to waive inheritance
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rights; (ii) after the marriage, the decedent used other means, such as trusts or insurance policy
benefits, to provide for the surviving spouse; or (iii) the spouse was given something in the will even
though the will was written prior to the marriage, and the will expressly states that it excludes any
persons the testator might marry in the future.
a. The Testator’s Intent
Bay v. Estate of Bay
Facts: Husband left his estate to his first wife, and then in trust for his two children. His will
expressed his desire that his estate provide for his children’s post-secondary education. After he
divorced and remarried, he changed the beneficiaries of his 401(k) so that his new wife was an
80% beneficiary and his two children would split the remaining 20%. He did not change his will.
PR distributed the entire estate equally between the children, with nothing for the new wife.
Wife claimed omitted spouse statute allowed her to her intestate share of the probate estate.
Holding: Presumption that she should be entitled to share of probate under omitted spouse is
rebutted.
Reasoning: The omitted spouse will receive her intestate share “unless the court determines on
the basis of clear and convincing evidence that a smaller share, including no share at all, is more
in keeping with the decedent’s intent; on the basis of clear and convincing evidence, the
presumption can be rebutted when considering the decedent’s dispositive scheme and
provisions for the omitted spouse outside of the will.
b. The UPC Approach
Under the UPC, the omitted spouse has the right to receive an intestate share of the probate
estate, but only from that portion of the estate not devised to descendants of the testator.
UPC § 2-301. Entitlement of Spouse; Premarital Will.
(a) If a testator’s surviving spouse married the testator after the testator executed his [or
her] will, the surviving spouse is entitled to receive, as an intestate share, no less than the
value of the share of the estate he [or she] would have received if the testator had died
intestate as to that portion of the testator’s estate, if any, that is neither devised to a child
of the testator who was born before the testator married the surviving spouse and who is
not a child of the surviving spouse nor devised to a descendant of such a child or passes
under sections 2-603 or 2-604 to such a child or to a descendant of such a child, unless:
(1) it appears from the will or other evidence that the will was made in
contemplation of the testator’s marriage to the surviving spouse;
(2) the will expresses the intention that it is to be effective notwithstanding any
subsequent marriage [will explicitly not providing for spouse]; or
(3) the testator provided for the spouse by transfer outside the will and the intent
that the transfer be in lieu of a testamentary provision is shown by the testator’s
statements or is reasonably inferred from the amount of the transfer or other
evidence.
(b) In satisfying the share provided by this section, devises made by the will to the testator’s
surviving spouse, if any, are applied first, and other devises, other than a devise to a child
of the testator who was born before the testator married the surviving spouse and who is
not a child of the surviving spouse or a devise or substitute gift under Section 2-603 or 2-
604 to a descendant of such a child, abate as provided in Section 3-902.
In short, determine the share (amount) of the estate not left to decedent’s separate children (or
descendants of such children) born before the marriage to surviving spouse. With respect to that
portion:
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• Apply the rules of UPC §2-102 35, i.e., 100% if only spouse survives or if only spouse and
common children survive, $150,000 + ½ if spouse and Decedent-only children survive.
• Compare to elective share
• Surviving spouse entitled to the larger of the two.
Example: Decedent wrote a will several years before his marriage to surviving spouse that left 25%
to his siblings and 75% to his children from a previous marriage. At his death, his estate
was worth $1,000,000.
As an omitted spouse, the surviving spouse is only entitled to take from the $250k
portion left to siblings. Her quasi intestate share would be $150k + $50k (1/2 of the
excess $100,000) for a total of $200,000. Bottom line is that the siblings share $50k,
surviving spouse gets $200k, children get $750k.
However, if the elective share was more than $200k, she could elect that instead.
2. Omitted Children
Even though children have no right to inherit from their parents, most states protect children who
have been disinherited unintentionally through pretermitted or omitted child statutes. These
statutes protect children born after the execution of a parent’s will, and some even protect children
alive at the time of the will’s execution under some circumstances.
Doctrine does not apply if child gets a gift under the will.
Rebuttable Presumption: only by showing (1) failure to provide for the new child was intentional
and that intent appears from the will (2) testator provided for the child outside the will and the
intent that the transfer outside the will be in lieu of the child taking under the will is established by
any evidence; OR (3) testator had one or more children when the will was executed and devised
substantially all his or her estate to the other parent of the omitted child.
a. Intentional Disinheritance
Testator can intentionally disinherit his descendants, whether presently alive or to be born, if
that intent is clearly stated in the will. If not clearly stated in the will, some states protect them
also. But almost ALL states protect against unintentional disinheritance.
In re Gilmore
Facts: Decedent died and left his entire estate to one of his children. Two individuals who
claimed to be decedent’s children claimed that the decedent wrote the will before he knew that
they were his children. These two claimed that they should be considered “after-borns” under
NY law which would entitle them to a share of the estate.
Holding: father failed to address potential offspring by not addressing it in his will, so that is
considered intent to preclude those children.
Reasoning: Adopted children do not become the children of a person until after the adoption; by
adopting a child, a parent makes an affirmative decision to incur legal obligations that are
triggered by an adoption. On the other hand, after-known children are children of a person at
the time of their birth; a child’s birth prior to the execution of a will, and a testator’s subsequent
discovery of said child, involves no affirmative act.
b. The UPC Approach
To show an intent to exclude present or future children, all that a testator must do is make “a
simple recital in the will that the testator intends to make no provision for then living children
or any the testator thereafter may have.” See UPC §2-302. Omitted Children. [Link]. UPC
includes adopted children.
35 UPC §2-102. Share of Spouse. [LINK]

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Per UPC §2-302, if there are no other children, the omitted child receives his intestate share. If
there are other children, omitted child’s share is (1) taken out of the portion of the testator’s
estate being devised to the then-living children; and (2) should equal the share or interest the
other children are receiving, had the testator included all omitted children with the children
receiving shares and given each an equal share.
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XIII. Planning for Incapacity

A. Financial Decisions During Incapacity
1. What Happens When There Is No Planning?
Conservatorships and guardianship proceedings. A conservator is someone who is given legal
responsibility for the health and welfare of another person (the ward) because the ward is unable to
care for herself. A court may appoint a conservator: (i) to care for children whose parents have died,
are incapacitated, or whose rights have been terminated; or (ii) to care for adults who have become
incapacitated. The conservator’s authority extends not only to physical and legal control over the
ward but also to medical and other personal decisions.
Medical decisions that would need to be made by EMTs, doctors, hospital staff, or surrogates.
The UPC defines an incapacitated person as someone who “is unable to receive and evaluate
information or make or communicate decisions to such an extent that the individual lacks the ability
to meet essential requirements for physical health, safety, or self-care, even with appropriate
technological assistance.” UPC §5-102(4). A court must find, by clear and convincing evidence,
that the individual is incapacitated. UPC §5-311(a)(1). Not all states have adopted these provisions
of the UPC. Indeed, state practices vary substantially with respect to the scope of guardianships and
conservatorships, the definition of “incapacity” that supports appointment of a guardian or
conservator and that person’s accountability. States also vary with respect to whether the ward (in
either a guardianship or a conservatorship) retains any rights, such as the right to enter into a
contract or to initiate a lawsuit.
2. What Is Possible with Advance Planning?

Advance planning allows an individual to control who should make financial decisions in the event
of her incapacity, keeping the process private rather than court supervised. Wills, RLTs, Powers of
Attorney, living will, appointment of guardian, standby guardianship, etc.
a. Powers of Attorney
i. General
A power of attorney is a written instrument designating an agent to act on behalf of the
principal in a legal, health, or business manner. Every state authorizes durable powers of
attorney (DPOA).
The capacity standard for appointing an agent is typically the same as that required to enter
into a contract, a high standard which requires that the individual have a reasonable
understanding of the act in which she is engaging.
Under common law, powers of attorney expired once the principal became incapacitated.
Today, the UPC assumes that all powers of attorney are durable (i.e., they last during a
principal’s incapacity) and are effective immediately, although the principal can provide
otherwise.
Trustee Agent
Owns property Does not
Controls property in trust Act on behalf of all of the principal’s
property
Complex Simple
Banks more likely to honor actions Banks less likely to honor actions
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ii. Agent’s Responsibilities

Utility of power of attorney depends on the trustworthiness of the agent. While the agent has
a fiduciary duty to the principal, the parameters are not entirely clear—duty of loyalty, due
care, are highly relevant.
Breaches can occur when the power of attorney is created, as when the principal is coerced
into signing a form; breaches may also occur when the agent engages in: (i) actions that
exceed the delegated authority, such as making gifts in the absence of explicit permission to
do so; and (ii) self-dealing, such as when an agent uses the principal’s money for his own
benefit rather than for the principal.
In re Ferrara
Facts: Decedent executed a will leaving all his estate to charity; didn’t make a single
provision for family. While hospitalized, the decedent signed a statutory short form for a
durable general power of attorney that appointed his brother and nephew as a power of
attorney, which permitted gifts to others. Brother/nephew added a clause, which the
decedent initialed, that provided for unlimited gifts to them.
Holding: Nephew was not allowed to gift himself money because it was not in the best
interest of the principal.
Reasoning: The term “best interest” does not include such unqualified generosity to the
holder of a power of attorney, especially where the gift virtually impoverishes a donor whose
estate plan, shown by a recent will, contradicts any desire to benefit the recipient of the gift.
iii. Uniform Power of Attorney Act
The Uniform Power of Attorney act establishes procedures so that individuals can arrange
for surrogates to handle their property if incapacitated.
UPC §5B-110. Termination of Power of Attorney or Agent’s Authority.
(a) A power of attorney terminates when: (1) the principal dies . . . (3) the principal revokes
the power of attorney; (4) the power of attorney provides that it terminates . . .
(b) An agent’s authority terminates when: (1) the principal revokes the authority; (2) the
agent dies, becomes incapacitated, or resigns; (3) an action is filed for the [dissolution]
or annulment of the agent’s marriage to the principal or their legal separation, unless the
power of attorney otherwise provides. . . .
(c) Unless the power of attorney otherwise provides, an agent’s authority is exercisable until
the authority terminates under subsection (b), notwithstanding a lapse of time since the
execution of the power of attorney.
UPC §5B-114. Agent’s Duties.
(a) Notwithstanding provisions in the power of attorney, an agent that has accepted
appointment shall: (1) act in accordance with the principal’s reasonable expectations to
the extent actually known by the agent and, otherwise, in the principal’s best interest; (2)
act in good faith; and (3) act only within the scope of authority granted in the power of
attorney.
(b) Except as otherwise provided in the power of attorney, an agent that has accepted
appointment shall: (1) act loyally for the principal’s benefit; (2) act so as not to create a
conflict of interest that impairs the agent’s ability to act impartially in the principal’s best
interest; (3) act with the care, competence, and diligence ordinarily exercised by agents
in similar circumstances; (4) keep a record of all receipts, disbursements, and
transactions made on behalf of the principal; (5) cooperate with a person that has
authority to make health-care decisions for the principal to carry out the principal’s
reasonable expectations to the extent actually known by the agent and, otherwise, act in
the principal’s best interest; and (6) attempt to preserve the principal’s estate plan, to the
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extent actually known by the agent, if preserving the plan is consistent with the
principal’s best interest based on all relevant factors. . . .
(d) An agent that acts with care, competence, and diligence for the best interest 36 of the
principal is not liable solely because the agent also benefits from the act or has an
individual or conflicting interest in relation to the property or affairs of the principal. . . .
(h) Except as otherwise provided in the power of attorney, an agent is not required to
disclose receipts, disbursements, or transactions conducted on behalf of the principal
unless ordered by a court or requested by the principal, a guardian, a conservator,
another fiduciary acting for the principal. . . .
UPC §5B-119. Acceptance of and Reliance upon Acknowledged Power of Attorney.
. . . (c) A person that in good faith accepts an acknowledged power of attorney without
actual knowledge that the power of attorney is void, invalid, or terminated, that the
purported agent’s authority is void, invalid, or terminated, or that the agent is exceeding or
improperly exercising the agent’s authority may rely upon the power of attorney as if the
power of attorney were genuine, valid and still in effect, the agent’s authority were genuine,
valid and still in effect, and the agent had not exceeded and had properly exercised the
authority. . . .
UPC §5B-201. Authority That Requires Specific Grant; Grant of General Authority.
(a) An agent under a power of attorney may do the following on behalf of the principal or
with the principal’s property only if the power of attorney expressly grants the agent the
authority and exercise of the authority is not otherwise prohibited by another agreement or
instrument to which the authority or property is subject: (1) create, amend, revoke, or
terminate an inter vivos trust;(2) make a gift;(3) create or change rights of survivorship;(4)
create or change a beneficiary designation;(5) delegate authority granted under the power of
attorney;(6) waive the principal’s right to be a beneficiary of a joint and survivor annuity,
including a survivor benefit under a retirement plan; [or](7) exercise fiduciary powers that
the principal has authority to delegate. . . .
iv. Dealing with Digital Property
Although most of probate law is state-based, federal laws protect the privacy of some forms
of digital assets, and copyright law protects some of the information an individual may hold
in a digital account. Moreover, digital accounts have their own terms of service that may
preclude transfer of the underlying assets—or the passwords.
b. Agents vs. Conservators
Conservators Agents
Court action to begin/end Power of attorney can be
initiated/revoked at any point
Appointed upon incapacity of principal Only can be established while
principal has capacity
Conservators subject to court supervision No court supervision
Revocable Trusts
Even if the RLT document specifies that a conservator shall not have the power to revoke, a
court may nonetheless approve the revocation if it concludes that the action is necessary in the
interests of justice. See UTC §602. Revocation or Amendment of Revocable Trust.
(e) A settlor’s powers with respect to revocation, amendment, or distribution of trust
property may be exercised by an agent under a power of attorney only to the
extent expressly authorized by the terms of the trust or the power.
36 Note that this is “best interest” not “sole interest.”

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(f) A [conservator] of the settlor or, if no [conservator] has been appointed, a

[guardian] of the settlor may exercise a settlor’s powers with respect to
revocation, amendment, or distribution of trust property only with the approval
of the court supervising the [conservatorship] or [guardianship].
In re Franzen
Facts: Ms. Franzen signed a letter for the bank and expressed she wanted to keep her late
husband’s trust intact for her lifetime. The bank was concerned about some of the assets not in
the trust, and contacted her nephews. Her brother intervened and moved her to a nursing home
in KY and asked the bank to turn over her assets to him, providing an alleged power of attorney.
Holding: the power of attorney authorized brother to remove the bank as trustee and to revoke
the trust and held, that the bank was not liable for expenditures made in good faith after
receiving the removal and revocation letter, including the legal fees incurred in the course of
opposing the brother’s efforts.
Reasoning: Power of attorney doesn’t need to refer to a specific trust by name. The terms of the
power of attorney need only evince an intention to authorize the agent to make decisions
concerning the principal’s interests in trusts generally, not necessarily a particular trust.
B. Health Care Decisions During Incapacity

1. What Happens Without Planning?
A competent adult can make her own decisions about health care. Once a person is no longer
competent though, someone will need to make decisions on that person’s behalf. There are a few
possible options after incapacity.
Most states have laws that establish a hierarchy of default health care decision makers, often called
“surrogates,” for any medical decision that must be made while the person is incapacitated. Under
these statutes, spouses, sometimes along with recognized domestic partners, are generally listed
first. These individuals are generally followed in descending order of priority by the patient’s adult
children, parents, adult siblings, and other blood relatives.
a. The Constitutional Context for the Right to Die
i. Quinlan and Cruzan
In re Quinlan: Court permitted father to pull the plug on his daughter while she was in a
coma and a chronic vegetative state.
Cruzan v. Dir., Missouri Dep’t of Health: a competent person has a constitutionally
protected liberty interest in refusing unwanted medical treatment. However, when another
seeks to act on an incapacitated person’s behalf, the Court held under the Due Process
Clause of the Fourteenth Amendment that since both the interests of the state and of the
individual must be considered and balanced, “a State may apply a clear and convincing
evidence standard in proceedings where a guardian seeks to discontinue nutrition and
hydration of a person diagnosed to be in a persistent vegetative state.”
ii. Schiavo
In re Guardianship of Theresa Marie Schiavo
Facts: Daughter had a cardiac arrest and never regained consciousness—permanent
vegetative state. Medicine would not have cured her condition. Her parents wanted to
maintain life support, but her husband wanted to pull the plug. Trial court allowed the
discontinuance of life support, but the parents appealed.
Holding: Affirmed trial court decision. To overcome the default position erring on the side
of life, a trial court acting as surrogate decision maker must conclude by clear and
convincing evidence that a ward in a long-time persistent vegetative state with no hope of a
medical cure would want life-prolonging treatment to cease.
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Reasoning: Because husband and the parents could not agree on the proper decision and the
inheritance issue created the appearance of conflict, the husband, as the guardian of
Theresa, invoked the trial court’s jurisdiction to allow the trial court to serve as the surrogate
decision-maker. The clear and convincing standard of proof, while very high, permits a
decision in the face of inconsistent or conflicting evidence.
b. State Standards for EOL Decision Making
In the absence of an advance directive, all 50 states allow a surrogate to make decisions on
behalf of an incapacitated individual to decline or terminate life-sustaining treatment. Some
require clear and convincing evidence, while others have a lower standard of proof.
Some states require the best interest standard, while others require the surrogate to exercise
“substituted judgment,” a standard based on what the patient would choose if she could speak
on her own behalf. Some states have developed a hybrid that allows the surrogate to exercise
substituted judgment when the patient’s wishes are known but to make a decision in the
patient’s best interests where these wishes are unknown.
2. What Is Possible with Advance Planning? Advance Medical Directives

Advanced medical directives are written documents specifying how health care decisions will be
made if the person is incapacitated.
Living wills are directives to a physician, with instructions about withholding/withdrawing life-
sustaining treatment if terminally ill.
Durable power of attorney for healthcare (DPAHC) or a health care proxy is a power of attorney
empowering agent to make health care decisions for principal.
DNR—do not resuscitate.
C. Covering the Costs of Medical and Long-Term Care

Private payment, private insurance, Medicare, and Medicaid.
1. Medicare
Federal healthcare insurance program that provides coverage for people 65 and older, people under
65 with certain disabilities, and people of all ages with end-stage renal disease. Covers medical care,
hospital stays, and some physician visits and prescription drugs, but does not cover most types of
long-term care services, vision, or dental.
There are four different Medicare programs—Parts A-D
A) Generally covers the first 90 days of most semi-private inpatient services provided by hospitals
and a lifetime max or 60 reserve days.
B) Supplementary Medical Insurance, generally covers medical services and procedures not
covered by Part A (i.e., hospital out-patient departments, labs, suppliers of medical equipment,
some additional drugs, and sometimes home-healthcare.
C) Medicare Advantage Plan, allows those eligible for Medicare to receive Medicare through private
insurance plans. Extra benefits and lower copayments.
D) Provides prescription drug coverage, and everyone with Medicare is eligible for this coverage.
2. Medicaid
Medicaid is a program that can provide health care payments for qualified low-income and low
resource individuals. To obtain coverage, an applicant must require medical assistance and fall
below the strict income-and-asset thresholds.
a. Requires Medical Assistance
Applicants must “need assistance” with some or all of the following to qualify for long-care
coverage:
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• Activities of Daily Living (ADL): getting out of bed, bowel and bladder care, mobility,
transferring, eating, and bathing
• Basic Instrumental ADL: meal preparation, housework, laundry, shopping
• Supportive Services: managing medicine, appointments, money, arranging for services,
using the phone.
b. Cannot Have Too Many Assets
An individual must have no more than $2,000 in liquid assets. The limit exempts the value of a
home, a car, and a few other assets.
To ensure that individuals do not game the system by giving away assets to family members, the
law imposes a 60-month “look-back period.” There is a heavy record-keeping burden to
establish transactions of last five years.
Example: Assume an individual had $500,000. She gave her grandchildren $320,000 and
kept $180,000. She used the retained $180,000 for her own in-home care for 22
months, after which her assets were below the $2,000 threshold, thus seemingly
making her eligible for Medicaid nursing care coverage. However, her penalty
would be calculated to be 40 months ($320,000 given away ÷$8,000, the
average cost of nursing care in her state for that year), meaning she would have to
pay for her own care for 40 months or leave the nursing home.
i. Disclaimers
A disclaimer of property is treated as the transfer of a resource that is taken into account in
determining eligibility.
Schell v. Department of Public Welfare
Facts: Petitioner was the primary beneficiary to a trust but she disclaimed that interest in
favor of her two children. ALJ stated that by renouncing her rights, Petitioner disposed of
this resource which made her ineligible to receive benefits for a period of time.
Holding: Affirmed ALJ decision.
Reasoning: Petitioner has provided no statutory or regulatory authority to conclude that the
remaining income and principal from the terminated trust should not be considered an
available resource.
Note: Although federal law on eligibility does not directly address disclaimers, Schell
is in accord with most other state courts that have held disclaimers do not
prevent the underlying resources from being counted in the eligibility period.
ii. Exceptions?
Asset transferred to a spouse or third party for the sole benefit of the spouse, or transfer of
an asset with a purpose other than to qualify for Medicaid.
Special Needs Trusts Exception [SNT]: The purpose of the trust is to “supplement,” not
replace, public benefits by enhancing the individual’s life. To retain the beneficiary’s
eligibility for public benefits, SNTs may not be designed to provide for the individual’s basic
needs—food, shelter, or any asset that could be converted into food or shelter (including
cash). Supplemental needs trusts might be used, for example, for physical therapy, medical
treatment, education, entertainment, a television, travel, clothing, eyeglasses, or a computer.
There are two types of supplemental trusts for persons with disabilities: third-party trusts
and self-settled trusts. Third-party trusts are often established by parents or other relatives
for the benefit of their developmentally disabled or mentally ill children. The trust cannot
entitle the beneficiary to either income or principal; instead, whatever rights to income or
principal the beneficiary has must be at the trustee’s complete discretion. Self-settled SNTs
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are funded by a disabled individuals own assets, often established through personal injury
funds or an inheritance.
c. Cannot Have Too Much Income
All states set a limit on the amount applicants for Medicaid can earn and still be eligible for
nursing home care. States generally use one of two alternative standards for determining
eligibility. In most states, an individual is qualified if the monthly income is less than the cost of
the nursing home; in a minority of states, the “income cap” states, the monthly income must be
less than a set amount. Regardless of the state, individuals who earn below the designated
amount through pensions, Social Security, rents, dividends, interest, etc., are qualified.
Miller Trust Exception: in income cap states, individuals who earn too much but can’t pay for
their own care can sometimes set up a Miller or Income Trust wherein the trustee will pay the
allowance. The balance from the income can be paid toward the nursing home.
D. The End of Life—Physician-Assisted Suicide

California, Oregon, Montana, Vermont, and Washington all permit it as of 2016. The statutory
requirements generally are: (1) at least 18 y/o and resident of the state; (2) two independent doctors
must determine that the patient is terminally ill, will likely die in 6 months, and of sound mind to make
medical decisions; and, (3)
E. Ethical Issues in Representing a Person with Mental Disabilities

Estate lawyers may have clients with diminished capacity. Lots of competing interests; there are
capacity requirements for wills, trusts, etc. Additionally, a client with diminished capacity could be
advised by close family who’d like to participate in the representation.
MRPC 1.14. Client with Diminished Capacity.
(a) When a client’s capacity to make adequately considered decisions in connection with a
representation is diminished, whether because of minority, mental impairment or for some
other reason, the lawyer shall, as far as reasonably possible, maintain a normal client-lawyer
relationship with the client.
(b) When the lawyer reasonably believes that the client has diminished capacity, is at risk of
substantial physical, financial or other harm unless action is taken and cannot adequately act in
the client’s own interest, the lawyer may take reasonably necessary protective action, including
consulting with individuals or entities that have the ability to take action to protect the client
and, in appropriate cases, seeking the appointment of a guardian ad litem, conservator or
guardian. . . .
Lawyers should still advise competent clients on what to do to protect their interests in the event of
diminished capacity.
Implied authority to disclose and act—if lawyers need to consult with people other than client with
diminished capacity, the lawyer needs to consider the client’s wishes, impact on estate plan, and
confidentiality. Lawyer can also seek appointment of guardian ad litem, conservator, guardian to take
other protective action. If the testamentary capacity of a client is uncertain, the lawyer should exercise
particular caution in assisting the client to modify his or her estate plan. The lawyer generally should
not prepare a will, trust agreement, or other dispositive instrument for a client who the lawyer
reasonably believes lacks the requisite capacity.
Lawyers can represent fiduciaries who have a duty to those with diminished capacity. While the lawyer
represents the fiduciary, if the lawyer is aware that the fiduciary is acting improperly and adversely to
the disabled person’s interests, the lawyer may have an obligation to disclose, to prevent or to rectify the
fiduciary’s misconduct. Some states make it mandatory to report elder abuse.
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F. Planning for the Care of Children on the Death or Disability of a Parent

There are three different methods by which parents can provide for the personal guardianship of their
children: by will, by petition, or through another statutorily created mechanism, such as standby
guardianships. A guardianship by will only becomes effective when both parents are dead, while a
guardianship by petition or by statute can occur while one (or both) parents are living.
1. Death of a Parent
When one parent dies, the surviving parent is generally assumed to be the custodian of the child.
When both parents die, then a court will typically appoint a guardian, who will be given physical
custody of the child, and/or a conservator, who becomes legally responsible for managing the child’s
financial assets.
Parents can nominate guardians or conservators in a will. Parent-appointed states give parents the
control over who to appoint, while in court-appointed states, it generally comes down to the courts
to decide.
UPC § 5-202. Parental Appointment of Guardian.
(a) A guardian may be appointed by will or other signed writing by a parent for any minor child the
parent has or may have in the future. The appointment may specify the desired limitations on
the powers to be given to the guardian. The appointing parent may revoke or amend the
appointment before confirmation by the court.
Guardians have to accept the appointment before it’s effective; where no guardian is appointed, or if
they decline, the courts will typically choose next of kin.
Guardians generally take physical custody of the minor, decide where the child will live, make
educational and medical decisions, and decide on religious training. Unlike parents, guardians are
not legally obligated to provide their own funds for the minor—they can get money through
insurance or statutory benefit. Guardianship ends when the child is no longer a minor.
2. Standby Guardianship
A standby guardianship is written and can be confirmed inter vivos but does not result in
guardianship until an event, such as incapacity or death, takes place. Generally, there must be: (1) a
writing that designates a person to act as a standby; (2) non-custodial parent has an opportunity to
be heard through notice and a court hearing; (3) proof of the triggering event, i.e., parent’s death;
(4) court determines whether standy guardianship is in the best interest of the child.
The UPC allows for court appointment of a standby guardian upon “a finding that the appointing
parent will likely become unable to care for the child within [two] years.” UPC §5-202(b).
3. Partial Delegation—Educational and Medical Consents

Medical and educational consent laws authorize caregivers to make a specific set of limited
decisions on behalf of a child when the parent or guardian consents to such a delegation. The
delegation generally must be in writing, although some states permit oral consent.
4. Child with Disabilities

Parents should plan for the long-term custodial and financial needs of children with disabilities.
Parents can use the same options for minor children discussed above to make custody decisions for
children with disabilities, including nominating either a testamentary guardian or standby
guardian.
5. Financial Planning for a Child

In addition to nominating a conservator, parents may establish trusts for their children or may
transfer funds more directly.
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XIV. Estate and Gift Tax Planning

A. Tax Cuts and Jobs Act of 2017
Increased unified credit to equivalent of tax on estate of $10.0 million + COLA ($11.4 million for
decedents dying in 2019). Any amount of taxable estate above unified credit equivalent will be taxed at
rate of 40%. Tax Cuts and Jobs Act sunsets in 2025 and reverts to 2017 level of $5 million + COLA in
2026.
B. Introduction to Transfer Taxes

Generally, transfer taxes are the liability of the transferor whereas income taxes are the liability fo the
recipient of income.
There are three types of transfer taxes at the federal level: estate tax, gift tax, and generation-skipping
tax (GST).
Generation Skipping
Estate Tax Gift Tax
Tax (GST)
At the core of federal transfer

Complement the estate tax regime.
taxation.
focuses on testamentary focuses on inter vivos tax on transfers where

transfers that lack transfers that lack consideration. the beneficiary is more
consideration. Imposed on the Imposed where a donor makes a than one generation
decedent’s taxable estate at time taxable gift under IRC. The tax is below the transferor’s
of death. imposed on the donor and is generation.
implicated if there is a taxable gift.
Prevent folks from giving away unlimited amounts of property

during their lifetimes to avoid estate tax.
The entire value of a transfer may not be taxed. There are deductions, exclusions, and credits in the
code that allow some property to pass transfer-tax free.
Generally, the amount of a transfer subject to tax is the difference between the fair market value (FMV)
of property gifted and any monetary consideration received.
FMV: the price at which the property would change hands between a willing buyer and a willing seller,
neither being under any compulsion and both having knowledge of relevant facts.
If the transfer occurs during the donor’s life, FMV is determined on the date of the gift.
If the transfer occurs at death, the property is valued at date of death.
Overriding Goals for Minimizing the Tax

• “Freezing” the estate with respect to property that is expected to appreciate significantly in value
in the future, where the property is gifted when its value is low so that it is not included in the
decedent’s estate at death when its value is, presumably, higher.
• Shifting future income on gifted property from a parent with a high income tax rate to a child
with a low income tax rate.
• Fully utilizing deductions, credits, gift splitting, and exclusions.
• Taking advantage of discounts and other opportunities to reduce the value of transferred
property subject to tax.
• Seeking to obtain for beneficiaries a high income tax basis in inherited property with little or no
transfer tax cost.
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C. Income Tax Issues Related to Estate Planning

1. What Are the Income Tax Consequences to the Recipient upon Receiving a Gift
or Bequest?
Generally, income tax is levied on the receipt of money or property derived from any source. The
most common sources of taxable income include wages, interest, dividends, rents, and the gain or
loss from the sale of stocks and other property. Income taxes are reported on a 1040.
The Code, however, excludes gifts and inheritances as taxable income to the recipient.
2. What Is the Recipient’s Basis in Property Received as a Gift or Inheritance?

While there is no current income to the recipient of a gift or inheritance, there may be future tax
consequences upon the disposition of property (other than cash) received). This is particularly so if
the transfer is by gift due to how “basis” in property is determined in the Code.
A property’s basis usually equals its cost, or what the owner paid for it. Basis helps determine
whether someone has a gain or loss on the sale of property. Gain occurs if the sales price exceeds the
individual’s basis in the property, and loss results if the sales price is less than the basis.
Example: So, if Lisa bought General Motors stock for $50,000 and sold it for $75,000, she
would have a gain to report of $25,000. By contrast, if Lisa sold it for $35,000,
she would have a loss of $15,000 to report. Lisa’s basis is $50,000.
When a person receives property by gift or inheritance, there are special basis rules under the Code:
Gifted property [carryover basis]: donee assigned the same basis (cost) as the donor (paid for it)
Under the Code, it’s wise to gift property that will significantly increase in value in the future
because (1) it freezes the amount subject to tax at the date of gift value and (2) the difference
between capital gains tax (15%) and estate tax (40%) can save as much as 25% of the future
appreciation
Inherited property [stepped-up basis]: donee assigned a basis (cost) equal to the property’s FMV
on the donor’s date of death
Under the Code, it’s wise to hold onto property that has done most of its appreciating
because any “built-in gain” transferred by inheritance is never taxed due to the stepped-up
basis rule.
Example: Mom owned stock that she bought at $100,000. She gifts Child the stock on
February 17, at a FMV of $1 million. The carryover basis is $100,000. Mom has
gift tax consequences, but Child has no taxable income on the gift. If Child sells
stock for $1 million, Child has a taxable gain of $900,000 to report on her 1040.
With capital gains generally taxed at 15%, this costs Child $135,000.
Same facts, except instead of gifting Child, Mom leaves stock in her will. Mom
dies on February 17. The stepped-up basis is $1 million. The estate has estate tax
consequences on the transfer, but Child has no taxable income to report. If Child
sells the stock for $1 million, Child has no gain to report on her 1040.
3. How Is the Income Earned on Transferred Property Taxed?

When property is gifted outright to another in fee simple, any income subsequently earned on the
property must be reported on the 1040 of the donee, just as with any other income that person
earns. The donee has “shifted” the income (and income tax consequences) to the donee. For
planning purposes, this may be worthwhile if the donee is in a lower tax bracket than the donor.
When property is transferred into a trust, the tax consequences are more complicated.
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• Revocable [grantor trust]: settlor/grantor taxed on income because they’ve retained full
control of the property. Grantor trusts should report income on a 1040.
• Irrevocable [grantor retains rights aka “grantor trust”]: settlor/grantor taxed on income
where they retain certain rights, such as the right to income or the right to change
beneficiaries.
• Irrevocable [non-grantor trust]: beneficiaries are taxed on whatever income is distributed to
them. Trusts should report income on a 1041 and are taxed at the highest rate applicable to
individuals.
D. Taxation of Estates
The estate tax is imposed on the “taxable estate.” To calculate the taxable estate, there are a few steps:
1. Determine the “gross estate,” i.e. the value of all property the decedent owned at death.
2. Determine any reductions for the decedent’s debts
3. Deduct the value of property transferred to the decedent’s surviving spouse and to charities
4. Deduct whatever the expenses are of administering the estate
Once the value of the taxable estate is calculated, that value is multiplied by the applicable estate tax
rate. The tax liability, if any, is then reduced by several credits.
In all cases where the gross estate (before deductions) at the decedent’s death plus lifetime gifts exceeds
the exemption amount, the executor must file an estate tax return. The return must be filed within nine
months of the decedent’s death, though a six-month extension is generally available.
1. Determining the “Gross Estate” 37

Property comprising the gross estate for tax purposes is made up of, not only probate property, but
also property over which the decedent had control or “incidents of ownership” 38 at the time of
death. Property that is subject to will substitutes are usually included in the gross estate, e.g.,
checking accounts with POD designations, investment accounts with TOD designations, retirement
accounts with beneficiary designations, and property in revocable trusts.
To determine when a decedent has interests sufficient to include the property in gross estate, ask:
(1) whether the decedent had actual ownership or the functional equivalent of ownership
during his life; and
(2) whether the decedent’s death was the triggering event that resulted in the transfer of the
property to another person or trust.
Generally, if the answer to both of these questions is yes, the subject property is included in the
decedent’s gross estate.
a. Property in Which the Decedent Had an Interest at Death—IRC §2033
What’s included in the gross estate under IRC §2033:
• All probate property, whether tangible or intangible, present or future interests, and
wherever located.
• Property held in fee simple
• Decedent’s interests in tenancies in common and community property
• Property received by the estate after the death of the decedent to which the decedent or
his estate was entitled, like stock dividends.
• Decedent’s single-party bank or investment account that has a POD or TOD provision
37See charts in The Gross Estate: Broken Down [THIS IS A LINK TO THE CHARTS AT THE END]
38“Incidents of ownership” refers to, for example, the right of an insured or his estate to the economic benefits of his life
insurance policy, including the power to change the beneficiary, to borrow against the policy, etc. See FN 3 for more
examples.
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b. Revocable Trusts—IRC §2038

Under IRC §2038, the corpus of a revocable trust is included in the settlor’s gross estate upon
his death at its then FMV. Where the settlor retained the power to revoke less than the entire
trust, then only the corresponding portion of the trust corpus is includible.
A revocable trust is included in the gross estate because by its very nature, the settlor can
revoke, alter, amend, or terminate the trust; the settlor’s powers are tantamount to owning the
property in the trust, and there is no gift when the settlor transfers property into the trust.
c. Transfers with a Retained Life Estate—IRC §2036
Under IRC §2036, the FMV of transferred property, where the individual still retains the right
until death to receive income from it or to use it (or even the right to designate the persons who
should possess or enjoy the property or the income received), must be included in the gross
estate. The retained interest is treated as the practical equivalent of owning an income-
generating asset in an investment account.
d. Life Insurance Proceeds—IRC §2042
Under IRC §2042, if any one of these is true, the proceeds from a life insurance policy are
taxable 39 in a decedent’s estate; whether the decedent:
(1) owned the policy at the time of death;
(2) had “incidents of ownership” 40 in the policy at any time in the three-year period; or
(3) named the estate as the beneficiary of the policy.
To avoid inclusion in the gross estate, the purchase and ownership of the policies must be
structured correctly. The safest way is for the decedent to have never owned the policy, never
had any incidents of ownership, and not named his estate as the beneficiary of the policy.
Estate planners frequently recommend that a family member or an ILIT 41 purchase/own the life
insurance from its inception and that the insured avoid having any rights associated with it. If
the insured already owns a policy, planning involves transferring and hoping the insured
survives the three-year inclusion window of IRC §2035.
e. Transfers of Certain Interests Within Three Years of Death—IRC §2035
Under IRC §2035, a taxpayer’s attempt to avoid estate tax inclusion by transferring away the
tainted property 42 (either directly or by the exercise/release/lapse of the right) is ineffective if it
occurs within three years of death.
The question to ask is whether, but for the action of the decedent within the last three years, the
property would have been included in the gross estate under §2036, (§2037), §2038, or §2042.
If the answer is yes, then §2035 requires inclusion.
f. Annuities—IRC §2039
An annuity is a contract between the annuitant 43 and an insurance company that promises to
pay the annuitant a certain amount of money, on a periodic basis, for a specified period. Some
annuities are directly purchased, while others are acquired as a result of participating in a
retirement plan.
39 If none of them are true, the proceeds from the policy are excluded from the taxable estate.
40 “Incidents of ownership” refers to the right of the insured or his estate to the economic benefits of the policy, including
the power to change the beneficiary, to surrender or cancel the policy, to assign the policy, to revoke an assignment, to
pledge the policy for a loan, or to obtain from the insurer a loan against the surrender value of the policy, etc.
41 ILIT: irrevocable life insurance trust – a trust for the benefit of family members.
42 As relevant and related to the situations described under IRC § 2038 (revocable transfers), IRC §2036 (transfers with
a retained life interest), and IRC §2042 (life insurance)

43 Person receiving the annuity
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Under IRC §2039, only annuities that have a survivorship feature and make payments to
others upon death are subject to estate taxation. The amount included in the gross estate is,
correspondingly, the actuarial value of the amount receivable by the surviving beneficiaries.
Individual retirement accounts (IRAs) are included in a decedent’s gross estate, either because
of §2039 (annuity) or §2033 (investment account awaiting retirement).
While the transfer tax treatment of annuities and retirement plans is generally straightforward,
the rules on when and in what manner the distributions must be made from an inherited plan
are very complicated. Contrary to most inheritances, the beneficiary has income to report on the
receipt of the payments to the extent the payments represent income that was not taxed to the
decedent (known as ‘‘income in respect of the decedent’’ or IRD).
g. Joint Tenancy with Right of Survivorship—IRC §2040
IRC §2040 requires the full value of the asset owned in joint tenancy to be included in the
gross estate. However, if the JT is between spouses, half the value of the property is included in
the estate of the first spouse to die. Additionally, if the JT was acquired as part of a gift or
inheritance, only the decedent’s fractional share of the property is includable.
Finally, the full value of the asset owned in JT is included except to the extent the decedent’s
estate can establish the percentage of the cost of the JT asset contributed by others. Therefore, if
the decedent’s estate, absent the first two scenarios, can prove that the other tenant paid 75%
toward the cost of the JT, then only 25% of the value is included in the decedent’s gross estate.
h. General Power of Appointment 44—IRC §2041
The property subject to a GPOA is treated as functionally owned by the powerholder. Thus,
under IRC §2041, the exercise of a GPOA in favor of another gives rise to gift tax consequences
estate tax.
This can result in tax consequences if payments can be made to or on behalf of the
powerholder’s minor children. To prevent this problem, the donor should specify either (i) that
the powerholder cannot exercise the power in a manner that would discharge a legal obligation
of his; or (ii) that a third-party is required to make all decisions involving discretionary
distributions to any beneficiary to whom the powerholder had a legal obligation of support.
GPOA treatment creates a significant double taxation problem since the same property is taxed
both to the donor in her estate and again to the powerholder when he exercises it. To avoid tax
consequences, and where the donor wants the property to be available for the powerholder’s
needs, the Code considers any HEMS (health, education, maintenance, and support) powers not
general powers, and therefore not taxable.
i. Qualified Terminable Interest Property (QTIP) Trusts—IRC §2044
Under IRC §2044, a QTIP trust must satisfy two requirements:
(4) the trust provides the surviving spouse with an exclusive income interest for life 45; and
(5) no person can have the power to appoint any part of the property to someone other than
the surviving spouse.
When these requirements are met, then the estate of the decedent spouse must elect to qualify
the property for QTIP treatment. QTIP trusts allow the estate of the first spouse to die to get a
marital deduction for the value of the property transferred into the trust, and to avoid estate
44 If the POA is nongeneral, the powerholder is viewed merely as a conduit or agent of the donor. Consequently, there are
no transfer tax consequences to the powerholder upon exercising the power; it is as if the person who created the power
(the donor) made a direct gift to the recipients.
45 Remainder to descendants permitted
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taxes. Upon the death of the surviving spouse, however, is that their gross estate includes the
FMV of any property remaining in the trust.
2. Deductions Allowable in Determining the “Taxable Estate”

To calculate taxable estate,
Gross estate
– Allowable deductions
Taxable estate
Allowable deductions include: admin expenses; debts/claims against estate; transfers to surviving
spouse; and charitable donations
a. Administrative Expenses, Etc.—IRC §2053
Under IRC §2053, if paid by the estate, the estate may deduct any administrative expenses
including funeral expenses, executor expenses, and other professional expenses, such as for
attorneys, accountants, and appraisers.
b. Debts of the Decedent
Under IRC §2053(a)(3), (4), an estate may deduct the payments of any debts against the
decedent’s estate, e.g., credit card payments or mortgage payments. It’s the decedent’s net worth
that’s transferred, i.e. assets less liabilities.
c. Transfers to Surviving Spouse—IRC §2056
The marital deduction under IRC §2056 permits unlimited tax-free transfers, in fee
simple, of property between spouses, for the full value of the property.
This allows the surviving spouse to receive property from the decedent without the
imposition of any tax. When she dies, the surviving spouse will include in her gross estate
whatever property remains.
A marital deduction is principally only a matter of deferring transfer taxes from the
decedent’s estate to the surviving spouse’s estate. Other benefits in addition to deferral
include: (1) if the survivor consumes quite a bit of the property before she dies, there is less
to tax; and (2) as tax rates have gone down and the unified credit has gone up, the estates of
surviving spouses have experienced significantly reduced tax liabilities.
The marital deduction under IRC §2056 allow some transfers into trust (or a trust
equivalent) to qualify for the marital deduction. Whether a transfer into trust qualifies for
a marital deduction depends on the type of interest the surviving spouse receives.
No marital deduction is generally allowed if the recipient spouse acquires merely a life
estate. This is because the interest of the recipient spouse is ‘‘terminable,’’ that is, it dies with
her. As such, there would be nothing to tax upon the survivor’s death. To allow this type of
transfer to qualify would circumvent all taxes.
Of course, there are exceptions to the above rule regarding life estates. A marital deduction is
available if, in addition to an income interest for life, the trust (1) gives the surviving spouse
a general power of appointment (GPOA); or (2) meets the requirements associated with a
QTIP trust. This is because in both instances, the trust corpus will be taxed in the recipient
spouse’s estate, either by IRC §2041 or IRC §2044, respectively.
d. Other Deductions
Deductions are allowed for the FMV of property transferred to charity, IRC §2055, and any
estate, inheritance, legacy, or succession taxes actually paid to a state or the District of Columbia
in respect to property included in the gross estate. IRC §2058.
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3. Calculating the Estate Tax—IRC §2001

After the gross estate is reduced by the allowable deductions to determine the taxable estate, the
next step is to calculate the estate tax. Under IRC §2001, the estate tax base is combined with
lifetime transfers. To avoid double taxation, however, any gift tax previously paid is subtracted from
the computed tax liability.
Tax Calculation – Example
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4. Estate Tax Credits

Once the estate tax is computed, there are several credits that reduce the tax liability. The unified
tax credit under IRC § 2010 is the most important.
Unified Credit is the tax equivalent to that imposed on a $10 million taxable transfer + COLA [$11.4
in 2019].
The unused portion of the unified credit of first spouse is portable to surviving spouse if election is
made on a timely filed 706 form of first spouse, whether a return needs to be filed otherwise or not.
Example: Assume A and B are married, and A dies first. On A’s death in 2019, his estate
was worth $3 million. If A leaves everything to B and takes a marital deduction
for the $3 million transfer, his taxable estate is zero. The PR files a 706 and elects
portability. Upon B’s death, she will be entitled to her unified credit amount (at
whatever it is on her death, COLA) and his $11.4 million. Prior to portability, A’s
$11.4 million would have been wasted.
5. Liability for Estate Tax

The Code places the burden on the PR (personal representative) of an estate to pay the estate tax. If
the personal representative does not pay all taxes owed by the decedent (such as the estate tax and
income taxes and gift taxes for the year of death and for previous years) before paying other
creditors or making distributions to the beneficiaries, and if there is not enough money remaining in
the estate to pay the taxes due, the government will seek payment from the transferees and, to the
extent there remains an outstanding balance, from the personal representative personally.
A wise PR will pay taxes first before distributing any other property/payments. PRs can request the
IRS to determine how much tax is due and request that they discharge the PR from any personal
responsibility for the taxes.
E. Taxation of Gifts
Gift taxes are calculated on ‘‘taxable gifts.’’ Taxable gifts are the ‘‘total amount of gifts’’ made during the
taxable year (at their then FMV) minus exclusions for certain gifts and minus deductions for transfers
to charities and to the donor’s spouse.
1. Determining “Total Amount of Gifts”

Subject to some exceptions noted below, all inter vivos transfers 46 of property for less than full and
adequate consideration in money or money’s worth give rise to the imposition of gift taxes.
Gifts occur only to the extent interests are transferred to others; the portion of any interest retained
by the donor is not taxed. For example, if a settlor transfers property to an irrevocable trust and
retains an interest, only the value of the interests irrevocably given to others is subject to gift tax.
Inter vivos transfers to a revocable trust are not considered gifts at all because nothing is deemed to
have been given away. Gift taxes are imposed, however, when the settlor later acts in a manner for
the benefit of another, i.e., if the settlor invades the corpus and gives to another, releases their
power to revoke, or lets it lapse.
Under IRC §2035, if the exercise, release, or lapse occurs within three years of the settlor’s
death, the corpus and any gift taxes are pulled back into the gross estate; any remaining corpus
in the trust subject to the decedent’s power to revoke at the time of death is included in the gross
estate.
46The term ‘‘transfer’’ in the gift tax area is much broader than merely a gratuitous conveyance of a fee simple interest. It
may include a transfer of property into trust, as well as the exercise, release, or lapse of certain rights or powers over
property.
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a. Gifting Within the Annual Exclusion Amount

Some portion of gratuitous inter vivos transfers may escape taxation. A simple and often-used
way to remove a significant amount of property from an estate without incurring gift taxes is to
take advantage of the annual gift exclusion.
Simply put, the donor can annually give up to $14,000 in gifts of present interests to any
number of people and, if those are the only transfers made to each such individual, the donor
does not have to file a gift tax return. Importantly, gifts within the annual exclusion do not count
against the lifetime unified tax credit equivalent of $5 million inflation-adjusted.
b. Gifting for Medical and Educational Needs
Additionally, a donor can make unlimited gifts for a donee’s tuition or medical expenses, but
only if payment is made directly to educational institutions or medical providers. Only tuition is
excluded from tax; room, board, and books are taxable.
c. Section 529 College Savings Plans, or Qualified Tuition Programs
Section 529 College Saving Plans are tax-advantaged investment opportunities that can be used
to cover all qualified higher education expenses, including tuition, room and board, mandatory
fees, and books and computers.
With 529 plans, the account owner always remains in control of the plan’s assets. Even though
the contributions are considered completed gifts, and therefore outside of the donor’s estate, the
donor, and not the beneficiary, remains in control of the money.
2. Deductions Allowable in Determining “Taxable Gifts”

The value of gifts to the donor’s spouse or to charities is deductible to determine taxable gifts. The
rules are the essentially the same for estate tax deductibility.
3. Gift Tax Rates and Credits

After the amount of taxable gifts is determined, gift tax is calculated in much the same manner and
at the same rates and with the same unified credit as the estate tax.
F. The Generation-Skipping Transfer Tax—Briefly

GST concerns arise when a person makes a gratuitous transfer, either during life or at death, which
skips a generation of the person’s family. Credits similar to those available under the gift and estate tax
regimes are available to offset GST tax liability, including the $5 million, inflation-adjusted, lifetime
exclusion amount. However, there is no portability of the GST. An individual may elect to allocate her
GST exclusion amount in any way she prefers, some to each of several transfers or all to one.
The GST tax is a flat-rate tax. The rate is set at the highest estate tax rate, currently 40%. This tax rate is
applied to three different transfer events: a direct skip, a taxable termination, or a taxable distribution.
• A direct skip is a transfer to a skip person. A skip person is assigned to a generation two or more
generation below the transferor’s. A transfer to a trust is a direct skip if all the interests in the
trust are held by skip persons.
• A taxable termination is a termination by death, lapse of time, release of power, or otherwise of
an interest in property held in trust. A taxable termination does not occur if immediately after
the termination a non-skip person has an interest in the property or if after the termination, the
trust makes a distribution to a skip person.
• A taxable distribution is a distribution from a trust, other than a taxable termination or direct
skip, to a skip person.
The GST does not use the unified tax credit. Instead, a GST exemption is allowed to each individual for
the GSTs during life or at death. The exemption is doubled for married individuals. An indirect skip
property transfer automatically triggers the GST exemption. An indirect skip occurs when the
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generation one level below the decedent (e.g., children) receives some beneficial interest in the property
before the property passes to the generation two or more levels below (e.g., grandchildren).
The exclusions for tuition and medical expense payments from the gift tax also apply to the generation-
skipping tax. Additionally, the $14,000 per donee annual exclusion from the gift tax is recognized
against taxation of direct skips only.
G. Post-Mortem Planning Using Disclaimers

Where there is no estate planning, the laws changed, or it was done incorrectly, some after-the-fact
planning may be needed. The principal way to engage in post-mortem tax planning is through
disclaimers.
With disclaimers, the survivors may be able to rearrange who gets what without additional transfer
taxes. This is because the disclaimant is treated as never becoming the owner of the property to which
she is entitled by the will, intestacy, or will substitute. After a disclaimer, when the property passes to a
different person, it is as if it went from the decedent directly to that person and not from the decedent
to the beneficiary to the third person.
For tax purposes, the following are the major requirements that must be met to qualify a disclaimer
under the Code:
• The disclaimer must be filed, in writing (identifying the interest and signed by the disclaimant),
with the personal representative within nine months of the decedent’s death;
• The disclaimed interest must pass without direction of the disclaimant; and
• The disclaimant may not have received any benefits from property disclaimed nor received
consideration in money or money’s worth, directly or indirectly, from anyone in exchange for
the disclaimer.
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XV. Administration of the Probate Estate

A. Introduction
What to do immediately upon death:
◦ Contact family members and friends;
◦ Follow organ donation and body bequeathal instructions – could be on driver’s license, health care
directive or living will, or declaration of disposition of last remains;
◦ Make funeral arrangements – Did the individual leave behind memorial instructions? Determine the
decedent’s wishes regarding funeral/memorial, burial/cremation, last wishes, etc.;
◦ Secure the person’s property, including house, car and tangibles – property must be distributed
according to the person’s estate plan or intestate succession;
◦ This includes arranging for proper care and storage of property;
◦ Search for tangibles list;
◦ Arrange for care of pets and minor children;
◦ Order multiple death certificates;
◦ Forward mail to personal representative – mail will have information about assets, outstanding bills,
etc.;
◦ Notify Social Security office and Medicare – any overpayments will need to be returned. If the
decedent has surviving spouse or descendants, they may be entitled to some of the benefits;
◦ Find estate planning documents, including original will and trust, including all codicils and
amendments;
◦ Stop health insurance;
◦ Determine whether there is any life insurance and submit claims;
◦ Determine whether there were any retirement plans, and who the beneficiaries are;
◦ Notify mortgage companies and banks;
◦ Cancel credit cards, cable, phone, memberships, etc.;
◦ Notify credit reporting agencies;
◦ Access safe deposit box;
◦ Hire attorney to handle probate and trust administration. PR will need to be appointed, etc.
Overview of Probate Process:

Probate opened and PR named – Letters obtained
◦ Notice to beneficiaries and right to challenge
Will offered or Adjudicating Intestacy
◦ Notice to heirs and devisees
◦ Assets gathered and inventoried @ FMV – supplement as needed
◦ Manage, preserve and protect property
◦ Notice to heirs and devisees
Creditors identified and provided notice of death
◦ Claims made are either allowed or disallowed
◦ Litigate and resolve as needed
◦ Creditors paid, including taxes
Final accounting
◦ Notice and challenge?
Property remaining distributed to beneficiaries
Only probate property:

◦Remember that the probate process does not generally involve
nonprobate property or property in other jurisdictions (as they
require ancillary proceedings)
◦Nonprobate beneficiaries may need to contribute to pay debts and
taxes of decedent if governing instruments or state law require
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◦ IRS may pursue recipients of property if estate does not pay estate
taxes due, regardless of governing instruments or state law
B. Matters That Need Immediate Attention

1. Appointing Someone to Take Charge
Some decisions must be made quickly even before a probate estate is opened and a personal
representative is appointed. See above for tasks that need to be completed under “What to do
immediately upon death.”
All states provide a summary (expedited) procedure for appointing someone to act at this time. Any
interested person (e.g., the personal representative named in the will, if known, heirs, devisees,
children, spouses) may seek appointment as the “special administrator.” This can be accomplished
informally by an ex parte application or by order of the court in a formal proceeding on petition of
an interested person. UPC §§3-614 to 3-616. Once appointed and until the appointment of the
permanent personal representative, the special administrator is authorized to act in the best
interests of the estate and is cloaked with the powers of, and assumes the duties associated with,
being a fiduciary, though courts oftentimes limit the authority to collecting and protecting the
decedent’s property to avoid abuse. UPC §3-616.
2. Deciding What to Do with Decedent’s Body

Currently, state laws on the disposition of remains vary to a great degree. Decedents may articulate
in their will what they want regarding the disposition of their own body at death.
Example: Baseball legend Ted Williams’ will provided that his remains should be cremated, and
his ashes scattered off the coast of Florida. However, a handwritten note signed by Williams and
two of his children, dated after Williams’ will, specified that their bodies should be placed in
“biostasis” (commonly known as cryopreservation). The personal representative of the estate
petitioned a court for guidance but withdrew the petition after a handwriting expert declared the
signature genuine. Williams’ body was surgically decapitated, and his head and torso are now frozen
separately in liquid nitrogen.
3. Protecting the Decedent’s Property

Immediately upon the decedent’s death, some action may be needed to preserve the property, such
as getting or maintaining insurance on it, taking care of pets and livestock, disposing of perishable
goods, cultivating and harvesting crops, and managing an ongoing business or completing pending
transactions, even making sure that automobile insurance covers surviving drivers after the policy
owner’s death.
The personal representative or the special administrator should gain access to the decedent’s home
as quickly as possible to ensure protection of property, and to inventory the items and store the
valuable property in a safe location, such as a storage unit, and insure the contents.
4. Having a Guardian and Conservator Appointed for Minors and Incapacitated

Persons
There may be individuals for whom guardians and conservators must be appointed, such as minors
(if there is no other parent) or individuals who are disabled or incapacitated.
The decedent’s will should be consulted, because the will may indicate the decedent’s preference for
the appointment of a guardian and conservator. However, even if there is such a document, judicial
proceedings normally are required to determine guardianship and conservatorship. See UPC §5-
101.
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5. Providing for the Family Financially During Estate Administration

States generally allow the surviving spouse (and those treated as a surviving spouse) and dependent
children a reasonable family allowance, designed to maintain the family during the period of
probate administration. UPC §2-404. States may impose conditions on the availability of the
family allowance.
UPC §2-404(a) provides that minor and dependent children are entitled to the allowance if the
other parent does not survive
UPC §2-404, cmt. states that “[i]n determining the amount of the family allowance, account
should be taken of both the previous standard of living and the nature of other resources available
to the family to meet current living expenses until the assets of the estate can be distributed.” What
is “reasonable” is determined on a case-by-case basis; however, the UPC allows the personal
representative to grant an allowance of up to $2,250 per month for 12 months ($27,000 for a year),
indexed for inflation.
This family allowance is available regardless of the decedent’s testamentary intentions.
6. Obtaining the Will and Other Important Documents

Whoever has the decedent’s will or other document that states the decedent’s wishes, such as a
memorandum disposing of personal property, should provide them to the personal representative
or the court as quickly as possible. The UPC makes the responsibility mandatory; failure to do so
may result in sanctions. UPC §2-516.
People who are likely to have such items include the drafting attorney, a family member, a trustee,
and an agent under a power of attorney.
These documents must be found because filing the will is the first step in the probate proceedings.
C. Where to Probate the Estate—Jurisdiction and Venue

Decedent’s domicile: The estate of the decedent is administered pursuant to the laws of the state in
which the decedent was domiciled at the time of death, regardless of whether the decedent died testate
or intestate or in another state.
If all of the decedent’s property, real and personal, was located in the domiciliary state, the appropriate
court in that state has jurisdiction to decide all matters associated with the estate, including the validity
and interpretation of the will, if any, and all other matters of administration.
Ancillary probate: when multiple probates need to be opened, often for real estate located in a place
other than where the decedent was domiciled
If the decedent owned any real property outside of the state of last domicile that is subject to probate
(e.g., real estate not held in joint tenancy with right of survivorship, in a trust, or subject to a transfer-
on-death deed), then action must be taken in each situs state. UPC §3-201.
D. Formal and Informal Procedures to Probate Estates—In General

The probate process can be divided into three broad stages: (i) opening the estate; (ii) administering the
estate; and (iii) closing the estate. All phases can be done on an informal or formal basis with
administration being either supervised or unsupervised
Two separate procedures - often combined
Formal – sometimes referred to as probate “in solemn form.” Entails supervised administration, the
process requires judicial approval and a hearing at each stage.
*Advance notice required
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◦ Must go formal if person died without a will and a determination of heirship

Required
Informal – sometimes referred to as probate “in common form.” Entails “unsupervised” administration.
Rather than having a hearing in court and getting a decision or order for each proposed action, the
personal representative performs most functions without any involvement of the court.
*Notice afterwards
◦Absent a contrary directive in the will, the UPC creates a presumption of informal probate
◦Informal probate enhances speed, reduces cost, and increases efficiency because a personal
representative does not have to wait for a hearing on an overcrowded docket, request permission
to routinely pay attorneys’ fees, or continually take time for court appearances
Priority of interested persons if no will

Getting “letters”s
E. Opening the Estate—Getting the Will Accepted for Probate and Getting the
Personal Representative Appointed
1. General
The first step involves two different procedures: (i) determining whether there is a valid will or the
decedent died intestate; and (ii) appointing a personal representative to assume legal responsibility
for the estate and to perform a variety of required functions. This can all be accomplished informally
by filing the application for appointment directly with the Registrar ex parte or formally by
petitioning the court.
While getting the will admitted to probate (or intestacy adjudicated) and a personal representative
appointed are technically two separate procedures, they are frequently handled together, especially
in states with more modern probate procedures, such as in those states that have adopted the UPC.
UPC §§3-301, 3-402.
2. Probating the Will or Adjudicating Intestacy

Informal Formal
If informal probate of a will is sought...
-moving party must file the will with the -Petitions for formal probate of a will must be
Registrar along with the application no filed with the court and contain statements
earlier than 120 hours after the decedent’s similar to those required in an informal
death. application. UPC §3-402.
-Certain information must be verified by the -If moving party seeks to have a will
applicant to be accurate and complete to the probated, the original of the will, including all
best of his knowledge and belief. UPC §3-301. codicils, should be filed with the petition.
-moving party must provide notice of his -The applicant must also state that he is
application to any person demanding it unaware of any instrument revoking the will,
pursuant to UPC §3-204, and to any personal and that the applicant believes the
representative of the decedent whose instrument that is the subject of the
appointment has not been terminated. application is the decedent’s last will.
-The application must state that after the “A formal testacy proceeding is litigation to
exercise of reasonable diligence, the applicant determine whether a decedent left a valid
is unaware of any other unrevoked will.” UPC §3-401.
testamentary instrument relating to property -In contrast to informal probate where
in the domiciliary state, and identify the notice to interested parties follows the
priority of the person whose appointment is opening of the estate, formal proceedings
sought and the names of any other persons require that all interested parties be provided
having a prior or equal right to the with notice and afforded the right to a
appointment under UPC §3-203. hearing prior to the hearing. -The court “shall
determine the decedent’s domicile at death,
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-An applicant who applies to probate a will his heirs and his state of testacy [whether he
informally does not have to give advance died testate or intestate. The interested
notice to anyone other than the appointed parties may contest the will on a variety of
personal representative and anyone who has grounds, such as the capacity of the testator,
filed a request with the court that he be whether the formalities were satisfied and
notified of all actions. whether there was undue influence, fraud or
-BUT- if the will is accepted by the Registrar mistake.]
for probate, the applicant must provide -Any will found to be valid and unrevoked
written information of the probate to the shall be formally probated.” UPC §3-409.
heirs and devisees within 30 days after -Petitions for adjudication of intestacy, by
acceptance. contrast, must be directed to the court and
-Failure to do so does not affect the probate request a judicial order; i.e., a determination
but is considered a breach of the duty owed to of intestacy and heirship can only be
the beneficiaries. UPC §3-306. accomplished in a formal proceeding. UPC
-Ex post facto notice in this manner affords §§3-402, 3-407 (burden of proof).
interested parties an opportunity to challenge
the Registrar-approved will by filing a
petition with the court for a formal
proceeding on this matter.
-If no petition is filed, the Registrar’s
determination becomes final and conclusive.
3. Appointing the Personal Representative

If will names a personal representative, the court will generally appoint that person. If not, (per the
state) the list of who can be appointed as a personal representative may include persons named on a
beneficiary designation form, registered domestic partners, or others.
UPC §3-203. Priority Among Persons Seeking Appointment as Personal Representative.
(a) Whether the proceedings are formal or informal, persons who are not disqualified have priority
for appointment in the following order: (1) the person with priority as determined by a probated will
including a person nominated by a power conferred in a will; (2) the surviving spouse of the
decedent who is a devisee of the decedent; (3) other devisees of the decedent; (4) the surviving
spouse of the decedent; (5) other heirs of the decedent; (6) 45 days after the death of the decedent,
any creditor.
Process differs depending on whether formal or informal proceedings are filed.
4. Obtaining Letters
Once the personal representative is determined, whether via formal or informal means, the personal
representative assumes the powers and duties pertaining to the office. UPC §3-307.
“Letters testamentary,” “letters of [intestate] administration,” or, more simply, “letters” are issued
to the person appointed as the personal representative and they look like an order of the court.
Once issued, letters demonstrate that the personal representative has the legal authority to
administer the estate, including gathering the assets, notifying and paying creditors, disposing of
assets, and distributing property to the beneficiaries.
The personal representative designated in a will may not wish to serve or may be unable to serve, if
the will is silent as to a successor, the court will need to appoint another person from the interested
persons available.
If the personal representative appointed wishes to resign, it generally requires court approval and
appointment of a successor before the personal representative can be relieved of her duties. UPC
§§3-610, 3-414.
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To remove a personal representative, an interested person may petition the court and seek to
establish cause for the removal. Per UPC §3-611 “cause for removal exists when removal would be in
the best interests of the estate, or if it is shown that a personal representative or the person seeking his
appointment intentionally misrepresented material facts in the proceedings leading to his appointment,
or that the personal representative has disregarded an order of the Court, has become incapable of
discharging the duties of his office, or has mismanaged the estate or failed to perform any duty
pertaining to the office.”
F. General Duties, Powers, and Liability of the Personal Representative

Similar but different than trustee (UPC 3-712) due to different goals: long-term vs. short-term
Powers are similar to what any owner of property would have. See UPC 3-711 and 3-715
The duties imposed by the law on the personal representative fall into two broad categories:
(1) General fiduciary duties
UPC §3-703. A personal representative owes general fiduciary duties to the estate and
to all persons entitled to the estate, including creditors, surviving spouses, children, and
other devisees.
◦ Most common of the general fiduciary duties are: duty of loyalty, the duty of care and
prudence; the duty not to commingle assets of the estate with the personal assets of the
representative; the duty to maintain accurate records; and the duty of impartiality
(2) Probate-specific procedural duties- duties that are unique to probate administration.
UPC §3-703. the personal representative is responsible “to settle and distribute the
estate of the decedent in accordance with the terms of any probated and effective will
and this Code [e.g., intestate succession], and as expeditiously and efficiently as is
consistent with the best interests of the estate.”
UPC §3-704. the personal representative normally may satisfy the duty to settle and
distribute the estate “without adjudication, order, or direction of the Court, [and, when
necessary, can] invoke the jurisdiction of the Court, in proceedings authorized by this
Code, to resolve questions concerning the estate or its administration.”
1. Duties of the Personal Representative
The personal representative’s specific probate duties and responsibilities include the duties:
◦ To notify the heirs and devisees and certain other interested parties of his appointment.
UPC §3-705.
◦ To gather the assets of the decedent and to “prepare and file or mail an inventory of property
owned by the decedent at the time of his death, listing it with reasonable detail, and indicating as to
each listed item, its fair market value as of the date of the decedent’s death, and the type and
amount of any encumbrance that may exist with reference to any item,” UPC §3-706; supplement
it as needed, UPC §3-708; and file a final report. UPC §§3-1001, 3-1002.
◦ Consistent with this duty is the right to employ appraisers, if needed. UPC §3-707.
◦ To take control of the estate property and to take all reasonably necessary steps for the
management, protection, and preservation of those assets. The personal representative must also
pay any taxes due on the property. To notify creditors, determine the validity of their claims, and
pay amounts properly due.
◦ To prepare a financial accounting of the administration of the estate and to distribute the property
to the devisees and heirs.
UPC §3-715(21) allows the personal representative to “employ persons, including attorneys,
auditors, investment advisors, or agents, even if they are associated with the personal
representative, to advise or assist the personal representative in the performance of his
administrative duties; act without independent investigation upon their recommendations; and
instead of acting personally, employ one or more agents to perform any act of administration,
whether or not discretionary.”
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*This provision effectively absolves the personal representative of all liability that may occur
because of a poor decision by the designated agent, unless there is gross negligence or fraud
involved
2. Powers of the Personal Representative

The powers and authority of the personal representative to act emanate from two sources: the will
(if there is one) and the applicable probate law.
The law grants the personal representative “the same power over the title to property of the estate
that an absolute owner would have, in trust however, for the benefit of the creditors and others
interested in the estate.” UPC §3-711.
UPC §3-711 authorizes 27 powers, including managing (retaining, selling, insuring, voting stock,
abandoning, repairing, etc.) the decedent’s assets and business, litigating, settling and paying debts
and taxes, retaining other professionals to assist and advise the personal representative, etc.
3. Liability of the Personal Representative

The personal representative may be liable individually for damages that occur based on a breach of
his fiduciary duties.
There may be a penalty or surcharge of up to 100% of the loss to the estate imposed on the personal
representative by statute. A “personal representative may not be surcharged for acts of
administration or distribution if the conduct in question was authorized at the time.” UPC §3-703.
G. Duty to Gather, Inventory, and Value the Estate

All states require the personal representative to gather, inventory, and value the estate’s assets
1. Gathering the Decedent’s Property

Immediately upon appointment, the personal representative should begin to identify and gather the
decedent’s property. UPC §3-709.
Marshalling: the process of gathering the decedent’s property
The personal representative has the fiduciary duty of prudent administration, which includes the
duty to identify, control, protect, and conserve estate property. UTC §809.
This process should include: (1) the decedent’s home should be thoroughly searched for financial
records; (2) the personal representative may benefit from discussing the estate with family
members, partners, attorneys, and especially accountants, financial planners, and insurance
agents; (3) the personal representative should obtain the decedent’s bank records. Bank deposits
may indicate previously unknown sources of income. In addition, checks and charges on bank
records and credit cards may disclose payees to whom the decedent was indebted; (4) the personal
representative should peruse the decedent’s mail; checks representing income and bills for debts
and normal household charges such as utilities and credit cards will be delivered on a regular basis.
If the decedent was recently sick, hospitalized, or in a nursing home, there should be bills associated
with that. A change of address should be filed
2. Inventorying and Valuing the Decedent’s Property

Within a short time of being appointed (three months, per UPC §3-706), the personal representative
“shall prepare and file or mail an inventory of property owned by the decedent at the time of his
death, listing it with reasonable detail, and indicating as to each listed item, its fair market value as
of the date of the decedent’s death, and the type and amount of any encumbrance that may exist
with reference to any item.” UPC §3-706
Depending on state law, the inventory must either be sent (i) to all interested persons; (ii) to
interested persons who have requested a copy of the inventory; and/or (iii) to the court. Under UPC
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§3-706, while the personal representative’s decision to file the inventory with the court is optional,
doing so with interested parties is mandatory.
H. Duty to Manage the Property of the Estate

Once the assets of the estate are identified and inventoried, the personal representative has the
duty/power to manage the property in a fiduciary capacity for the benefit of the estate, the creditors,
and others interested in the estate. UPC §§3-703(a), 3-711.
Powers to manage are extensive and much like those of any property owner, including duties re:
investing
Be sure property is already insured; if not, get insurance
Be mindful of rules/order of abatement when deciding which property to sell in order to pay debts and
beneficiaries
I. Duties Associated with Creditors

The personal representative must notify existing creditors of the decedent of his death, requesting that
they submit their claims, determining the validity of the claims, litigating those that the personal
representative believes are not valid, and paying amounts properly due.
Creditors of the decedent of the estate are interested parties. UPC §1-201(23). Therefore, the personal
representative owes fiduciary duties to the creditors comparable to those owed to potential distributees.
Examples of ways a testator can address the payment of debts:
Example: I direct my personal representative to pay my funeral and burial expenses and the unpaid
cost of the perpetual care and maintenance of the burial plot in which I should be buried, claims against
my estate other than any mortgages as mentioned below, and expenses of estate administration of my
estate. If, for any reason, my residuary estate is insufficient to make the gifts provisioned for, in order to
promote equity, fairness, and my further intentions, shares of distributees shall abate, without any
preference or priority as between real and personal property, in the following order: (1) property not
properly disposed of by this will; (2) residuary devises;(3) general devises; (4) specific devises.
Abatement within each classification shall be made in proportion to the amounts of property each of the
beneficiaries would have received if full distribution of the property had been made in accordance with
the terms of this will.
Example: I direct my personal representative to pay all estate, inheritance and succession taxes payable
by reason of my death shall be apportioned as provided under the law of Maryland in effect at the date
of my death. In so doing, my personal representative shall charge such taxes against the property
generating the tax, whether or not such property passes under my will. To the extent practicable, it shall
deduct the amount of such taxes from the property distributable under my will and recover from the
beneficiaries of property passing other than by my will their allocable share of such taxes, unless my
personal representative in its discretion determines that the cost of recovery is greater than such
recovery warrants.
Example: My fiduciaries shall have the following powers and, except to the extent they may be
inconsistent with such powers, all other powers now or hereafter conferred by law. Each of such powers
may be exercised without authorization of any court. In addition to all of the powers below, my
fiduciaries may exercise those powers set forth in the Maryland Code, as amended after the date of this
instrument. To compromise, contest, prosecute, settle or abandon any claims or other charges in favor
of or against any trust or the trust property.
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1. Notification and the Statute of Limitations

Publication in a newspaper in county where decedent was domiciled once a week for three
consecutive weeks
Direct notification to those reasonably ascertainable
The big three credit reporting agencies – Experian, Equifax and TransUnion – and request the
account be flagged with the statement “Deceased: Do not issue credit.”
Nonclaim statute – Statutes that require creditors to submit their claims to the personal
representative within a prescribed time period before they can institute legal proceedings
against the estate to collect. If they do not follow this procedure in a timely manner, their
claims are disallowed.
These statutes place a time limit on the actions of the creditors after which their claims are untimely
and barred, i.e., they become nonclaims. A nonclaim statute differs from a statute of limitations
because it cannot be waived or tolled.
Statute of limitations – usually claims must be filed 4-6 months after notice given
Pay allowed claims
Where property of estate is insufficient to pay all claims in full, pay per classification of creditors
Tulsa Professional Collection Services, Inc. v. Pope
Facts: H. Everett Pope, Jr., was admitted to the hospital in Tulsa, he died testate, while still at the
hospital. Wife, JoAnne Pope (appellee), initiated probate proceedings in the district court. After
letters testamentary were issued] the court ordered appellee to fulfill her statutory obligation by
directing that she “immediately give notice to creditors.” She published notice in the Tulsa Daily
Legal News for 2 consecutive weeks beginning advising creditors that they must file any claim they
had against the estate within 2 months of the first publication of the notice. A collection agency,
(appellant), a subsidiary of the hospital was the assignee of a claim for expenses while Pope was at
hospital. Appellant failed to file a claim with appellee within the 2-month period. Appellant filed an
Application for Order Compelling “Payment of Expenses of Last Illness,” relying on an Okla. Stat.
that indicates that an executrix “must pay the expenses of the last sickness.” Arguing that this
specific statutory command made compliance with the 2-month deadline for filing claims
unnecessary [and that the nonclaim statute’s notice provisions violated due process. The state
courts, including the Supreme Court of Oklahoma rejected these positions].
Issue: Must actual notice be given to an estate creditor whose identity is known or
reasonably ascertainable?
Holding: Due process requires that actual notice be given to any estate creditor whose
identity is known or reasonably ascertainable. Requiring actual notice to be provided to
reasonably ascertainable creditors is not overly cumbersome, as the executor need only
make reasonably diligent efforts to identify potential creditors. Due process requires that
actual notice be given to any estate creditor whose identity is known or reasonably
ascertainable. Here, if Tulsa’s identity was known or reasonably ascertainable, then
terminating Tulsa’s claim without providing actual notice of the proceedings violated due
process.
Self-executing nonclaim statutes bar claims after the lapse of various periods regardless of
notice.
UPC §3-803 says that (i) all claims against a decedent’s estate that arose before the death
of the decedent are barred unless presented within one year after the decedent’s
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death; and (ii) all claims against a decedent’s estate that arise at or after the death of the
decedent are barred unless presented, in the case of a contract claim, within four months
after performance by the personal representative is due, and for all other claims, within the
later of four months after a claim arises, or one year after the decedent’s death.
2. Presenting Claims and Determining Validity
The UPC allows creditors to present their claims in a number of ways, including filing with the
court, filing with the personal representative, or bringing a suit against the personal representative
within the allowed statutory period. UPC §3-804.
Under UPC §3-807(b), the personal representative “may pay any just claim that has not been
barred, with or without formal presentation, but [may find himself] personally liable to any other
claimant whose claim is allowed and who is injured by its payment [i.e., there is not enough money
left in the estate to pay the claim]. . . . ”
It is prudent practice to delay paying any unsecured claims unless the personal representative has
sufficient funds to pay all debts.
Once claims are made, the personal representative must decide whether they are valid or not. The
personal representative is not required to pay all claims. If the personal representative does not feel
the claim is rightfully due, he may “disallow” the claim by mailing notice to the creditor that its
claim has been denied and informing it of the time limit. The creditor then has 60 days to challenge
the disallowance. UPC §3-806. If litigation is necessary, the personal representative is authorized
to pursue the action. UPC §3-715(22). The personal representative also “may, if it appears for the
best interest of the estate, compromise, i.e., settle, the claim, whether due or not due, absolute or
contingent, liquidated or unliquidated.” UPC §§3-715(17), 3-813.
3. Payment of Claims and Priority of Payment

Once the personal representative has determined which claims are valid, he is authorized to pay
them if there is enough money in the estate to cover all the claims. UPC §§3-715(22), 3-807(a).
However, not all estates will be able to pay all the expenses of and claims against the estate, in which
case the estate is deemed to be “insolvent.” Where estates are insolvent, probate laws typically
provide a specific order of payment. UPC §3-805
It’s wise to wait until the expiration of the creditor claims period and all creditors are known before
payment is made on any claims or distributions made to beneficiaries. Expenses of the estate are
paid by category, or “class.” If a class cannot be paid in full, the class will split the available funds
proportionate with how much each creditor is owed within that class.
UPC §3-805. Classification of Claims.

(a) If the applicable assets of the estate are insufficient to pay all claims in full, the personal
representative shall make payment in the following order:(1) costs and expenses of
administration;(2) reasonable funeral expenses;(3) debts and taxes with preference under federal
law;(4) reasonable and necessary medical and hospital expenses of the last illness of the decedent,
including compensation of persons attending him;(5) debts and taxes with preference under other
laws of this state [e.g., Medicaid];(6) all other claims.(b) No preference shall be given in the
payment of any claim over any other claim of the same class, and a claim due and payable shall not
be entitled to a preference over claims not due.
a. Secured Creditors
A general creditor is one who has recourse to the debtor’s general assets if the debtor defaults on
an obligation to pay. A secured creditor, by contrast, has been granted an interest in identifiable
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property (the collateral) and may, upon default by the debtor, foreclose upon the property that
secures the loan and seize it.
Example, a bank that holds a mortgage on the decedent’s house is a “secured creditor” since the
house is security for the debt and the bank may foreclose on it for nonpayment.
The priority rules of UPC §3-805 apply only to unsecured debts; secured creditors are entitled
to foreclose on their collateral directly if the personal representative or successor does not either
assume the debt or continue to make the required payments. In addition, unless the will clearly
indicates to the contrary, a specific devisee of mortgaged property takes subject to the lien
without right to have other assets sold to pay the secured obligation. UPC §2-609. This issue,
called “exoneration” (Chapter 6).
If the collateral is insufficient to fully pay the outstanding debt to a secured creditor, the creditor
is unsecured for the difference and falls under the “all other claims” category of creditors in
UPC §3-805
b. Homestead Allowance, Exempt Property, and Family Allowance
After the rights of secured creditors to their collateral, the homestead allowance, exempt
property, and family allowances have the highest priority.
The family allowance is what the spouse and minor children who were dependent on the
decedent are entitled during the administration of the estate. The family allowance is a claim
against the estate and does not, absent a will provision to the contrary, affect the amount to
which the recipients are otherwise entitled under the will or statute.
The homestead exemption or allowance is a statutory protection that allows spouses, and
sometimes other dependents, to retain property after the death of the homeowner. They take
priority over other creditors’ claims against the estate, resulting in the set-aside of certain
property that cannot be used currently to pay the claims of unsecured creditors. In some states,
the homestead is an exemption, and in others it is an allowance. There are certain requirements
that must be met both for the property to qualify for protection and for the family members to
be entitled to protection. For example, in order for a plot of land to be protected, it typically
must be occupied by a head of household and function as the family home; a vacation home is
not protected.
The homestead allowance provided for in the UPC is different from a homestead exemption.
Instead of protecting a particular piece of property, it grants a relatively small homestead
allowance in the decedent’s property as a monetary payment to the surviving spouse or minor
children, with the intent that the payment be used to cover the cost of housing, whether that is a
mortgage or rent.
The rationale for using the set dollar amount is to minimize the fact that the homestead
allowance can cause minor children of the decedent to be favored over the decedent’s children
who have reached the age of majority. Cmt to UPC §2-402
4. Payment of Claims Nonprobate Assets

Estate planners have used trusts and other will substitutes to avoid the claims of the estate’s
creditors by passing property outside of probate. In response to this trend, many states have
enacted legislation designed to protect creditors and allow them to satisfy debts of the estate and of
the decedent by attaching assets that pass outside of the probate process.
UPC §6-102. Liability of Nonprobate Transferees for Creditor Claims and Statutory Allowances.
(a) In this section, “nonprobate transfer” means a valid transfer effective at death, other than a
transfer of a survivorship interest in a joint tenancy of real estate, by a transferor whose last
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domicile was in this state to the extent that the transferor immediately before death had power,
acting alone, to prevent the transfer by revocation or withdrawal and instead to use the property for
the benefit of the transferor or apply it to discharge claims against the transferor’s probate estate.(b)
Except as otherwise provided by statute, a transferee of a nonprobate transfer is subject to liability
to any probate estate of the decedent for allowed claims against decedent’s probate estate and
statutory allowances to the decedent’s spouse and children to the extent the estate is insufficient to
satisfy those claims and allowances. The liability of a nonprobate transferee may not exceed the
value of nonprobate transfers received or controlled by that transferee.
If the probate estate is insufficient to satisfy the decedent’s debts, §6-102 generally allows creditors
to satisfy their debts from nonprobate transferees “to the extent that the transferor immediately
before death had power, acting alone, to prevent the transfer by revocation or withdrawal.
a. Creditor Access to Trusts
Transferees of a revocable living trust may be held responsible to contribute if the probate estate
is insufficient to satisfy all the claims against the estate. This assumes the settlor could revoke
the trust on his own and did not have to get a nonadverse party to join in the revocation. UTC
§505(a)(3) says, “After the death of a settlor, . . . the property of a trust that was revocable at
the settlor’s death is subject to claims of the settlor’s creditors.”
Irrevocable trusts generally do not fall within the §6-102 definition of “nonprobate transfer”
unless the settlor retains the sole power to withdraw trust property or reserves a general power
of appointment, whether presently exercisable or testamentary. Rest (3d) of Trusts §25,
cmt. e and §56, cmt. b.
If, however, the general power of appointment was granted to the decedent by another,
transferees are not responsible. UPC §6-102, cmt. 3.“While the trustee of an irrevocable trust,
or of a trust that may be revoked only by the settlor and another person would ordinarily not be
subject to this section, transferees might be liable if the trust is named as a beneficiary of a
nonprobate transfer, such as of securities registered in TOD form.” UPC §6-102, cmt. 7
b. Creditor Access to Joint Tenancies with a Right of Survivorship
With the possible exception of the Internal Revenue Service and Medicaid, joint tenancies in
real estate are specifically excluded from the scope of §6-102, and creditors are unable to attach
such interests after the debtor’s death.
Cmt 5 to §6-102 cites “stability of title and ease of title examination” as the reason for this
exemption. Creditor access to joint tenancies in personal property will largely depend upon the
terms of the agreement creating the joint tenancy. The outcome might depend on who
originated the registration and whether severance by any co-owner acting alone was possible
immediately preceding a co-owner’s death.”
c. Creditor Access to Beneficiary Designations; Statutory Exemptions
The majority of states have statutes protecting life insurance and retirement account proceeds
from creditors, so long as the estate itself is not designated as a beneficiary. “The initial clause of
subsection [§6-102](b), ‘Except as otherwise provided by statute,’ is designed to prevent a
conflict with and to clarify that this section does not supersede existing legislation protecting
death benefits in life insurance, retirement plans or IRAs from claims by creditors.”
In the absence of an applicable statute, such designations likely fall within the scope of §6-
102(a), since the policy owner may usually change the beneficiary designation at any time
before his death—a power analogous to the power of revocation described in the UPC. In such
cases, creditors will be able to access proceeds “to the extent of any cash surrender value
generated by premiums paid by the insured that the insured could have obtained immediately
before death.”
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Statutory exemptions applicable to life insurance and retirement beneficiary designations are
common.
The Supreme Court decided Clark v. Rameker (2014) that an IRA inherited by an individual’s
daughter could not be claimed as exempt in bankruptcy with respect to the daughter’s debts.
The Court reasoned, that the exemption was predicated on the need to protect the account for
the mother’s retirement post-bankruptcy, not for the retirement of the debtor/daughter. (Clark,
being a bankruptcy case, should not be confused with exemptions under the probate code).
d. Creditor Access to TOD and POD Accounts and Deeds
Contracts creating transfer-on-death (TOD) and payable-on-death (POD) accounts, including
TOD beneficiary deeds for real property, often reserve for the account owner the power to
change the named beneficiary. This power is comparable to the revocation power described in
§6-102(a). As a result, the account owner’s creditors may seek to attach account assets in the
absence of contradictory legislation.
Real property subject to a TOD deed remains under the control of the property owner, who can
revoke the deed at any time. For that reason, the property also remains subject to the creditors
of the owner, both during life and at death. The Uniform Real Property Transfer on Death Act
(URPTDA) provides alternative provisions for states to adopt. (Alternatives on pg. 788)
e. Procedure for Pursuing Claims Against Nonprobate Transferees
Under UPC §6-102, a creditor may access nonprobate transfers only if the probate estate
cannot satisfy the debt. If the claim cannot be satisfied by the probate estate, the creditor must
demand in writing that the personal representative of the estate notify the nonprobate
transferee and initiate a proceeding to have the debt satisfied from assets transferred outside of
probate.
As with any claim against the estate, claims against nonprobate transferees generally must be
initiated within one year of the decedent’s death. See UPC §6-102(f)-(h).
For a revocable trust, this is the date of the decedent’s death. For other nonprobate transfers,
this is the date of receipt. Joint and several liability is imposed if multiple transferees are
deemed liable.
J. Important Matters to Be Addressed Before Finalizing the Estate

1. Will Contests and Other Estate Controversies
See Chapter 7
2. Tax Issues
The most obvious of the tax responsibilities of the personal representative is to file any federal and
state tax returns. The personal representative may need to make certain tax elections that will affect
beneficiaries differently. See p. 791 for a list of important tax elections the personal representative
must consider.
3. Partial Distributions
Making partial distributions is dangerous. Personal liability can be levied on the personal
representative for distributions that make the estate unable to pay creditors with a more senior
status, UPC §3-807, and a distributee of property improperly distributed or paid may be liable to
return the property. UPC §3-909.
K. Closing the Estate—The Final Accounting and the Final Distribution

1. Closing the Estate
The final accounting and the distribution of the estate to devisees and heirs are the last stages of the
personal representative’s responsibilities leading to the closing of the estate. Closing an estate, like
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most aspects of estate administration, can be accomplished in formal proceedings by petition for an
order of the court pursuant to UPC §3-1001 or UPC §3-1002 or informally by verified statement
under UPC §3-1003.
Formal proceedings better protect the personal representative from personal liability and more
quickly relieve him of authority and responsibility (claims against the personal representative for
breach of fiduciary duty are barred unless commenced within six months after the filing of the
closing statement, UPC §3-1005), personal representatives occasionally choose the formal
proceedings route, regardless of whether prior aspects of administration were handled formally or
informally.
Personal representatives may opt not to go the formal route, however, because (i) they may not want
to get the court involved at the end of what has, so far, been an informal proceeding and to put in
the public record what has been private information up to then; (ii) a formal closing could delay
what would otherwise be a straightforward matter; or (iii) there are additional costs to the estate to
do a formal closing.
2. The Final Distribution

UPC §3-902 tells us that “shares of distributees abate, without any preference or priority as
between real and personal property [therefore bequests and devises are treated equally], in the
following order,” but that within each classification, abatement is pro rata: (1) residuary devises;(2)
general and pecuniary devises; (3) specific devises.The statutory order of abatement is overridden if
“the will expresses an order of abatement, or if the testamentary plan or the express or implied
purpose of the devise would be defeated by the order of abatement stated in subsection (a) [and
would be inconsistent with the testator’s intention]. . . . ”
See also Ch. 6 on abatement; Example p. 794
Once the personal representative has addressed all relevant matters, a statement of the proposed
distribution must be filed with the court (unless the informal procedure in UPC §3-1003 of a
verified statement is not utilized) along with a Petition for Final Settlement and Distribution of the
Estate.
The personal representative must also give notice to the interested parties. Only then may the
personal representative begin to distribute assets of the estate. Where the beneficiaries are minors
or are under some other disability, special rules apply. UPC §3-915. The personal representative
should obtain receipts for all distributions .Once the distribution is complete, the personal
representative will pay himself whatever amount he is still owed (keeping in mind that, as an
administrative expense, the personal representative has likely been paid periodically as the case
moved forward) and file for a Decree of Final Discharge.
3. Finality of Final Settlement and Reopening the Estate

Generally, once the Decree of Final Discharge is granted, the settlement is final and the estate
cannot be reopened.
There are exceptions: the personal representative may move to reopen the estate if other property of
the decedent is later discovered and it was not administered; if he must perform a necessary act that
requires his authority, like signing a tax return, or for any other proper purpose determined by the
court; if the decedent was originally deemed to have died intestate and a will is later discovered.
UPC §3-1008.
The Decree of Final Discharge also provides protection to the personal representative for actions
taken, except where there was misconduct or nondisclosure.
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L. Ethical Issues in Estate Administration

ACTEC COMMENTARY ON MRPC 1.2 (1.2- Scope of Representation)
Touches on following topics:
-representing two clients on one matter;
-the need to consult with the client regarding the role of the lawyer, as well as other players such as
personal representatives, trustees, fiduciaries, etc;
-communication with beneficiaries of fiduciary estate
-representation of client in fiduciary, not individual capacity
-general and individual representation (representing a fiduciary)
-lawyers should not attempt to diminish duties of lawyer to beneficiaries without notice to them
duties to beneficiaries
ACTEC COMMENTARY ON MRPC 1.7 (1.7- Conflict of Interest)

Touches on following topics:
-General Nonadversary Character of Estates and Trusts Practice; Representation of Multiple Clients
-Disclosures to Multiple Clients
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UPC § 1-201 General Definitions

Subject to additional definitions contained in the subsequent articles that are applicable to specific articles,
parts, or sections, and unless the context otherwise requires, in this Code:
(1) “Agent” includes an attorney-in-fact under a durable or nondurable power of attorney, an individual
authorized to make decisions concerning another’s health care, and an individual authorized to make decisions
for another under a natural death act.
(3) “Beneficiary,” as it relates to a trust beneficiary, includes a person who has any present or future interest,
vested or contingent, and also includes the owner of an interest by assignment or other transfer; as it relates to
a charitable trust, includes any person entitled to enforce the trust; as it relates to a “beneficiary of a beneficiary
designation,” refers to a beneficiary of an insurance or annuity policy, of an account with POD designation, of a
security registered in beneficiary form (TOD), or of a pension, profit-sharing, retirement, or similar benefit
plan, or other nonprobate transfer at death; and, as it relates to a “beneficiary designated in a governing
instrument,” includes a grantee of a deed, a devisee, a trust beneficiary, a beneficiary of a beneficiary
designation, a donee, appointee, or taker in default of a power of appointment, or a person in whose favor a
power of attorney or a power held in any individual, fiduciary, or representative capacity is exercised.
(4) “Beneficiary designation” refers to a governing instrument naming a beneficiary of an insurance or annuity
policy, of an account with POD designation, of a security registered in beneficiary form (TOD), or of a pension,
profit-sharing, retirement, or similar benefit plan, or other nonprobate transfer at death.
(5) “Child” includes an individual entitled to take as a child under this Code by intestate succession from the
parent whose relationship is involved and excludes a person who is only a stepchild, a foster child, a
grandchild, or any more remote descendant.
(6) “Claims,” in respect to estates of decedents and protected persons, includes liabilities of the decedent or
protected person, whether arising in contract, in tort, or otherwise, and liabilities of the estate which arise at or
after the death of the decedent or after the appointment of a conservator, including funeral expenses and
expenses of administration. The term does not include estate or inheritance taxes, or demands or disputes
regarding title of a decedent or protected person to specific assets alleged to be included in the estate.
(8) “Court” means the [ . . . Court] or branch in this State having jurisdiction in matters relating to the affairs
of decedents.
(9) “Descendant” of an individual means all of his [or her] descendants of all generations, with the relationship
of parent and child at each generation being determined by the definition of child and parent contained in this
Code.
(10) “Devise,” when used as a noun, means a testamentary disposition of real or personal property and, when
used as a verb, means to dispose of real or personal property by will.
(11) “Devisee” means a person designated in a will to receive a devise. For the purposes of Article III, in the case
of a devise to an existing trust or trustee, or to a trustee or trust described by will, the trust or trustee is the
devisee and the beneficiaries are not devisees.
(12) “Distributee” means any person who has received property of a decedent from his [or her] personal
representative other than as a creditor or purchaser. . . .
(13) “Estate” includes the property of the decedent, trust, or other person whose affairs are subject to this Code
as originally constituted and as it exists from time to time during administration.
(15) “Fiduciary” includes a personal representative, guardian, conservator, and trustee.
(16) “Foreign personal representative” means a personal representative appointed by another jurisdiction.
(17) “Formal proceedings” means proceedings conducted before a judge with notice to interested persons.
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(18) “Governing instrument” means a deed, will, trust, insurance or annuity policy, account with POD
designation, security registered in beneficiary form (TOD), transfer on death (TOD) deed, pension, profit-
sharing, retirement, or similar benefit plan, instrument creating or exercising a power of appointment or a
power of attorney, or a dispositive, appointive, or nominative instrument of any similar type.
(19) “Guardian” is as defined in Section 5-102.
(20) “Heirs,” except as controlled by Section 2-711, means persons, including the surviving spouse and the
state, who are entitled under the statutes of intestate succession to the property of a decedent.
(21) “Incapacitated person” means an individual described in Section 5-102.
(22) “Informal proceedings” means those conducted without notice to interested persons by an officer of the
Court acting as a registrar for probate of a will or appointment of a personal representative.
(23) “Interested person” includes heirs, devisees, children, spouses, creditors, beneficiaries, and any others
having a property right in or claim against a trust estate or the estate of a decedent, ward, or protected person.
It also includes persons having priority for appointment as personal representative, and other fiduciaries
representing interested persons. The meaning as it relates to particular persons may vary from time to time
and must be determined according to the particular purposes of, and matter involved in, any proceeding.
(24) “Issue” of an individual means descendant.
(25) “Joint tenants with the right of survivorship” and “community property with the right of survivorship”
includes co-owners of property held under circumstances that entitle one or more to the whole of the property
on the death of the other or others, but excludes forms of co-ownership registration in which the underlying
ownership of each party is in proportion to that party’s contribution.
(26) “Lease” includes an oil, gas, or other mineral lease.
(27) “Letters” includes letters testamentary, letters of guardianship, letters of administration, and letters of
conservatorship.
(28) “Minor” has the meaning described in Section 5-102.
(31) “Organization” means a corporation, business trust, estate, trust, partnership, joint venture, association,
government or governmental subdivision or agency, or any other legal or commercial entity.
(32) “Parent” includes any person entitled to take, or who would be entitled to take if the child died without a
will, as a parent under this Code by intestate succession from the child whose relationship is in question and
excludes any person who is only a stepparent, foster parent, or grandparent.
(33) “Payor” means a trustee, insurer, business entity, employer, government, governmental agency or
subdivision, or any other person authorized or obligated by law or a governing instrument to make payments.
(34) “Person” means an individual or an organization.
(35) “Personal representative” includes executor, administrator, successor personal representative, special
administrator, and persons who perform substantially the same function under the law governing their status.
“General personal representative” excludes special administrator.
(36) “Petition” means a written request to the Court for an order after notice.
(37) “Proceeding” includes action at law and suit in equity.
(38) “Property” includes both real and personal property or any interest therein and means anything that may
be the subject of ownership.
(39) “Protected person” is as defined in Section 5-102.
(40) “Protective proceeding” means a proceeding under Part 4 of Article V.
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(41) “Record” means information that is inscribed on a tangible medium or that is stored in an electronic or
other medium and is retrievable in perceivable form.
(42) “Registrar” refers to the official of the Court designated to perform the functions of Registrar as provided
in Section 1-307.
(43) “Security” includes any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificate
of interest or participation in an oil, gas, or mining title or lease or in payments out of production under such a
title or lease, collateral trust certificate, transferable share, voting trust certificate or, in general, any interest or
instrument commonly known as a security, or any certificate of interest or participation, any temporary or
interim certificate, receipt, or certificate of deposit for, or any warrant or right to subscribe to or purchase, any
of the foregoing.
(44) “Settlement,” in reference to a decedent’s estate, includes the full process of administration, distribution,
and closing.
(45) “Sign” means, with present intent to authenticate or adopt a record other than a will:to execute or adopt a
tangible symbol; orto attach to or logically associate with the record an electronic symbol, sound, or process.
(47) “State” means a state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, or
any territory or insular possession subject to the jurisdiction of the United States.
(48) “Successor personal representative” means a personal representative, other than a special administrator,
who is appointed to succeed a previously appointed personal representative.
(49) “Successors” means persons, other than creditors, who are entitled to property of a decedent under his [or
her] will or this Code.
(51) “Survive” means that an individual has neither predeceased an event, including the death of another
individual, nor is deemed to have predeceased an event under Section 2-104 or 2-702. The term includes its
derivatives, such as “survives,” “survived,” “survivor,” and “surviving.”
(52) “Testacy proceeding” means a proceeding to establish a will or determine intestacy.
(53) “Testator” includes an individual of either sex.
(54) “Trust” includes an express trust, private or charitable, with additions thereto, wherever and however
created. The term also includes a trust created or determined by judgment or decree under which the trust is to
be administered in the manner of an express trust. The term excludes other constructive trusts and excludes
resulting trusts, conservatorships . . . .
(55) “Trustee” includes an original, additional, or successor trustee, whether or not appointed or confirmed by
court.
(56) “Ward” means an individual described in Section 5-102.
(57) “Will” includes codicil and any testamentary instrument that merely appoints an executor, revokes or
revises another will, nominates a guardian, or expressly excludes or limits the right of an individual or class to
succeed to property of the decedent passing by intestate succession.[FOR ADOPTION IN COMMUNITY
PROPERTY STATES][
(58) [“Separate property” (if necessary, to be defined locally in accordance with existing concept in adopting
state.)
(59) “Community property” (if necessary, to be defined locally in accordance with existing concept in adopting
state.)]
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Glossary—American Probate Glossary

Administration: Collecting, managing, and distributing the estate of a deceased person or “decedent.” This is
done by a court-appointed representative known as the “administrator” or the “executor.”
Administrator: The person or institution named by the probate court to collect, manage, and distribute the
estate when a decedent either dies without a will (“intestate”) or does not name someone in his or her will to
take on this task.
Attestation: The dual act of watching the testator of a will sign the will and then writing one’s signature as a
witness.
Codicil: A document that modifies or amends a will and that is executed with the same formalities, including
proper witnesses, as a will.
Conservator: The person or institution appointed by a probate court to manage the affairs of a person who is
incapacitated. If the conservator is merely appointed to manage the financial affairs of the incapacitated
person, this is known as a “conservator of the estate.” If the conservator is to be accountable for the physical
well-being and care of the incapacitated adult, this is known as a “conservator of the person.” In many states,
this function is also known as a “guardian of the estate” or a “guardian of the person.”
Escheat: The general principle under most state inheritance laws that provides for an intestate decedent’s
estate to pass to the state where there are no heirs to inherit the property.
Execution: The act of putting one’s signature on a will. Also the actual implementation of the provisions of a
will.
Executor: The person or institution named or “nominated” by the testator of a will and appointed by the
probate court to implement its provisions.
Fiduciary: In the probate area, someone who is appointed by the court to act in the best interests of another.
For example, executors, administrators, trustees, and guardians are all fiduciaries who owe a legal duty to
those for whom they manage property, and their breach of such duty is actionable.
Grantor: The person who creates a trust. Synonymous with the terms “donor,” “settlor,” or “trustor” in relation
to a trust.
Guardian: The person or institution named or “nominated” by the testator of a will to assume responsibility for
the testator’s minor children. Also, the person or institution appointed by the probate court to act on behalf of
an incapacitated adult. (See also “conservator.”)
Guardian ad Litem: The person appointed by the probate court for the limited purpose of representing a minor
child or unborn beneficiary’s legal interests in the context of a legal proceeding. Unlike a “guardian,” a guardian
ad litem (typically an attorney) has no power to make decisions about the minor child’s physical custody or
financial assets.
Heirs: Those relatives who are legally entitled under state law to inherit the estate of a person who dies without
a will or “intestate.”
Inter vivos trust: A trust created during the grantor’s lifetime (as opposed to a “testamentary trust” created at
the time of death, under the terms of a will). Also known as a “living trust.”
Intestacy: Having died without a will.
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Intestacy statutes: State laws defining who is legally entitled to inherit a decedent’s estate if that decedent dies
without a will.
Issue: The lineal descendants of a person, including children, grandchildren, and great-grandchildren.
Joint tenancy: The form of title to property that provides for co-ownership and which results in title to the
property passing automatically to the surviving joint tenants when one co-owner dies, by “right of
survivorship.” The property passes outside of the probate process. To be distinguished from a “tenancy in
common,” which results in a co-owner’s interest in the property being transferred by will or by intestacy
statutes.
Letter of administration or letters testamentary: Official appointment papers signed by the probate court so
that an administrator or executor may demonstrate they have the legal authority to manage, sell, or distribute
the decedent’s property.
Marshaling assets: The act of identifying and inventorying the decedent’s assets in an estate. A legal duty of the
administrator or executor.
Power of appointment: A provision in a will or similar document that grants an individual (known as the
“donee”) the power to direct trust assets at termination of the trust to himself, his estate, or another individual
or group named in the will or similar document.
Power of attorney: A document that grants authority to act on one’s behalf to another (known as the “attorney-
in-fact”) creating an agency relationship between the two. The grantor of the power is the principal and the
grantee is the agent. A “durable” power of attorney is one that survives the incapacity of the principal. Such
agents may perform a variety of functions on behalf of the principal, including buying, selling, and managing
property.
Probate: The process of validating a will, if one exists, and administering a deceased person’s estate.
Probate asset or probate estate: Property that passes under a will or by intestacy, in contrast to property that
passes automatically, outside the probate process, like jointly held property and contractual assets such as life
insurance.
Probate court: The court in each state that oversees the collection, management, and distribution of decedents’
estates. Also known as “surrogate court” or “orphan’s court” in some states.
Remainderman: An individual who is named in a trust to receive the principal or corpus when the trust comes
to an end or “terminates.” This is contrasted with an “income beneficiary” who is named to receive benefits
from the trust during its ongoing existence.
Residuary estate: The assets that remain in an estate after the specific bequests have been made and any taxes
and expenses of administration have been paid. The balance of the estate is also known as the residue or
residual estate and is distributed under a “residuary clause” in a will.
Tenancy in common: A method of co-ownership between two or more persons under which the interest of a
deceased co-owner passes in accordance with her will, or, if there is no will, in accordance with the laws of
intestate succession.
Testamentary: This phrase denotes those matters having to do with a will. Wills become effective only upon the
death of the testator who executes them, thus the phrase can also mean effective upon death.
Testamentary capacity: The requirement that a person making a will (1) understand that she is making a
permanent disposition of her estate, (2) understand the extent of her assets, and (3) is aware of which people
constitute the “natural objects of her bounty,” in other words, her relatives. All three must be present for the
testator to create a valid will.
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Testamentary trust: A trust created by the terms of a will. Such a trust comes into existence when the testator
dies, as contrasted with an inter vivos trust, which comes into existence during the grantor’s life.
Testacy: Having died with a will.
Testator: The individual who makes or “executes” a will is the testator. If one dies with a will one is said to have
died “testate.”
Trustee: The person or institution designated by the grantor of a trust or appointed by the court to assume the
fiduciary duty of holding and administering a trust for the beneficiaries.
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UPC §2-102. Share of Spouse.

UPC §2-102. Share of Spouse.
The intestate share of a decedent’s surviving spouse is:
(1) the entire intestate estate if:
(i) no descendant or parent of the decedent survives the decedent; or
(ii) all of the decedent’s surviving descendants are also descendants of the surviving spouse and
there is no other descendant of the surviving spouse who survives the decedent;
(2) the first $300,000 [+ COLA], plus three-fourths of any balance of the intestate estate, if no descendant
of the decedent survives the decedent, but a parent of the decedent survives the decedent;
(3) the first $225,000 [+ COLA], plus one-half of any balance of the intestate estate, if all of the decedent’s
surviving descendants are also descendants of the surviving spouse and the surviving spouse has one or
more surviving descendants who are not descendants of the decedent;
(4) the first $150,000 [+ COLA], plus one-half of any balance of the intestate estate, if one or more of the
decedent’s surviving descendants are not descendants of the surviving spouse.
Share of Spouse, Visualized

Example: Caroline died recently without a will. Her probate estate was worth $1,225,000. She is survived
by her husband, Harry, two children with Harry (Lashaun and Letitia), and Harry’s child, Carrie
(Caroline’s stepdaughter), from his first marriage with Faith that ended in divorce ten years ago.
Per UPC §2-102(3), Harry is entitled to $225,000, plus 50% of $1,000,000 (the remaining
value of the estate), for a total of $725,000. Lashaun and Letitia split the other 50% of
$1,000,000 (or $250,000 each).
Example: The facts are the same as the previous example, except that Caroline is also survived by three
children from her first marriage to Fritz. Harry is entitled to only $150,000, plus 50% of
$1,075,000 (for a total of $687,500) and her five children split $537,500 equally.
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Table of Consanguinity
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UPC §2-504. Self-Proved Will.

UPC §2-504. Self-Proved Will.
(a) A will may be simultaneously executed, attested, and made self-proved, by acknowledgment thereof by the
testator and affidavits of the witnesses, each made before an officer authorized to administer oaths under the
laws of the state in which execution occurs and evidenced by the officer’s certificate, under official seal, in
substantially the following form:
I, ______, the testator, sign my name to this instrument this ___ day of ______, and being first duly sworn,
do hereby declare to the undersigned authority that I sign and execute this instrument as my will and that I
sign it willingly (or willingly direct another to sign for me), that I execute it as my free and voluntary act for the
purposes therein expressed, and that I am eighteen years of age or older, of sound mind, and under no
constraint or undue influence.
______________________
Testator
We, ______, ______, the witnesses, sign our names to this instrument, being first duly sworn, and do hereby
declare to the undersigned authority that the testator signs and executes this instrument as [his] [her] will and
that [he] [she] signs it willingly (or willingly directs another to sign for [him] [her]), and that each of us, in the
presence and hearing of the testator, hereby signs this will as witness to the testator’s signing, and that to the
best of our knowledge the testator is eighteen years of age or older, of sound mind, and under no constraint or
undue influence.
______________________
Witness
______________________
Witness
The State of ______

County of ______
Subscribed, sworn to and acknowledged before me by ______, the testator, and subscribed and sworn to
before me by ______, and ______, witness, this ___ day of ______. (Seal)
(Signed) ____________________
________________________
(Official capacity of officer)
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Implied Revocation by Subsequent Inconsistent Will

or Codicil
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Uniform Principal and Income Act (UPIA)
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Summary re: Settlor’s Debts
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Summary re: Non-Settlor Beneficiary’s Debts
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General Terminology: Powers of

Appointment
Donor: The person who creates a power of appointment.
Powerholder (or donee of a power of appointment): The person who holds the power and makes decisions
using the power. Unlike the trustee or the beneficiaries, the powerholder does not hold title to the property and
does not have a beneficial interest in the property.
Appointive property: The property subject to the power.
Permissible appointees (or objects of the power): The persons in whose favor the power can be exercised.
Takers in default of appointment: The persons who will take the property if the powerholder fails to exercise
the power and the powerholder’s power terminates (often at death).
Testamentary power of appointment: A power that can be exercised only by will.
Presently exercisable power of appointment: A power the powerholder can exercise during life, through an
inter vivos instrument.
General power of appointment: A power to appoint in favor of the powerholder, the powerholder’s estate, the
powerholder’s creditors, or the creditors of the powerholder’s estate. A general power of appointment can be
broad—to anyone—or can be limited to one or more of the four categories listed—for example, to the
powerholder. Different tax and creditor consequences follow depending on whether a power is general or
nongeneral. See Section E below.
Nongeneral power of appointment: A power that cannot be exercised in favor of the powerholder, the
powerholder’s estate, the powerholder’s creditors, or creditors of the powerholder’s estate. A nongeneral power
can be broad—to anyone in the world other than those in the four categories—or it can be narrow, such as to
the settlor’s descendants or to a named person. A nongeneral power is also sometimes called a “special power”
or a “limited power.”
Power of withdrawal: The right to withdraw property, or a specified amount of property, from a trust. A power
of withdrawal is a general power of appointment, because the powerholder can withdraw property for her own
benefit. See UPAA §503.
Exclusionary power of appointment: A nongeneral power of appointment that can be exercised in favor of one
of a group of permissible appointees, to the exclusion of the other appointees. Most powers are exclusionary
powers. The default rule is that nongeneral powers are exclusionary.
Nonexclusionary power of appointment: A power that must be exercised in favor of all permissible appointees,
so that each member of the group receives something. There is no requirement of equal distribution, and the
amount each appointee must receive can be the subject of controversy among the group of permissible
appointees. (Is $1 enough?) Careful drafting should clarify the donor’s intent.
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UPC §2-302. Omitted Children.

(a) Except as provided in subsection (b), if a testator fails to provide in his [or her] will for any of his [or
her] children born or adopted after the execution of the will, the omitted after-born or after-adopted
child receives a share in the estate as follows:
(1) If the testator had no child living when he [or she] executed the will, an omitted after-born or
after-adopted child receives a share in the estate equal in value to that which the child would
have received had the testator died intestate, unless the will devised all or substantially all of the
estate to the other parent of the omitted child and that other parent survives the testator and is
entitled to take under the will.
(2) If the testator had one or more children living when he [or she] executed the will, and the will
devised property or an interest in property to one or more of the then-living children, an omitted
after-born or after-adopted child is entitled to share in the testator’s estate as follows:
(A) The portion of the testator’s estate in which the omitted after-born or after-adopted child
is entitled to share is limited to devises made to the testator’s then-living children under
the will.
(B) The omitted after-born or after-adopted child is entitled to receive the share of the
testator’s estate, as limited in subparagraph (A), that the child would have received had
the testator included all omitted after-born and after-adopted children with the children
to whom devises were made under the will and had given an equal share of the estate to
each child.
(C) To the extent feasible, the interest granted an omitted after-born or after-adopted child
under this section must be of the same character, whether equitable or legal, present or
future, as that devised to the testator’s then-living children under the will.
(D) In satisfying a share provided by this paragraph, devises to the testator’s children who
were living when the will was executed abate ratably. In abating the devises of the then-
living children, the court shall preserve to the maximum extent possible the character of
the testamentary plan adopted by the testator.
(b) Neither subsection (a)(1) nor subsection (a)(2) applies if:
(1) it appears from the will that the omission was intentional; or
(2) the testator provided for the omitted after-born or after-adopted child by transfer outside the
will and the intent that the transfer be in lieu of a testamentary provision is shown by the
testator’s statements or is reasonably inferred from the amount of the transfer or other evidence.
(c) If at the time of execution of the will the testator fails to provide in his [or her] will for a living child
solely because he [or she] believes the child to be dead, the child is entitled to share in the estate as if
the child were an omitted after-born or after-adopted child.
(d) In satisfying a share provided by subsection (a)(1), devises made by the will abate under Section 3-902.
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The Politics of Taxing Transfers of

Wealth
Arguments Against Tax Responses
The estate tax is best characterized The estate tax does not tax all deaths. Very few estates are
as a “death tax.” subject to the estate tax. Only the estates of the wealthiest
0.2% of Americans—roughly 2 out of every 1,000 people who
die—owe any estate tax.
The estate tax rate is too high, with Among the few estates nationwide that owed any estate tax
the top statutory rate being 40%. in 2013, the effective tax rate averaged 16.6% because there
is no tax on the amount below the generous exclusion
amount. This is far below the top statutory rate of 40%.
Many wealthy estates develop and The use of careful tax planning mechanisms, such as Grantor
exploit loopholes in the estate tax Retained Annuity Trusts, enables estates to avoid
that allow them to pass on large extraordinary amounts of tax.
portions of their estates tax-free.
These strategies do not benefit the
broader economy; they only allow
the wealthiest estates to avoid taxes.
The estate tax targets small Only a handful of small, family-owned farms and businesses
businesses and small family-owned owe any estate tax at all, and the average tax rate among
farms, requiring their liquidation to them is very small. The few estates without the liquidity to
pay the tax. pay the tax have the option to spread payments over a 15-
year period at low interest rates.
The public and private costs of The costs of estate tax compliance are relatively modest and
estate tax compliance are are consistent with the costs of complying with other taxes.
significant. Compliance costs equal about 7% of estate tax revenues—
well within the range of compliance costs for other taxes.
The United States taxes estates Measured as a share of the economy, U.S. estate tax
more heavily than do other revenues are below the average for taxes on wealth transfer
countries. among the members of the Organization for Economic
Cooperation and Development.
The estate tax unfairly punishes The estate tax affects only those most able to pay, and the
success. funds it raises help support a range of essential programs
that benefit the nation. If the estate tax were weakened or
repealed, other taxpayers would foot the bill for these
programs, face cuts in the benefits and services provided, or
bear the burden of a higher national debt.
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The Gross Estate: Broken Down47
47 Numbers correspond with the order in which the relevant IRC sections appear below
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Tax Problems from Pages 746-748

Unless stated otherwise, you should assume that Tomasita is the decedent. She is survived by her spouse (Humberto), their daughter (Delia), their son
(Spencer), their grandchild (Georgia), and Tomasita’s sister (Sally). As to each of the following fact situations, answer these three questions.
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WTE Fall 2019 - WTE Outline

Wills Trusts Estates (American University (USA))

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Wills, Trusts, and Estates – Fall 2019

A. The Legal System Governing Trusts and Estates

2. The Emergence of Will Substitutes

3. The Probate Process

1 Only significant advantage

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B. Testamentary Freedom and Limitation son “Control from the Grave”

C. The Professional Standards Associated with Estate Planning

2. The Model Rules of Professional Conduct and ACTEC

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3. Common Situations Raising Ethical Issues for Estate Planners

Some clients may need separate representation. Some examples include:

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II. Inheritance and Relationship

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(2) an effective acknowledgement of paternity by the m an under [Article] 3, unless

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e. Foster and Stepchildren

3. Interpreting Class Gifts in Wills and Trusts

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1. Inheritance by a Parent From or Through a Child Barred in Certain

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nonsupport, abandonment, abuse, neglect, or other actions or inactions of the

1. Legally Married Spouses

2. Common Law Spouses

4. Civil Unions and Domestic Partnerships

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III. Intestacy—What Happens to a Decedent’s Property If There

1. The Limitations of Intestate Succession—Not All Things to All People

2. The Intestate Estate

B. Share for Surviving Spouse

1. Introduction and Share in Non-UPC States

2. The UPC Share for Surviving Spouses

3 UPC §2-102. Share of Spouse.

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C. Share to Lineal Descendants

D. Share to Ancestors and Collateral Heirs and Escheat to the State

5 See Share of Spouse, Visualized (pg. 102)

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E. The Representation Models

1. Strict Per Stirpes

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3. The Current UPC Method—Per Capita at Each Generation

F. Reducing the Intestate Share for Advancements

1. Is an Inter Vivos Transfer a Gift, an Advancement, or a Loan?

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UPC §2-109. Advancements

2. How Do These Transfers Affect the Shares to the Heirs?

3. Advancements and the “Hotchpot” Calculation

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