Wills, Trusts, and Estates

To ensure the authenticity of wills, every state requires certain formalities for making or revoking a will. These enable a easy clear-cut way for courts to determine the authenticity of a will.

Under the doctrine of integration, all papers present at the time of execution and intended to part of the will are treated as part of the will.

There has to be sufficient evidence to show that the decedent intended the papers to be part of his will.

Whenever a codicil is published, it is treated as if the will itself is republished. R3P § 3.4

An external writing may be incorporated as part of the will if the language of the will manifests this intent and describes the writing sufficiently to permit its identification. UCC § 2-510.

1. The external writing must be in existence at the time of the publication of the will.
   • Republication by codicil can allow one to incorporate a newer memo.
2. The will must manifest an intent to incorporate the writing.
3. The will must describe the writing sufficiently to permit its identification.

If a will identifies beneficiaries or property by a reference to something that has significance outside the will, it may be thereby modified.

E.g., you may bequeath "my house" or "my car" to someone and it will continue to your new house or car because you did not get a new house or car just to change your will.

R3P § 8.1

[T]he testator . . . must be capable of knowing and understanding in a general way:

1. the nature and extent of his or her property,
2. the natural objects of his or her bounty, and
3. the disposition that he or she is making of that property, and must also be capable of
4. relating these elements to one another and forming an orderly desire regarding the disposition of the property.

He does not have to actually know these things, only be capable of knowing them.

Making a lifetime gift requires more capacity than making a will, and making a will requires more capacity than getting married.

Someone can be mostly crazy, but as long as his will is made in a moment of lucidity, it will be valid.

Undue influence is when someone exerts such influence so as to overbear the donor's free will and make him make a transfer he otherwise would not have made.

Undue influence prevents a will from being voluntary when:

1. The donor was susceptible to undue influence
2. The alleged wrongdoer had an opportunity to exert undue influence R3P § 8.3

The burden to show undue influence is on the person who contests the will.

• Although the burden may be given to the proponent of the will if he was a fiduciary of the decedent.

R3P § 8.3(c)

A donative transfer is procured by duress if the wrongdoer threatened to perform or did perform a wrongful act that coerced the donor into making a donative transfer that the donor would not otherwise have made.

R3P § 8.3(d)

A donative transfer is procured 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 ot make a donative transfer that the donor would not otherwise have made.

Fraud can either be in the execution of the will, where misrepresents the character or contents of the will, or in the inducement of the will, where one's misrepresentation causes the testator to make his will in the wrongdoer's favor.

Under the plain meaning rule, no extrinsic evidence is allowed to disturb the plain meaning of wills.

Extrinsic evidence can only be admitted to resolve ambiguities in the will. (Not mistakes)

Under the no reformation rule, courts cannot correct mistakes in wills. They will follow what the will says even if it is not what the testator wanted.

Despite still following this rule, modern courts often try to construe things as ambiguities to allow them to fix mistakes.

Then some modern courts, like California, will not follow the no reformation rule, and will just do whatever they think is the best if there is clear and convincing evidence of a mistake.

A specific devise is a devise of a specific item of property. (e.g., my watch to my niece)

If the specific property cannot be given away, the devise is traditionally adeemed.

A general devise is a devise that does not specify which property is supposed to be given to the devisee (usually because it's fungible). (e.g., $10,000 to David or 10 cows to Joel)

A demonstrative devise is a hybrid between general devises and specific devises. It states a general devise that should be paid from a specific source.

If such a source is inadequate, the devise is then paid out of the general, instead of being adeemed.

A residuary devise is when the residue of one's property is left to someone. (i.e., everything not otherwise devised)

If all residuary devises lapse, the heirs of the testator take the residuary devise by intestacy.

A class gift is a testate gift to a group of described people.

Adoptees and nonmarital children count as children in class gifts if they would count as children for intestacy purposes. UPC § 2-705(b), VA Code § 64.2-101.

If members of the class die before the testator, that portion of the devise is divided among the remaining members.

A devise lapses if the if the devisee dies before the testator.

At common law, a devise is implied to be conditional upon the devisee's surviving the testator unless specified otherwise.

Know the chart on page 373, which details the process to go through when a gift lapses to find who to distribute it to:

• A gift lapses.
• Does the antilapse statute apply?
  • If so, distribute it to the devisee's descendants instead.
  • Else, is the gift a class gift?
    • If so, reallocate it among the other class members.
    • Else, is the gift specific or general? (i.e., not residual)
      • If so, it is then added to the residue.
      • Else, does the state follow the no-residue-of-a-residue rule?
        • If so, distribute it to the decedent's heirs by intestacy.
        • Else, distribute it to other residuary devisees if available.
          • Else, distribute it to the decedent's heirs by intestacy.

If a devisee is already dead at the time the will is executed or if the devisee is an ineligible taker (often because he is a cat or dog), the devise is void. This is much more uncommon in the digital age.

Void devises are treated the same as lapsed devises.

Nearly all states have antilapse statutes that substitute other beneficiaries for predeceased devisees under certain circumstances. This is because it is presumed that testators would prefer a substitute gift to the devisee's descendants rather than for it to pass by intestacy.

Antilapse statutes only apply if the devisee has a close enough relationship to the testator, as specified by state statute. The UPC's and Virginia's versions applies to grandparents and descendants thereof. UPC § 2-605; VA Code § 64.2-418.

Antilapse statutes can be avoided by specifying in the will what happens if the devisee does not survive the testator. If the will implies contrary intent (e.g., "to my living brothers, share and share alike"), the antilapse statute will also be avoided.

• However, generic "words of survivorship" are not enough of an indication of contrary intent to prevent application of antilapse statutes. UPC § 2-603.

Dean Todd recommends reading all 7,000 words of UPC § 2-603.

Ademption by extinction is a taking away or revocation of a devise that traditionally happens when a specific devise cannot be fulfilled.

It used to be an issue that portfolios had to have the right balance of capital growth and dividend income to maintain impartiality between income beneficiaries and remainder beneficiaries. However now, you can just make an adjustment and distribute the growth as income. (Or alternatively, use a unitrust.)

In a mandatory trust, the mustee must make specified distributions.

In a discretionary trust, the trustee has discretion over how the property is distributed, but must still exercise this discretion prudently, in good faith, and in accordance with the terms of the trust in light of the needs and circumstances of the beneficiaries.

A discretionary trustee has a duty to inquire into the beneficiaries' finances so he can determine whether a distribution is needed or not.

UPIA § 2

1. 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.
2. A trustee's investment and management decisions respecting individual assets must be evaluated not in isolation but in the context of the trust portfolio as a whole and as a part of an overall investment strategy having risk and return objectives reasonably suited to the trust.
3. Among circumstances that a trustee shall consider in investing and managing trust assets are such of the following as are relevant to the trust or its beneficiaries:
   1. general economic conditions;
   2. the possible effect of inflation or deflation;
   3. the expected tax consequences of investment decisions or strategies;
   4. the role that each investment or course of action plays within the overall trust portfolio, which may include financial assets, interests in closely held enterprises, tangible and intangible personal property, and real property;
   5. the expected total return from income and the appreciation of capital;
   6. other resources of the beneficiaries;
   7. needs for liquidity, regularity of income, and preservation or appreciation of capital; and
   8. an asset's special relationship or special value, if any, to the purposes of the trust or to one or more of the beneficiaries.
4. A trustee shall make a reasonable effort to verify facts relevant to the investment and management of trust assets.
5. A trustee may invest in any kind of property or type of investment consistent with the standards of this [Act].
6. A trustee who has special skills or expertise, or is named trustee in reliance upon the trustee's representation that the trustee has special skills or expertise, has a duty to use those special skills or expertise.

It used to be an issue that portfolios had to have the right balance of capital growth and dividend income to maintain impartiality between income beneficiaries and remainder beneficiaries. However now, you can just make an adjustment and distribute the growth as income. (Or alternatively, use a unitrust.)

A condition precedent means that something has to happen before the remainder-holder can take possession.

It's like being subject to a condition subsequent, but backwards. Something has to happen before the natural termination of the preceding estate.

e.g. O to A for life, then to B if B has reached 25 years old.